"Those who know are better at scheming, not as good as at that time"
On March 19, the 2024 (9th) China Cosmetics Trends Conference was held in Hangzhou, hosted by Blue Eye, Blue Eye Intelligence, and CHAILEEDO, and jointly supported by Meidd. With the theme of "Offline Reconstruction", Fu Zichong, Sales Director of the Distribution Division of Shangmei Co., Ltd., delivered a keynote speech on "Shangmei's Confidence in Returning to Offline", comprehensively analyzed the mental process of Shangmei's positioning offline, shared the successful experience of the Hanshu brand, and expressed his views on the future trend of offline channels.
The following is a transcript of the speech:
I am honored to be invited to participate in this cosmetics trend conference, since I entered the industry, I have been committed to offline channels! But this time, with the popularity of "returning to offline", I would also like to take this opportunity to share with you a simple share.
The content shared included Shangmei's offline development process, Shangmei's confidence in returning to offline, its thoughts and measures to return to offline, Han Shu's offline focus, and Shangmei's long-term offline planning.
1. Shangmei's offline development process
Shangmei started in 2002 and currently owns many brands such as Han Shu, Yiye, and Red Elephant. On December 22, 2022, we officially listed on the Hong Kong Stock Exchange. Speaking of offline, Shangmei really began to exert its strength offline in 2013-2014, and it completely broke out in 2015. In 2017, Shangmei's entire offline channel reached its peak. However, since 2018, the overall offline has declined sharply and it has been difficult, but we are still exploring new offline directions.
In 2022, the epidemic in Shanghai rebounded, and we experienced the most difficult year in history. Shangmei's corporate culture is only four simple words - "because I like", we believe that a person only likes one thing, in order to make himself tireless to work hard. But in 2022, there are only three words to be seen in the office area - "survive", because we feel the crisis that we have never felt before. In the second half of 2022, under the leadership of the founder Mr. Lu, various channels worked together to study and learn together, and mastered the breakthrough point of Douyin live broadcast. In 2023, we will officially come out of the circle on Douyin, opening a new round of glory for Shangmei.
In addition, I would like to share with you the current plan for the industrial sector in the next ten years. In terms of public skin care, it is mainly based on Han Shu and Yiye. The cleaning and care brand is mainly to expand 2032, Jifang, and the upcoming one-leaf cleaning and Hanshu cleaning. Mother and baby brand, we already have two major brands: Red Elephant and One Page. In the future, we will also expand the track of makeup, dermatological medical beauty and high-end skin care + equipment, as the focus of Shangmei in the next ten years.
Second, the confidence of Shangmei to return to offline
Our confidence in returning to offline comes mainly from our attitude and determination. Without a disruptive mindset, it's impossible to make problem-solving decisions. In 2024, Shangmei officially sounded the clarion call of "strengthening offline", and we believe that offline is the foundation of the brand. No matter how good any brand is in the online channel, the offline channel is too weak, which means that it has no foundation and must not be able to maintain sustainable development.
3. Thoughts and measures to return to offline
I saw that in the previous sharing, I didn't see Han Shu in the top ranking of offline excellent brands in 2023, because at the end of 2022, we found that the entire CS channel of Shangmei was not in place to control the goods, and there was no good control method for the time being. Therefore, in 2023, we have made a major move, nationwide, the CS channels of the three brands of Han Shu, Yiye, and Red Little Elephant will all stop supplying, and terminate the channel cooperation with all agents. We have thought about the future development of Shangmei, we think about whether we can manage our own pallets, and if we can't manage it well, we will temporarily give up this channel.
We believed that we did not have the ability to control the goods in the CS channel agent sector at that time, so we immediately stopped the supply of the channel, so we basically could not see our data in the CS channel last year. But last year, we still maintained cooperation with the top 100 chain channels. The agent channel belongs to distribution, and the goods are scattered, which is prone to fleeing goods, which will have an impact on the market. But the top 100 chains are retail stores, and retail stores will not flee goods, so our pallets can be controlled. At the same time, we don't want the top 100 chains to do cultivated products again, so starting in March last year, we officially announced that Douyin's first popular product, the Red Man Waist Gift Box, will be directly supplied to the top 100 chains nationwide, and empower these chains with our traffic, so that the top 100 chains can sell products that sell well.
Here is also a brief introduction to the 5 major offline channels in the United States:
1. Top 100. In addition to the top 100 chain companies in the industry's top 100 list, we will also choose national fast fashion fashion stores.
2. CS channel. Mainly in the channel of agent distribution, 2017, is the peak of our CS channel, a total of 88 agents in the country, the national division of 135 agents, the purpose is to let agents in the market segmentation under the premise, do intensive outlets to expand business.
3. KA channel.
4. Watsons.
5. Maternal and infant channels.
Fourth, Han Shu's offline focus
The reality of online and offline is that online channels have become mainstream over the past decade with competitive prices and convenient services. The offline channel has to face a cruel reality, that is, the offline channel is no longer the mainstream channel of the industry. Because in the past decade, the entire offline CS channel has lost a large number of consumers in the way of blind price increases, which has led to the decline of offline channels.
Returning to the Hanshu brand, we decided to return to offline this year and have already had a great start. The next thing we have to do is nothing more than 4 sentences: super brand, super quality, super explosive product, super cost-effective.
Super brand: First of all, I would like to share with you why Han Shu is called a super brand. In 2023, Han Shu's GMV in Douyin live broadcast will reach 3.34 billion, ranking among the TOP1 on Douyin. In the first two months of 2024, we have achieved another 1.4 billion sales, which proves that Hanshu has enough traffic at present and is a veritable super brand.
Super quality: I care more about super quality than traffic. Han Shu's online repurchase rate is very high, with an average repurchase rate of 20.99% in 30 days, which is 3 times higher than that of the same industry, and this data is also the first place in Douyin at present. I want to tell you here that quality is the most important thing for Shangmei at the moment. In the past ten years, the most heard voice we have heard offline is that Han Shu's repurchase rate is too low. I can only tell you here that we wanted to make good products back then, but our ability was limited. But the current Shangmei no longer has the ability to make poor quality products.
As a local traditional brand, brand aging is a common problem we encounter. Consumers think that these brands are all brands of mother-level and aunt-level consumption. After this round of Han Shu's reform, we have seized the most wanted group of 18-35 years old, which is the biggest wealth of Han Shu at present, which is the wealth brought by product quality.
Super explosive product: Everyone knows Han Shu's red waist and white waist. Among them, the red waist sold 7.71 million sets on the whole network last year, ranking first on the whole network.
Super cost-effective: What we need to do now is not to blindly increase the price of products, but to make some products that are just needed. As ordinary people, we can feel the economic downturn and consumption downgrade, but in the process of consumption downgrade, it must not prompt consumers to switch to buying cheap products, but to prompt consumers to be willing to buy things with the ultimate cost performance. There is a relatively strong chain offline - MINISO, we have also studied the core advantages of MINISO, in addition to its strong supply chain, its biggest advantage is two sentences and nine words: high-frequency new, ultimate cost performance. Last year, the two chains that everyone paid great attention to: Sanfu and Shenzhen's Leshar, also highlighted the ultimate cost performance in the selection of products. At present, Han Shu, whether it is a CS channel exclusive product or a traffic explosion product directly supplied by the top 100 chains, is also going in this direction.
5. Shangmei's long-term offline planning
1. Be patient and stick to long-termism. To do a good job, it must not be rash, but restrained. To share an example, after we re-open the CS channel, for agents across the country, we do not take the task assessment, but the agent has a monthly purchase limit, and any agent cannot exceed the established limit every month. The purpose is to control the market, slow is fast, take enough patience to precipitate the market, and we are also determined to struggle for a long time.
2. Altruism. Do things that are beneficial to consumers, whether it is the original intention of the product or policy orientation, everything is based on the interests of consumers as the direction of thinking.
3. Rebuild consumer trust in the next 10 years. This sentence may be considered serious by many people, but I think we must dare to face the problem, and only by daring to face the problem can we have the confidence and determination to solve the problem. In the past 10 years, we have received a lot of criticism from consumers, and we should face these problems head-on in the future. Whether it is product quality problems or the confusion of the price system, many consumers have lost confidence in our offline stores and brands, so as a brand owner and retailer, we must think about how to let consumers regain this confidence and return to the store.
4. Strictly control the goods and prices. In March last year, I began to directly supply the top 100 chains to put forward strict control of goods and prices, and the online and offline mechanisms are all the same. Whoever is cheaper by 1 cent, immediately cancels the cooperation. At present, there are 160 chains in China's top 100 chains, but last year I canceled 18 chains. At that time, someone mentioned a problem, he said that the top 100 chains had been solidified at the local level, and if one cooperation was cancelled, it was impossible for another to make up for it. Slowly cancel, there will be less and less business. But I think that such a move will let everyone see my determination to strictly control the market, and I think that the better the management, the more customers and more chains will be willing to cooperate with me. At present, we can see that from last year to this year, the entire offline data is gradually rising.
5. Mutual benefit and win-win situation. I think that the current era is the era of Hanshu traffic overflow, and we need more channels to carry traffic, and we are willing to share the dividends of traffic in these channels. I firmly believe that as long as we can give you reasonable and good trade terms and good quality products, they will be able to cooperate and sell more and better products to consumers.
"To be a collaborator of offline channels", this is the slogan put forward by our department. We will never be a leader in the industry, because on the retail side, every retailer is our teacher. We will do a good job of cooperating with everyone's needs, meet everyone's needs, and develop with everyone's development, which is what we want to do at the moment. "At the beginning of all things, the road is simple", this is a sentence we advocate at the moment.
Finally, I would like to summarize a few sentences about what Shangmei and Han Shu are doing offline:
1. What we sell well online, we will take it down and sell it offline.
2. Do the best product quality.
3. Ensure the cleanliness of the channel goods to the market and ensure the strength of the price system, so as to ensure that the partners have profits.
4. Study consumers and study products to the ultimate cost performance, so that brands, retailers, and consumers can form a good ecosystem. It is not very difficult for us to return to offline and reconstruct offline, we only need to show our confidence, patience, sincerity and sincerity, and we can gradually let consumers return to our arms.
5. Super traffic enhances consumers' brand awareness, super quality enhances consumers' purchase satisfaction, and super price enhances consumers' purchase pleasure. As long as these 3 points are done well, I believe that all domestic beauty brands can regain their position offline.
This year is just the beginning of Han Shu, and I hope that the next efforts can give you a more satisfactory answer at the end of this year or the beginning of next year. At present, there is no better trick offline, only relying on offline people to work hard together. It has always been said that the line is the army, and it is all our group of mud legs who slowly come out one hand at a time. Now that we have reached the era of the best reconstruction, we will work together diligently to cultivate the market and serve these offline chain stores together. Give everyone a chance, but also give ourselves a chance.
Thank you for listening!
Arrangement / Takeichi
