Published July 8, 2019
Founded in 1994 by the company’s namesake, jane iredale is an award-winning cosmetics brand that embraces a holistic approach to beauty. Based in Great Barrington, Massachusetts, the company is committed to providing clean, vegan and cruelty-free beauty products and is touted as being the first to offer a makeup line with healthy skincare benefits. Their tagline is “The Skincare Makeup.”
Currently, jane iredale is available in more than 50 countries through fine spas and salons, resorts, apothecaries, medical offices, and luxury retail stores. With China well on its way to becoming the largest cosmetics and body care market in the world, company founder Jane Iredale recognized the massive potential for eCommerce sales in the country. However, a lack of marketplace knowledge and several regulatory roadblocks prevented the cosmetics brand from entering the China market.
A beautiful but blemished business opportunity
While U.S. eCommerce sales continue to show impressive growth, it pales in comparison to China’s online retail market. In 2018, eCommerce sales in China totaled $1.31 trillion, two and half times more than the U.S. total of $513.6 billion. China is also the fastest growing-and soon to be largest-cosmetics and body care market in the world, with $130 billion in annual sales and growing at a CAGR of 13 percent.
Explosive retail growth in China can be largely credited to eCommerce giant Alibaba fueling the concept of ‘New Retail,’ the convergence of online and offline shopping with innovative technologies to deliver the ultimate customer experience. eCommerce in China is not just a shopping transaction between buyers and sellers – it has transformed into an ‘experience’ where each interaction is designed to build the relationship between brands and consumers. This consumer-centric model is shaping and influencing retail development across the globe.
Despite being the world leader in eCommerce sales, China presents many barriers for brands and retailers trying to enter the market. In cosmetics, pre-market animal testing is mandatory for brands to export to and sell in China. Government regulations also preclude companies without a Wholly Foreign Owned Enterprise in China to sell through physical and direct-to-consumer (D2C) eCommerce in the country. The alternative and answer is selling through a cross-border eCommerce (CBEC) platform.
This model gained traction when the government passed laws to encourage cross border commerce and technology giants Alibaba and JD.com launched marketplaces designed specifically for cross-border selling, Tmall Global and JD Worldwide, respectively, that enable U.S. brands to bypass many regulations, including animal testing and establishing operations in China.
Once jane iredale learned about CBEC, they questioned if this could be their gateway to the China market. After listening to an hourlong retail discussion led by Michael Zakkour, Vice President of Digital Commerce and New Retail Strategy at Tompkins International, Jaime Kemp, Senior Manager, International Business at jane iredale, walked down the hallway to the Senior Vice President, Global Sales & Business Development’s office and declared that they had to talk to Zakkour. After a few follow-up calls, Zakkour and the Iredale team determined there was an opportunity for the company to enter the China market through CBEC.
While the jane iredale team looked at a few other consulting firms with experience and offices in China, they ultimately decided that Tompkins’ plan, track record of success and vision for China entry were unsurpassed in the market, making them the perfect partner for jane iredale.
“With three major practice areas and more than 17 years on the ground in the China/APAC market, Tompkins International possesses a deep understanding of the unique opportunities, challenges and demands of doing business in China,” said Zakkour. “From conducting the most comprehensive research to building the right strategy and structure to launch implementation, our team provides true end-to-end services for the entire project lifecycle.”
With three major practice areas and more than 17 years on the ground in the China/APAC market, Tompkins International possesses a deep understanding of the unique opportunities, challenges and demands of doing business in China
Facing imperfections in China’s cosmetics market
Even though a cross-border selling platform would eliminate the barriers of animal testing and having a physical presence in the country, jane iredale would still face a myriad of challenges when entering the China market.
In order to sell via Tmall’s CBEC platform, brands must engage a third-party Tmall Partner (TP), whose primary functions include storefront creation and operation, marketing and promotions, customer service management, and logistics and shipping. The TP is a crucial relationship as it can determine a brand’s success or failure in China. With more than 3,000 TPs with diverse qualifications, experience and skills, selecting the best partner for jane iredale would require extensive research and thorough understanding of the China retail market.
As the fastest-growing cosmetics and body care market in the world, China is also a highly competitive market. Cosmetic sales in China from April 2017 to April 2018 totaled more than $38 billion and is projected to grow 10 percent over the next five years. Newcomers like jane iredale would face stiff competition among well-established foreign brands as well as emerging Chinese brands.
Brand awareness and positioning are also essential for success in a highly competitive market. The challenge for jane iredale would be effectively communicating core messages while localizing the brand for the China consumer.
Selling D2C would also be a new approach for jane iredale, which previously utilized a wholesale to retail sales and distribution model in international markets. To succeed in China, jane iredale would have to become a digital D2C retailer, a complex undertaking that again would require in-depth research, analysis and understanding of the Chinese market and consumer landscape.
Applying the perfect primer for long-term success
After evaluating China’s major online marketplaces based on specific products and market conditions, Tompkins International determined that Alibaba’s Tmall Global would be best suited for jane iredale‘s CBEC strategy. This decision kickstarted a 12-week project that would culminate with the completion of a comprehensive research and analysis report, China entry and market strategy, and a step-by-step roadmap and timeline detailing all pre-launch, launch and post-launch needs and activities to ensure jane iredale’s long-term success in China.
The common denominator among the majority of foreign companies that fail in China is a lack of due diligence and rush to market without a sufficient understanding of the Chinese retail sector and customer preferences. According to Zakkour, “Many of these companies are not grounded in Chinese language, culture, history, and philosophy, and do not understand the very different eCommerce landscape in China.” Despite valiant efforts, many companies do not have the internal resources needed to successfully navigate an international market entry.
With over 10 years of experience taking more than 300 brands into the China digital commerce market, the Tompkins consulting team took a deep dive into the opportunity for jane iredale in China, conducting exhaustive qualitative and quantitative research across the following major categories:
- Competitive Benchmarking
- Industry Trends & Projections
- Consumer Insights
- Product Dynamics & Analysis
- Pricing Analysis
- Marketing & Branding
- New Retail & Market Dynamics
- Regulatory & Legal Environment
- Naming & Intellectual Property Protection
Utilizing the quantitative and qualitative data as the foundation, the Tompkins consulting team began developing a comprehensive China market entry, consumer engagement and CBEC strategy for jane iredale. The entry strategy included recommendations on selling model, pricing, positioning, marketing and branding partners, marketplace selection, and-most importantly-TP selection.
“Identifying and selecting the TP that meets all of the core requirements needed for cross border cosmetics and body care product sales is an art and a science,” said Zakkour. “With more than 3,000 TPs of varying capabilities, expertise and services to choose from, it is far easier to make the wrong choice than the right one.”
The Tompkins consulting team embarked on an extensive TP search, identification, vetting, and selection initiative for jane iredale. Having provided TP analysis and selection services for brands and retailers for the nearly 10 years the marketplace model has existed, Tompkins International has curated a robust proprietary database of TPs and their key attributes, expertise and strengths and weaknesses. The Tompkins team began the vetting and selection process by mining its proprietary TP database, conducting secondary research to collect the latest and most relevant data on TPs, and engaging in primary research by performing face-to-face interviews with digital commerce executives and influencers to collect quantitative data and valuable expert opinions on potential TPs.
The potential TPs were evaluated on their demonstrated abilities in their four major service areas-storefront creation and daily operations, marketing and promotions, customer service, and fulfillment-as well as their track records for success, rankings and relationships with key marketplaces (including Alibaba), and experience in cosmetics and body care brands. After selecting the top finalists, the Tompkins team managed the final vetting process, developing and disseminating the RFP and assessing the received proposals with jane iredale to complete the TP selection initiative.
A flawless foray into the China market
Tompkins International delivered an all-inclusive CBEC strategy, structure and implementation roadmap that would enable jane iredale to offer its products to the $130 billion cosmetics market in China. The robust workplan provided an in-depth exploration of the China market, including the consumer profile, cultural trends, social factors, research-based insights, and regulatory environment. In addition to maintaining its cruelty-free and natural ethos, the CBEC model allows jane iredale to sell to the lucrative China market while maintaining full control over its brand, including pricing, assortment and marketing.
During the strategy creation, Tompkins also identified key cultural findings on products, social media and marketing, logistics, and value-added taxes. These valuable findings provided jane iredale with the insights needed to successfully tailor their offerings to Chinese consumer preferences and gain a competitive advantage in the saturated market.
By partnering with Tompkins’ recommended TP, Transcosmos, jane iredale can now build a storefront on Tmall Global where its products will be available to the online marketplace’s user base of 200 million consumers. In addition to just selecting a TP, the Tompkins team worked closely with jane iredale to educate them on the TP relationship, their capabilities and responsibilities and provide them with strategic advisement on onboarding processes such as contracts, costs and structure and storefront building to ensure a successful, long-term business in the challenging China market.
In addition to successfully entering the fastest-growing cosmetics market, jane iredale can utilize the new D2C approach established with Tompkins and Alibaba to expand operations at home and globally. The D2C selling model is widely used throughout Asia and other international markets. Armed with its new digital commerce expertise, jane iredale can leverage its relationship with Alibaba to expand its presence in China and enter additional Asian markets to generate more revenue and business opportunities.
As a consulting firm, our goal is to provide our client with the best strategy for success. Engaging us beyond strategy and into implementation is the biggest compliment and a testament to the level of work and service our consultants provide day in and day out.
Beauty beyond skin deep
Jaime Kemp emphasized the value that Tompkins International delivered above and beyond the strategic needs set forth in the scope of work.
“The Tompkins team made themselves available to us 24/7 for seven months,” recalls Kemp. “They spent countless hours teaching and educating us on the China market. We didn’t feel like we just hired consultants, we felt like we truly bolted a China commercial team onto our company that shared the same passion for success and commitment to our brand that we did.”
That trust and appreciation was rewarded when jane iredale enlisted Tompkins to implement its carefully constructed launch strategy. After a successful soft launch on May 6, 2019, the Tompkins team is now working with jane iredale to prepare for JD.com’s annual 618 Shopping Festival on June 18, 2019, which is the second largest selling day in China, raking in $24.6 billion in sales in 2018. This will be followed with an official hard launch on July 10, 2019, which will be celebrated with parades, celebrities and influencers, and more.
“As a consulting firm, our goal is to provide our client with the best strategy for success,” said Zakkour. “Engaging us beyond strategy and into implementation is the biggest compliment and a testament to the level of work and service our consultants provide day in and day out.”