The Chinese beauty market is increasingly becoming more competitive given the high costs to drive traffic and the efficiency of marketing promotion getting lower. Consequently, start-ups brands have been working to revise their operating models to adapt to the needs of the market.
Health and beauty care chain store Watson has been working with start-up brands to improve their process efficiency and increase market share. Watson China has adopted 'advanced data analytic capability' to know its customers’ preferences and can identify the right target audience for start-up brands.
Watsons has successfully helped the brand Herborist Derma explore new O+O (Online + Offline) opportunities by sending coupons to customers through SMS and delivering content through live streaming, Xiao Hong Shu, and Grass Seeding. Herborist Derma has quickly become the customers’ top choice in whitening essence, and the sales went up by 200 percent, breaking the start-up brand’s record.
Understanding O+O Retail Model
The O+O (Online + Offline) retail model seamlessly integrates offline and online platforms, using cloud technology to connect physical stores with online platforms. After customers place their orders in the cloud stores, products can be delivered to their homes within 30 minutes, meeting customers’ immediate demand.
Winona is another skincare brand that adopted Watsons’ O+O retail to strengthen offline experience and helped the brand to grow. Online customers were brought offline through live broadcasts, apps, and WeChat, turning them into loyal customers while establishing closer connections both offline and online.
'WATsNEW' – Incubator for Start-up Brands
Watsons China has established the WATsNEW online concept store, to bring together a selection of start-up brands that have not yet been listed in Watsons physical stores. Members can try these brands for free and submit a trial report. Watsons also invites beauty industry experts to conduct professional reviews.
After vetting the brands with customers and experts, Watsons then decides whether a brand can officially enter the Watsons O+O retail platform. New brands can gain customers’ trust within a short period, making it easier to successfully enter the market.
The model is very effective because it not only helps start-up brands to save market research costs, it also provides real users' and experts’ evaluation.
Such a model can be used in retail stores outside China as well, particularly useful for a complex and varied market like India where the cost of market research is very high.