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Is Cosmetics Sample A Good Business?

The cosmetics sample business is playing an important role in the Chinese beauty industry. For brands, handing out samples is an effective way to drive traffic. Samples’ popularity even gives birth to a new business format, sample gift box. For consumers, especially young consumers, buying samples can satisfy their curiosity for high-end beauty brands on a low budget. One thing worth noting is that the government and e-commerce platforms also have launched regulations and rules to regulate misconduct in this industry recently.

Cosmetics sample is a smart marketing strategy created by the beauty giant Estee Lauder 70 years ago, but Lady Estee Lauder didn’t know that this strategy could develop as a good business today.

According to NPD Group, the sales of cosmetic samples reached 1.2 billion dollars in 2018 globally, with a YoY growth rate of 13%.1 Chinese consumers are big fans of a variety of cosmetic samples, boosting the rapid rise of the sample economy in China. At present, there are even millions of posts online sharing experience about how to get affordable samples in multiple ways.

Multiple Ways to Get Samples

The most traditional way to get samples is to buy products from official channels and get samples as gifts from the brands. At present, watching live-streaming e-commerce is a regular way to get free samples since many brands and live-streamers are keen on handing out many free samples to gain more traction. Especially in some top live-streamers live-streaming, consumers can even get six samples for buying one product, as shown in the below picture. If consumers buy normal size products on the left, they will receive free samples on the right.

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Some cosmetic stores on Taobao also sell samples from big beauty brands at a discounted price. These online cosmetic stores usually have a long history and hundreds of thousands of fans to prove that they are trustworthy, so their sample business usually performs well. Several products’ monthly sales can even reach thousands of units.

Some big brands even joined the sample business by themselves. For example, the L’Oreal Group opens a flagship store on Tmall named Tmall Little Pretty Box, focusing on selling sample gift boxes, which contain products from multiple brands in the L’Oreal Group. This store now has about 2.4 million followers. Its most popular product is a gift box with three samples, including HR Soothing Cream (5ml), Lancome Essence Muscle Foundation (7ml), and Shu Uemura Amber Cleansing Oil (14ml). Tmall itself also opens a specific channel named Tmall U Xian (天猫U先), in which consumers can apply for a sample from many big brands at a meager price.

The second-hand e-commerce platform is another good channel to buy samples from other consumers. Some consumers like to sell samples that they get as gifts when buying normal size products. In China, Xianyu (闲鱼) is the top priority choice for most consumers to deal second-hand products, and cosmetics samples.

In addition to online platforms, some new cosmetic offline stores, such as HAYMAY and The Colorist, also sell big beauty brands’ samples as part of their main business to attract young people who want to try big brands in a low budget.

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Samples in the cosmetic store

Samples Drive Traffic and Sales for Brands

Low price and free are the two major factors that motivate customers to purchase. Cosmetics brands are the master to apply this strategy. Using samples to attract more consumers is a classic trick used by many brands. Once consumers accept samples, they bite the bait.

In the Estee Lauder Tmall Flagship store, people can easily find comments such as “I had tried the sample before and bought a normal size product this time because the sample worked well.” According to Euromonitor, “cosmetics samples” has become the third driving force for consumers to purchase normal size products, following another two reasons “experience” and “friends/relatives recommendation.” 2

Some brands successfully drove much traffic to their brands by handing out samples. A Chinese brand Winona distributed 300,000 samples online, bringing 290,000 new customers to its online store.3 Tmall put more than 17,000 offline sample distribution machines across China. In 2019, these machines sent 16 million samples from over 600 brands in nine months. All people who received samples from these machines become part of Tmall U Xian’s new traffic.4

The sample also gave birth to a new product, mini-sized sample gift box. Big beauty brands such as Estee Lauder, Lamer, Givenchy, etc. started to launch mini-sized gift boxes containing various product samples. Surprisingly, these gift boxes are popular in the market. Drunk Elephant is a successful example. Drunk Elephant provides its consumers with a skincare sample kit that contains several different product samples. These mini samples are packaged in colorful and adorable packages and can be used for 7-10 days. This alternative marketing strategy made Drunk Elephant quickly noted by consumers and became one of the bestsellers in Sephora. Similarly, a Chinese beauty brand Perfect Diary launched five lipstick sample kits at the price of 109 yuan and received more than 13,000 good comments online.

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Drunk Elephant’s popular samples

According to practitioners, these mini sample kits are beneficial to establishing wider connections with consumers, increasing overall consumption frequency, and improving brand exposure.

Reasons Why Consumers Love to Buy Samples

An affordable price is the primary reason why many consumers choose to buy samples. For many consumers, especially young consumers, high-end cosmetics are beyond their purchasing power. Samples give them opportunities to try these products.

Also, cosmetics trends are changing rapidly, so young consumers who want to follow the trends have to increase the frequency of purchase. In this situation, low-priced and small quantity mini samples satisfy their needs perfectly.

Another reason why some consumers prefer to buy samples before they buy normal-sized products is that they can avoid taking the risk of buying something expensive that doesn’t suit them in the end.

Last but not least, samples are more portable than normal sized products so that they can satisfy some younger generation’s needs for convenience. They can travel without bringing a large bag of cosmetics.

Risks and Regulations in the Sample Business

The sample business can be risky since it has become an independent business. The biggest risk is that the sources of cosmetics samples in the market remain a mystery. Many brands deny that they have licensed their samples to third parties to sell. Therefore, it’s hard for consumers who purchase samples from third parties to protect their consumer right properly once they encounter quality problems.

The governments and some e-commerce platforms have released some regulations and rules to regulate the sample business. Article 35 of the "Cosmetic Supervision and Administration Regulation," which came into effect on January 1, 2021, clearly stipulates: "The minimum sales unit of cosmetics shall be labeled, which shall comply with relevant laws, administrative regulations and mandatory national standards, and the content therein shall be true, complete and correct." On March 1, Tmall also issued the “Notice on the Release of Tmall Sample Product”, which clarified the definition, classification, and product release specifications of samples. This notice has come into effect on March 8, 2021.

It’s difficult to predict the future of the sample business, but one thing for sure is that this business has gained much attention and has great potential to explore.

Tags : ChinaBusiness
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