How Badly Will Sephora’s Customer Info Leak Damage The Brand?

    Ahead of the Double 12 shopping festival, dozens of customers reported online that their personal information was leaked through Sephora’s Tmall store.
    Ahead of the Double 12 shopping festival, dozens of customers reported online that their personal information was leaked through Sephora’s Tmall store. Photo: Sephora's Tmall store
    Yaling JiangAuthor
      Published   in Finance

    What happened

    : Ahead of the Double 12 shopping festival, at least a few dozens of customers have found their personal information leaked after purchases from beauty retailer Sephora’s Tmall store, and they have taken complaints to Weibo and Little Red Book over the recent weeks. The company is working with the Shanghai police to investigate the matter.

    The scammers identified customer purchases and contacted them, claiming that their purchases were defective to gain financial information. Customers wrote on Weibo that the items they bought ranged from perfume and lipsticks to cotton pads. “I first believed the scammer because they told me the sum of my transaction and lipstick color,” wrote one Sephora customer @-布兜仕- on Weibo, while tagging the retailer’s official account of around two million followers. “They said that they needed to recall the defective product and asked me to enter my password through Alipay (an Alibaba-owned mobile payment service).”

    Sephora’s Tmall store has posted a warning on its landing page. The final number of affected customers remains unknown.

    Jing Take#

    : According to multiple accounts, scammers have used a lesser-known microloan service through Alipay called Beiyongjin (备用金) to fool customers into transferring money to them. As such, both Sephora and the customers involved are seemingly victims of this scam. However, the customers are not showing sympathy for Sephora in this case.

    Of the dozen customers Jing Daily reached out to on Weibo, seven respondents all said that the incident had highly affected their trust in the beauty retailer. “I probably won’t buy anything from Sephora online anymore; not from the Sephora app, Tmall or — nothing,” said one customer. Another one was disappointed by the reaction from Tmall customer service and thought she could have been informed sooner.

    For brands, there is never a good time for such incidents to occur, but with the last e-commerce shopping festival in 2020 coming up, Sephora’s reputation is at high risk. It is still unknown how big of an impact this would have on the brand’s online expansion and store openings in China, which the LVMH-owned retailer discussed in its H1 financial report and Q3 presentation.

    COVID-19 had already dragged down Sephora’s profit by 143 percent over the first half of 2020 (ending on June 30) compared with the same period last year.

    The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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