In China, online beauty sales are growing exponentially even as store sales stagnate. Online Beauty sales have grown at a compound annual rate of 53.9% since 2010, more than seven times the overall market. Furthermore, online accounts for a larger portion of sales than in the U.S. and Europe. More than 15% of Beauty sales took place online in 2014, a 23% increase from the year before.
This surge in online skin care and cosmetics purchases is not just an opportunity for domestic brands, or even brands with Chinese e-commerce sites; China’s online shoppers buy cross-border. For example, 41% have purchased cosmetics online from a U.S. retailer. However, brands that establish a presence on domestic e-tailers and sites will be ahead. In 2015, Bobbi Brown, Lancôme, and Make Up For Ever opened stores on Tmall while Sephora joined JD.com.
So which beauty industries are winning and losing when it comes to expansion in China? Domestic and Korean brands have an edge in digital. In L2’s 2015 Digital IQ Index: Beauty China, Chinese brands maintain the largest Digital IQ. Korean brands are not far behind, and had collectively boosted their digital performance in China by 18% since 2014. French brands had the second largest Digital IQ in the country after domestic brands, but their performance had slid by 3% in the past year.