On November 19, Yixian E-Commerce, the parent company of the new Chinese beauty brand "Perfect Diary", officially landed on the New York Stock Exchange, becoming the first Chinese beauty group to go public in the United States. According to
data, Yixian e-commerce was founded in 2016, and it owns four major beauty brands: Perfect Diary, Little Ondine, Abby's Choice and Galénic. During the rapid development in the past 4 years, Yixian e-commerce has provided users with a combination of online and offline beauty consumption experience through the omni-channel Direct-to-Consumer ("DTC") model. The
prospectus shows that the IPO raised funds of Yixian E-commerce will be mainly used for the company's market expansion and daily operations, potential strategic investments and acquisitions, product research and development and technology development, and the expansion of offline experience stores. Perfect Diary, the core brand of
, is developing rapidly.
Specifically, the online channels of Yixian e-commerce mainly include e-commerce platforms such as Tmall, JD, Vipshop, WeChat, Douyin, Kuaishou, Xiaohongshu, Bilibip Social platforms such as Miles; offline channels have achieved customer diversion and rapid business development by opening a large number of experience stores. As of the end of September this year, Yixian e-commerce has opened more than 200 offline experience stores in more than 90 cities in China.
Yixian e-commerce's brand matrix, derived from the prospectus
benefited from the rapid development of the core brand Perfect Diary, and the performance of Yixian e-commerce also showed rapid growth. According to the prospectus, the total sales of Yaxian e-commerce in 2019 was 3.5 billion yuan, a sharp increase of 363.7% from 2018; the total sales of Yaxian e-commerce in the first three quarters of 2020 was 3.8 billion yuan, an increase of 70.2 compared with the same period in 2019 %. In addition, in 2019, Yixian e-commerce achieved net income of 3.031 billion yuan, a significant year-on-year increase of 377.1% compared to 2018; net income in the first three quarters of 2020 was 3.272 billion yuan, a year-on-year increase of 73.20% compared to the same period in 2018.
In the prospectus, Yixian e-commerce will DTC (Direct-to-Customer, direct contact with consumers) and data-driven (Digitally Native) new business models, as well as the company's beauty needs for Generation Z and millennials The in-depth insights are summarized as an important reason for the above-mentioned performance.
With this model, Yixian e-commerce can complete the concept proposal, development and launch of new products within 6 months, which is far less than the 7 to 18 months usually required for international brands. In 2019 and the first three quarters of 2020, Yixian e-commerce has launched more than 1,500 new SKUs in eye makeup, lip makeup, base makeup, makeup tools, gift boxes and skin care categories.
Why did Hillhouse bet heavily
It is worth noting that the rapid growth of Yixian e-commerce has also received strong support from many venture capital institutions including Hony Capital, Warburg Pincus, Gaorong Capital and other venture capital institutions. For example, Hony Capital led the round A financing of Yixian e-commerce in 2017, and continued to increase its E round financing this year. Currently, Hillhouse Ventures is the largest institutional investor in Perfect Diary. As early as May 2018, Hillhouse Ventures led the A+ round of financing of Perfect Diary, and has continued to increase in multiple rounds of financing since then, continuing to invest for five rounds.
It is understood that Perfect Diary is Hillhouse Ventures' first IPO in the consumer sector. It is understood that Dai Yuexiang, the managing director of Hillhouse Ventures, met Huang Jinfeng for the first time, and after chatting for less than an hour, he expressed his investment intentions.
It is understood that at this stage, many institutions have come into contact with Perfect Diary. The concerns of most VCs are: limited capacity ceiling in the cosmetics market, low online repurchase rate and low loyalty.
And Dai Yuexiang’s investment in Perfect Diary is based on the following judgments: First of all, from the infrastructure level, the Internet’s "hydropower, coal" has been built-e-commerce platforms such as Tmall and JD.com, WeChat and Alipay. The payment system and social platforms such as Douyin Xiaohongshu provide new brands with channels for direct communication with consumers.
Secondly, cosmetics is a rapidly growing track in China. Emerging markets headed by China have already surpassed Japan in 2013, becoming the world's second largest consumer of cosmetics. The growth rate of cosmetics consumption is also higher than the overall growth rate of consumer goods retail in the same period. In addition, the supply chain of the Chinese cosmetics industry is very mature and the founder Huang JinfengThe grasp of the business model fits well with Hillhouse's logic.
Zhang Lei and Huang Jinfeng
The story of Zhang Lei and Huang Jinfeng is related to "snow".
On the last day of 2019, Huang Jinfeng, the founder of Perfect Diary, and Zhang Lei, the founder of Gaoling, skied for a whole day at the Niseko Ski Resort in Hokkaido at an altitude of more than 1,300 meters. During the dinner together, Zhang Lei said to Huang Jinfeng: "China must have a chance to give birth to a new L'Oreal."
"One time David and Zhang Lei had dinner, which caused a lot of confusion about the company's operations, such as whether to switch offline, Discuss with Zhang Lei how to transfer, how to expand the category, etc. The most important thing is the positioning of the perfect diary offline store." According to a source from Hillhouse, Zhang Lei believes that the perfect diary must be offline, but not in the traditional sense. Offline store. The brand positioning he extracted is: to make girls "beautiful quickly." Therefore, the perfect offline store is not only a place to sell goods, but also has social interaction and beauty attributes, creating a comprehensive fashion and beauty destination for girls who love beauty. "This inspired David a lot. After returning to the company, he quickly began to invest more resources offline." How
empowers
Not long ago, Yixian e-commerce and one of the largest dermatology and care groups in Europe-France Pierre Fabre Group reached an agreement to acquire Galénic, its high-end beauty brand. It is understood that Hillhouse Ventures also played an important role in this merger.
"This acquisition will further enhance the R&D and production strength of Yixian e-commerce, accelerate product innovation and iteration, and create a richer brand matrix. This is a milestone innovation path and future for Chinese domestic beauty brands to integrate into the international standard. It has also inspired many entrepreneurs of Chinese domestic brands in this big era to become a very important benchmark and leader." A person familiar with the matter said. Dai Yuexiang, managing director of
Hillhouse Ventures, said, “We hope to establish long-term escort relationships with entrepreneurs. This is Hillhouse’s consistent investment philosophy, and it will also be carried over to early investment. Hillhouse values the relationship with entrepreneurs. The long-term trust of the company, and provide financial and strategic support during the key development stage of the company."
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