On Alibaba’s Tmall platform, the luxury beauty category in China has been growing at a rapidly pace, with the growth of gross merchandise value (GMV) hitting triple-digits compared to the previous year.
“As China’s middle class expands and the consumer becomes more affluent, the country’s appetite for designer brands and penchant for high-quality product are also rising... On Tmall, the growth rate of luxury beauty account is impressive,” said Jason Chen, general manager, Tmall Beauty.
Luxury beauty brands favoured by Chinese shoppers include brand such as Dior, Chanel, La Mer, Estée Lauder and Lancôme.
In terms of transaction value, consumers in the 35 to 45 age group are the highest spenders of high-end beauty products.
Their consumption more than tripled compared to last year due to the effects of the novel coronavirus (COVID-19) pandemic.
“A main reason for the sharp growth is due to the current international travel restriction, a large portion of China’s consumption of foreign branded high-end beauty products have migrated to online, instead of in a foreign country or at airport duty-free shops,” Chen explained.
However, the largest consumer group of luxury beauty consumers are the younger generation Z consumers in the first- and second-tier cities in China, such as Beijing and Shanghai.
Unlike older consumers who favour skin care products, Gen Z consumers are more interested in colour cosmetics which “help them to accentuate their individual personalities and unique styles”.
Reaching Gen Z through live streaming
One of the key drivers supporting the boom of luxury beauty is the rapid growth of livestreaming in China.
“Chinese consumer’s growing fondness for livestreaming is exactly why China’s high-end beauty buyers, especially the younger generation, come to Tmall repeatedly,” said Chen.
In the second quarter of 2020, the GMV generated by Alibaba’s Taobao Live platform grew 100% year-on year.
“Livestreaming not only augments the size of your consumer base that you can reach out at once, it also bolsters the social interactions and allows consumers to have a joyful online shopping experience that was traditionally only available at an offline setting,” said Chen.
By livestreaming, brands instil consumers with confidence in the authenticity and the credibility of the products.
“Furthermore, they can directly engage with beauty experts and key opinion leaders who can offer them sound suggestions and introduce to them the latest trends… For many consumers, they learn about the latest brands, products and beauty tips from influencers and well-known livestreamers who have established themselves as an authoritative and credible voice.”
Tmall has seen more luxury brands – including beauty pushing for digital reform. Most recently, English brand Burberry launched a virtual store on Tmall dedicated to their cosmetic products.
“In recent months, more high-end luxury brands are undergoing digital transformation and opening up online stores on our platform. These heritage brands are leveraging the power internet and Tmall’s innovative marketing campaigns to renew and recreate themselves while keeping their signature appeals,” Chen.
He added that leveraging the Internet and e-commerce platforms was becoming increasingly critical for luxury beauty brands to reach younger consumers especially.
By doing so, brands have the opportunity to widen their consumer touchpoints, deepen their engagement with consumers and lengthen consumers’ journey while they are shopping on the brand’s virtual store.
“By putting greater emphasis on their connections to the Chinese young consumers, brands can gain a better understanding on how to attract new consumers and how to sustain consumer’s loyalty for the long run.”