The Korean style has passed, Chinese cosmetics have sold out in South Korea, domestic beauty has become an assassin, "where is expensive?" and "everywhere is expensive!" has become the voice of the people; and more than 5,000 domestic cosmetics companies will fall in 2023...... Recently, the hot discussion of cosmetics has continued, and under the change of consumption concepts, the ten years of Korean cosmetics and Chinese cosmetics in Hedong and ten years in Hexi, as well as the Chinese cosmetics themselves from affordable to unattainable, such topics have become the tipping point of heated discussions. The reporter of Aoyi News looked at the controversy in the cosmetics industry and reported on the fierce competition of domestic cosmetics, the loneliness of Japanese and Korean cosmetics, and the surprise of domestic products going overseas.
When it comes to domestic cosmetics, the public's first impression is "cost-effective", "big-name replacement" and "the light of domestic products", but the sentence "79 yuan, where is it expensive" makes top beauty blogger Li Jiaqi stand on the cusp of public opinion, and at the same time, some domestic products tear off the coat of "good quality and low price", and "too much marketing" has become the focus of criticism by consumers. Although it is an indisputable fact that there are many domestic beauty brands and their rise is indisputable, the savage growth has long been a thing of the past, the "false fire" is gradually extinguished, and some "little tricks" that think of "overtaking in corners" have been recognized by consumers, and I am afraid that it will be difficult to continue to make money in the fiercely competitive market at home and abroad......
Source: Nandu Gallery. Li Jiaqi was ridiculed for the Huaxizi incident
"Good quality and low price" will be broken as soon as it is poked?
The sentence "79 yuan, where is it expensive" made top beauty blogger Li Jiaqi become the target of public criticism because of an eyebrow pencil, which aroused the resentment of consumers. At the same time, "How many Huaxizi coins did you earn today?" became a hot meme, and Huaxizi became the "currency" for measuring income in the new era. After the turmoil, Li Jiaqi apologized with tears, and failed to make up for the loss of millions of fans, and Huaxizi's sales fell off a cliff.
Some consumers listed the comparison of the unit prices of different brands of eyebrow pencils, indicating that some makeup brands with the name of "affordable domestic products" have less formal capacity than the samples of international brands, and the average unit price per gram is even more expensive.
Take the classic machete eyebrow pencil of Shu Uemura, which has always been expensive and easy to use, as an example, each gram is 58. 82 yuan, and the unit price of Huaxizi eyebrow pencil per gram is 985. 71 yuan, not counting gifts, the price of Huaxizi eyebrow pencil is even higher than the gold price of gold jewelry around 600 yuan per gram. In addition, brands such as Little Odin and Hua Luoliya are regarded as affordable cosmetics in China, and the unit price per gram of eyebrow pencil is much higher than that of international brands such as Givenchy, YSL, and Dior.
Not only eyebrow pencils, but also mascara to lipsticks, from repair creams to serums, there are many types of domestic brands, and the unit price is much higher than that of international brands. For example, the three-color concealer palette and Caitang three-color concealer are 37.8 yuan per gram, while the famous foreign brand Phantom of the Opera is 7.7 yuan per gram, and the orange steel tube mascara seems to be priced at less than 50 yuan, but the price of a single gram is 24.9 yuan, which is higher than the 138 yuan price of Kissme mascara, which costs 23 yuan per gram. In general, some domestic brands of the same type and performance win by price, and the total price is controlled at about 100 yuan, but due to the light weight, the average price per gram is higher than that of foreign brands.
In recent years, it is not incomprehensible that domestic brands have focused on "lightweight". If the volume is too large, consumers will easily lose their freshness, second, they will not be able to use all of them, resulting in waste, and third, they will reduce the frequency of buying new products. In addition, lowering the unit price can also give consumers a visual sense of how cheap things are.
However, if it is a small trick, reducing the unit price but raising the single gram price, once it is perceived by consumers, it will undoubtedly be a harm to the brand image, just like Huaxizi as the head of the domestic beauty scenery, but to this day, it has been resisted by consumers, and after the storm, it has brought many domestic beauty brands to be torn off the glamorous skin, revealing the true face of low cost performance.
Source: Nandu Gallery. Huaxizi eyebrow pencil manufacturer is Shanghai Yongli Pen Industry Co., Ltd.
High marketing, low R&D
In addition to the rapid rise in the price of cosmetics-related raw materials several times, and the entry threshold for cosmetics is getting higher and higher - on January 1, 2021, the "Regulations on the Supervision and Administration of Cosmetics" was officially implemented, and the cost of "preparation" cannot be underestimated before enterprises enter the market of related products, which has become an objective and important factor in the growth of cosmetics production costs.
In addition, there is a significant increase in marketing costs. It can be seen from the fact that the flower fairy has been tied to "Li Jiaqi" and "National Style" that in order to apply the rising Internet e-commerce and live broadcast industry, promote popular products, tell good business stories and leave a clear impression on consumers, domestic beauty listed companies have maintained high marketing costs.
In the first half of 2023, Proya and Shanghai Jahwa spent 1.58 billion yuan on marketing, 17 times and 20 times their R&D expenses, respectively, and Yixian E-commerce, the parent company of Perfect Diary, invested more than 60% of its revenue in marketing.
In contrast, the R&D cost of most cosmetics accounts for less than 5%, and Yatsen E-commerce will invest 50.1 million yuan in R&D in the first half of 2023, accounting for 3.1% of R&D expenses, while Bloomage Biotechnology, the parent company of Rurun Baiyan, which accounts for more R&D expenses, only accounts for 6.07%.
Of course, expensive does not mean that the cost performance is low, consumers pursue good quality and low price, "good quality" in the front, "low price" in the back. "It's expensive, the key is that it's worth it, for example, Huaxizi, in addition to the packaging design with the beauty of the national style, and the bundled marketing with Li Jiaqi, the internal products are not so easy to use, and then convert the price to the unit price per gram, it can be intuitively seen that its brand premium is very high. Of course, the entire cosmetics industry has high premiums. But today, consumers are becoming more rational and want value for money. A beauty evaluation blogger bluntly told reporters that in fact, consumers do not reject the high price of domestic products, and even hope that domestic products can go high-end, but they do not want to be through the way of "gold and jade".
Source: Huaxizi official website
The competition behind the rise is fierce
In this way, under the eyes of consumers, it also poses a new challenge to domestic products, relying only on price wars, relying on false "big brand substitution" coats, or relying on packaging and marketing to declare their "high-end", "storytelling" and "selling feelings", these practices are difficult to work. The savage growth of domestic products has long been a thing of the past, and now there are many brands, and behind the rise is more fierce competition.
According to the National Bureau of Statistics, from January to November 2023, the total retail sales of consumer goods reached 427945 billion yuan, a year-on-year increase of 7.2%. Among them, the total retail sales of cosmetics were 384.3 billion yuan, a year-on-year increase of 4.7%, and the total retail sales of cosmetics in November were 54.8 billion yuan, a year-on-year decrease of 3.5%, and the growth rate was lower than that of the broader market.
In parallel with the slow growth of total retail sales of cosmetics, there are a large number of store closures. Last month, Shanghai Huayimei Cosmetics Co., Ltd., the parent company of Zeping, a skincare brand that once generated 100 million yuan in sales, and Hangzhou Naturalist Brand Management Co., Ltd., the parent company of beauty collection store Only Write, faced bankruptcy liquidation.
In the search of "beauty" as the keyword, it was found that there were 5,328 cosmetics companies established less than one year whose registration status was abnormal, including "cancellation, revocation, revocation, suspension of business, closure of business, liquidation and order to close", that is, there are more than 5,000 cosmetics companies with a life cycle of less than one year.
And compared with the financing boom in the previous two years, the financing of the beauty industry is also cold, and it is very difficult for domestic beauty brands to rely on financing to achieve scale expansion. Zeng Qiao, founder and CEO of Morketing &iBrandi, said that according to incomplete statistics, from January 2022 to June 2023, there will be a total of 48 financing events in the new consumer beauty track, compared with 126 financing events in the new consumer beauty track in 2021, which is directly reduced by nearly 3 times.
However, it can also be seen from the financing that under the calm of the market, the subdivision of raw materials, ingredients and efficacy has attracted the most attention from capital, and it is the direction with the largest financing density in the entire new beauty consumption field, accounting for 64%, in this part, "natural raw materials" as the core value of the brand or enterprise accounts for the largest proportion, 21%, in addition, anti-aging, technology empowerment, skin care ingredients and other key investment directions of the capital.
It can be seen that with the fierce competition in the beauty market, although brands focus on marketing and need to form their own characteristics to differentiate the competition, the companies that are really favored by the market are still heavy research and development, with innovation and technological content, and real "real materials".
The squeeze of the market is like a "litmus test". Looking back on the past, how will domestic beauty continue to burst out with engine effect in the new year?
Written by: Aoyi News reporter Liu Jie Wang Qian