Launching A Niche Brand in China Part I: New Gen Retailer Feature Image

From 2017 to 2020, there were 220k new brands launched on Tmall. The China market is becoming increasingly attractive and overseas brands need to compete not only among them but also with strong domestic brands. Chinese consumers are also more and more willing to try new brands. In this series of articles, we will focus on the strategy and methodology of niche beauty brands launching in China.

(Source: Alimama M Insight Report, 2020)

Before entering the Chinese market, these brands generally have little awareness and some level of organic traction in China. Compared to brands owned by large MNCs, they also have limited resources to leverage.

Consumer Insights

As Chinese consumers become more and more mature and well-exposed to new brands, they are looking for products that satisfy specific needs and paying less attention to the price of such products. Niche brands could better tailor to these consumers’ needs. 

Data from Nielson Global Consumer Insight Report 2019

According to Alimama M Insight Report in 2020, there are more than 60 million “new brand early adopters” on Tmall who contribute to 50% of the GMV of new brands’ sales with relatively low penetration rate. 

Niche brands should target early adopters. Instead of spending huge money on ads, brands should focus on education to achieve long-term results. 

— Marc Ardisson
Managing Director, Asia, Feelunique

Strategies to launch a niche brand in China

Unlike well-known brands, niche brands seek more targeted launch methods. Typically, they would leverage influencers, social commerce, cross-border ecommerce, and new generation retailers. In this article, we will look closely at the new generation of beauty retailers in China.

New Gen Retailer

Traditional offline retail channels are being disrupted in China with different beauty retail concepts such as Bonnie & Clyde, H.E.A.T, HARMAY, Wow Color and many others. These retailers have all been established after 2019 and backed by capitals. There are more than 16 domestic beauty retailers with more than 800 stores in China. 

(Source: Cosmetic Observer by Guanpin App)

Generally, these stores focus on providing trendy and instagrammable store environments and omnichannel experience. Also, they often invest heavily on social media and offer personalization to build unique customer experiences. For example, beauty store H.E.A.T decorates its stores with vibrant orange for photo shooting and implements eyeshadow machines to customize makeup looks for young and fashionable shoppers. It also has more than 30,000 notes on RED.

Case Study: Dermalogica

With limited resources, a few niche brands partnered up with these trendy beauty stores to establish their offline presence. Dermalogica is a professional-grade skin care brand founded in  the United States. It has positioned itself as a professional skincare brand that is used in spas. Besides ecommerce and social commerce channels on Tmall and WeChat, Dermalogica officially entered a dealership in HARMAY with its new product line in 2017.

HARMAY is one of the most hip-and-trendy beauty retailers in China with both online and offline channels. HARMAY’s offline stores are inspired by industrial warehouses with metal and minimal decorations. There is a section inside the HARMAY store called “HARMAY Lab” where customers can test foreign products and purchase online through scanning a QR code.

By showcasing best sellers and special installations, Dermalogica’s offline presence attracts tremendous footfall from the younger crowd for product testing and picture posting. A current activation featuring female empowerment and treasure hunt at HARMAY Xintiandi store is generating buzz and engagement on social media as well. Additionally, HARMAY supports Dermalogica on distributing promotional materials with its own private traffic pool on WeChat, navigating customers to HARMAY’s Mini Program store for purchasing. Dermalogica’s Recovery Masque acquired 6 million gross sales on Tmall in the past 30 days. As a brand entering the Chinese market for less than 4 years, Dermalogica’s success certainly speaks for itself. 

(Source: Tao Data)

For the next article in this series, we will look into social commerce — another promising strategy to launch niche brands.


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