By Laurie Burkitt
BEIJING--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 JD.com'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 JD.com before they roll out elsewhere,
said Ms. Bruel.
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 JD.com Inc.
dominate e-commerce.
"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.
Getting a cut of China's booming online sales is more important
than ever as growth at brick-and-mortar stores is slowing.
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.
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,
Amazon.com 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.
Nadya Masidlover contributed to this article.
Write to Laurie Burkitt at laurie.burkitt@wsj.com
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