LVMH’s Sephora picks for China online store

Sephora doesn't disclose sales data for China.

The Luxonomist. 14/05/2015
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Sephora. Click to buy

Cosmetics company Sephora is giving itself an online makeover in China, where e-commerce is proving to be a tough battle for many Western retailers. The unit of LVMH Moët Hennessy Louis Vuitton SA is opening a flagship store on Chinese e-commerce provider’s website to rev up sales of its beauty products online, said Anne Veronique Bruel, president of Sephora Asia. Sephora, which already sells on its own e-commerce platform in China, will sell exclusive products and launch new cosmetics on before they roll out elsewhere, said Ms. Bruel, according to Reuters.

The deal marks a global first for the retailer. In other countries, Sephora draws customers to its own website and hasn’t teamed up with another e-commerce company to build sales. But in China, it is a different story. Sephora and other multinational companies are struggling to get attention online, as companies like Alibaba Group Holding Ltd., China’s largest e-commerce provider by transactions, and No. 2 player Inc. dominate e-commerce.

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«You have to know that what is happening in China is not happening in the rest of the world,» said Ms. Bruel. Sephora doesn’t disclose sales data for China. The share of sales of beauty and personal-care products, including cosmetics and shampoo, from China’s physical retail stores dropped to 70% in 2014 from 88% in 2009, while sales on the Web increased to 15.5% from 0.7% in the same period, according to the most recent available data from market research firm Euromonitor. Non-retail channels, such as direct sales and even hair salons, make up the remainder.

Sephora, which runs 175 stores, has had a rocky road since entering China in 2005. It closed some China-based stores in recent years after sales of perfumes, lipsticks and the like slumped. It launched its own website in China in 2013. But analysts say it hasn’t matched the traffic of rival cosmetic retailers like Beijing-based Jumei International Holding Ltd., which focuses on e-commerce and listed on the New York Stock Exchange last year.

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The company will focus on building its brand online, where it sees its highest growth figures, said Helen Zhou, Sephora China’s vice president of marketing and e-commerce. Still, Sephora plans to open additional physical stores in China’s smaller cities, reaching a total of 200 in China by year-end, said Ms. Zhou.

Sephora’s online move is also part of an emerging trend for Western companies to link up with China’s online giants. In March, opened a flagship store on rival Alibaba’s marketplace Tmall, aiming to sell more goods, like imported food, toys and shoes, online. Alibaba and JD have opened up international sections of their sites to expand access to foreign products, like imported wine and mixed nuts, for Chinese consumers. Sephora is one of the two chains in LVMH‘s fast-growing selective retailing unit, which accounts for about 30% of the company’s revenue.

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