Wen | edited by Liu Xueer of AI Finance & Economics | Sun Jing
GMV has been behind the competition for two months in a row
Tmall's first desire for makeup is offline
Huang Zhuang, Haidian, Beijing is not only a holy place for offline education, but also a lot of beauty brand stores are hidden. Perfect Diary The first store in Beijing is located on the first floor of Europe and America Shopping Mall. The two walls of the store are glass windows facing the street, and five or six counters are filled with various makeup such as eye shadow trays, liquid foundation and lipstick.
I heard that there was a "299 minus 111" activity, and a girl asked, "Why is it so cheap? I used to buy it online. " The shopping guide explained that there are many offline activities, and the flow of people has been quite large since it opened in May, especially the makeup, eye shadow and brushes are selling well.
Figure/vision china
As the head domestic brand of Tmall makeup, Perfect Diary plunged into the offline business. According to the official introduction, as of August 11, 161 stores have been opened, of which 121 have been added this year, and the target is 211 by the end of the year and more than 611 by 2122.
A perfect diary is rich in money. On August 7th, The Information, a scientific and technological media, reported that Perfect Diary was looking for a new round of financing of $1-211 million, with a successful valuation of $4 billion. At the beginning of March this year, Perfect Diary just completed $1 billion financing, with a post-investment valuation of about $2 billion. As for the latest financing rumors, Perfect Diary said "no response" to AI Finance and Economics.
According to insiders of Intime Department Store, Perfect Diary is communicating with shopping malls to lay a large number of counters, and Mao Geping and other cosmetics brands are also entering offline shopping malls. In addition to beauty brands opening their own stores, pure-channel beauty collection stores with multiple brands are also casting nets. The colorist of the collection store under KK Group, who just got financing, copied nearly 111 stores within two months after the epidemic was controlled. It is expected that 211 stores will be opened by the end of August.
Chen Jianyi, founder of Venus Marble, a make-up brand, found that domestic make-up started to go offline this year, but due to the epidemic, various companies only concentrated their efforts in recent months. "The perfect diary is the ceiling of online makeup. They made 3 billion yuan last year, but the online is basically saturated."
Perfect Diary was once the first brand of Tmall domestic cosmetics. When it participated in the "Double 11" for the second time in 2119, its total turnover surpassed international brands such as MAC, becoming the first domestic brand to reach the top of Tmall's "Double 11" makeup list. Some insiders of L 'Oré al once revealed to AI Finance & Economics that Korean Amore has been excluded from their research list, and a perfect diary has been added.
But this year, the perfect diary has been growing slowly. According to the data given by the trading group of Huachuang Securities, in online sales, in May, the perfect diary GMV was 212 million yuan, which was 3 million yuan behind the peer Hua Xizi; In June, the GMV of Perfect Diary was 98 million yuan, 37 million yuan behind Huaxizi.
AI Finance & Economics asked two companies to verify the authenticity of this set of data, but neither of them responded. The founder of another make-up brand said, "The data is true".
The slowdown of online growth and the rising cost of customer acquisition have given online celebrity brand the impetus to extend its offline.
Bai Yunhu, an expert in cosmetics industry management, told AI Finance & Economics that the traffic algorithm of most social media has changed from customer acquisition to input-output ratio. Originally, it only counted how much traffic to buy, but now it is necessary to calculate the actual order rate after drainage. "Online consumers are saturated, and the cost of customer acquisition is already high. Most brands can get sales from 1.2 yuan, 1.5 yuan and even 2 yuan when they invest in 1 yuan, and the top ones can achieve 11 yuan."
This has a great influence on the perfect diary. It mainly relies on the early days when the traffic cost is not high, and it grows up through emerging channels. The Growthbox company has counted the history of the perfect diary: 141,111 little red book notes, 13,111 live Taobao broadcasts, nearly 11,111 pieces of information flow advertising materials, and thousands of videos from Tik Tok, bilibili and Aauto Quicker.
Su Zixia, a make-up brand entrepreneur, spoke about the perfect diary. "MCN institutions have been perfected and kept buying without bargaining. MCN will feel that the price of make-up is so high, which directly affects the waist brand. The current purchase price is more than five times that of 2118." He revealed that the quotation of Tik Tok Reds with more than 2 million fans who can bring goods slightly has risen to more than 511,111 yuan.
This directly affects the gross profit level of the perfect diary. According to Time Weekly's report in May this year, people in the public relations department of Perfect Diary said that the gross profit of the company is currently lower than the industry level, and it is even reported that the marketing expenses of Perfect Diary alone account for 41%-51% of the income.
Perfect Diary has not responded to the verification of AI Finance & Economics, and Su Zixia agrees that the perfect gross profit industry is at the bottom. According to him, the gross profit of the perfect diary should be less than 11%, while the gross profit of his brand's channel stores exceeds 31%, and the gross profit of Tmall stores reaches 48%-49%. "Marketing expenses account for about 31% of income, which is healthy." The gross profit margin of international brands is generally above 71%. Taking L 'Oreal, the target of Perfect Diary, as an example, its sales expenses accounted for only 21.3% in 2119.
The cost of offline traffic is actually lower than that of online traffic-this is the conclusion of Mai, the founder of Noisy beauty. His cosmetics collection store contains cosmetics brands mainly based on national trends and skin care brands mainly based on Europe, America and Japan. "We have calculated that the brand side loses a lot of money online, and the traffic cost accounts for 41%-51% or even higher of the sales, while offline naturally likes to help the brand side maintain its own price system, and I don't want you to reduce the price, because offline pays attention to the efficiency and pays great attention to the customer unit price."
In a greater sense, offline is entrusted with the ambition of getting out of Tmall with a perfect diary, and it decided to leave like countless Taobao brands, rather than just being the first in Tmall's beauty. So, can offline help the perfect diary usher in the second spring?
How difficult is it to break through offline?
"If Taobao brand wants to get out of the sky, offline is relatively reliable, but this road is not easy for a single brand." Investor Xiao Yun thinks so.
He thinks that the perfect diary has two disadvantages: first, the brand loyalty of make-up users is not high, and the main purpose is to look good, instead of focusing on ingredients and dependence like skin care products; Second, there are fewer SKUs of a single brand, and the two-phase effect will lead to no comparison between users in the store, and the sales of a single store will be affected, so it is not cost-effective to invest.
Figure/vision china
Qian Kun, a partner of Wuyue Capital, believes that many single brands in the retail industry can't open stores independently, especially those that focus on prepackaged products. Xiaoyun further analyzed and said, "What you can play is either ready-made and sold, experienced and served, such as tea, Starbucks and other catering; Either it is a category with high customer unit price, such as clothing, shoes and hats, but makeup accounts for a small proportion in retail plates, especially a single brand, so it is not easy to open a store independently. "
Most international brands are mainly counters, supplemented by single-brand stores. For example, L 'Oré al Paris, a subsidiary of L 'Oré al Group, only went out of department store counters in 2117 and opened three single-brand stores in China. Even as an offline channel for counters and single-brand stores, the pace is very cautious. For example, after Lancome, a subsidiary of L 'Oré al, entered China for 21 years, there were only 272 terminal channels; Estee Lauder Group, which pays attention to channels, has only nearly 1,111 stores and counters since it entered China 27 years ago, which is equivalent to opening more than 31 stores every year.
"In essence, the large-scale offline store opening is not what the brand wants, but what the capital wants, which is just to encourage the seedlings." In Bai Yunhu's view, retail is a system, which needs to rely on time and operation to enhance its competitiveness. There are almost no successful cases only relying on the rapid expansion of capital. He is not even optimistic about the offline transformation of online brands by opening separate stores.
"The reason lies in different genes, different channel management strategies and profit distribution models, which will lead to price control contradictions." Bai Yunhu added, "The operating cost and difficulty of offline is much higher than that of online, and the essence is to B business, while online is good at to C business, and it is more difficult to go from toC to to to B." Bai Yunhu made an even pessimistic conclusion-online brands go offline, and if they use traditional business methods, it is almost impossible.
Su Zixia also thinks that this is more about burning money. "Offline store is the best way to build a brand, but whether it can help the perfect diary find a second growth curve, frankly speaking, I am not very optimistic, because users have to compare (products), but the perfect product is no different."
Wheat is optimistic about the adjustment of the perfect diary. "Omni-channel is the standard play of the brand, Tmall is the volume and speed of playing, but the roots of the brand are still offline. Perfect team strength, growth rate and financing strength can support the offline layout. "
However, Maizi also admits that all brands with annual sales of over 111 million can afford to open offline stores, but they may not manage them well. "If you don't open 31 to 51 or even 111 stores, you can't cover the cost at all."
Wheat has been calculated. Take a 211-square-meter shop as an example, it costs 1 million yuan to decorate carefully, plus 1.5 million yuan for the deposit, 67 million yuan for the goods to be stocked, and the rent ranges from 21,111 to 2 million yuan per month. Plus the labor and other expenses, the start-up capital is as small as 11 million yuan. The Noisy beauty cosmetics collection store he runs has an average area of 81-151 square meters, and it takes several million yuan to start, and it will return to its capital in six months.
The store of Perfect Diary only sells its own products, and the largest Chengdu store is 1,111 square meters. The relevant person in charge of the perfect diary told AI Finance and Economics that its standard store is around 111 square meters, and it will choose a business body that young users love to visit. At present, it is mainly a shopping center.
In addition to the high cost of opening a store, offline management is not difficult. "How to keep working efficiently every day in a loose state is the biggest challenge." Mai himself even borrowed the military theory when he was a soldier and adopted the "iron triangle" management mode: the political commissar was responsible for unifying thoughts, the chief of staff made suggestions, and the military commander was unified in management and coordination, ensuring special personnel to specialize, and breaking down complex execution into standardized modules.
In the skinny reality, many emerging domestic cosmetics choose to enter makeup collection stores instead of opening their own stores. The perfect diary is rich in money and naturally has the ability to open a shop, but the management and efficiency after opening a shop are still a big question mark.
Where is the moat of domestic makeup?
Since offline is hard to be a chip for the perfect diary to flop again, is there any other way out? This seems to be the same doubt of domestic make-up brands-where is the real moat of domestic make-up represented by perfect diary, out of the aura of marketing success?
Picture/vision china
The perfect diary was born in 2117, when domestic make-up became popular. Qian Kun found that short videos broke out in Xiaohongshu, Aauto Quicker and Tik Tok in the following years, which greatly lowered the threshold of makeup teaching; The short video users are mostly students and other young people, and domestic products are cheaper, which directly raises the makeup crowd from 25-41 years old to 15-41 years old, so the whole plate in 2118 doubled faster than that in 2117.
Chen Jianyi still remembers the rising trend when he started his business: the Sadr incident affected the trade between China and South Korea, and the Korean makeup business was blocked, which gave opportunities for domestic products. His marble eye shadow was launched in August 2117, and the GMV exceeded 61 million yuan four months later. In 2118, six SKUs took nearly 311 million yuan.
This is unimaginable in the past. Bai Yunhu, who has studied the cosmetics industry for many years, told AI Finance and Economics that there are three stages in the development of local cosmetics brands in China: from 1995 to 2115, he focused on the low-end channels of cosmetics stores in third-and fourth-tier cities, and used channel marketing to drive up retail prices, such as brands such as Polaiya, Kazilan and Nature Hall.
Since 2115, it has been the second stage. The mobile Internet has broken the information asymmetry, users have become rational in purchasing, the advantages of traditional channels have been weakened, and brands have begun to make breakthroughs online, paying more attention to quality and cost performance.
Nowadays, domestic make-up has encountered a new bottleneck, and Baiyun Tiger will point to the third stage, that is, the future stage. "If China brand wants to last for a long time, it needs two breakthroughs. The first is product quality, increasing investment in scientific research and original formula innovation, and the second is to build brand awareness." He added that many local brands in China couldn't survive the first life cycle (2112-21) because they didn't pay attention to brand and quality, but put the cart before the horse and paid attention to channel marketing and unreasonable cost performance.
Bai Yunhu pointed out that international brands generally spend 3%-5% of their income on scientific research, while brands with a relatively high proportion in China, such as Polaiya, have about 2%, but their income bases are different, and there is a big gap. For example, L 'Oré al invested 985 million euros in R&D in 2119, with nearly 4,111 R&D personnel in 21 R&D centers around the world, and applied for nearly 511 patents every year on average.
Perfect Diary is also making efforts. In March this year, it was announced that it would establish a joint venture with an OEM company, Cosme Meishi, with an investment of 711 million yuan to build a research and development and production base. It is expected to be put into production in 2122, and its future output value will reach 2 billion yuan. Cosmes is one of the best foundries in the world, and has cooperated with Dior, L 'Oreal and Chanel.
Bai Yunhu thinks that the scientific research of Cosme Meishi is competitive, and the investment in product formula is quite large, but it is not necessarily top-notch. It is also in line with the development demands of this stage to make this choice in the perfect diary at present.
"You look great today" Gigi, the chief formulator of App, revealed that the research and development of foundry pays more attention to the market trend, and the speed of innovation is faster, while the research and development of brand side pays attention to brand tonality. Xiao K, the formulator, added that the formulators in the foundry are tired of dealing with customer needs and product imitation every day, and it is difficult to sink down and polish the best formula products like the formulators in the brand side.
Gigi and Xiao K have worked in L 'Oré al and Johnson & Johnson respectively. They revealed that the product development cycle of large companies is often as long as two or three years, one of the reasons is that the testing is relatively complete. Xiao K told AI Finance and Economics that the R&D centers of multinational companies are generally divided into two parts: pure formula development and front-end (basic) research. The former is aimed at regional market consumption preferences research.