Yixian E-commerce laboratory.
experimental raw materials.
———Hotel 5 Yixian E-commerce founder, chairman and CEO Huang Jinfeng
traffic dividends disappear, offline store optimization and adjustment, and industry competition intensified... In the past two years, it has been a bit difficult for Yixian E-commerce to build a leading brand of domestic beauty products and cosmetics Perfect Diary . However, Huang Jinfeng, founder, chairman and CEO of Yixian E-Commerce, is confident. As a leading beauty company cultivated in Guangzhou, Yixian E-commerce has created many industry myths. It was established in 2016. Perfect Diary of 2018 became the fastest cosmetic brand with Tmall sales of over 100 million yuan; in November 2020, Yixian E-commerce became the first Chinese beauty company to be listed in the United States.
However, since its listing, the doubts from the outside world have pushed Yixian E-commerce into the spotlight again. In this regard, Huang Jinfeng said: "Difficult is only temporary, and confidence is the most important support for us to survive the headwind period. I believe that the essence of resilience is to be able to endure. Enduring is a mentality that can move forward no matter what difficulties and obstacles are encountered. It depends on the direction, persist for a long time, and travel through the cycle."
Not long ago, Yixian E-commerce released its second quarter performance report for 2022, and its operating cash flow has turned positive for the first time since its listing, sending a positive signal.
internal and external factors are accelerated to expose corporate shortcomings due to the superposition of
. Since 2020, consumers' consumption willingness has declined, and wearing masks has affected the demand for beauty use, the domestic beauty industry has changed from the rapid growth in the past to slowing down or even falling.
According to National Bureau of Statistics data, the total retail sales of cosmetics from January to August this year was 245.3 billion yuan, a year-on-year decrease of 2.7%. If you look at the past August alone, the performance will be more obvious. The total retail sales of cosmetics in August 2022 was 28.8 billion yuan, a year-on-year decline of 6.4%, which is the only negative growth in five years.
At the same time, due to the repeated impact of the epidemic, the supply chain, logistics and offline businesses of the beauty industry have been greatly impacted. "In March and April this year, our supply chain and logistics of , Yangtze River Delta, , both encountered a certain degree of shutdown, and makeup is a new product-driven industry. Many of our new products cannot be launched in time. At that time, offline experience stores in the entire Shanghai market were closed." Huang Jinfeng said. As the competition for
intensifies, international beauty and cosmetics groups have seized the Chinese market with greater promotions, which also puts huge pressure on domestic beauty and cosmetics that are still in the initial stage. However, Huang Jinfeng did not blame all the difficulties encountered by the company on the external environment. He admitted that the challenges encountered by Yixian E-commerce are the result of the joint internal and external factors. The epidemic has only exposed internal problems faster and clearer.
"I set the five years from 2016 to 2021 as the first stage of the company. In this stage, the company has put a lot of homework while developing rapidly, such as insufficient attention to R&D in the early stage, low operating efficiency, and insufficient profit margins in organizing the talent echelon to build , etc. The entire team of the company is relatively young and may not be firm enough in the face of a high-pressure environment. If you want to continue to maintain an innovative breakthrough, it is indeed a big challenge for the team." Huang Jinfeng said.
is also because of this that Yixian E-commerce quickly launched a strategic adjustment and took the initiative to start a "second entrepreneurship" in July last year. Taking the second five years as a new beginning, the first step is to achieve profitability, the second step is to continue to invest in product research and development and brand building, and the third step is to fully enter a new stage of high-quality development.
slow down and seek stability
"lipid reduction and muscle gain" effect has begun to show
"In the first five years, Yixian E-commerce seized the traffic dividend, grew rapidly, and completed the leap from zero to listing. Now the external environment has changed, and our strategy has also changed from seeking 'fast' to seeking 'stability'. In four words, it is to reduce lipid and muscle gain." Huang Jinfeng said.
's adjustment to offline retail stores reflects Yixian E-commerce's determination to "reduce fat". Yixian E-commerce has opened more than 200 stores in 150 cities across the country in less than three years. Among them, the rental prices of some stores will be launched even if they do not meet expectations. Once the epidemic occurs, many stores will be in a loss state. This year, Yixian E-commerce actively adjusted its development strategy and optimized some stores to stop losses in a timely manner.
On the other hand, Yixian E-commerce has also adjusted its existing stores, including area, decoration, services, products, etc. For example, the size of the store is determined based on the decrease in the traffic flow of the mall. For example, increase the service area in the store and bring more experience and added value to consumers through makeup services to enhance consumers' preference for the brand.
"build muscle" refers to Yixian E-commerce's increase investment in R&D, brand and talent. In the second quarter of this year, Yixian E-commerce's R&D investment was 32 million yuan, and the proportion of R&D expenses increased from 2.3% in the same period last year to 3.4%. This proportion ranks among the top domestic beauty companies, and is the same as the average percentage of global industry R&D investment.
In terms of brand building, Yixian E-commerce focuses on supporting the development of skin care brands. "Splitting beauty into skin care and makeup, the skin care category has stronger anti-cycle ability. Masks may reduce people's willingness to put on makeup, but the demand for skin care will not weaken. The overseas brands we acquired such as Galénic and EVE LOM have a history of more than 30 years. They are top skin care brands that are well-known in France and the UK. We want to convey to the outside world that Chinese beauty companies can be well recognized by global consumers." Huang Jinfeng said.
In fact, Yixian E-commerce has begun to show results in its efforts in skin care products. In the second quarter of 2022, with the decline in revenue of cosmetics, Yixian e-commerce skin care product revenue increased from 213 million yuan in the same period last year to 318 million yuan, and its proportion of total revenue increased from 14% to 33.4%. The total revenue of the three major skin care brands, Galénic, DR.WU and EVE LOM, increased by 112% year-on-year.
has also invested heavily in the construction of talent teams Yixian E-commerce. Yixian E-commerce has attracted many foreign talents to come to Guangzhou to find jobs through its plan to recruit management trainees. The average age of employees is 27 years old, of which more than 70% of employees are born in the 1995s. Huang Jinfeng believes that long-term investment in talent cultivation is required. Only young people with potential who are full of love for the company, have sufficient industry knowledge and experience, and can lead the future development.
R&D and product strength
The focus of the second stage of the enterprise
In the first five years, Yixian E-commerce has accumulated a team, brand matrix and funds. Now, R&D and product strength have become the focus of the second stage of the enterprise.
"The product strength of makeup and skin care is different. The product strength of makeup is reflected in the understanding of fashion, so we pay more attention to the presentation of products, such as color selection, outer packaging design, product name, etc. The product strength of skin care is reflected in the technological strength. Consumers have higher and higher requirements for product efficacy and more knowledge about skin science. Therefore, solid research and development is what we must focus on in the next five or even ten years." Huang Jinfeng said.
Huang Jinfeng is neither optimistic nor pessimistic about the future environment. He said that the environment is uncertain and there are both opportunities and challenges. Enterprises must pursue stability, but stability is only the first step, and the second step is to develop with high quality. Faced with short-term uncertainty, Yixian E-commerce chose to invest its limited resources in the assets that establish core capabilities and moats, such as the above-mentioned R&D and brands, as well as the construction of talent teams. How to achieve stronger product and brand power-driven growth, and how to improve market share, corporate operation efficiency and corporate profit margins in segmented fields are all the hurdles that Yixian E-commerce will overcome in the next high-quality development.
In March 2020, Yixian E-commerce cooperated with one of the world's largest cosmetics OEM/ODM companies, Yixian (Guangzhou), a research and development and production base built by Cosimeishi, one of the world's largest cosmetics OEM/ODM companies, announced construction on Conghua . The project has basically not been interrupted since the epidemic and is expected to be put into production in May next year. After the project is completed, it will become the most technologically advanced cosmetics production base in the country, with a monthly production capacity of more than 30 million cosmetics.
In addition, backed by , the mature daily chemical industry supporting cluster of , Guangdong-Hong Kong-Macao Greater Bay Area, Yixian E-commerce is also trying to promote domestic brands to go overseas. At present, Perfect Diary’s products have been exported to the United States, Japan, Singapore , Philippines , Malaysia and other places, and have been ranked at the top of the beauty sales list many times."In the future, Yixian E-commerce will continue to build fundamentals and make steady progress, showing the world a more three-dimensional, modern and fashionable 'Chinese beauty'." Huang Jinfeng said.
interview: Nandu reporter Feng Yunqing Intern Zhou Xiaodan Li Gewen Photo provided by the interviewee
