US EUROPE AFRICA ASIA 中文
Business / Companies

Personal care items get big boost online

(China Daily) Updated: 2016-07-18 10:33

Personal care items get big boost online

Two Shanghai Jahwa United Co Ltd employees step into the company's office in Shanghai. Earlier this month, the Chinese cosmetics company inked a deal with online retailer JD.com in Beijing to sell its personal care products online. [Photo/China Daily]

China's cosmetics makers are shifting focus to digital marketplaces from stores

Chinese cosmetics makers are increasingly taking their battle with global competitors online, where digital marketplaces have been outpacing brick-and-mortar stores in selling cosmetics and personal products.

Earlier this July, Shanghai-based Jahwa inked a deal with online retailer JD.com in Beijing to sell and market its cosmetics and personal care products on JD's marketplace.

The deal will also see Jahwa working with the online retailer to figure out consumer preferences, tailor its own digital marketing program accordingly and participate in JD's programs to reach out to China's increasingly wired consumers.

It entered into a similar deal with JD's arch rival Alibaba last year, setting up its own shop on Alibaba's online marketplace Tmall and running digital campaigns from there.

Both international and domestic cosmetic brands have long regarded department stores and shopping malls as the primary sales channels in China. But as the country's e-commerce revolution sweeps brick-and-mortar stores, cosmetics and personal care products are chief among a list of consumer goods witnessing sales migrating online.

According to consulting firm Bain & Company, products ranging from biscuits and chocolate to shampoos and personal cleaning agents have experienced annual growth of no less than 30 percent in online sales over the past four years.

Jahwa, which traces its roots to a daily-use chemical products maker in the late 1890s, is a household brand in China for its mosquito repellent Liushen and hand cream Maxam.

The company has been seeking to break global brands' dominance of premium cosmetics in China with its own Herborist line, inspired by traditional Chinese medicine and herbal ingredients.

In recent years, Jahwa has sought to put a global spin on Herborist by selling it in Europe through cosmetic retailers Sephora and Douglas.

In 2015, Herborist was the only Chinese name to make the top 10 cosmetic brands by market share at department stores in China, at number eight, according to China Market Monitor.

But like its peers, Jahwa's reliance on traditional channels has weighed on its performance. Revenue growth in 2015 shed 5 percentage points from five years earlier to 9.58 percent. Excluding non-recurring items, profit growth slid for the first time in a decade.

Jahwa said the slowdown in its own business has come largely as a result of overall weakness in the cosmetics sector. Cosmetics retail sales growth moderated from 13.3 percent in 2013 to 8.8 percent in 2015, according to the National Bureau of Statistics.

For skin care products in general, growth at department stores has almost stagnated, Jahwa said in a response to an inquiry over its 2015 financial results by the Shanghai Stock Exchange.

As a result, domestic cosmetics brands including Jahwa have been the most active in embracing e-commerce, where they see a chance in overtaking global titans that have been slow to adapt to China's increasingly digitalized retail scene.

Very few international cosmetics brands can make the monthly list of top 10 best-selling cosmetics on Alibaba's e-commerce site. Domestic brands such as Pechoin, Hanhoo, Chando and KanS lead cosmetics sales online.

As a result, foreign brands have been losing share in skincare and makeup to Chinese competitors, by roughly 2 to 5 percent during each of the past two years, according to Bain.

Jahwa is hoping that 20 percent of its sales of cosmetics and personal care products sales will be made online by 2018. Last year, its e-commerce revenue stood at 557 million yuan ($83.3 million), or 9.5 percent of the company's total.

Xinhua

Hot Topics

Editor's Picks
...