Title map | vision china
Three years after the epidemic, it seems that the economy and consumption have been slowly drawn out. How many people will wear full makeup when they go out now?
According to the latest data released by the National Bureau of Statistics, the total retail sales of cosmetics in March 2022 was 34.5 billion yuan, down 6.3% year-on-year, which was the first decline in two years. Waves come between the ripples, and the signs of industry change can be seen from these data.
In it, China’s beauty brand has also sung all the way to a difficult step, and after a sharp rise and fall, it has come to a difficult turning zone:The whole industry has entered a period of deep ploughing, and it is urgent to find a new growth engine after the traffic dividend disappears.
But for enterprises, the transformation under the headwind of the industry has always been a life-and-death test.
Even Yixian E-commerce, which achieved the listing myth in four years by virtue of the perfect diary of "Light of Domestic Products", has become a shackle now. If it cannot establish a higher barrier for its own products and brands, its road to rise will reach its peak.
So,The key question now is, where will the tide of the beauty industry flow? Can the perfect diaries follow the trend and be reborn, and then get the favor of capital?
The direction of the tide
Tides also have cycles. If you want to understand the challenges of domestic beauty products more deeply, maybe you can look back a little.
Around 2000, a batch of "Made in China" appeared in China’s daily chemical industry, which seems to be a big brand today: "Vitality 28", "Little Nurse" and "Ding Jiayi" … Now these forgotten names have also sprung up, even if they compete with international big brands, they have never fallen behind.
But in the end, most of them failed, and the reasons are very complicated. First, under the epidemic, beauty cosmetics, as a non-mandatory consumption, are weaker as a whole; Second, consumers are more picky and the traffic is getting more and more expensive; Third, the industry supervision policy has become stricter; Fourth, the business strategy failed to be adjusted in time, and the living space was squeezed by the acquisition of Xuecang.
But even if the market is cold, China’s beauty industry still has huge imagination:
In 2021, the Food and Drug Administration officially announced that China had become the second largest cosmetics consumption market in the world, which took only 20 years. With the increase of per capita disposable income and the improvement of consumption concept, the beauty market has not yet reached the ceiling. From the subdivision of the track, skin care products are more needed and the ceiling is higher.
If we benchmark overseas markets, the per capita consumption of cosmetics in China will be less than 50 US dollars in 2019, and the markets in Europe, America, Japan and South Korea will be 5-7 times that of ours, which shows that the demand has not been fully released. But from the perspective of competition pattern,International brands still dominate the high-end beauty market in China, while domestic products are dormant in the mass market. In the era of the rise of the national tide, there is hope to run out of domestic beauty brands that can compete with international giants in the future.
There is room for development,How do domestic beauty brands find and install the next round of growth engines?
Judging from the growth path of global beauty brands that have been deposited for a hundred years, product strength and brand strength are undoubtedly the two core competencies that can lead by far. This clearly shows that beauty brands must have strong R&D strength in order to provide products with more powerful and targeted functions.
For a time,The strategic layout of brand power and crossing cycle has become the focus of beauty industry.New domestic products have also tried the water.
For example, Yixian e-commerce has launched a triple transformation. But many years ago, "Made in China" failed to cross the threshold. Can today’s new domestic products solve it?
Fight change with change.
Let’s focus on Yixian e-commerce, a beauty brand that has reached the level of ten-year revenue of some domestic brands in three years. It develops products by integrating the world’s top supply chain, gains the recognition of users with the quality of comparable brands, and superimposes the accurate grasp of traffic dividends, so that its repurchase rate, conversion rate and positive word-of-mouth continue to rise, thus grabbing market share faster.
However, with the gradual fading of the channel dividend and the impact of the epidemic, the overall growth of the beauty industry slowed down, and Yixian e-commerce also experienced an "unwell" reaction-in 2021, it achieved an operating income of 5.84 billion yuan, an increase of 11.6% year-on-year, and the growth rate slowed down. But in fact,Yixian e-commerce is also one of the few beauty companies in the industry to achieve positive growth in performance.
When the environment is different, the market competition intensifies and the traffic platform matures gradually, and now there are fewer and fewer "traffic depressions". Compared with competing for traffic, the key element of future competition is hard power in all aspects. Therefore, beauty companies began to enter the stage of refined operation 2.0, from "impulse" to "quality improvement".
Yixian e-commerce has also opened a new model of "hematopoiesis", and the first step is the transformation of "reducing blood fat and increasing muscle".This has also brought it higher operational efficiency and improved profitability:
In 2021, the operating expenses of Yixian e-commerce totaled 5.523 billion yuan, down 8.67% year-on-year; Sales gross profit margin increased by 2.5 percentage points year-on-year to 66.8%; Net loss narrowed by 42.5% year-on-year.
butThe key is still in the second step: creating a new growth curve.
Internet gives new domestic products the opportunity to become "online celebrity", but it also reduces the possibility of them becoming "Changhong" brands. Yixian e-commerce is lucky, and Perfect Diary is its first brand to enter the mature stage; However, referring to the development history of those international beauty giants, we must establish our own multi-brand matrix to maintain lasting vitality.
The first direction of attack is definitely the new growth point of China’s beauty industry-mid-to-high-end beauty market. According to the data of Huajing Industrial Research Institute, the proportion of mid-to high-end beauty market in 2020 and 2021 was 24.8% and 26.3% respectively, and the growth rate was significantly higher than that of mass beauty market. It can be seen that the trend of consumption upgrading is also applicable to the beauty industry.
Yixian E-commerce has also laid out two high-end skin care brands, EVE LOM and French Kelanli, and achieved initial results: during the double 11 in 2021, EVE LOM sold for two hours, which exceeded the total sales of double 11 in 2020; Kelanli broke the international record of Tmall and became one of the fastest growing high-end skin care brands in 2021.
Thanks to this, Yixian e-commerce skin care sector achieved rapid growth. In 2021, the income of skin care brands grew rapidly, and GMV reached nearly 1 billion yuan, up 332% year-on-year, accounting for 14.6% of the total revenue, which has become the second growth curve.
In addition,Beauty and skin care have also set off a "component party" craze. This young people are keen to explore whether the product ingredients are scientific and pursue a healthier and more effective way to become beautiful.Yixian e-commerce also launched a targeted brand: DR.WU Darfu, who positioned the brand of "Doctor Specialized Research". As long as you have a little understanding of "brush acid" and "Early C and Late A", almost no one knows its ace single product almond acid essence; Everyone’s yearning for eggshell muscle also helped it become the first acid product of Tmall double 11.
Yixian E-commerce also independently hatched the skin care brand Wanzi Xinxuan and launched the independent beauty brand Pink Bear, thus building a matrix with eight brands, including Perfect Diary, Little Odin, Wanzi Xinxuan, Galénic French Colanli, DR.WU (Chinese mainland business), EVE LOM, Pikoan and Yi ‘an State, and initially forming a coverage of all categories and full price bands.
If the brand matrix is still an iceberg on the water, then talents, R&D and infrastructure are huge bases under the water.
Judging from the 2021 annual report of Yixian E-commerce, it is actively investing in these "three major assets".
In terms of research and development, Yixian e-commerce invested 142 million yuan in real money in 2021, up 113.6% year-on-year, and the R&D expense ratio reached 2.43%; Its R&D investment level has been in the first echelon of domestic beauty listed companies. Up to now, Yixian e-commerce has 118 patents worldwide, and the number of patents has increased by 71% year-on-year, including 39 invention patents (some of which are in the process of transfer).
Yixian e-commerce also actively uses external forces to integrate global resources through Open Lab open R&D system.Its cooperation not only includes well-known research institutions at home and abroad, such as the Institute of Chemistry of the Chinese Academy of Sciences, the National Nano-drug Engineering Technology Research Center of Huazhong University of Science and Technology, and the 3D Skin Research Institute of the University of Lyon, France; It also includes related upstream and downstream, such as Shanghai Ruijin Hospital, Kosmeishi, Yingteli, etc., in order to jointly solve the problem of beauty research.
It can be seen that Yixian e-commerce turned"technical beauty cosmetics"With great determination, it also has enough liquidity and flexibility to achieve strategic goals (by the end of 2021, its book capital totaled 3.14 billion yuan); It’s just that this return may be nonlinear, but can today’s capital market be patient?
Enter a new value cycle
Yixian e-commerce used to be the "darling of capital", whether it was multiple rounds of financing in the process of growth, or ultra-fast completion of listing, or the market value soared from 100 million US dollars to 16 billion US dollars in February 2021.
However, after that, influenced by the double factors of the inner ring, the performance of Yixian e-commerce capital market is hardly optimistic, and its share price has seriously deviated from its intrinsic value.
External factors include the end of the channel dividend period, the constant pressure on the share price of the beauty sector caused by repeated epidemics, and the constant turmoil of the China Stock Exchange policy and the valuation killing caused by geopolitical conflicts. Internal factors mainly mean that Yixian e-commerce is in a strategic transition period, and now it focuses more on reducing costs and increasing efficiency and realizing profitability. These measures will also make sales fluctuate within a certain period of time.
For this reason, Yixian E-commerce received a delisting warning from new york Stock Exchange. Although this is a normal regulatory risk warning of NYSE, it does not mean that the enterprise is in the delisting stage, and Yixian E-commerce can completely raise its share price by means of repurchase and "share reduction" in the next six months to avoid delisting risk, but in the end, it depends on the effectiveness of its transformation to regain the favor of the capital market.
However, there is no precedent for the reversal of difficulties in China Stock Exchange.
Weilai, one of the top three domestic new electric forces, once fell to the red line of delisting in 2019, but by the end of the year, Weilai’s sales had grown against the trend and won the sales champion of new car-making forces for two consecutive months.The core is inseparable from the user’s belief in its product strength.
Inconvenient charging and long charging time are another obstacle to the use of electric vehicles after the anxiety of continuing navigation and battery safety problems. However, Weilai’s power exchange mode has solved the pain points in the market and brought confidence to electric vehicle users.
Many car owners have great expectations for the popularity of Weilai 100-degree battery and power exchange station. In their eyes, Weilai can solve the problem of users’ energy replenishment, at least at high speed, without considering the problem of running without electricity.
It is because of product strength that word-of-mouth comes out of the circle that Weilai’s sales can return to the growth track (Q4 still delivered more than 8,000 vehicles in 2019).
Visible,Product strength and brand strength are the basis for these new domestic products to enhance their fundamental performance and ultimately faithful wife.
This is also what Yixian e-commerce is practicing.
From the perspective of pure capital market, for beauty companies, the driving force of valuation switching usually comes from the continuous growth of existing brands, the marginal contribution of new brands, and the β -type development opportunities brought about by the tightening of supervision, accelerating the clearing of small and medium-sized enterprises, channel change and the rise of national tide.
What can be expected is that research institutions generally predict that the growth rate of cosmetics industry will show a trend of low before and high after this year, and the industry beta market is expected to be realized in the second half of the year; In the long run, the cosmetics industry is still a good track for "long slopes and thick snow". In the end, the new local beauty forces with strong brand matrix and group development potential will have greater investment value.
It is easy to break the circle, but difficult to grow red. Only by doing difficult and valuable things can perfect diaries truly usher in the next golden five years.
