E-commerce sales are predicted to account for 20 percent of all worldwide retail sales by 2022, and the online beauty category is growing fast, outpacing the overall e-commerce growth rate by 24 percent. Due to the rising popularity of buying cosmetics online, it’s essential for many RegASK customers to utilize e-commerce as a primary sales channel. The question is, once you have a cosmetic ready to sell, how do you ensure that it remains compliant on the platform you choose to engage?
Thus, we’re looking at two of the biggest e-commerce channels in the world, Alibaba and Amazon, to see what requirements are needed to sell cosmetics on their sites. Both require products comply with the regulations in the marketplace of which the seller chooses to engage. However, having a compliant product is only the first step, as there are other rules and procedures to follow in order to sell cosmetics on these sites.
As China’s largest online commerce company, the Alibaba Group amassed $39.9 billion in revenue during the fiscal year of 2018, nearly 74 percent more than the previous year.
The Alibaba Group consists of Alibaba.com, focusing on international and domestic B2B and B2C sales, Taobao.com (also known as Taobao Marketplace) focusing on C2C sales, and Tmall.com (also known as Taobao Mall) which focuses on B2C sales.
|Platform Name||Type of Sales||Shipping||Chinese Bank Account||Business Presence in Mainland China||Intended Use|
|Alibaba.com||B2B, B2C||International and Domestic||Not Required||Not Required||Global sales from business to business|
|Taobao.com||C2C, B2C||International and Domestic||Required||Required – Must be registered in Mainland China||Chinese consumers/businesses targeting Chinese consumers|
|Tmall.com||B2C||Domestic||Required||Required – Must be registered in Mainland China for at least 3 years||Chinese businesses targeting Chinese consumers|
|Tmall Global||B2C||International and Domestic||Not Required||Not Required||International businesses targeting Chinese consumers|
Alibaba.com separates branded products and unbranded products. Since most of RegASK’s clients want to sell branded products, we’ll focus there. Branded products on Alibaba require proof of brand authorization from the parent company through the certification center. Before listing a product, businesses are required to complete a company profile which asks for the following: basic company details, manufacturing/research and development/export capabilities, and quality control information. Sellers must upload relevant certification(s) (ex. MSDS) during listing, to show they are legally permitted to sell the product in question (certifications are verified through a third-party verification co.). Within 24 hours of posting, the seller will be notified whether their product is compliant or not.
For over-the-counter cosmetics (meaning cosmetics containing an OTC drug or ingredient), sellers must provide appropriate production and sales permits before listing products. Prescription-based cosmetics are not permitted for sale on Alibaba.com
The following is a breakdown of the documents needed to prove authorization to sell OTC products:
1. Drug License
2. Certificate of Registration
3. Certificate of Import-Export Code (IEC)
4. Alibaba.com Member ID
Amazon is considered to be the largest retailer in the world, having recently surpassed Walmart. Amazon operates in the B2C and C2C space, allowing for both manufacturers and consumers to list their products.
As it relates to the rules/requirements involving the sale of cosmetics on its platform, Amazon is a bit more stringent on its procedures.
First, it is important to understand that Amazon allows for the sale of products in numerous marketplaces (ex. Europe, North America, etc.). Thus, users must comply with all state, federal, and local laws, in addition to Amazon policies, when selling in a specific marketplace. This essentially dictates that sellers must guarantee compliance with safety standards and labeling requirements in the marketplace of which they are selling (i.e. Amazon.de sellers must abide by regulations of the European Union). Learn more about Amazon’s global selling service here.
Next, users must abide by Amazon’s rules regarding the product’s packaging, labeling, detail page, and ingredients. The following breakdown details those rules:
1. Packaging – Cosmetics must be sealed in original manufacturer packaging, be new and unused, and must clearly display manufacturer identification codes on packaging (matrix codes, lot numbers, serial numbers).
2. Labeling – Cosmetics must be labeled in English, and include the following: product name, purpose of product, content measurement (weight in oz, mL, etc.), ingredient list, name/address of manufacturer/packer/distributor, and necessary warnings.
3. Detail Page – A product’s detail page must consist of the following: product name, purpose, ingredient list, and necessary warnings. Unless approved by FDA, the product and the detail page should not contain any statements claiming the product to be a cure, treatment, or having the ability to prevent disease.
4. Products/Ingredients – Product cannot appear on FDA recall or safety alerts page, or contain prohibited ingredients. Products considered to be unsafe by the FDA are excluded from sale. A list of prohibited those items can be found here.
5. Other Amazon Rules – Cosmetics cannot contain ingredients derived from sharks, whales, dolphins, or porpoises. Cosmetics containing more than 12% hydrogen peroxide cannot be sold. Cosmetics containing acetone must be 16oz in volume or lower.
As you can see, there are many challenges to overcome when selling a product online, and it can be confusing for businesses to use e-commerce platforms – especially for international sales. We understand the difficulty of constant regulatory monitoring in the e-commerce sector. At RegASK, we work with clients all over the world to ensure their products remain compliant. By utilizing our proprietary technology, the RegASK team can monitor and identify changes in relevant regulations, develop regulatory strategies to work around them, and ease potential compliance headaches for the client.
Disclaimer: This article merely provides the framework of the rules and regulations relevant to the sale of cosmetics on e-commerce platforms such as Amazon.com and Alibaba.com. It is not meant as professional advice, nor a comprehensive analysis of all required information on this topic. State, federal, and local laws should always be followed when listing a product for sale online, in addition to the policies/rules listed on the platform(s) in question. Should you have further questions pertaining to the regulatory landscape, contact us at RegASK; our team will be happy to provide a full evaluation for your particular case.