Three import makeup brand, Korean makeup brand HERA, the affordable luxury makeup brand GlamGlow and Korean mass makeup brand Etude House all have announced to close their Chinese Tmall flagship store one after another.
Since 2020, Etude House has had several adjustments before such as pulling off offline single-brand stores, deploying its products into beauty collection stores and developing online channels. Why did they decide to close its online store on Tmall? What happened to the imported makeup brands in China?
Another Korean makeup brand makes strategic adjustments in China
Shortly after the Chinese Double 11 Shopping Festival, CHAILEEDO noticed that many netizens recently said on social media platforms that “flagship store of Etude House on Tmall was closed.” Some of them even worried that they would never be able to buy the brand’s products again.
The announcement released by Etude House’s Tmall flagship store shows that the store will suspend operations and take down all its products from the store from November 12, with the resumption time to be determined. It is understood that the store has 3.69 million followers.
The company’s parent company, Amore Pacific, was contacted by CHAILEEDO, who did not provide details, but said that the store would be reopened afterwards.
Looking back the company’s development in the Chinese market, this is at least the third time the brand has made adjustments.
According to public information, Etude House was founded in 1985 and entered China in 2013, and was loved by Chinese domestic consumers for its pink, dreamy princess style and trendy creativity when it first entered China. In its heyday, Etude House had nearly 60 stores in the Chinese market.
Due to the early entanglement with Chinese agents, the brand once changed its thinking and adopted a self-operated model, which can be regarded as the first major adjustment. The second time was when Etude House shut down its offline single-brand stores and instead started to focus on online and beauty collection stores.
Now, Etude House is adjusting again by closing its Tmall flagship store, does this mean that it is wavering on the Chinese market?
CHAILEEDO found that, in addition to the Tmall flagship store has been suspended, Etude House official mall on WeChat has been closed as early as February 23 this year. Although the official flagship store on JD is in normal operation, only two products primer and Palette are available for purchase in the store. In this regard, customer service told CHAILEEDO, in addition to the above two products, the rest of the products are not in stock, “Products is arranged by the company. We can not determine the specific date of replenishment.”
CHAILEEDO also call COLORIST, a makeup collection stores, in Wuhan, Shenzhen, Shanghai, Hangzhou and other places. We learned that the Etude House is still available normally with a full range of its products.
It can be seen that although the channel is frequently adjusted, the Etude House is still holding on.
However, it will be difficult to recapture the market that Etude House missed. CHAILEEDO previously compiled according to Amore Pacific’s financial report, Etude House made a total loss of 250 million yuan (about $34.9 million) in 2018 and 2019.
(Credit: from official account of Etude House on Weibo)
Amore Pacific’s third quarter 2022 results report showed that both makeup and skin care sales at Etude House increased, but overall sales declined by 3.6% due to the impact of the closure of its duty-free stores (sales of approximately 138 million yuan about $19.3 million in the third quarter of 2021 and 133 million yuan about $18.6 million in the third quarter of 2022)
In its research report, Huaxi Securities also pointed out that Korean makeup brands first caught the express train of cultural industry development. With the help of film and television works to promote the brand, Korean makeup brands also integrated traditional cultural elements to enhance brand identity. But the history of overseas expansion period shows that cultural empowerment can only help short-term overtaking, and long-term reputation will depend on product quality and technology content to establish.
Several imported makeup “lost”
By the overall environment, makeup market growth pressure on the industry is obvious to all in the past two years. Relying on reputation and quality to lay the cornerstone of the market, the strategy that gain a foothold in the Chinese market also applies to other imported brands.
However, in the face of the high-speed sector and rapidly changing channels that color cosmetic is in, some imported brands are slow to respond. Some brands do not understand the market, then they adjusted the strategy or simply exit China.
It is understood that the Korean makeup brand HERA has withdrawn from Chinese offline counters in March, and closed the online WeChat mall on March 25. In June this year, Estee Lauder Group’s makeup brand Too Faced Tmall overseas flagship store issued an announcement, saying that in August to end the operation of the flagship store, Too Faced Tmall overseas flagship store store is no longer searchable.
It is no coincidence that in July this year, Stila, an American makeup brand, announced the end of its overseas flagship store on Tmall. GlamGlow, another online luxury makeup brand, also closed its flagship store on Tmall in August and exited the Chinese market in disgrace.
It is worth mentioning that recently, Lilah B., one of the first high-end brands to enter the clean beauty market, also announced the closure of its brand at the end of the year, and the brand’s retail partners include Sephora, Net-a-porter and BlueMercury.
As you can see, it will take some time for the makeup market to recover globally, not to mention a market with many brands and full competition like China.
Compared with Korean makeup, which continues to wither, and imported niche makeup, which frequently loses ground, Chinese cosmetics brands are growing rapidly under the rise of e-commerce platforms and new social platforms.
Taking the Double 11 list as an example, in the past 3 years, the Tmall Double 11 makeup Top 10 list has had 2 Chinese brands on the list every year, with Perfect Diary and Florasis both having topped the list respectively.
(Credit: from official account of Florasis on Weibo)
At the same time, Timage, Blank me, Maogeping, etc. has been recognized by the public. It is understood that Timage sales in the first half of the year reached 232 million yuan (about $32.4 million), an increase of 110.57% year-on-year. During Double 11, Timage gained 137 million yuan (about $19.1 million) in total commodity transactions ranked 12th in the makeup list. Blank me also once into the top 10 of this year’s Chinese double 11 Shopping Festival makeup pre-sale list.
A beauty e-commerce industry practitioners told CHAILEEDO that the beauty market is changing at a faster pace. With the rise of Chinese products, the younger generation of consumers have more choices. If beauty brands lack iteration in product quality and innovation, they may be vulnerable in terms of cost performance and product functionality, while quality and innovation are precisely the most important point for Chinese domestic brands. Another beauty retail leader also said, “Chinese consumers are now more rational.”
Currently, the beauty market competition is fierce, color cosmetics products trends are changing with rapid iteration. The cosmetic brands should follow the current consumer trends and capture user demand to achieve the product with the times. They also should take in-depth insight into the pain points of young consumers in order to win a place in the beauty market.