Booming business for new Chinese cross border e-commerce platforms, with Japanese cosmetics brands, also get a piece of the pie
Restrictions on overseas travel due to the COVID-19 pandemic has resulted in a buying spree on cross border e-commerce sites, which allow online purchasing of overseas goods. Alibaba Group’s Tmall Global, one of the biggest such e-commerce sites, is seeing a surge of overseas brands getting on board to sell their goods. However, China also has many other cross border e-commerce businesses in existence.
According to China’s iiMedia Research, the country’s cross border e-commerce market is mostly owned by Kaola and Tmall Global, which are in turn both owned by Alibaba Group and when combined make up a 56.5% share of the market. The next biggest share is owned by JD.com’s Jingdong International with 17.8%, meaning that the two companies of Alibaba Group and JD.com together own over 70% of the market. The rest is made up of small-to-medium platforms that are scrambling for the remaining share.
In third place is “VIP International” run by VIP.com, with a share of 10%. Their user base is 69% female and their product categories include apparel, baby goods, home appliances, and cosmetics. After having grown their business through focusing on sales events, in 2012, VIP.com listed on the New York stock exchange, and since then their market cap has exceeded 17.17 billion dollars.
They handle all major personal care and cosmetics brands, but also many niche brands. An example of which is the brand Job’s Tears Skin Lotion by Purevivi (also known as Alovivi in Japan), which has sold 116,000 units — the most for a Japanese brand in VIP.com’s skin lotion category.
In fourth place is social media-style e-commerce RED, with a share of 4.5%. After finding success as a platform for overseas travelers in search of local shopping information, RED added e-commerce functionalities to their service around the end of 2014 and began selling overseas brands that the company stocked themselves. This has made them strong in the overseas department from the start. Currently, they’re planning to open up the platform to manufacturers and brands and add online mall-like functionalities.
RED goes hand in hand with beauty products and, according to their published “2020 RED Mid-year Makeup Insight Report”, their number of monthly active users (MAU) exceeded 100 million in June 2020 and 56% of those users read and viewed cosmetics-related content.
One platform outside of the market share ranking is Mia.com, which launched in 2014 and focuses on beauty. An AI-driven skin analysis feature was added to their app, allowing it to also recommend products that match the skin condition of the user. Their Japanese brands include Shiseido’s Clé de Peau BEAUTÉ with their “Voile Correcteur n” and Kao with their “Curél Intensive Moisture Face Cream”, of which both products ranked highly in the number of units sold.
Mia.com originally started by importing baby goods, and from there went on to broaden their range of products. Comments and posts from users with children not only show the users’ account names but also specify their child’s gender and age, and social media functions are used in the site’s design to help forge a community of parents.
Some platforms choose a more specialized approach. For example, a Chinese cross border e-commerce app that only sells Japanese products. Named “Wan Dou (The Princess and the Pea)”, the app was launched in 2015 by Inagora, a company started by a Chinese businessman living in Japan and that is headquartered in Tokyo. According to Chinese media, the app’s user numbers in 2019 grew up to 20 million. Those users are mainly between 20 and 30 years old, with post-90s (those born after 1990) making up 60%. The app’s target demographic is young women and registered users are called “princesses”. Over 3,000 Japanese brands are available, which include beauty products, daily necessities, small electrical appliances, apparel, and baby goods.
Best-selling cosmetics on the platform have included facemasks, of which the “Keana Nadeshiko Rice Mask” from Ishizawa Laboratories ranked number one after selling 16,000 units. For eye creams and eye masks, Meishoku’s “Whitening Eye Cream” sold the most (over 2,800 units), and for beauty lotion, Daiso’s “Cosmo Whitening Essence V (medicated whitening essence)” sold over 8,000 units.
There is also a cross border e-commerce business specializing in cosmetics: “iDS BuyBuyBuy” run by Beijing Nuoshi Technology. It was launched in 2017 as a WeChat mini-program, and in November 2020 acquired 40 million dollars (approx. 4.2 billion yen) in a series B+ round of funding.
The platform’s founder Yu Ge was previously the editor-in-chief of Harper’s Bazaar China and, through using her connections at the time, she succeeded in forming partnerships with high-end independent cosmetics brands from Europe, such as Chantecaille, Leonor Greyl, By Terry, and Acca Kappa. Not only are their limited-edition products only sold on iDS BuyBuyBuy, the brand owners of products interact extensively with the platform’s fan community, expertly answering user questions and also writing columns.
iDS BuyBuyBuy mostly doesn’t handle major brands and is unique in the way they select and bring together minor brands. Japanese brands on the platform that are eating into the higher sales rankings include Sansho Cosmetainment International with their “Nose Pore Cleaning Gel”, Cocochi Cosme with their “Cocochi Facial Essence Mask”, and Spoon Drift with “Long Keep Makeup Base UV”.
In this way, new cross border e-commerce sites with different approaches to the larger platforms are flourishing in China, and users who want to discover new brands are beginning to flock to them. Niche overseas brands that haven’t been able to take off in China due to lack of recognition and funds are increasingly likely to use these new cross border e-commerce platforms as a way to get their foot in the door.
- The number of products sold for each platform are as of December 20, 2020.
Text: Ching Li Tor
Original text (Japanese): Team Roboteer
