The Evolving Landscape of Beauty Retail in China

The question of how China will cultivate a competitor to established global beauty giants like Estée Lauder is gaining prominence in the digital era.

Ushopal suggests the answer lies in a unified retail approach, seamlessly blending online and offline experiences. This caters to the discerning Chinese beauty consumer who seeks unique, high-quality brands and the narratives behind them.

Ushopal: An Omni-Channel Approach

Established in 2017 by J&J veteran Lu Guo, Ushopal functions as an “omni-channel” partner for luxury beauty brands. This model addresses the increasing convergence of online and offline retail within China.

Unlike conventional import distributors focused solely on product placement, Ushopal delivers a comprehensive solution. It assists brands in developing both their digital presence and physical retail channels, alongside crafting compelling marketing content through a network of 2,500 influencers.

Strategic Investment and Growth

Recognizing the limitations of purely collaborative partnerships, Ushopal expanded in 2019 by launching a strategic investment division. This move aimed to secure greater operational influence over partner brands.

Investment amounts range from $10 million to $100 million, with Ushopal leveraging investors like Cathay Capital, a private equity firm specializing in global ventures, for larger funding rounds.

Success Story: Juliette Has A Gun

Cathay Capital acquired a minority stake in Juliette Has A Gun, the Paris-based fragrance brand founded by the grandson of Nina Ricci. Ushopal, as both investor and partner, facilitated the brand’s growth in China.

Within one year, Juliette Has A Gun’s gross merchandise value in China surged from zero to over 70 million yuan, demonstrating the effectiveness of Ushopal’s integrated strategy.

Expanding Financial Resources

To bolster its investment capabilities, Ushopal secured $100 million in funding in March, bringing its total funding to $200 million.

Existing investors include FountainVest Partners, a Chinese private equity firm that recently acquired Arc’teryx, and Chinaccelerator, SOSV’s China-based accelerator for cross-border businesses.

Bridging the Gap in the Chinese E-commerce Experience

While Chinese consumers are heavily engaged with e-commerce platforms, existing marketplaces like Alibaba and WeChat mini-stores cannot fully replicate the traditional shopping experience.

In response, Ushopal inaugurated its first multi-brand store in an upscale Shanghai mall last year. The store features brands typically found in prestigious retailers like Neiman Marcus and Le Bon Marché.

The concept aims to present a curated selection of global treasures, reflected in the store’s name – Bonnie&Clyde – evoking the image of a stylish and rebellious duo.

A New Delivery Model

Customers at the Bonnie&Clyde store do not make immediate purchases. Instead, they order via the Ushopal app, with delivery to their Shanghai addresses within four hours.

This expedited delivery timeframe significantly surpasses the standard three to seven-day import delivery times common in China, which rely on goods arriving from overseas distribution centers.

Strategic Warehousing

Ushopal maintains its own warehouse within a Shanghai free trade zone, enabling faster fulfillment. Exclusive distribution rights to its partner brands allow for precise inventory management.

A Focused Customer Experience

Unlike mass-market beauty stores where shoppers are often distracted by numerous products and mobile browsing, Bonnie&Clyde prioritizes focused customer attention.

The store limits product selection and employs a team of beauty advisors to provide personalized guidance. The target demographic differs significantly from typical mass-market shoppers.

Targeting the Affluent Consumer

“They are accustomed to the experience of shopping at stores like Barneys and Saks Fifth Avenue in the U.S., or Harrods in the U.K.,” explained William Lau, Ushopal’s Vice President of Brands, in an interview with TechCrunch. “They aren’t seeking to browse in a crowded environment.”

Impressive Sales Figures

Last year, Bonnie&Clyde generated over $200 million in gross merchandise value from a portfolio of a dozen brands. The average transaction value exceeded 5,000 yuan ($770), with many customers spending over 10,000 yuan per order.

Lau identified a significant portion of the clientele as “second-generation rich” – comparable to trust fund beneficiaries – and “well-to-do wives.”

A Global Brand Perspective

Ushopal’s portfolio isn’t limited to international brands. The company evaluates brands based on their merit, regardless of origin – Chinese, Japanese, or European.

While currently focused on Western brands, Lau acknowledges the increasing sophistication of Chinese brands and their strong understanding of the local market.

“Our primary goal is to cultivate exceptional brands. Similar to Estée Lauder, which encompasses brands from around the globe, we are a China-based company with a global luxury business perspective.”