In the past few years, observers have made various "deductions" about the beauty industry. The mainstream views are also focused on product power based on scientific research, brand power based on long-termism, and new business formats based on consumption upgrades.
Internal motivation is important, but external pressure can promote industrial upgrading faster, especially in the coming year of 2022. The ancient prophecy "Winter is coming" has become the best footnote of the moment - Some media cited data from Enterprise Chacha saying that at least more than 210,000 cosmetics companies have "disappeared" this year, and the number of cosmetics company registrations has also experienced negative growth for the first time in 10 years.
The combination of factors such as economic downturn and increasing regulations has intensified the reshuffle of the beauty industry. Yixian e-commerce 's delisting crisis is like a mirror, reflecting the plight of domestic cosmetics after the traffic bonus ebbs. Cutting-edge cosmetics brands represented by CROXX, Yuji, YES!IC, Light Makeup Diary , etc. have all suffered losses this year; not only Cosmetics, international skin care brands Revlon , Cosmeti, Blanc Holy Spring, Too Faced , etc., as well as domestic skin care brands Fangji AFRELLA, Yan Xiaosheng , etc. have also fallen one after another this winter.
How do leading/cutting-edge brands survive the winter amid the waves?
Part 01
Scientific research: grabbing raw materials, grabbing technology, grabbing talents
R&D is still the main position, and Chunlei Society has also mentioned in articles many times that scientific research competition has penetrated into every link of the industrial chain.
If "5,000 Xiaohongshu KOC reviews + 2,000 Zhihu Q&A + Li Jiaqi " was the formula for brands to get out of the circle, then is now in the dimension of brand improvement and product strength. "Institution/laboratory endorsement + joint patent + specialized ingredients/raw materials" seems to have begun to become a fixed "routine" on the effective skin care track .
But unlike the former which is purely capital and ammunition investment, the latter requires a longer technical reserve and front layout.
In the article "Investment and Financing in the Beauty Industry in 2022", Chunleishe took stock of Huaxi Biotechnology , Proya , Marubi , etc. Domestic leading beauty companies are investing in the upstream sector. The raw material story of based on synthetic biology , collagen that is expected to become the "next hyaluronic acid", and device linkage in the light medical beauty scene are all hot spots for investment this year.
In addition to these upstream battlefields, leading companies will also absorb some senior R&D personnel with backgrounds from large international companies, or invite technical experts in biomedicine and other fields to join the R&D team, using "chief scientists" to emphasize the brand's own scientific research strength , for example -
In January this year, Former chief technology officer of Huaxi Biotechnology Li Huiliang joined Huaxizi as chief scientist. Huaxizi announced that it will invest more than 1 billion yuan in product innovation and basic research in the next five years to build five major R&D centers; in August this year, PMPM parent company Shiyin announced that three top scientists with more than 70 years of scientific research experience - Sun Peiwen, Li Jinhua, and Liao Feng have joined PMPM at the same time, serving as its chief scientific research officer, chief formulation scientist and R&D partner respectively.
Picture source: Weibo
In September this year, Wei Xiaolan, former vice president of R&D of Coty Group Asia Pacific, joined Proya as chief scientific officer of CSO; on the same day, Shuiyang Co., Ltd. officially announced Chen Jian, an academician of the Chinese Academy of Engineering who has been working in the field of fermentation engineering for more than 40 years, as the company's chief scientist.
It is worth mentioning that Shuiyang Co., Ltd., which hopes to get rid of the inherent impression of "Taobao brand channel dealer", has also become the first company in the domestic cosmetics industry to hire an "academician" as its chief scientist.
In November this year, Asia Group also officially announced Pan Zhi, the former chief scientist of L'Oréal North America R&D Center and an expert on the Global Expert Committee, as the company's chief scientist.
The "war for people" also reflects the scientific research anxiety of the industry to a certain extent.
Part 02
brand: subdividing the track into a new growth pole for effective skin care
Perfect Diary is an excellent observation sample in the beauty industry.
Judging from the financial report for the third quarter of this year, the series of functional skin care brands previously deployed by Yixian E-commerce achieved a total revenue of 269 million yuan, an increase of 33% over the same period last year, accounting for 3% of the total revenue. 1.4%; Thanks to the increase in sales of mid-to-high-end skin care brands, Yixian e-commerce's gross profit margin has remained stable and increased . The adjusted net loss narrowed significantly by 41.5% to 127 million yuan; during the reporting period, the company's operating cash flow was approximately 21.8 million yuan, turning positive for the second consecutive quarter.
Image source: Weibo
According to Yixian E-commerce's new five-year "three-step" plan, the first step of "increasing gross profit and turning operating cash flow positive" has begun to take shape, and is currently moving closer to the second step of "adjusting the category structure, increasing the proportion of skin care, adjusting the channel structure, and improving operating efficiency" . Although
is expected to recover, its delisting crisis at the beginning of the year still sounded the alarm for the capital market. The era of relying on low customer unit prices and traffic bombing has finally become a thing of the past.
It is reflected in the market that this year the beauty brand financing is a little lonely, and IPO gates are no longer showing signs of new talents. Instead, there are many familiar old faces - the leading player in the collagen track, Juzi Bio, the facial mask printing machine Fuljia , domestic skin care veterans Xiangyi Herborist and Shangmei Group , etc.
Image source: Weibo
On the other hand, take Shanmei, which owns Hanshu , Red Little Elephant , Yiye and other brands as an example. Referring to Proya's turnaround with "morning C and evening A", this year Shanmei upgraded the brand positioning of Hanshu to "scientific anti-aging" and Yiye to "pure beauty". The upgrade of the brand carries the ambition of corporate transformation.
The turnaround of these old domestic products also means that functional skin care has begun to enter the second half.
Looking back at the trends of this year’s leading brands, we can find that most of them focus on the anti-aging track and are developing layouts in the directions of “light medical beauty”, “popular raw materials”, and “high-end”.
For example, Huaxizi, which emerged almost at the same time as Perfect Diary, its parent company Yige launched the high-end anti-aging brand OGP Time Skin this year. It mainly focuses on radio frequency beauty devices and blue copper peptide , and has entered into the two major tracks of "light medical beauty" and "popular raw materials".
Bettany has launched the high-end anti-aging brand AOXMED AOXMED, building on the original dermatology-grade skin care products. After investing in the functional makeup brand "FUNNY ELVES" in June this year, Bettany took advantage of the situation and built a category matrix of "daily care + medical and art after-care + makeup + maternal and infant". (Link to previous issues)
The imagination of more functional scenarios also brings the possibility for brands to increase their growth ceiling.
For example, Huaxi Biotechnology’s four major brand matrix based on functional segmentation has officially formed , and its influence has been further expanded. Among them, BM Bio-Active quickly broke through. In the first half of 2022, its revenue increased by as high as 445.75% year-on-year. It also successfully created the "Bio-MESO Bio-MESO Brown Rice Muscle Essence Water" series, which was the first large-scale single product with sales revenue of over 200 million yuan in the first half of the year. According to the third quarter financial report, the sales of this single product have exceeded 300 million yuan.
In addition, Huaxi Biotechnology has also further laid out its functional drinks and gradually improved its product line. In the first half of this year, its brand Shuijiquan launched hyaluronic acid soda sparkling water, Black Zero launched 4 products based on market popularity, and Xixiang Corner launched 5 products in the 2.0 series. However, it remains to be seen whether this emerging track is an exploration for the brave or a game for the confident.
Image source: Weibo
Unlike raw material vendors such as Bloomage Biotech, which has a unique background, Proya, which has entered the industry with a "big single product" strategy, performed well in this year's "Double Eleven" (in Tmall , Douyin , JD.com and other platforms are all ranked No. 1 in domestic beauty products, with growth rates of 120%+, 120%+, and 110%+ respectively), is still committed to cultivating Proya, the second growth pole, and the key bet is Caitang . According to the third quarter financial report, Caitang brand revenue has maintained high growth and turned losses into profits, which enhances the certainty of the company's growth.
Another cutting-edge brand that also starts with makeup is Zhiben, which will officially launch the makeup brand "Yifiniye" at the end of this year. According to the brand's official Weibo introduction, the base makeup of "self-developed 98% pure ergothioneine " may become the core product of the brand, and the product line will also cover the entire range of makeup categories.
Part 03
Marketing: Content e-commerce has become the main battlefield
It is worth noting that although keywords such as scientific research and efficacy are getting more and more attention, due to the attributes of the beauty industry itself, marketing is still an inevitable focus.
According to QuestMobile data, in the first half of 2022, from the perspective of Douyin, WeChat Moments and the entire industry, the advertising revenue contribution from the beauty care industry was the highest, and its industry-wide advertising contribution accounted for 14.9%.
Image source: QuestMobile data
Marketing and channels are deeply bound. In the article "The Past of International Beauty Giants in China", we mentioned that channel changes are one of the important factors why brands such as Revlon, Benefit , Innisfree , Etude House and other brands have become "tears of the times".
Over the years, channel changes and marketing battlefield shifts have not only created many beauty myths, but are also accompanied by secret war stories among platforms.
After upgrading from a small store to a mall last year, Douyin e-commerce proposed "all-area interest e-commerce" this year, extending the merchant's business field from content scenarios with short videos and live broadcasts as the core to shelf scenarios composed of search, malls, and stores, as well as marketing scenarios that deepen product and sales collaboration.
Taobao has deepened its live broadcast e-commerce layout and greatly increased its support for anchors. Following the launch of the "Pilot Plan" for all e-commerce celebrities, content experts and MCNs last year, it also released the 2022 annual incentive plan at the beginning of this year to continue to support mid-range and new talents.
At present, both sides are going deep into each other's hinterland, but Douyin seems to have a slight upper hand, especially in the 109 days since Li Jiaqi left. While emerging brands are anxious, they are also trying to find growth possibilities through new channels.
Huaxizi, which was once closely tied to Taobao Super Group, had stepped up its operations on Douyin even before Li Jiaqi stopped broadcasting . According to the "Douyin & Xiaohongshu Beauty Industry Marketing Insights in the First Half of 2022" report, Huaxizi's official flagship store topped the Douyin beauty guru GMV list in the first half of 2022.
Image source: Weibo
It can also be seen from this year’s “618” and “Double Eleven” that although Tmall’s territory is still grand, cracks have quietly emerged.
According to star map data , the live broadcast e-commerce platform will have 618 network-wide sales in 2022, and the GM of Diantao (formerly Taobao live broadcast app) V lost to Douyin and Kuaishou, ranking third; according to data from Guoyuan Securities and Hongta Securities , the total GMV of Douyin’s beauty category reached 40.209 billion yuan in the first half of the year, which was close to one-third of the total GMV of Taobao Beauty Cosmetics in the first half of the year.
In Alibaba 2023 first fiscal quarter financial report, Taobao Tmall GMV fell 5% year-on-year . At that time, Alibaba head Zhang Yong said that user growth would not be mentioned in the future; and Douyin data shows that during the Double 11 period, business transactions participating in the Double 11 event increased by 86% year-on-year, and the total exposure of Douyin Mall products was 78.6 billion.
In addition, during the years of the rapid rise of Perfect Diary, Xiaohongshu was the main marketing position for many beauty bloggers and beauty brands, and has the reputation of "the Baidu of the beauty industry".
However, according to Youmi 's "2022 Q1 Beauty Marketing Trends" theme report, Xiaohongshu's current beauty cultivation status has been shaken by Douyin - data shows that Douyin has grabbed the largest share of the brand marketing budget, accounting for 43.53%; followed by the Xiaohongshu platform, accounting for nearly 30%.
Image source: QuestMobile data
QuestMobile data also shows that from the perspective of hard advertising media in the beauty industry, the Douyin channel accounts for almost "half of the country." For example, in August 2022, the share of hard advertising on the Douyin channel was as high as 42.8%.
In this context, whether it is a big international brand, a new domestic brand, or even an agent operator, it is worth re-branding on Douyin.
Sephora , which aimed at content e-commerce last year, became one of the first international beauty companies to enter Douyin e-commerce. It was the first to open the membership function on Douyin platform, and gradually explored an operating model that combines official e-commerce self-broadcasting, KOL live broadcasting and store live broadcasting.
QuestMobile data points out that international giants are now more active and active in commercial content delivery than local brands, especially Lancôme , Estee Lauder , and L'Oréal Paris are representatives, showing a two-pronged strategy of Douyin + Xiaohongshu. Local brands are more inclined to use Douyin channels to achieve the dual goals of exposure + conversion. Among them, the investment intensity of natural hall has surpassed that of Japanese and Korean top brands, with Proya and HBN following closely behind.
Summary:
, The competition for talents, technology and raw materials is the brand hot spot on the functional skin care track this year, and will also be the norm in the future. For emerging brands, also means a substantial increase in competitive costs, especially when the industry is experiencing a cold spell and the barriers to entry are constantly being raised.
, Efficacy skin care has entered the second half. More scene choices provide more subdivided efficacy tracks and categories, and also bring new entry angles to the brand. Depending on its own background, can follow "light medical beauty" to create a professional temperament for the skin care brand, or focus on "high-end anti-aging" to enhance the brand image and profit margins, or it can "cross-border" to find another growth pole, etc.
, The main marketing battlefield has begun to shift, and content e-commerce will be a key channel for brand development. At present, Douyin’s beauty landscape, which is composed of pioneering “Douyin brands”, cutting-edge brands that are rushing to land, and international big names that are quickly following up, has begun to take shape, and is expected to shake Taobao’s status; at the same time, the more dispersed and secretive KOLs in the middle and tail, as well as the brand’s self-broadcasting model, will reshape the live broadcast world.
*Note: Unless otherwise noted, the pictures in the text come from the Internet.
Reference:
QuestMo bile, "2022 Beauty Industry Market and Marketing Insights"
Case SHOWCASE, "Escape from Li Jiaqi to Douyin: Beauty Brands Cut in Half, Struggle and Reorganize in 109 Days"
Salon Preview
, "Light Medical Beauty Special", theme: "Light Medical Beauty" Development and innovation of medical and aesthetic skin care products"
, "Ingredient Trend Special Session", theme: "2023 Ingredient Trends and Innovation and Application of Active Raw Materials"
