Spanish skincare companies have over 10 million reasons to be optimistic about their future in China.
That’s the number of ampoules—a small sealed vial containing a beauty serum with highly active ingredients—that were sold during last year’s 11.11 Global Shopping Festival. For one of those Spanish companies, derma-cosmetic giant MartiDerm, the better-than-expected performance proved that its choice to sell to China exclusively through Alibaba’s cross-border e-commerce site, Tmall Global, was the right move.
“It was MartiDerm’s first full Double 11 participation and it surpassed our expectations,” said Didier Wang, the company’s representative in China. Barcelona-based MartiDerm sold over 5 million ampoules during the annual online extravaganza.
Since its debut on Tmall Global in 2016, MartiDerm’s sales of ampoules in China have reached one unit per 2.49 seconds, shattering its own record in Spain, Wang said. The 65-year-old company recently added two production lines at its Barcelona plant exclusively for the production of ampoules for sale on Tmall Global.
The Kingmaker for Foreign Brands in China
With over 18,000 brands from 74 countries and regions, Tmall Global is a leading cross-border B2C online platform targeting the China market.
In China, international businesses must obtain a license before opening a brick-and-mortar shop, which can be a costly and lengthy process. But they don’t need one to sell on Tmall Global, making it a popular way for them to tap into the Chinese market.
With over half-a-billion active users, the platform is an ideal testing ground for new products before mass distribution. The analytics gleaned from the platform also help bolster brands’ understanding of customer likes and dislikes, as in the case of ampoules.
“Instead of having a consultant telling you how successful your products and brand might be, you can just let the consumers do the talking because you can use data and the actual performance of your flagship store on the online retailer site to gauge your success,” said Tom Birtwhistle, director of China Digital Strategy at PricewaterhouseCoopers.
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ISDIN, another Spanish derma-cosmetics company, say it relies on the metrics and statistics provided by Tmall Global to get a “more-granular look at our customers,” said Charlotte Zhang, the company’s e-commerce manager in China.
“Such understanding enables us to co-develop product launches and more-targeted commercial campaigns with Tmall Global that truly meet the needs of the consumers,” she said. By leveraging Alibaba’s ecosystem, the brand can formulate a well-rounded strategy that reaches all the different demographics they intend to target, Zhang added.
Tmall Global strives to introduce only high-quality brands on the platform, as it understands Chinese consumers are becoming more discerning and eager to stay ahead of the curve.
“There is a growth of individualism among Chinese consumers. In particular, the younger generation is looking for ways to stand out and be unique from their peers,” said Birtwhistle, pointing out that Chinese consumers have also become more-selective about the product’s country of origin and its ingredients.
China’s Pursuit of the Perfect Complexion
That description of Chinese consumers’ use of cosmetics and skin care products is spot-on, said Tang Gu, head of Tmall Global Cosmetics, whose team helped popularize ampoules in China when it brought MartiDerm to the platform.
“Before, Chinese women thought taking care of your skin meant using face wash and moisturizers,” she said. “But now, more Chinese women, especially those born after the 1990s, are very knowledgeable about skincare and have become frequent users of high-quality products like essence and serum,” she said.
According to China’s National Statistics Bureau, the country’s cosmetics retail industry in 2017 climbed 13.5% on-year to RMB 251.4 billion ($40 billion). And an OC&C Strategy Consultants report shows that over 90% of respondents surveyed increased their spending on skincare products last year by going up the value chain. Even men are spending more in an effort to defy aging. Tmall Global’s statistics show male customers of facial serum products rose 20% from last year.
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“China’s skincare market will continue to grow at a steady pace, fueled by the rising middle class and its increasing disposable income and sophistication,” the report said.
“As such, this market will remain a magnet for the most-ambitious international brands for years to come.”
From Tmall Global’s research on Chinese consumers demand for better facial products, “we had a good hunch that ampoules from Spain would do very well here,” Gu said.
In fact, Spanish beauty products are among the bestsellers on Tmall Global, while Spanish-made ampoules enjoy an overwhelming lead compared to other countries in the category, she said.
More Than Just an Online Partner
Barcelona-headquartered Sesderma, without disclosing the exact figure, said since joining Tmall last June, revenues from the sale of its skincare products in China have grown to account for 10% of its total global figure, from zero.
“Last November, we developed a plan with Tmall Global for this year. By March, our sales in China have already exceeded our six-month forecast,” said Gustavo Chorro, the company’s international director.
But success on a digital platform is only part of Sesderma’s ambition in China. It also wants to expand into the physical space by getting its products into local pharmacies. To do so, the company has teamed up with Tmall Global to implement “New Retail,” a seamless blend of online and offline commerce that uses technology and analytics to drive traffic to both channels. For Sesderma, that means leveraging insights, such as the locations of most of its online customers, to determine where it’s best to place its products.
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“By working with Tmall Global, we can get immediate customer feedback,” Chorro said. “This way we know what people are buying, when is the right moment for us to communicate what to our consumers and where the interests for our products are physically located.”
If You Build It, They Will Come
The foundation that Tmall Global has built for Spanish beauty names has enticed more European brands, such as Mesoestetic, Babor, Rival de Loop, Ganassini, Annamarie Borlind, Chantecaille and others to turn to Alibaba as well.
Klaus Redomske, the president and chief operating officer of German skincare company Babor, which inked a deal with Tmall Global this year, said that although the Germans weren’t part of the initial wave of ampoule vendors on Tmall, “I believe together with other brands, we can grow the category together.”
“Together with Tmall, we can come up with a plan, substantiate it with data and move forward by leveraging insights that can help us to choose the right products for Chinese consumers,” he said.