Alibaba expects international and domestic cosmetics brands to open 1,000 stores this year on its Tmall platform to meet demand from Chinese consumers.

Seven international cosmetics companies, Tom Ford, Glamglow, P&G’s new beauty line Oriental Therapy, Cosme and d-program from Japan, Primera from Korea and Barnängen from Sweden, have signed agreements to launch flagship stores on Tmall this year at Tmall’s annual beauty summit.

Related: Tmall and JD had a combined market share of over 85% in China’s B2C e-commerce market in Q4 2018

Another five beauty companies signed New Retail partnerships with Tmall during the summit, including Maybelline, Kiehl’s, Innisfree from Korea and domestic brand WINONA. It gives them a complete view of their customer base by integrating insights from digitized offline promotion activities and storefront information with online information.

Catering to the needs of shoppers who want to enjoy a variety of Korean beauty products, the Korean Small & Medium Business Corp. (SBC) announced at the Tmall Beauty Summit that it plans to launch a flagship store to house 50 niche Korean brands.

The store openings and Tmall’s target to open 1,000 new cosmetics stores with brands are part of its drive to cement itself as the platform of choice for beauty brands to connect with Chinese shoppers.

With Alibaba’s extensive reach of nearly 700 million customers in China, its strong technical support and in-depth market knowledge, Tmall has become the most-effective platform for brands to manage the entire customer journey from product discovery, awareness building, engagement, transaction and delivery, to after-sales services, and offers consumers a seamless experience, both online and offline. Tmall physical goods GMV grew 29% year-over-year in Q4 2018.

We are honored to be trusted by 180,000 brands on our platform, empowering them to accelerate their digital transformation and grow their business in China. As China continues its consumption upgrade, more and more people from different age groups and geographic locations are willing to spend on high-quality beauty products. We are looking forward to working with more brands to address the opportunity

said Jet Jing, President of Tmall.

Tmall’s sales of beauty products jumped over 60% last year, surpassing the industry’s average growth rate. Online sales of cosmetics and personal care products grew 37% and 36% in China in 2018, respectively, which was also ahead of the whole fast-moving consumer goods sector average of 32%, according to a report jointly released by Tmall and retail market research firm Kantar during the summit.

The report also highlighted untapped potential in Generation Z. Aged between 15 to 19 years old, Generation Z female consumers are newcomers to the beauty market and are willing to spend more on high-end lipsticks than women in other age groups, representing an opportunity for cosmetics companies.

Tmall offers beauty brands an unparalleled edge in the launch of new products, including consumer insights based on data analytics, using live streaming to enhance shopping experiences and exclusive online offers, as well as leveraging offline and online integrated channels to provide customers with personalized shopping experiences.

In 2018, some 80% of Tmall brands chose the marketplace to launch new products, proof of the platform’s ability to identify new markets and demand. For example, two new emerging domestic beauty brands – Perfect Diary and Home Facial Pro – were among more than 30 beauty and personal care brands whose sales topped RMB100 million at the 2018 11.11 Global Shopping Festival, due largely to Tmall’s robust offerings. Check out Double 11 statistics of top retailers & top 50 Tmall stores in 2018 here.

Also at the summit, Tmall showcased a one-stop solution, the Alibaba Business Operating System, as part of a new effort to help beauty brands succeed in China. The Alibaba Business Operating System, officially unveiled by the group in January, is a one-stop solution that helps brands digitally transform themselves in sales, logistics and supply chain management, payment, marketing, cloud computing, and other supporting services.

Alibaba’s Tmall also announced plans earlier this year to incubate 100 new products for 10 billion yuan GMV in 2019.

71 brands exceeded 100 million yuan (US$14.37 million) in GMV in the pre-sale period of Double 11. Among that, 15 brands came from Tmall apparel, i.e. Nike, Adidas, Puma, Lining, Converse, Anta, Fila, Skechers, New Balance, Underarmour, Uniqlo, Eifini, Only, Vero Moda, and Bosideng. The same figure was only 40 in last year’s Double 11. 

14 brands were from consumer electronics, namely, Apple, Huawei, Xiaomi, Vivo, Honor, Haier, Midea, Siemens, Gree, Aux, Hisense, Fotile, Dyson, and Ecovcs.

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Three brands are from autos, namely, SAIC Volkswagen, Buike, and Lincoln.

17 brands came from makeups, personal care, and maternal & child, namely, Lancome, Estée Lauder, Olay, SK-II, L’Oreal, Pechoin, HomeFacialPro, Innisfree, Elizabeth Arden, Shiseido,  La Mer, Ya-Man, Whoo, Ssulwhasoo, MAC, P&G, and Purcotton.

20 brands were from home decoration, for instance, Linshimuye, KUKA, QUANU, CHEERS, Nabel, Sophia, tata, Shangpin Home Collection, and OPPEIN.

YA-MAN and MOONY were the only two brands in Tmall Global saw GMV hit 100 million yuan in pre-sale.

Consumer electronics: Apple, Huawei, and Haier all in the “100 million yuan club” On November 1st, total pre-sale GMV of Tmall consumer electronics increased by roughly 6 times year-on-year, which remained to be the top platform for smartphone and home appliances.

To be specific, GMV increased by 15 times for smartphones, 10 times for digital 3C, and 4 times for large home appliances.

Notably, Xiaomi’s flagship smartphone MIX3 was sold out at the moment the sale started, Honor’s Magic2 was sold out in the first 5 minutes, and nearly 10 thousand vivoZ3 sold out in 10 minutes.

16 thousand pieces of Haier 10KG tumbling-box washing machine sold out in two days. 20 thousand Dyson supersonic hairdryer and over 50 thousand vacuum cleaner were pre-sold accumulatively.

Apple, Huawei, Haier, Xiaomi, Midea, Siemens, GREE, Dyson, and ECOVACS had already marched to the “100 million yuan club” as of November 2nd. Among them, sales of hot items like iPhone X, iPhone XS Max, Huawei Mate 20 Pro, Apple iPad 128G, and Apple iPad 32G all exceeded 100 million yuan.

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Top pre-sale brands as of November 2nd

Top smartphone brands were Apple, Xiaomi, Vivo, Huawei, honor, Oppo, Meizu, Samsung, Nokia, and Meitu.

Top home appliances brands were Midea, Supor, Joyoung, Ecovacs, Philips, Roborock, A. O. Smith, Flyco, Bear, and Haier.

Among them, hot items were Xiaomi Mijia Vacuum Robot Cleaner, Roborock S51 Smart Robot Vacuum Cleaner, Roborock S50 Smart Vacuum Robot Cleaner, Midea WH2202S induction cooker, A. O. Smith NL1200D Water Purifier, ECOVACS Cleaning Robots, Midea Simple301 electric cooker, ECOVACS Deebot  DT85G Robot Vacuum Cleaner, Midea Simple 101 electric pressure cooker, and OGAWA OG7508S massage sofa.

Tmall Double 11 has become the best timing for launching new consumer electronics products. iPhone XR, Huawei Mate 20 series, Xiaomi MIX3, honor Magic, Dyson Airwrap, and Beats Solo3 Mitch Limited Edition were all in a hurry to catch up with Tmall Double 11.

Apparel: sales of down jacket increased by 90%

It seems that consumers wanted to take advantage of Double 11 to buy everything they might need for a year round.

Over 60 thousand Newbalance565 and 50 thousand MiiOW long underwear suits for couples were pre-sold. Though the snow season had yet to come, 80 thousand snow boots were pre-sold. The sales of down jacket increased by 90%.

The youngest who is in pursuit of street fashion showed extraordinary consumption power. The sales of Edison Chen founded Clot grew by around 60% year-on-year; sales of celebrities Jerry Lee and Wilber Pan co-founded NPC increased by 55% year-on-year; sales of Aape that was under the brand of HK I.T group rose by 45% year-on-year.

Luxury or affordable luxury products were hot. Sales of fur were almost doubled compared with last year’s.  Limited-edition scarves by Burberry were sold out on the first day of pre-sale.

Cosmetics and toiletries: 50 thousand Philips electric toothbrush sold out

Pre-sale GMV of Lancome, olay, Estée Lauder, SK-II, L’Oréal, Sulwhasoo, Elizabeth Arden, and Procter & Gamble were all hit 100 million yuan.

Beauty apparatus generated double sales compared with the previous year. An eyeshadow that was co-branded by domestic brand Perfect Diary and the British Museum sold out at a fast speed of one in every 11.5 seconds. 100 thousand HomeFacialPro’s Hyaluronic Acid Stock Solution – last year’s most trending brand- were sold out.

140 thousand OLAY White Radiance Light Perfecting Essence 50ml sold out in just 4 days of the pre-sale period. Around 20 thousand Givenchy Le Rouge were sold in less than five days. MAC sold over 500 thousand lipsticks in the pre-sale period.

Philips sold 50 thousand electric toothbrushes in the first one minute. Crest sold 6 thousand and 80 thousand 3D White toothpaste in the first one minute and ten days, respectively. Lancome sold 10 thousand Tonique Confort in every minute.

Food & Beverage: sales of 1919 increased by ten times

Pre-sales of KFC increased by 70.4% year-on-year, 5 thousand KFC and Tmall co-branded card were sold out at the moment it launched.  1 million KFC Original Recipe were sold. Three Squirrels new product Trembling Noodle were sold 10 thousand buckets.

1919.cn, an online wine, and spirits shop that has recently received 2 billion yuan investment from Alibaba saw sales of its Tmall flagship store grew by 1,000% year-on-year.

Roughly 80 thousand cars were booked

Autos saw record sales in the pre-sale period. 90 Land Rover at a fixed price of 265.9 thousand yuan was sold out. Buick sold 7,000 cars in a week, over 1,000 consumers in rural areas placed orders through rural Taobao partners. Over 600 high-end Lincoln was booked in 5 days with 300 thousand new customers following its Tmall flagship store.

Users booked a total of 80 thousand cars on Tmall, equal to the entire years’ sales of 30 4S shops.

Alibaba Health: medical beauty services increased by 533% as of October 30th

Online celebrities played a role in the big sales of traditional tonic. The Internet celebrity Li Ziqi’s shop sold 13 thousand jars of Changbaishan honey. For the dietary supplement, BY-HEALTH sold 22 thousand cans of collagen powder, which was bundled with celebrity Cai Xukun-tailored gift.

Inspired by Chinese famous chili sauce Lao Gan Ma’  hoodies that were sold at the New York Fashion Show, several mind-blowing cooperation had sprung up in health care. For example, Durex and Cat’s Kitchen sold 8,000 items of their co-branded popping candy and ultra-thin condom gift box. TongDaoDaShu, a prominent social media influencer, and Omron sold 9 thousand pieces of their co-branded low-frequency massage device.

Fliggy: five-star hotels and business class tickets were the most popular

High-end hotels like Marriott, Hilton, Hyatt, and InterContinental sold 35o thousand night rooms. Airlines also sold 7.5 thousand business class tickets through Fliggy.

Over 200 thousand consumers paid attention to travel products about Hong Kong. Sales of Lao’s hot tourist route was increased by 4 times year-on-year. 16 thousand visas of top destinations Japan, Philippines, and Thailands were booked.

Marriott launched several hundred Double 11-tailored products. Its limited edition pass card for celebrating the coming new year was sold out in two days.

Several online travel agencies united with Tmall Double 11 to release more membership profits like shared membership system and exclusive discounts. For example, Singapore Airlines had shared its membership system with Fliggy on October 28th; the stock was running out in just half an hour after it opened the registration system.

With 180 thousand brands participating this year, which was only 27 brands in the first year of 2009, Tmall Double 11 had become the commercial Olympic for global brands, to a certain extent.

Find out Tmall Double 11 highlights or Double 11 statistics of top retailers & top 50 Tmall stores in 2018

The Chinese government announced on May 30 that it will significantly lower import tariff on many consumer goods. Among them, the average tariff rate for detergents, cosmetics such as skin care and hair care products, and some medicine and health products will be cut from 8.4% to 2.9%.

How will this affect brands’ fate in China?

This is apparently a good news for imported cosmetics products. According to Kantar Worldpanel data in recent years, imported cosmetics products have been enjoying very healthy growth: in 2017, the sales value growth of imported cosmetics products, mostly premium ones, reached 40%. Thanks to the new tariff cut, we expect this trend will continue and this sector will be able to maintain a growth between 30% – 40% in the next couple of years. Some typical brands are Lancôme, Estee Lauder, SK II, Dior, Saint Laurent and Shiseido.

From the origin country perspective, whether the actual products are produced in or outside of China, brand owners have to remember that many Chinese consumers have very consolidated opinion about cosmetics from this country. For example, Japanese products increased their sales in 2017 because Chinese consumers believe Japanese goods are meeting their need for health and professionalism. Japanese cosmetics are widely acknowledged for addictive-free features and outstanding functions.

The growth of European and US brands came against the backdrop that increasingly sophisticated Chinese consumers are entering into previously niche categories, such as essence and eye-cream. European and US brands have accumulated many signature formulae in these categories and have won the votes of many Chinese consumers.

Their usage of social key-opinion leaders (KOLs) has also contributed to their stellar performance because color cosmetics categories are high-involvement sectors and consumers are willing to spend a lot of time to learn from KOLs. South Korean brands went through a challenging period of time in China, but they weathered it by developing lower-tier and online channels as well as launching “fast beauty” hit products.

The macro trend of China’s cosmetics market is favorable to imported products. The rebound of China’s FMCG market was supported by premiumization. Personal care sector outperforms other categories with skin care and makeup products the biggest opportunity to grow.

If we look into the details, Kantar Worldpanel’s Beauty Panel has shown that young females in their 20’s are the market leader and growth driver. They are exposed to and become fans of cosmetics products on mobile APPs, creating numerous instant purchasing occasions. They’ve also formed a habit of making small but frequent purchases, which is a stark contrast with shopping patterns of 40 and above female buyers, who prefer to hoard up products in much fewer purchases to drive down per unit cost.

The rise of vertical e-commerce sites and mobile apps has also created rooms for lesser-known foreign brands to establish themselves. Thai brands, for example, became a surprise leader in sales growth because the humid and hot weather has fostered long-wearing products with outstanding oil-control functions. These are also pain points for many young Chinese consumers.

Geographically speaking, lower-tier cities experienced a big boom of consumer spending. A, B, C and D-tier cities have all posted per person spending growth rates more than doubled that of Key cities (Beijing, Shanghai, Guangzhou).

If a brand wants to make a decision on which products to bring to China first, we can share three latest trends of Chinese consumers’ pursuits for beauty products:

1. Healthier skins

Chinese consumers’ pursuit of healthy skin condition has blurred the definition of traditional functions. For example, new “anti-age” means repairing skin barrier; new “oil control” means improving water-oil balance; new “whitening” means healthy glowing skin.

2. More professional products

As Chinese consumers increase their knowledge about skin care and makeup, they are choosing more professional products more proactively. Kantar Worldpanel Beauty Panel data has shown that the once popular easy-to-use BB cream and CC cream kept losing in penetration rates, while more professional products, such as cushion and foundation have been bought by more consumers. They have also added more pre-steps to create a flawless look.

3. More personality

More Chinese women are now showing off their personality by using fragrant products and bold makeup colors. Brighter and bolder lip colors and eyeshadows have jumped in occasion index.

*Index calculation: occasion share of the period/of 14 fall/winter *100

To summarize, lower tariff definitely will make imported cosmetics more competitive in prices. But the more fundamental factor to decide a brand’s performance in China is their access to reliable market data and their understanding of real Chinese consumer needs. Data-based consumer insight is the ultimate short-cut to win in China.

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This article was originally published on Kantar.com.