After years of rapid growth, cosmetic companies have experienced a challenging time in China, with consumers adopting more cautious spending habits.
As the Singles’ Day, or 11.11, mega sales festival approaches, Chinese consumer confidence remains muted.
“There might be some mega sale fatigue on the consumer side due to the frequency, unsatisfied discounts and overwhelmed deal choices these years,” said Elena Gatti, managing director of Azoya Europe, a China cross-border e-commerce enabler.
“Nevertheless, their consumption patterns have evolved to become more rational, with a preference for products of similar quality. This shift opens the door for niche brands offering competitive pricing to enter the Chinese market and gain traction.”
Despite this, Gatti expects this year’s mega shopping event to be an intense event.
“This Single’s Day would still be quite competitive. Chinese consumers, who have endured a three-year lockdown, are now eager to satisfy their long-suppressed demands.”
“Nevertheless, their consumption patterns have evolved to become more rational, with a preference for products of similar quality. This shift opens the door for niche brands offering competitive pricing to enter the Chinese market and gain traction.”
Furthermore, competition is heating up between e-commerce players in China.
“Moreover, emerging players like Douyin, Xiaohongshu, and [Kuaishou] are posing formidable challenges to traditional giants of the industry, such as Tmall, Taobao and JD.com,” said Gatti.
“To stay relevant and competitive, these established platforms are being forced to rethink their strategies, focusing on enhancing both their content and pricing. Merchants on these e-commerce platforms are eager to capitalise on the opportunity to clear out their inventory that has been reserved during the pandemic period.”
Competition will drive future trends
The competition between brands and platforms is set to shape the future of Singles’ Day in China. Gatti expects that consumers will be able to enjoy more attractive promotions moving forward.
“The competitive landscape, characterised by diverse e-commerce players like Douyin and Xiaohongshu, is anticipated to drive more significant discounting efforts. Brands and platforms are likely to amplify their discount margins, striving to be more competitive in this saturated market.
“Moreover, an increased integration with social media platforms is foreseen for promotional and sales activities, utilising these channels for enhanced advertising, promotion, and direct sales. Douyin and Xiaohongshu will play more significant roles in the events.”
A shift towards simpler promotional strategies, emphasising straightforward approaches is anticipated.
“Rather than intricate cross-store cumulative discounts, the focus will be on direct price reductions, supported by platform subsidies to deliver immediate benefits to consumers,” Gatti elaborated.
Gatti also expects increased participation of international brands in these mega events, reflecting the globalisation of such sales festivals.
“The development of Chinese cross-border e-commerce and growing globalisation of mega sales events will see more international brands actively engaging in promotional activities, providing Chinese consumers with access to a broader spectrum of global products.”
