Fears of counterfeits and a mass-market image tend to make luxury brands wary of major Chinese e-commerce platforms like Alibaba’s Tmall – but not when it comes to beauty.
According to L2’s Digital IQ Index: Beauty China, premium beauty brands have now embraced Tmall as 73% of them had official shops on the platform by 2016, up from only 24% two years earlier. Their newfound willingness to join caused the percentage of all Index brands with Tmall storefronts to increase from 50% in 2014 to 81% in 2016.
Mass brands have traditionally been much more willing to join China’s e-tail giants, as 88% of them already had Tmall shops by 2014. Their adoption of the platform reached near ubiquity with 92% on it as of 2015, but the number reached a plateau as the only brands to open new stores for 2016 were in the prestige category.
Alibaba now faces significant competition in beauty as brands branch out to multiple e-commerce platforms, including JD.com, Jumei, and VIP.com. As of 2016, the percentage of Index brands on JD.com surpassed the number on Tmall for the first time with 85% of them on Alibaba’s main rival – up from only 26% two years earlier. Beauty-focused Jumei and VIP.com are also catching up quickly, with 73% of Index brands on Jumei and 74% selling through VIP.com’s flash sales as of 2016.
JD.com has aimed to position itself as less counterfeit-prone than Alibaba in order to attract higher-caliber brands, which helped it land an official Sephora shop in 2015. But the lure of Tmall is strong: in 2016, the LVMH-owned beauty retailer gave up its initial resistance to Alibaba with a September launch on the platform. JD.com also benefits from its WeChat connectivity, which was enhanced in May 2016 when it teamed up with Tencent to release an advanced tool for utilizing customer data for targeted ads.
Meanwhile, Tmall’s livestreaming feature is far ahead of JD.com in popularity with premium beauty brands, as many used it for high-profile celebrity promotions in 2016 – Guerlain enlisted actor Yang Yang for two livestreaming events while Clé de Peau Beauté featured a livestream with its global brand ambassador Amanda Seyfried.