Just last week, Amazon.cn shut down a third-party retailer for selling fake cosmetics. In a previous post, we mentioned how price discrepancy across e-tailers has made China Beauty brands vulnerable to the gray market and counterfeits. These products can also undermine the credibility of e-tailers, who have taken steps to reduce the threat. Tmall requires brands and authorized sellers to pay a deposit for a storefront. Yihaodian, Suning, LeFeng, Tmall and Dangdang (all major retailers except Amazon.cn) have posted official statements saying they will take responsibility for any fake products sold on their site. Jumei has fought back hardest, creating the Zhenpin.org platform where users can verify products by entering their barcode. Laneige, Maybelline, Vichy, La Roche-Posay and Herborist are Zhenpin partners.
Brands have made innovative efforts on that front as well. Featured in a Flash of Genius in our Digital IQ Index: Beauty | China, the Avène app verifies counterfeit products on the go. Chinese brand Carslan offers numbers for users to call or text for product verification.
Yet, the best practice is to maintain control over e-commerce sales by offering direct-to-consumer e-commerce on brand sites, or through e-tailer storefronts. For example, L’Oréal has partnered with six major e-tailers in China and operates a Tmall shop to reduce the impact of the gray market. Currently, just a third of prestige Beauty brands with DTC maintain a Tmall shop, the rest leaving pricing, authenticity and reputation in the hands of third-party sellers.