Recently, the Tmall official flagship store of Amorepacific’s affordable makeup “Eti House” issued an announcement stating that due to the strategic adjustment of Eti House, the store will suspend operations and all products of the store have been removed from the shelves on November 12, and the recovery time is to be determined.
In response to this, a relevant person in charge of AmorePacific Group said, "It is just a short-term adjustment and will reopen in the first quarter of next year." At present, Yidi House Land’s official flagship store and Tmall overseas flagship store are still in normal operation.
Industry insiders commented that Korean wave culture was prevalent before, and Korean makeup and skin care products such as Yiti's House, Incisive, and Hou were well-selling in the Chinese market. However, since the "Range restriction order" was reported in 2017, the influence of Korean dramas and Korean wave fashion has gradually weakened, and the sales performance of related products has gradually begun to decline.
2 frequently adjusted performance has continued to decline
click to enter the Tmall flagship store of Yiti's House. The home page is the announcement that the store is suspended operations, and there are no products on sale in the store. On the search page, the House of Eti left an announcement, "If you want to continue to purchase the authentic products of the House of Eti, you can go to ETUDE HOUSE Overseas Flagship Store" and click to jump to the store directly.
Itti's House Tmall flagship store has 3.68 million fans, while the number of fans in overseas flagship stores is only more than 1,200. The products on sale are divided into lip makeup, eye makeup, eyebrow makeup, base makeup, and pure crystal series, with a total of 16 product links, with a unit price basically within 100 yuan. The official flagship store of Yiti's House JD.com has 395,000 fans, and the types of products are similar in sales.
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paidai learned that Yiti's House had had many business adjustments before. As early as February this year, the official store of the Yiti House WeChat mini program had been closed. Earlier, since 2020, Yiti House has sacked online ordering brand stores, returned to beauty collection stores and developed online channels. The reason for this series of adjustments in
is that the performance of Itti House continues to decline. AmorePacific's third-quarter 2022 performance report shows that sales of cosmetics and skin care products in Eti House have increased, but overall sales have fallen by 3.6% due to the withdrawal of duty-free shops. In 2021, Yiti House's sales in the third quarter were approximately RMB 138 million, and in the third quarter of 2022, sales were approximately RMB 133 million.
It is reported that Yiti's House was founded in 1985 and entered China in 2013. It was originally loved by domestic consumers for its pink and dreamy princess style and trendy creativity. At its peak, Yiti House had nearly 60 stores in the Chinese market, but global sales have declined continuously since 2017.
data shows that from 2017 to 2020, the sales of Itti House were 256 billion won, 218.3 billion won, 180 billion won and 111.3 billion won respectively, down 18%, 15%, 18% and 38% year-on-year respectively.
The revenue of Amorepacific Group, the parent company of Itti's House, is also not optimistic. In the first three quarters of 2022, AmorePacific Group's Chinese market revenue fell by 40%.
domestic products are rising, international makeup and skin care products gradually retreated from the Chinese market
In 2017, due to the THAAD incident and the Korean restriction order, this year has become a turning point for almost all Korean makeup brands in the Chinese market.
Data from the Korean Cosmetics Industry Research Institute and Euromonitor International show that from 2013 to 2016, the growth rate of Korean cosmetics exports to China reached 66%, but the data began to decline in 2017, fell to 20% in 2018, and fell to 14% again in 2019. In 2021, Korean makeup has only 3.6% of the share of the Chinese market.
In the past three years, in addition to Yiti's House, the performance of Korean makeup brands such as Indian Fengyin, Feishi Shop, Mengzhuang, IOPE, and Hera has also experienced performance declines to varying degrees. Among them, Indy Wind's revenue and operating profit in 2020 decreased by 37% and 89% year-on-year. It has gradually withdrawn from the Chinese market since the second half of 2020 and has successively closed hundreds of stores.
Against this background, an e-commerce practitioner commented that behind the decline of Yiti's House is the decline of the entire Korean makeup. With the decline of Korean wave culture, Korean makeup brands will no longer be popular in the Chinese market. Instead, the rise of domestic brands, such as Hua Xizi, Perfect Diary, Caitang, Juduo, etc.
For the House of Itti, its sad departure is accompanied by many negative public opinions related to products. In 2018, the related products of the House of Itti were detected that the heavy metal exceeded the standard, and then Amorepacific Group admitted its mistake and stated that it would stop selling and recover the problematic products. This incident had a certain negative impact on consumers.
In addition, in the eyes of many merchants, another reason why Yiti's House failed to enter the Chinese market is that it "has not grasped new channels in a timely manner, such as live broadcasts, short videos, and graphic grass planting, etc.". The House of Iti was popular with Korean dramas, but after the Korean restriction order appeared, no marketing methods could be found that could replace Korean dramas. Take the House of Iti as a TikTok account for example. Most of the short videos it posted were no more than 20, and only 3,524 of the best-selling product links in the store were sold.
Some people in the beauty industry pointed out that the rise of domestic makeup has a consistent blow to all international affordable makeup brands, not only Korean brands. In addition to the above brands, Too Faced, a makeup brand under Estee Lauder Group, Stila, and GlamGlow, an internet celebrity light luxury makeup brand, have been forced to announce their withdrawal from the Chinese market in the past two years due to poor performance.
seizes the domestic market. What are the secrets for products, marketing, and channel?
According to the "Domestic Beauty Insight Report", domestic beauty products have accounted for 56% of the market share. Judging from the purchasing intention of consumers, 42% of consumers are more willing to choose domestic beauty brands, and 90% of consumers say they will buy domestic beauty products again in the future.
It can be seen that domestic beauty products are coming from behind and are occupying more market share. Paiyi summarized four successful experiences about the rise of domestic brands, which may bring some inspiration to merchants.
first, clear brand positioning and product strategy . Taking Hua Xizi as an example, in response to the unique skin characteristics and makeup needs of oriental women, Hua Xizi uses flower essences and Chinese herbal extracts as the core ingredients to create a series of popular items such as carved lipstick and light-colored honey powder. The sales in 2020 exceeded 3 billion yuan.
Second, keeps up with changes in user needs and quickly innovates and iterates the product . Taking the makeup brand INTO YOU as an example, INTO YOU found through research that Chinese consumers currently have more subdivided colors, and domestic makeup lacks fashionable and color-playing brands. Therefore, they use "lip clay" products to enter the makeup track and launched a series of bold, avant-garde and trendy colors, such as terracotta, light tea apricot color, and red honey sand color. The number of fans in Tmall flagship store exceeded 3.2 million.
Third, grasps new channels, such as live e-commerce, short videos, graphic and text planting, etc. . For example, if you search for the makeup brand "Juduo" on major platforms, there are 220,000 related notes on Xiaohongshu, and the Douyin #Juduo topic has been played over 400 million times, and there are countless related videos and live broadcasts.
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Among them, popular content appears with blogger test color, product introduction, makeup tutorial, etc., focusing on domestic products, affordable, big brands, etc., to stimulate users' desire to buy. At present, Juduo has accumulated 7.53 million, 920,000 and 400,000 fans on Tmall, Douyin and Xiaohongshu. For international brands, labels similar to "the same style as Korean stars" may no longer be effective, but domestic labels are more attractive.
Fourth, refines brand operations and creates emotional connections with users . Taking Perfect Diary as an example, after purchasing a product, consumers will give away a package card with the product, and use product benefits to invite new users to join the fan group, which will be received by beauty consultant "Maruko". Xiaomao can not only help fans analyze skin problems, but also recommend related product links in Perfect Diary Mini Program Mall to form a private domain traffic closed loop of "personal + mini program + group". Data shows that every month, hundreds of thousands of private domain traffic brings revenue performance of tens of millions of yuan to Perfect Diary.
In recent years, the national trend has emerged, and Chinese consumers are no longer so obsessed with international brands. International brands need to establish differentiated competitive advantages in the Chinese local market, and must compete with domestic brands on the same stage, understand the needs of China's local market, and have competitive advantages in all aspects of products, prices, marketing, and channels in order to maintain market share.
Reference materials:
1. "Eti's House suspends operating Tmall stores, is it possible to accelerate the "in-coil" of affordable makeup? 》.First Financial
2, "7-year-old store, 3.68 million fans! Another day, the Cat Store is out of service.》. Laogao e-commerce circle
3, "This beauty brand closes the store again! 》. Qingyan
