China’s fast-growing e-commerce market – 55% growth in 2012 – has loosened the grip of Beauty brands on their product pricing. Unsurprisingly, Amazon.cn is the biggest offender, listing prices that are on average 22% lower for mass brands and 39% lower for prestige brands. For example, a bottle of Vichy cream is sold at a 35% discount on Amazon.cn. Ferragamo’s Signorina Eleganza fragrance costs 44% less on Jingdong than on Sephora. Lefeng and Jumei are much less egregious with prices close to those on brand sites. For example. Laneige’s BB Cushion and SPF50+ costs the same on Lefeng, Jumei and Tmall.
Pricing discrepancies make a case for offering direct-to-consumer e-commerce on brands sites, which just third of brands do according to L2’s Digital IQ Index: Beauty | China. Relying on third-party retailers to determine prices can make brands susceptible to counterfeiters and the gray market, which in addition to taking sales can dilute a brand. This is especially true for foreign brands and Fragrance brands.
Brands can also maintain control by working with e-tailers. L’Oréal, for example, has partnered with China’s six major e-tailers and operates its own Tmall shop.
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