Yixian e-commerce, which has invested heavily in research and development, has entered a five-year evolutionary period, and the post-traffic era of domestic products needs an Yixian e-commerce that can be examined, but it also needs a Chinese beauty company that bravely faces internal and external pressure and will focus on the long river of history.
Earlier, on April 12, Perfect Diary's parent company, Yixian E-commerce, announced that it had received a notice from the New York Stock Exchange that its American Depositary Shares (ADS) were trading below compliance standards. As soon as the news came out, about Perfect Diary and its parent company Yixian E-commerce, it was once again placed at the center of public opinion.
There are not a few people who sing the decline of Yixian e-commerce and even cutting-edge domestic products, but in the context of new consumer traffic has peaked, from the perspective of the industry, the change of Yixian e-commerce from the inside out behind the perfect diary should not be ignored.
From its establishment in just a few years to the top of domestic makeup, to the listing in the United States to reverse acquisition of foreign brands, Perfect Diary has become a group symbol of China's emerging brands and DTC brands, providing a model from 0 to 1 and from 1 to 10 for countless latecomers. Nowadays, the perfect diary that is accumulating energy and is in the throes of the painful period and the Yixian e-commerce behind it, whether it can highlight the siege and achieve from 10 to 100, this is no longer a matter of its own enterprise, but also how to dance with consumers in the fiercely competitive market after the rise of a new generation of Chinese beauty brands relying on dividends, truly realize the branding, collectivization, and have a healthy financial industry proposition.
01
Being scrutinized is the fate of the "first"
In November 2019, Perfect Diary became the "first" domestic brand to top the makeup list in the eleven years since Tmall Double Eleven was held; in November 2020, Yixian E-commerce was officially listed on the New York Stock Exchange, becoming the "first" Chinese beauty company to land on the US stock market.
Since the listing, the impact of the epidemic on a global scale has further intensified, and the Turmoil in Chinese stocks has continued, at the same time, with the official implementation of the "Foreign Company Accountability Law" in the United States, The Yixian e-commerce in it cannot stand alone: after the listing, the market value of Theyixian E-commerce in 2021 once exceeded 100 billion yuan, and then it fell all the way, and the voices of all walks of life continued to decline.
Being scrutinized is often the fate of the "first". The outside world believes that Perfect Diary began to decline after reaching the peak, but for Yixian e-commerce, whether the "100 billion market value" is the peak or the starting point, in fact, the wise see the wisdom.
At the listing media meeting of Yixian E-commerce, Huang Jinfeng, founder and CEO of Yixian E-commerce, stressed that Yixian E-commerce should strengthen brand building in the next 20 to 50 years, and think about how to be with consumers and create value for consumers.
Yixian e-commerce has a vision, but the environment behind it is also quietly changing.
On the one hand, the US capital market is blind to the model and profitability of China's beauty commercialization. On the other hand, in the second half of 2021, the growth rate of national cosmetics retail sales fell to single digits month-on-month, and there was zero growth in August, showing the characteristics of market saturation and growth retardation as a whole, of which the growth rate of the beauty market slowed down, and when the economic and consumer environment changed, a number of cutting-edge beauty brands stopped operating.
In this context, during the Double Eleven period last year, one of the most difficult promotion festivals that were collectively silenced on all e-commerce platforms, foreign high-end brands chose to achieve performance growth through large-scale discount promotions, and achieved more than 400 yuan of overall growth of more than 40% of makeup products, especially international high-end brands such as Estée Lauder and YSL. This kind of discount to win the market continued until this year, and during this year's 3.8 promotion, even if the sales of the official flagship store of Tmall, a key makeup brand of the Tao family, fell by 21%, the sales of high-end makeup brands still maintained a 10% contrarian growth.
In today's sinking high-end beauty consumer market, the discounts of foreign brands have undoubtedly squeezed the living space of local brands. More importantly, in the view of the capital market, the current e-commerce environment, traffic has peaked, but the brand is still continuing to be born and grow, obviously, the current traffic environment, primary market financing, etc., capital has no patience to wait for the emergence of the next "perfect diary".
Capital in the prohibitive at the same time, the perfect diary also began to appear flat, the incubation of the brand was originally in the pursuit of traffic today is extremely weak, so that the price war between the existing brands has also weakened, coupled with the domestic beauty in the post-traffic era began to "applaud not to be seated", consumers have been nourished by foreign brands of consumption habits and needs, it is difficult to change for a time, the perfect diary folding is not difficult to understand.
Behind this, when the outside world generally plays the title of "Perfect Diary Loses Its Aura", has the entire consumer environment lost its fair assessment of the Yixian e-commerce represented by Perfect Diary?
Obviously, the starting point of Perfect Diary and Yixian e-commerce is too high, so every step it takes now, the outside world wants to see huge changes and innovations, but the real success is not achieved overnight, but also needs to be verified by the times. Compared with those global century-old beauty companies, Yixian e-commerce is still toddler, and it needs a little patience from all parties.
02
"Counter-cyclical adjustment" and "cross-cycle construction" are parallel
Walk on the road driven by brand value
What cannot be ignored is that in all the Chinese and foreign beauty consumption reports, with the maturity and establishment of the domestic consumer beauty consumption knowledge system, the user portraits of China's beauty consumer groups have been very perfect. On the one hand, mature beauty consumers are more "picky" about the endless products, on the other hand, the new consumer groups have a clearer awareness of the brand.
The new domestic products represented by perfect diary have successfully copied a batch of cutting-edge brands under the boost of traffic, and at this point, in the era of kol-everywhere social media, it seems that the commercialization path of new brands has been very clear, but new questions have come, for new brands, there is not enough value attributes, and market valuations can certainly not touch the ceiling.
Perfect Diary has indeed invested heavily in the marketing field in the era of drastic changes in traffic and overall marketing logic, which once made the outside world criticize that it can only rely on KOLs and traffic stars to support the façade; but now, it has found a way to break the game and figure out a unique commercial play.
In recent years, Yixian E-commerce has been clearly emphasizing the breakdown of users' minds and the effective diversification of the layout around the main business of beauty production, thus showing a trend of thick accumulation and thin hair.
Following Zhou Xun, Perfect Diary officially announced that Liu Haoran became the global spokesperson of the brand, appeared in support of Shanghai Fashion Week, and launched a series of innovative content focusing on the beauty of Chinese women with fashion COSMO, and the brand awareness and reputation continued to increase.
At the same time, as the leader of DTC beauty, Yixian e-commerce is not only facing traffic decline, but more importantly, how to obtain user value.
Previously, Huang Jinfeng also announced the new five-year plan of Yixian within the company, proposing that counter-cyclical adjustment and cross-cycle construction must be parallel, and expressed the prospect of the company's future direction from the aspects of "challenge" and "transformation".
To this end, Yixian E-commerce and China Women's Foundation launched the "Creative Beauty Life" beauty public welfare training; Perfect Diary helped launch the "Ginseng Fruit" photography exhibition, and the group's CSR strategy was upgraded; Yixian E-commerce debuted at the APEC Forum and was selected as a demonstration sample of China's digital economy industry.
It is worth mentioning that in 2021, Yixian E-commerce was also selected as the sixth place in the "2021 Hurun Ten Billion Potential Brand List". The list is mainly based on the comprehensive score of the two dimensions of revenue growth rate and market value growth rate of enterprises in 2021, and the final ranking of the "growth potential index" of enterprises is carried out.
At present, the Chinese stocks listed on the US stock market are also gradually in a state of valuation recovery. Zacks Investment Research, an overseas research firm, has also recently upgraded the stock rating of Yixian e-commerce to a "hold" rating; at the same time, Baillie Gifford, a well-known investment institution that has long held Tesla and Amazon, significantly increased its holdings in Yixian E-commerce, BlackRock and Oasis Management Co in the second quarter of 2021 Ltd. and other institutions also increased their stakes in Yixian e-commerce in the fourth quarter, indicating that the above-mentioned institutions have a long-term optimistic attitude towards Yixian e-commerce.
03
Continue to increase research and development to create a supply chain ecology
The multi-brand, multi-category strategy is starting to work
Huang Jinfeng once publicly stated: "R&D empowers category innovation, and promotes R&D breakthroughs with category innovation." Only with excellent product strength and more scientific and technological beauty achievements can we meet the expectations of more consumers for beauty. ”
In order not to continue to be underestimated by the market, on the research and development side, Yixian e-commerce is also accelerating optimization. It is reported that the annual R&D investment of Yixian E-commerce in 2021 increased by 113.6% year-on-year, exceeding 142 million yuan, accounting for 2.43% of the revenue ratio, ranking the head of the domestic beauty group and the same as the global industry research and development level. Up to now, Yixian E-commerce has 118 patents worldwide, including 39 invention patents (some of which are in the process of transfer).
In March 2020, the R&D and production base of Yixian (Guangzhou) built by Yixian E-commerce and the world's largest cosmetics OEM company Cosmecy was officially started, and it is expected to be officially put into operation this year. In July 2020, Yixian E-commerce began operation in guangzhou R&D center and laboratory for ingredient quality testing, formula research, efficacy and safety testing, etc., and in December 2020, Yixian E-commerce and the US FDA pigment manufacturer Senxin Technology Group established three innovative color joint laboratories in Shanghai, Guangzhou and Singapore.
In the fourth quarter of 2021, the Open Lab open R&D system created by Yixian integrating global resources was further strengthened, and in-depth cooperation was established with many well-known institutions at home and abroad, such as the Institute of Chemistry of the Chinese Academy of Sciences, the National Nanopharmaceutical Engineering Research Center of Huazhong University of Science and Technology, Senxin Technology Group, the 3D Skin Research Institute of the University of Lyon School of Medicine in France, and the French Plant Stem Cell Culture Institution Naolys.
Further expand the local advantages of enterprises in the field of local beauty, and at the same time, by integrating the upstream and downstream resources of the industry to integrate the world's top technologies and concepts such as raw materials, research and development, and production, Yixian E-commerce has created and launched the Open Lab system.
In November 2021, Yixian E-commerce participated in the Expo for the first time with the theme of "World Yicai Yao China", showing the new development layout and innovative application results of the Open Lab open R&D system created by Yixian integrating global resources; by the end of 2021, Yixian E-commerce has cooperated with more than five international top cosmetic raw materials to establish multi-direction raw material innovation and application cooperation, and established clinical research cooperation with more than one well-known domestic medical institutions.
Earlier, in the 2021 financial report disclosed by Perfect Diary's parent company Yixian E-commerce, it announced that the company's annual revenue reached 5.84 billion yuan, an increase of 11.6% year-on-year, of which the total revenue in the fourth quarter was 1.53 billion yuan, the income of skin care brands grew rapidly, and the GMV was close to 1 billion yuan, an increase of 332% year-on-year, accounting for 14.6% of the total revenue, becoming one of the important growth points of performance.
At the beginning of its establishment, the founding team of Yixian E-commerce determined the multi-brand, multi-category group development strategy, starting from the internally incubated skin care category - Completed Son Xinxuan, to the listing, through independent incubation and acquisition, etc., to continuously expand the company's high-end, efficacy skin care category matrix as of now, public information shows that Yixian E-commerce has perfect diary, little Odin, Completed Son Xinxuan, Galénic France Colony, DR. WU (Chinese mainland business), EVE LOM, Pique Bear and Yi'an Eight brands have covered makeup and skincare from the public to the mid-to-high end.
In 2021, Perfect Diary won the first place in the double 11 Tmall makeup category domestic brands, while continuing to focus on brand power construction. For example, in 2021, Perfect Diary was awarded "User-Biased Makeup Brand of the Year" by an independent third-party "User Says" award. The other two original national tide makeup brands also maintained continuous growth, and Little Odin and Pi Ke Bear, who participated in Singles' Day for the first time in 2021, both entered the top ten of Tmall domestic makeup.
During the double 11 period in 2021, the sales of the e-commerce skin care section of Yixian increased by more than 400% year-on-year, and the total sales of high-end skin care brands exceeded 100 million yuan in the first year of double eleven. Among them, its high-end skin care brand France's Coran Li broke the international record of Tmall, and EVE LOM opened for two hours to sell sales exceeding the total sales of Double 11 in 2020.
According to Euromonitor data, it is expected that in 2025, skin care products will sell nearly 490 billion, while makeup is only about 130 billion, less than one-third of skin care products. It can be seen that the future potential of the skin care market.
04
The second half of new consumption
The ceiling of the head domestic product is still very high
The way China markets and beauty production is undergoing changes, with the replacement of old and new not only happening on the consumer side, but also profoundly affecting the rapid changes between the supply side and the brand side.
On the brand side, the early emerging brands can solve problems from within themselves, but in the post-traffic era, brands have been unable to change the fact that traffic is exhausted, and in the future, brands must integrate resources from multiple levels such as internal and external channels to open up the operation capabilities of the whole region.
In the second half of the new consumer brands, bosideng and Li Ning's counter-overtaking explained how domestic brands with strong scientific and technological capabilities and supply chain precipitation dominated the second half.
Affected by the financial crisis, Bosideng revenue in fiscal 2008 showed a negative growth of -6.89%, and intensified in the 2009 annual reporting period. Due to the slowdown in consumer demand, the impact of e-commerce, the entry of foreign brands and other reasons, 2012-2016 ushered in the darkest moment of Bosideng, the revenue growth rate began to slow down in 2012, the year-on-year growth rate in 2014 fell to -11.63%, and then fell for three consecutive years, and the net profit also fell from 1.772 billion yuan in 2012 to 167 million yuan in 2015, with a year-on-year growth rate of -80.97%.
Through the repositioning and brand shaping of its four major down jacket brands, the brand design and image are comprehensively upgraded, the consumer demand is firmly grasped, the brand power is precipitated to focus on the core advantages, and the new media that young people like at the same time, they continue to cross borders to occupy the user's mind. Further, Bosideng began to position itself in the middle and high-end, reducing offline retail stores from more than 13,000 to 5,000, and promoting a wide range of pop-up stores in the gold shopping mall of key cities.
After the strategic change, Bosideng's net profit margin on sales began to pick up; operating income, gross profit and net profit also showed a rebound trend.
To sum up, even if the new generation of consumers have absolute enthusiasm for supporting domestic products, the consumption of domestic products is still rational. Especially after the national hot flashes receded, there is only one reason why consumers can take the initiative to pay money: the product is good. In addition to Bosideng, the rise of another major brand Li Ning in 2018 once again proved that product strength is the core competitiveness of brand development.
Judging from the current financial report of Yixian E-commerce, this local beauty company that represents the technology and development of China's beauty industry is upgrading the barriers to competition with it in terms of user demand sensitivity and channel strategy optimization while going abroad.
While further strengthening the brand and product matrix, Yixian E-commerce has accelerated its brand image, developed diversified categories, formed a multi-brand matrix to imperceptibly affect consumers' minds, and then upgraded through channels to optimize inefficient channels with a more suitable strategy, develop a retail direct sales model, and strengthen dtc construction, which has laid the foundation for the future yixian e-commerce to touch the higher ceiling of domestic cosmetics.