Overall Data
From May to August 2022, the online sales of the skincare and makeup sectors on Ali platforms performed a decreasing trend. Both sectors were waiting for dawn.
In May and June, the total gross merchandise value (GMV) of Ali's online makeup markets were 19.5 and 35.2 billion yuan, bumped by the 618 shopping festival. Among all beauty market, the skincare sector’s online GMV for May and June totaled 14.3 billion and 27.9 billion, while the makeup reached 5.2 billion and 7.4 billion yuan.
In July, the GMV of the online market on Alibaba platforms was 1.95 billion yuan, a YoY decrease of 11%. The decrease is mainly attributed to the forward spending during the 618 shopping festival in May and June.
In August, the total GMV of online sales in the cosmetics market reached 18.83 billion yuan. As expected, the year-on-year growth was still poor due to the lack of catalyzer, such as shopping promotions. Furthermore, the consumer market is still under the shadow of economic decrease due to COVID-19. Despite Linhui Fu, the spokesman for the National Bureau of Statistics, mentioned that the total retail sales of consumer goods had generally shown a recovery trend with a YoY growth rate of 5.4%. However, it was still under-expected.
Generally speaking, the makeup sector performed worse than the skincare sector from May to August. Its sales were less than 1/2 of the skincare sector’s sales, and recorded negative growth for four consecutive months. In August, the year-on-year growth rate was -31%.
Different from the Ali platform, Douyin e-commerce shows a massive opportunity to access more consumers. Douyin’s beauty sector, including skincare and makeup, is still in the fast growth stage, especially the international brands, which are discussed in the latter part of this article.
Brand Performance
Ali Platforms
For Ali platforms, most cosmetic brands are underperforming. Except for a few brands, such as Proya and Winona, most showed a year-on-year decrease even sharp drops in the 618 shopping festival.
In recent years, Proya actively followed the popular skin care trend ‘morning C and night A’ by using products made by Vitamin C in the morning while using products with retinol ingredients at night. As for the Chinese brand Winona, focusing on sensitive skincare areas, it is popular among consumers concerned about skin problems. On the other hand, Winona provided the anti-sensitive moisturizing tolerance-extreme cream as an auxiliary product for ‘morning C and night A’. Besides, their products are much more affordable than high-end competitors, such as Estée Lauder and Lancôme. As consumers tend to purchase products with a high price-performance ratio, Winona can attract price-sensitive customers on the lower market. In addition, Winona Baby’s success indicated the potential market needs of the baby skincare sector.
Nevertheless, Estée Lauder and Lancôme still dominated the online market on Ali platforms, benefiting from their diverse product lines and precision product positioning strategy.
Douyin Platform
Compared with Ali platforms, where international high-end cosmetic brands dominate, Douyin e-commerce was the arena of many Chinese domestic brands. Topping the list in the skincare and makeup sectors on Douyin were Bloomage and Florasis. Considering the makeup and skincare markets separately, Florasis gained a higher market share in the makeup sector, even though it owned a higher total sales. The reason why they get such success is that many users on Douyin are price-sensitive, whose disposable income is relatively lower than those in tier-1 cities. Hence, they are more likely to choose affordable Chinese domestic products. After pioneers’ success by joining live streaming sales, such as Shiseido, more and more international brands like Estée Lauder started to explore Douyin live streaming e-commerce. In return, the incredible YoY growth rate of 2,354% gave the best answer.
Bloomage ranked the first (633.85 million yuan) by online GMV among skincare brands and kept a high-speed growth (688% in 2022H1). In comparison, Estée Lauder’s online GMV ranked the second (544.46 million yuan). Following these two cosmetic brands was a Chinese domestic skincare brand, Proya. Its online GMV from May to August was 518 million yuan, with a year-on-year growth rate of 72% (2022H1).
As for international brands, almost all reported over 100% year-on-year growth rate due to low base. In June, L'Oreal and Estée Lauder 's GMV reached 112.47 million yuan and 187.76 million yuan, an increase of 356% and 1,184% YoY, respectively. In 2022H1, the total GMV of L'Oréal and Estee Lauder increased by 636% and 2,354% YoY, respectively. Lancôme and Shiseido's GMV increased by 1,057% and 458% year-on-year.
Note: For a better understanding of Douyin e-commerce, here is a brief introduction. On traditional e-commerce platforms like Taobao and T-mall, the sales format can be seen in the form of a supermarket where products are displayed on shelves. The primary way of finding products through this medium is only through clear purchase intent and active search for the actual product. The users of Douyin are largely unconscious and passive. They will unintentionally be attracted to the content in the short video, which means, Douyin will create new needs unconsciously, that’s how it reaches new consumers.
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