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Trouble Of Domestic Beauty: Starting From The Flow Of Products

2021/6/19 10:07:00 0

Domestic ProductsBeautyWorryFlowProducts

With the rise of generation Z and social networking platforms in China, in the past two or three years, a large wave of e-commerce has emerged in the wind of new consumption, and numerous new consumer brands have sprung up. With the help of the new flow entrance of online celebrities, and through the cooperation with Li Jiaqi, Weiya and massive small red book Koc, it seems that the brand popularity and "out of the circle" are all overnight things.

Behind the rapid rise of domestic cosmetics is the support of capital. According to the "2021 beauty industry trend insight report" released by CBN data, the beauty industry has disclosed the investment and financing amount of 4.812 billion yuan in 2020, which is 324% higher than that of 1.135 billion yuan in 2019. With Dongfeng, perfect diary and Winona took advantage of the IPO. In March this year, Winona's parent company betaine (300957) went public.

From smashing advertisement to "planting grass" with goods

Back in 2016, Huang Jinfeng had just stepped down from Yu Ni Fang and founded YSG. N. The company's name was Huang Jinfeng. In order to pay homage to his alma mater Sun Yat Sen, "Yixian", Chen Yuwen and LV Jianhua, CO founders of Yichun, a fast consumer clothing brand, were Huang Jinfeng's college friends for many years.

There is no doubt that the "gold owners" of capital support for it to provide a continuous source of power. Since March 2017, Yixian e-commerce has launched its first cosmetics brand perfect diary. With its cost-effective products focusing on "big brand pingti", it has a consumer group in line with its positioning among many high-end brand cosmetics. Whenever users have any complaints about the perfect diary product experience, there will always be a similar "only a few tens of dollars, what else do you want?" Comments on. In just three and a half years, Yixian e-commerce has completed seven times of financing and went to IPO. Its capital lineup is also extremely luxurious, including 13.8% of Hillhead capital, 10.5% of Zhenge fund and 9.2% of Gaorong capital, as well as Boyu capital, tiger global and many other large-scale investment institutions. It has been revealed that in a round of financing last year, "the new shareholders come in to rob them, otherwise they will be done by the old shareholders."

Obviously, the business model of perfect diary is the most typical "Internet game" in recent years. It has been pushed to the market after relying on funds to seize the market crazily. Its only fast and unbreakable speed is also a "double-edged sword". According to the national enterprise credit publicity information system, there are currently 38 patents of perfect diary (Yixian e-commerce), all of which are appearance patents, There is no core R & D patent information such as component technology.

From 2018 to 2020, the sales and marketing expenses of Yixian e-commerce will be 309 million yuan, 1.251 billion yuan and 3.412 billion yuan respectively. The overwhelming advertising has smashed the new generation of consumers' cognition of the perfect diary of domestic beauty. As a matter of fact, spending money on marketing has achieved great results. Generation Z has gradually become the main force of consumption. Nowadays, brands can quickly build up consumers' minds and cognition of brands by making use of the effects of online celebrities and stars. Packaging theme design with "mental tricks" and "beauty" and cross-border co branding can quickly capture the hearts of consumers. In the beauty track, Cross border co branded products have experienced a blowout in just three years, with a growth rate of nearly three times.

The turning point took place in February 2018. The keen marketing team of perfect diary found that many users published brand color test and grass planting content on little red book. Planting grass on the surface is actually dark and wide, which makes perfect diary see the possibility of new user growth. According to the data, in June 2017, there were only 50 million users of xiaohongshu, but by April of the next year, the number of users soared to 100 million, and the user activity was close to 30 million, three times the activity of a year ago. The perfect diary is riding the express train of little red book, and the sales volume is singing all the way.

Lack of product R & D capability

However, beauty brands will speak with products after all. Although the number of new fast products on the perfect diary products is large, there is still no impressive and classic large single. In terms of cost, large items do not need to upgrade the formula repeatedly, which is difficult to be eliminated, and does not need high new product promotion fees. But the money of perfect diary has been spent on advertising, and the research and development of products that need real gold and silver investment is far from enough. In 2020, the R & D expenditure of perfect diary is only 67 million yuan, accounting for 0.93% of revenue. In 2018 and 2019, it is only 3 million yuan and 23 million yuan.

The result of the lack of research and development is that, although the products are dazzling, they are always changing the soup and dressing, and the repurchase rate is not optimistic. According to the data of CICC Research Institute, after trying to cooperate with xiaohongshu, shuoyin and KOL, the sales growth of Shiseido, L'Oreal and Estee Lauder will exceed 60% in 2020, while the sales growth of perfect diary will be only 22%. In addition, another big "hard injury" of perfect diary is its low gross profit. It positions its brand as "big brand pingti", but its gross profit margin is 10% to 20% lower than that of Estee Lauder and Huaxi biological. If you want to break the low gross profit dilemma, the simplest and direct way is to raise the price, but rash price increase will certainly affect the biggest "advantage" of perfect Diary - cost performance. Therefore, perfect diary offers "reduction without price reduction". Under the general situation that the net content of lipstick is 3-4g, one of the products of perfect Diary - "small thin heel" lipstick is only 0.8g.

At present, there are more and more enterprises on the track of national cosmetics. In addition to the extrusion of foreign competitive products, "cost performance" is no longer the most important cornerstone for domestic products to break through. With the increasing market recognition, quality is the goal that Chinese beauty brands need to pursue.

Today, the domestic beauty industry has a perfect supply chain and industrial chain, which provides a very fertile soil for domestic brands to go abroad. According to CBN data "2021 beauty industry trend insight report", Guangzhou has become the incubator of new beauty brands. According to the report data, nearly 3 / 4 of tmall sellers in Guangzhou are mainly engaged in beauty care and other "beauty industry", which is 1.6 times of the national proportion; Guangzhou has more than half of the number of domestic cosmetics enterprises on record. In the past three years, the sales of Guangzhou beauty and skin care brands have nearly doubled on tmall platform, such as perfect diary, Zhiben, runbaiyan, etc.

It is obvious that the biggest possibility for domestic brands to choose to go abroad is that there are serious domestic losses, and it is urgent to explore new markets and take the international route to raise the price of high-end products for future research and development. With the IPO of Yixian e-commerce, the perfect diary that once said that it would take the thorny road of domestic brands, the best explanation for going abroad is to try to acquire international famous brands, and then turn to high-end market development. On October 30, 2020, perfect diary announced that it had reached an agreement with Pierre Fabre group of France to acquire its high-end beauty brand gal é nic; On March 2, 2021, perfect diary said it had reached an agreement with manzanita capital, a London based venture capital, to acquire Eve LOM, its high-end skin care brand. A series of high-end acquisitions have strained the cash flow of perfect diary. According to the annual report, in 2020, the net outflow of cash flow from the operation activities of perfect diary was 983 million yuan.

At present, the most popular categories of beauty at sea are lipstick, eye shadow and blush. According to the data of China Business Industry Research Institute, in 2020, China's export of beauty cosmetics and toiletries will reach 999000 tons, an increase of 4.3% year-on-year. With the help of e-commerce brands such as tmall and Amazon, it will be easier for new brands to go abroad.

In the future, the perfect diary plan will cost billions of yuan in marketing expenses. However, when the heat and sales light are faded, will the perfect diary develop "luminous" products that make the market refreshing? Consumers are more concerned about how the perfect diary will stand in the market with new products coming out again and again after eating the flow bonus.

The product business model of perfect diary is DTC, or direct to customer. In the list of OEM factories published by perfect diary, yingteli, cosmetz and Shanghai zhenchen are the world famous OEM factories of nature hall, peraya, Dior, chanel and Maybelline. With years of experience in OEM, these OEM factories also have design and R & D capabilities, It is not difficult to understand that behind the endless new products of perfect diary, only 0.9% of the research and development cost is spent. Under the loss, how will the perfect diary go next? Obviously, the product quality of the perfect diary can not compete with the first-line brands, but the price is in the embarrassing position of "less than the top, more than more than the bottom", and consumers are paying more for its "eye-catching" theme and packaging.

Circuit switching is also a self-help

Also in the field of domestic beauty, the company has three major brands, namely "Maru", "Chunji" and "Lianhuo". Its core brand and main revenue are "marmei", which accounts for more than 90% of the company's total revenue all year round.

Maru's advantage lies in the firm foundation of its customers. Since 2017, Maru's net interest rate has remained between 20% and 30%, and pelaya (603605) has also maintained above 10%.

In the case that only "Maru Mei" brand is unique, it is not easy for Maru to cultivate high-end products and face the fierce competition in the cosmetics market with high gross profit rate. In the first quarter of 2021, the gross profit margin of Maru Mei was 63.91%, which was 2.29 percentage points lower than that of 66.20% at the end of 2020. Compared with the gross profit margin of paraya (64.09%) and Shanghai Jiahua (64.56%) in the first quarter of 2020, Maru Mei no longer has the advantage of high gross margin.

With the rapid development of cosmetics, MARUMI shares is in urgent need of finding new consumption points to let consumers pay for high prices, so as to seize the new profit growth point and highlight the tight encirclement. It is worth noting that Maru announced on November 12, 2020 that it plans to abandon the original "color makeup" raised investment project, and the new project investment amount is expected to be 276 million yuan, which will mainly focus on skin care products and supplemented by color cosmetics products. After completion, it is estimated that the new production capacity of skin care products will be 3382.5 tons, and the production capacity of color makeup will be 200 tons, which will fully achieve the annual output value of about 596 million yuan, Will continue to deepen the company's skin care industry chain layout.

In this way, Maru plans to give up the fast-growing cosmetics track and turn to do skincare track. Not only that, Maru also plans to invest in food and beverage and new retail consumer industries. On October 29, 2020, MARUMI announced that the company plans to jointly invest and establish an industrial fund with a scale of 100 million yuan with several partners, which will mainly invest in high-quality or high-growth enterprises at home and abroad in relevant fields of consumer industries such as food and beverage, condiment and new retail, so as to create a food industry ecosystem. One of the limited partners is "laiyifen" in Shanghai. Maru said that the investment direction and the company's main business has a certain degree of correlation, mainly with beauty related functional food.

With the rapid development of Chinese cosmetics, the "ground" of "circle" is getting bigger and bigger, but it seems that it is getting farther and farther away from people's expectation. After the rapid rise of national cosmetics with capital, what will be the next step“ After "fan economy" and "beauty economy", national cosmetics still need to rely on high-quality differentiated products to gain a foothold in the market( Innovation Capital Research Institute in the 21st century.)

 

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