The Beijing News (Reporter Wang Shengnan) The cake of domestic beauty cosmetics is getting bigger and bigger, and the problems are also coming. Experts pointed out that the operation mode of low R&D and high marketing has never been able to break the positioning of the low-end domestic beauty brands. With the strong overweight of international brands after the recovery of the China market, it is not easy for domestic beauty brands to go more steadily and further.
"Recently, Hua Xizi’s advertisement was circulated in the elevator every day", "I saw the advertisement of Perfect Diary in the elevator, and actually found Zhou Xun to endorse it" … On the eve of the Double Eleven, Hua Xizi and Perfect Diary, domestic beauty brands that rely on online channels to grow day by day, chose Baping elevator to seize the consumer market through offline media. At the same time, it is still accelerating the layout of offline stores. By the end of September this year, Yixian E-commerce has opened more than 200 offline experience stores in more than 90 cities in China.
As for the reasons for developing offline channels, Hou Cong, a health beauty consultant and life aesthetician, pointed out that on the one hand, domestic beauty brands need to continue to explore potential customers offline, expand brand recognition, and conform to the traditional consciousness of "running away from monks but not temples" in China consumer market. For first-and second-tier cities, offline channels have the function of "brushing the sense of existence" and "shooting the face", while for consumers in sinking cities, what is real and within sight is still their important consideration.
On the other hand, relying on online channels is not a long-term solution. Although online marketing has brought high sales, the cost is also huge. For example, the annual report of Polaiya, which occupies a place in the recommendation list of beauty bloggers, shows that in 2019, the annual net profit of Polaiya was 393 million yuan, but the sales expenses reached 1.223 billion yuan, a year-on-year increase of 38.03%, of which the image promotion expenses were 839 million yuan. The high sales expenses contributed to the performance growth, but did not change the profitability. In 2019, the net interest rate of Polaiya decreased from 12.14% in 2018 to 11.73%, and the gross profit rate also decreased slightly from 64.03% to 63.96%. At the same time, the insiders also pointed out that the current way of marketing to create explosions is limited to the overall improvement of the brand, and users have not generated high loyalty to the brand. Continuing to create explosions means long-term high sales expenses.
In contrast to the high sales expenses, there are unmatched R&D expenses. In 2019, the sales expenses of Polaiya reached 1.223 billion yuan, and the research and development expenses were 74.6026 million yuan, and in 2018 it was 51.2918 million yuan. After large-scale marketing, the quality and reputation of domestic beauty cosmetics are not satisfactory. In the comments on Hua Xizi’s explosive powder, there are many comments such as "it’s not as good as shaking audio and video", "the packaging is really beautiful, but it’s really difficult to use" and "the advertising is too boastful".
Hou Cong pointed out that at present, the positioning of domestic beauty brands is still dominated by the low-end and middle-end, and the operating mode of low gross profit and high marketing has aggravated the financial burden of brands. At the same time, low-cost means can easily make brands reach the profit bottleneck ahead of time, which can only be used as one of the chips to enhance competitiveness, not a long-term solution. Nowadays, consumers’ loyalty to brands and commodities is not as good as before, so it is the key to seize consumers through product innovation and technical iteration, which is why many cosmetic products with indicators will be updated on the original basis every few years. The rapid development cycle and reaction speed of domestic beauty cosmetics meet the needs of consumers faster, but the quality system and related technologies are still not perfect, which can’t keep up with the development speed, and the quality and safety that follows will also become a problem.
Compared with international brands, Hou Cong said that in addition to the low-end positioning of domestic beauty products, some brands still have a "three-minute fever" operation mode, which is difficult to adhere to product research and development, technological innovation and consumer service, and the technology and high professionalism are still not as good as international brands. In addition, the enthusiasm of domestic beauty brands for independent research and development is also being hit by endless imitations. Insiders pointed out that after a domestic beauty product became popular, some brands that wanted to rub traffic would copy the original, launch their own products, and dilute the original traffic and sales. Over time, it weakened the enthusiasm of domestic beauty brands for independent research and development.
From skin care, make-up to medical beauty, China’s beauty market has great potential. According to the report released by data analysis agency GlobalData in June this year, the beauty market in China is expected to grow from 39 billion yuan in 2019 to 59.5 billion yuan in 2024, with a compound annual growth rate of 8.8%. After the outbreak of the epidemic, the China market is the first to recover. Although domestic beauty brands occupy the home advantage, international brands are also overweight, which is bound to carve up the existing market. How to go far and stabilize after the rise, there are still many problems that domestic beauty brands need to ponder.
Beijing News reporter Wang Shengnan
Editor Jake proofreads Chen Yanyan.