Behind Li Jiaqi's "overturn": domestic beauty is "trapped" in the traffic

In the memory of some consumers, the year 2019 when Hua Xizi and Li Jiaqi joined hands was the first year of the outbreak of domestic beauty.

In the following years, domestic beauty ushered in its own "highlight moment", and Hua Xizi also soared all the way to become a popular and well-known beauty brand.

Everything looks good, but the hidden dangers are long gone.

On September 10, 2023, Li Jiaqi had a serious "overturn" when he live-streamed Hua Xizi's eyebrow pencil, causing many consumers to "verbally criticize the pen".

Not only that, but even Hua Xizi and the domestic beauty industry are also on the "cusp" because of this.

Li Jiaqi broadcast "overturned", and Hua Xizi apologized for causing controversy

Here's how it started.

On September 10, when Li Jiaqi brought a Hua Xizi eyebrow pencil live broadcast, some netizens said in the live broadcast room: "Hua Xizi's eyebrow pencil is getting more and more expensive."

When potential consumers question the price of a product, the most reasonable thing to do is generally to explain why the product is expensive. Where are you expensive?

And Li Jiaqi's response was to support Hua Xizi, and said: "Don't talk nonsense, the eyebrow pencil has always been 79 yuan, and domestic products are difficult." Sometimes I find my own reasons, whether my salary has risen for so many years, and whether I have worked seriously. ”

As soon as this sentence with a bit of personal attack came out, public opinion instantly exploded.

In the early morning of September 11, Li Jiaqi apologized in writing on Weibo. On the evening of September 11, Li Jiaqi apologized again in the live broadcast room.

The matter did not end with Li Jiaqi's apology, and the fire quickly "burned" to Hua Xizi and domestic beauty.

It is reported that Li Jiaqi's eyebrow pencil brought by live broadcast is a slim version of Hua Xizi eyebrow chalk machete, and the price in his live broadcast room is 79.9 yuan, buy one and get two replacements. The price in Taobao's official flagship store is 89 yuan a free replacement pack, with a net content of 0.08 grams per stick.

Some netizens compared the price per gram of eyebrow pencil of some beauty brands and found that the price per gram of Hua Xizi's eyebrow pencil is higher than that of most beauty brands, and even more expensive than gold.

In addition, some netizens said that Li Jiaqi received a very high commission rate for bringing goods to Hua Xizi.

Time came to September 19, after Li Jiaqi apologized, Hua Xizi also posted an apology statement on Weibo.

However, many netizens did not buy Hua Xizi's statement. Some netizens commented that they didn't seem to say it.

The latest news said that the content of brand-related statements had nothing to do with the public relations department of Hua Xizi, and the public relations department of Hua Xizi left collectively because of the letter of apology.

Aftershocks may still not stop.

"Hua Xizi" is interested in "flow", but also trapped in "flow"

The "rollover" incident happened at this time node is accidental, but many people have foreseen that domestic beauty will usher in the "rollover" moment sooner or later.

In fact, in recent years, the rise of domestic beauty brands has gathered factors such as "the right time and place".

In the early days of the development of domestic beauty, many local beauty companies were OEM for foreign beauty brands. Later, under the label of "big brand replacement", some foundries and new entrepreneurs gradually established their own domestic brands.

According to data from the National Bureau of Statistics, from 2018 to 2022, the total retail sales of cosmetics in mainland China increased from 261.9 billion yuan to 393.56 billion yuan.

It can be seen that domestic beauty brands have just caught up with the heavy favorable factors of the continuous expansion of the scale of the industry. It is understood that in 2022, the revenue scale of more than 30 domestic beauty companies has reached 1 billion yuan, and the single-brand revenue scale of leading enterprises has exceeded 5 billion yuan.

At the same time, in recent years, the "domestic trend" has risen, and Li Ning (02331. HK), Anta Sports and other brands have ushered in good opportunities for expansion, in fact, the beauty field is also the same.

Compared with foreign brands, local brands are much stronger in telling the "domestic story" and obviously understand the preferences of Chinese consumers.

Specific to Hua Xizi, some brands can rise quickly and stand out, in fact, it has a lot to do with "people".

In recent years, the domestic live broadcast industry has risen at the speed of light, bringing a new wave of Internet traffic dividends. Traditional beauty salespeople are limited to offline and can only reach a few potential customers a day? With the rise of the live broadcast trend, the "cabinet brothers and sisters" completed the introductory education of domestic beauty and the expansion of the circle in the live broadcast room, reaching thousands of customers.

Benefiting from the outbreak of online channels, some people, including Li Jiaqi, have gradually become super anchors in this process, and the huge "traffic" that comes with them can even affect the rise and fall of a brand.

The most obvious example of this is Hua Xizi.

Founded in 2017, the brand uses traditional Chinese color as the theme color, and its products echo Chinese style across the board, and the design has been widely praised. On the other side, Hua Xizi and Li Jiaqi are deeply bound, and their products have frequently appeared in Li Jiaqi's live broadcast room for several years.

However, under the "right time and place", with the help of the traffic of these big anchors, the domestic beauty brand "Hua Xizi" has completed its rise, but it is actually trapped by this "traffic".

In fact, using the "traffic for sales" strategy, some brand owners such as Hua Xizi have suffered from "anchor dependence".

On the one hand, like the Li Jiaqi incident this time, after the anchor provoked public anger, Hua Xizi was also implicated. The data shows that after the consumer incident, not only Li Jiaqi lost a lot of fans, but the turnover of Hua Xizi's Douyin live broadcast room also plummeted.

On the other hand, in order to bind the big anchors with their own traffic, the "Hua Xizi" gave away a lot of benefits, and this time some netizens questioned that Hua Xizi gave Li Jiaqi a very high commission rate based on this situation.

Reflected in the data, the sales expenses of domestic beauty brands are in a very high position.

Shangmei Co., Ltd. (02145. HK), Juzi Biotechnology, Marumi (603983. Listed companies such as SH and Yixian E-commerce (YSG.US) all have leading domestic beauty brands, and Futubull's data shows that sales expenses accounted for an abnormally high proportion of revenue in 2022. Among them, the sales expenses of Perfect Diary's parent company, Yixian E-commerce, accounted for 62.87% of revenue.

In sharp contrast, the R&D expenses of these listed companies in 2022 are not too much, the lower ones like Juzi Bio have R&D expenses of only 44 million yuan during the period, and the higher ones like Bethenny (300957.SZ) have R&D expenses of 255 million yuan during the period.

Just from the comparison of sales expenses and R&D expenses, it is probably not much problem to say that domestic beauty leaders prefer to do simple, superficial things.

In contrast, more difficult and technical research and development work has not received enough attention.

Good things are happening, and the prospects for domestic beauty are promising

The good news is that domestic beauty brands have been awakened, and the research and development expenses in the past two years have continued to increase compared with before.

Taking Bethany as an example, flush data shows that from 2018 to 2022, the company's R&D expenses increased from 46 million yuan to 255 million yuan, with a compound growth rate of 53.44%; During the same period, its sales expenses also continued to grow, with a compound growth rate of 42.05%; In the same period, the company's revenue growth rate was 41.8%.

In contrast, it is not difficult to find that although Bethany R&D expenses are much worse than sales expenses, the growth rate of R&D expenses in recent years is quite high, and it is higher than the growth rate of sales expenses and revenue.

In a sense, Li Jiaqi's "overturning" this time is not a good thing.

After some fermentation and discussion, consumers may pay more attention to the company's R&D strength in the future, rather than focusing only on which big anchor the brand hired to bring the goods and which star endorsement. In this way, domestic beauty brands can be forced to pay more attention to long-termism, put more attention on more internal research and development, and improve their technical strength.

From the perspective of the development of the domestic cosmetics market, the prospects are not pessimistic.

On the one hand, entering 2023, as the impact of the epidemic gradually fades, residents' consumer confidence has rebounded, offline flow has picked up significantly, and coupled with online consumption channels, the demand for the cosmetics industry is expected to be boosted.

The data also shows that in the first half of 2023, the total retail sales of cosmetics in mainland China increased by 8.6% year-on-year to 207.1 billion yuan, reversing the decline of 4.5% year-on-year in 2022.

On the other hand, the per capita consumption of cosmetics in mainland China is far lower than that of the United States, Japan and South Korea in the same period, among which the per capita consumption level of cosmetics in mainland China is relatively larger than that of developed countries.

The Prospective Industry Research Institute pointed out that compared with developed countries, the per capita consumption level of cosmetics such as skin care and color cosmetics in mainland China is low, and there is more than double the room for improvement.

epilogue

It is worth noting that as far as the Chinese market is concerned, the data of the Prospective Industry Research Institute shows that from the perspective of product price and target group, the mainland cosmetics market can be divided into five market segments, namely high-end (luxury) cosmetics, high-end cosmetics, medium and high-end cosmetics, mass cosmetics, and the ultimate cost-effective market.

Among them, the high-end field of the domestic cosmetics market is dominated by foreign brands, mostly international top cosmetics brands, such as LA MER (La Mer), HR (Helena), SK-II. and so on. In terms of local cosmetics brands, they are currently mainly aimed at the domestic high-end, popular and ultimate cost-effective market.

With the rise of domestic products, local cosmetics brands are expected to gradually enter the high-end field with high value, which is also a big benefit for domestic leaders such as Shangmei Shares, Juzi Biotechnology, Marumi Shares, and Yixian E-commerce.

This article originated from Caihua.com