Image source @ Visual China
Text | Slightly larger reference, the author | Wangzai, Editor | Cheng Yi
From Perfect Diary, Huaxizi to Colorkey Kraki, playing with traffic has always been a tool for beauty brands to grow. They bet on the traffic of short videos and social networks, and they come and go all the way.
But traffic is the hardest to retain. Hongxing Erke, La Chapelle, Bee Flower, those "skyfall traffic", brands that are wild consumption. After the explosion, it quickly returned to daily life.
Traffic gameplay will not be a core weapon. Without good product support, planting grass is fast and pulling grass is faster.
01 Make up for the short board
Hanaiko finally ushered in the CFO.
According to Cosmetics Watch, former Morgan Stanley executive director April Fan (Chinese name: Fan Xinpeng) joined Huaxizi in early April as chief financial officer (CFO).
As a female manager, Fan Xinpeng has held important positions in Deloitte Touche Tohmatsu, Bank of America Merrill Lynch Asia Pacific Investment Banking, and Morgan Stanley, where she has successfully assisted companies in completing more than 40 M&A and investment and financing transactions, including nearly 20 cross-border M&A projects with a total value of more than US$50 billion and 20 equity and bond transactions totaling more than US$30 billion.
The introduction of CFOs is often seen as a signal that companies intend to do something in the capital markets. For example, the news that ByteDance recently announced that Gao Zhun, a female lawyer who has participated in the listing and financing projects of more than 100 companies such as Meituan, JD.com, and Xiaomi, will serve as byte's new chief financial officer (CFO) is interpreted as a signal that Byte is about to be listed.
Hua Xizi's move is seen as preparing for an IPO, or at least having a fundraising plan.
In 2017, Hua Xizi was born in Hangzhou, and the "Xizi" in the brand name is taken from Su Dongpo's poem "If you want to make the West Lake better than the West Lake, it is always appropriate to wear light makeup and thick makeup". The brand focuses on "oriental aesthetics".
Similar to new consumer companies such as Luckin, Xicha and Perfect Diary in recent years, they have experienced several rounds of financing. Hua Xizi has little experience in financing, and many investors have mentioned in interviews with the media that it is difficult for them to contact Wu Chenglong, the founder of Hua Xizi (Hua Man Tian).
In March last year, it was reported later that Hillhouse, who had invested in Perfect Diary, invested in Winona's Sequoia, was officially denied after contacting Huaxizi, and eventually disappeared.
Huaxizi co-founder Fei Slow once explained the reason for the "indifference" to capital: "Now is not the best time to raise funds." Financing takes time to study and understand, and HuaXizi immerses herself in making products. In addition, it is also worried that the premature intervention of capital may change the rhythm and way of building the brand of Huaxizi to a certain extent.
Many brands that have emerged through live streaming are on the road of financing. PmPM, a skincare brand that originated in Kuaishou, stands behind Source Code Capital, Black Ant Capital, Xinyi Capital, HARMAY and Tencent.
Figure: Screenshot of PMPM shareholder information
The C café founded by Xiao Rongshen, CEO of former Han hou, completed a series B financing a few months ago, led by SIG, and the old shareholders Shunwei Capital, Fuji Capital, belle consumer fund followed, and Light Source Capital served as the exclusive financial advisor.
Huaxizi's financing pace is slower than theirs, which may be related to the brand's own development plan. But it also reflects that Hua Xizi has shortcomings in the talent reserve. Perfect Diary has more than 20 co-founders, including founder Huang Jinfeng's alumni at Sun Yat-sen University, as well as investors zhenge fund, recommended executives.
The story of a new brand is about becoming an independent brand and business, not just an influencer product. This is what distinguishes them from the early Tao brands such as Afu and Yu Ni Fang. Enterprise operation is not only to create explosive products, marketing, planning, financing, research and development, strategic planning, is also an important function.
In addition to Huaxizi's ability to build products, other enterprise management capabilities also need to be supplemented. Last year, Li Huiliang, who is known as the "father of the six gods" and "the first person in China's cosmetics research and development", joined Huaxizi to help him establish a brand research and development network to support multiple product lines such as makeup and skin care.
With the addition of Li Huiliang and Fan Xinpeng, Hua Xizi's financing and listing road will have more imagination space.
02 Hit Li Jiaqi
Growth is a powerful tool for new consumer brands.
The reason why the new generation of consumer brands can become the outlet is their development path, that is, they are running to go independently. Capital invests in them, exchanging money for scale advantages, brand advantages, and is still an input and output model for traffic utilization efficiency.
This also causes the outstanding feature of new consumer brands to be heavy marketing. With the help of the perfect diary of Xiaohongshu traffic, Luckin, who plays Focus Media, PMPM and C Cafe, who have risen in recent years, are all traffic masters.
Picture: Screenshot of Little Red Book
Huang Jinfeng, the founder of Perfect Diary, served as the chief operating officer (COO) of the Amoy brand YuNifang, and during his tenure, the budget of Yujiahui, the parent company of Yunifang, in brand building and marketing has increased exponentially year by year, accounting for 43.8% of the total revenue at its peak. PMPM founder and CEO Shanming previously served as a brand director at Procter & Gamble, where he was responsible for OLAYA's branding and e-commerce business. Even the original Tao brand Afu, the founder of the carving, is also accustomed to making remarks to attract attention.
Hua Xizi's founder Hua Mantian is no exception, marketing origin, Baijiling's Sanshenghua series is his proud work, and on the Internet you can also find him as the head of the flagship store of Baijieling, in the name of Hua Mantian, five articles about the marketing of Baijieling released on the Paidai in the name of Hua Mantian.
In the five years since the establishment of Huaxizi, the most important development process is to bet on the live broadcast with goods, deeply bind Li Jiaqi, and find a development path with abundant traffic.
In September 2019, Li Jiaqi became the chief brand recommendation officer of Huaxizi. At that year's Tmall Double Eleven, Hua Xizi ran through the whole process of Li Jiaqi's live broadcast, and loose powder became a popular product. Also in this year, Huaxizi's sales exceeded the billion mark, up 25 times compared with 2018.
The data shows that in 2019, Li Jiaqi's live broadcast sales accounted for about 18% of Huaxizi's total omni-channel sales. Huaxizi co-founder Fei Slow once recalled that "there was a certain sales base before, but it was not as high as the follow-up." ”
In 2020, the turnover of Huaxizi exceeded 3 billion yuan, an increase of 165.4% over the 1.13 billion yuan in 2019. Among them, the sales volume driven by Li Jiaqi accounted for nearly 5%. Although the proportion has declined, the cooperation between the two live broadcasts has increased.
In the same year, in the early stage of the development of Huaxizi's "Miao Impression" series, Li Jiaqi was invited to go deep into Guizhou Miaozhai and jointly develop. Li Jiaqi also appeared in the "Miao Impression" promotional film filmed by Zhang Yimou's team, and appeared in Focus's building advertisements across the country.
Also in the second half of 2020, Hua Xizi has repeatedly led the first of the domestic beauty GMV. Since then, the personal relationship between Li Jiaqi and the boss of Huaxizi has been discussed by the outside world, and Li Jiaqi has also said something similar to "Crush said that we have too many Huaxizi, but its home is really easy to use".
In 2021, Huaxizi achieved a GMV of 5.4 billion yuan, and eliminated the "curse" of monthly sales of more than 300 million yuan of GMV through multi-platform live broadcasting such as Douyin and Kuaishou. However, Hua Xizi also said that in 2022, it will not pursue faster growth, and will maintain a consistent style to continue to make products and research and development solid.
Founder Hua Mantian believes that doing business is a 100-meter run, and doing a brand is a marathon. Huaxizi will maintain long-term values in the future, continue to output high-quality products and consistent brand positioning.
Hua Mantian University studied landscape architecture and likes ancient style. The oriental aesthetics of Huaxizi's main theme make it different from the brand image of the general new consumer brand. Hua Mantian once said that what Hua Xizi wants to do is to use makeup as a carrier and culture as a medium to convey oriental culture and oriental beauty to the world.
Speaking of the national tide, Hua Xizi is a "younger brother", Yu NiFang was founded in 2006, positioning itself as a national skin care brand that inherits the culture of Sheng Tang, focusing on "Chuan Sheng Tang, Beautiful Oriental". Traditional brands Yuxi and Herborist Also focus on the oriental skin care concept, Ganoderma lucidum and New Seven White are its main products. But Yuxi sold to L'Oréal Group, one of the brands of Shanghai Jahwa.
Good ideas are passed down, and ultimately rely on the product itself. And good products are not enough to make a company, for Procter & Gamble, L'Oréal and other group companies, there are many brands for different groups of people, different effects.
New consumer brands have a long way to go to compete with group companies with a single product selling point.
03 Here comes the hard days
After the start of traffic, the top cutting-edge brands have also invested in research and development. Perfect Diary, Hanashiko, Winona, HFP successively announced the Bureau's R&D Center.
On the one hand, in 2020, the Regulations on the Supervision and Administration of Cosmetics (that is, the new regulations) and a series of supporting regulations were successively issued, among which the person in charge of quality and safety set a "high threshold", the product filing to be submitted to the formula, and 6 types of products must be tested on human efficacy, which caused a "big earthquake" in the industry.
In addition to retaining measures such as confiscation, compulsory recall, ordering the suspension of production and business, and revoking licenses, the new regulations have added new punitive measures such as prohibiting business and punishing people, and also adjust the basis of fines from "illegal gains" to "value of goods". This means that the previous penalty according to the cost price is now the penalty according to the market price, and the intensity is self-evident.
Once the brand is punished, it is almost equivalent to "social death" in online public opinion.
New brands are investing more in research and development. In 2021, Huaxizi's own comprehensive R&D center and Oriental Beauty Research Institute have been opened, inviting Li Huiliang, the "Father of the Six Gods", to join, and announced that it will invest 1 billion yuan to build an Oriental Beauty R&D system in the next 5 years. Perfect Diary's parent company, Yixian E-commerce, invested 113.5% in research and development in 2021, an increase of 113.5% year-on-year, and created an open R&D system for Yixian Open Lab.
Polaria expanded to the upstream industrial chain, and held hands with basf, a majority of raw materials, and carried out a number of in-depth technical cooperation. BASF is an important global supplier of cosmetic raw materials, providing active agents, emulsifiers, polymers, softeners and other raw materials, which are widely used in cosmetics.
Since February 2022, BASF has issued three consecutive rounds of price increase letters, and all polyurethane products in the European market have been further adjusted, and if Russia stops supplying natural gas to Germany due to the Russo-Ukrainian war, it will lead to the complete suspension of the operation of BASF's world's largest chemical integration production site at the Devich Port site.
In addition, LG Chem will raise prices for ABS series products from the second quarter. Products such as salicylic acid and silicone DMC are also raising prices. According to Cosmetics Watch, at least 64 chemical companies have started price increases since the beginning, ranging from 5% to 60%.
For beauty brands, the price of raw materials has risen. In addition, traffic has also entered a bottleneck period, and the dividends of short videos and social platforms have achieved the era dividends of many new brands. A number of live streaming companies in Hangzhou have gone out of business, and anchors have cut their salaries to find jobs. After the listing of Perfect Diary, the stock price of the company also shows that the premium given by the capital market to beauty brands is more cautious.
The pricing of Huaxizi is slightly higher than that of domestic products. The air powder it created is priced at 169 yuan, and the concentric lock lipstick is priced at 219 yuan, breaking through the price ceiling of domestic products in the corresponding categories and benchmarking first-line brands. The unit price of lancôme, Estée Lauder, Dior and other makeup categories is between 200-300 yuan, and the unit price of Huaxizi in the same period is about 190 yuan.
Pictured: Screenshot of Hua Xizi's left and Lancome's right store
Pricing is close to the first-line brand, it is also necessary for Huaxizi to come up with the same line of brand, the same stable product quality. On the Little Red Book, the evaluation of Huaxizi is extreme, Huaxizi's fans "flower companion", praising its oriental aesthetics, there are many bloggers, writing notes about Huazixi's products, not easy to use.
In the end, Huaxizi, which has been established for five years, is still a "concentric lock lipstick" and "silk honey powder". Whether it is in the Japanese and Southeast Asian markets, or in the domestic market, the truly recognizable products may not exceed five.
Huaxizi's confrontation with the same line of brands can be easily achieved by relying not on the cultural confidence of "Oriental Beauty", or relying on product development and iteration capabilities.
Beauty is business, but business is not just about beauty.