Adore Beauty has announced its expansion into China via the Tmall platform — representing a first step in the company’s expansion plans in the APAC region.
Valued at around $100 billion, the Chinese beauty market is the largest in the world, with an affluent and growing middle class generating strong demand for Australian ethical and natural beauty products.
“It’s a very exciting market,” Kate Morris, Founder and CEO of Adore Beauty, told Power Retail. “It’s now the largest beauty market in the world and it’s continuing to grow really strongly. But there are still many areas of China where people aren’t really using beauty products or wearing cosmetics, so it’s a much newer, much less mature market than a lot of the others we’ve looked at.”
Adore’s Tmall online store will stock a curated range of six brands and around 50 products initially, including Australian brands evo, Lanolips, asap, Alpha-H, Skinstitut and ELEVEN — most of which will be exclusive on Tmall to Adore Beauty.
“Chinese shoppers are very discerning and favour high-quality, environmentally friendly beauty products, which is why Australian brands are very popular, but until now, have largely been unavailable in this market. We see a huge opportunity to launch these brands in China via Adore Beauty’s Tmall store,” said Morris.
“It is a limited and curated range to begin with. We’ll be providing an editorially selected curation of the very best Australian products in terms of performance and purity.”
Recent changes to China’s cross-border e-commerce regulations has made it possible to sell products into China without going through the onerous product registration and testing process. This means that ethical beauty brands have been unable to sell into China because of the mandatory animal testing that must take place before these products can be sold. But cross-border e-commerce now makes it possible for these products to be introduced to Chinese consumers without having to be animal tested.
This means that these Australian products have a competitive advantage that will appeal to the growing ranks of ethical Chinese consumers.
Furthermore, in China there are restrictions on the maximum level of actively ingredients in products that are manufactured in China, explained Morris.
“This means the products available locally in China are less effective than the products we’ll be selling via cross-border e-commerce.”
Besides these advantages, a range of Aussie products have become popular in China because of their reputation for quality.
“It’s not because the products are Australian, it’s because they’re good. People in China aren’t buying Blackmores or Bellamy’s because they’re Australian; they’re buying them because they’re good. The fact that they come from a place that has that good reputation for quality and purity is an added benefit,” added Morris.
Testing the market
For Adore, the Tmall platform was the logical place to test the Chinese market.
“Tmall seems to be the platform with most of the beauty brands or retailers that we’d align ourselves, so it made the most sense as a place to start.”
“We’ve certainly been able to tap into advice from their [Woolworths’] learning and experience. Obviously they’re a much larger company so the resources they can throw at investigating the ins and outs and potential partners is much greater than we have, so we’ve been able to tap into their discoveries and learn from their experience,” said Morris.
Despite this, the Chinese market remains a bit of an unknown. The initial move to Tmall is designed to test the market, with Morris reluctant to forecast out sales targets.
“The challenge with forecasting is that when you’re looking at products that are completely new to a market it’s almost impossible to do any kind of forecast that makes any sense because you have no data. You can look at the size of the market and you can pick a huge target or you can see how it goes, and we decided to take the latter approach — make a small investment, test and learn see what works, and whatever works, you roll that out first.”
While international expansion has been on Adore’s radar for the past year, the strength of the Australian dollar has precluded acting on any expansion plans.
“We’ve been primarily focused on expanding our market share here in Australia,” said Morris.
“We’re getting such good growth locally — we’ve grown between 65 and 70 percent in the past 12 months so we certainly have a lot of momentum up at the moment.”
However, for Morris, the time is right for Adore to explore further expansion opportunities. If things go well with the Tmall store, she will look to roll out the offering on a larger scale, across other Chinese marketplaces and even across other regions.
“At the moment we’re looking at ways we can expand around the APAC region,” said Morris.
“We’re taking one bite at a time, which can be challenging when you’re always keen to get out there and push in as many directions as possible. But China is a big market and we want to make sure we get it right.
“But there’s certainly many more markets with good potential for Adore Beauty in terms of what we’re trying to do, which is to try to create an empowered beauty consumer.”