Jing Daily’s latest insight report “How Niche Fragrances Are Winning Over Young Chinese Consumers” is available for purchase on our Reports page. This 25-page primer highlights China’s emerging niche fragrance market, one of the fastest-growing premium categories with plenty of untapped potential. Get your copy of the report here.
While China has a very small but growing group of consumers who find joy in discovering new scents and collecting niche brands, the vast majority of potential buyers has yet to be reached, and for many, their introduction to the world of fragrance comes from major luxury brands or popular hero products.
To sell in China, brands nowadays typically work with an online-to-offline strategy. However, given the significant discrepancies in the budgets of independent brands and those owned by larger beauty or luxury groups, points of entry will also vary.
E-commerce platforms operated by Alibaba and JD.com can serve as both springboards and testing grounds for beauty brands to enter the Chinese market. Cross-border channels such as Tmall Global and JD Worldwide offer straightforward registration for brands that do not have a physical or legal presence in China. However, these platforms draw less traffic than their domestically-oriented counterparts and delivery from overseas may take much longer than for products that are already stocked in China.
According to data from Tmall Global, the GMV (gross merchandise value) of its niche fragrance category saw a year-on-year increase of more than 300 percent in the fiscal year ended March 31, 2021. To meet the growing market demand for overseas goods and ease the path for smaller foreign brands, Tmall Global and Alibaba’s logistics arm Cainiao launched “Tmall Overseas Fulfillment” (TOF) in December 2020 with a dedicated daily flight to transport fragrances from Europe to China.
Using a consignment model, merchants can ship goods to overseas warehouses operated by Cainiao, which then fulfills orders from customers in China. This solution allows brands to respond to market trends without the need to set up online flagship stores or manage a large number of SKUs.
The inaugural “perfume route” was scheduled specifically to meet Chinese consumers’ growing interest in artisanal and niche scents. Products can’t always be easily accessed due to cross-border logistical challenges (suppliers are often refused by air carriers since their liquids may contain flammable substances such as alcohol). Smaller brands have found it hard to meet the minimum volume requirements for sea freight — usually the most common shipping option — but now, citizens can receive imported bottles directly from Europe in as little as three days.
Compared to traditional retail outlets, updated offline brand stores focus more on experience and services, which suits the branding of niche names. Swedish luxury fragrance brand Byredo was founded in 2006 and acquired seven years later by the U.K.- based private equity firm Manzanita Capital, which owns a portfolio of beauty-related companies that includes Diptyque and Malin+Goetz.
Byredo opted to enter China through physical stores rather than via online channels, and its strong financial backing helped it secure space in some of the most desirable destinations for luxury shopping. It opened its first flagship store in Shanghai’s Plaza 66 mall in November 2019 and another boutique at SKP-S in Beijing the following month, right before COVID-19 began to spread widely in China.
Get your copy of “How Niche Fragrances Are Winning Over Young Chinese Consumers” here.