While the market is attractive, competition is also mounting. There are several types of B2C online retailing portals in China, including brands operating their own online stores such as Lancôme and Shiseido, B2C online platform operators that provide a wide range of cosmetics brands such as Tmall.com, group buying websites that offer cosmetics products at discounted price like Jumei.com as well as online agents that help Chinese customers buy foreign cosmetics brands overseas.
For now, Lafaso.com, Jumei.com, Tiantian.com and Miqi.cn are among the most popular and recognized cosmetic online shopping websites. In a bid to strengthen their leading positions and stay head of their rivals, all of these online retailers have recently made big moves. Partly backed by the celebrity glamour of its founder, China’s well-known TV hostess Li Jin, Lafaso claimed a repeat purchase rate of 56% as sales approached $155 million in 2011 with 40% from its own brands. Lafaso is now planning to expand its in-house brands from about 10 to more than 20 this year.
Jumei also announced an expansion plan soon after raising more than $10 million from Sequoia Capital last year. Miqi was reported to consolidate its online business with SkinStore China, the Chinese subsidiary of American online cosmetic retailer SkinStore. Tiantian, which dates back to 1999, has also garnered a new round of tens of millions funding from SAIF Partners in 2011.
But when it comes to e-commerce in China, taobao.com cannot be neglected. After gaining predominance in the C2C e-commerce market in China, its owner, Alibaba Group, has been shifting its focus to B2C operation by developing Tmall (www.tmall.com). This strategic shift also demonstrates the likely boom of the B2C market in China in the near future, thanks to better product quality assurance, customer service as well as a healthier generation of revenue. It is reported that Tmall.com currently accounts for 37.38% of China’s B2C e-commerce market share, while 360buy, currently the second largest B2C online, retailer makes up 17.23%.
Ally Dai is Deputy Editor-in-Chief of Ringier Trade Media Ltd, responsible for trade publications including Happi China. She has more than 10 years of experience in the cosmetic and food industries. Happi China is a leading media for the China household & personal care industry. Published by Ringier Trade Media in strategic editorial partnership with Happi, it helps local manufacturers update their knowledge on formulating, testing and packaging, as well as providing market insight.