Domestic Cosmetics Brands Enter The "Warring States Era": Planning Overtaking On Curves With The Help Of More Efforts

In recent years, more and more market possibilities have been hit by the popular domestic cosmetics products and the new e-commerce platform with a wide user base. The beauty of domestic products has also become a new battlefield.

"Cosmetics has always been one of the categories of pinduoduo's new brand plan. In the past year or more, pinduoduo's leading United Nations products enterprises have created sub brands, hoping to meet the diversified needs of consumers and help these enterprises expand their market. We hope that in the next five years, the growth of new cosmetics brands will exceed 100 billion, and we will cultivate 5 billion yuan new cosmetics brands. " On November 2, Chen Qiu, vice president of pinduoduo, talked about the future plans of the platform in an interview with 21st century economic reporter.

On the same day, pinduoduo and Danzi group announced the joint launch of a new brand of domestic cosmetics "cuirun". This is the fifth local cosmetics company to join pinduoduo's new brand plan after pelaia, oshiman, Shangmei and bailing. It is worth noting that the perfect diary of local cosmetics brand has achieved a sales scale of 1 billion yuan in three years. In this analogy, pinduoduo's ambition is self-evident.

Cosmetics industry has always been a hot topic for e-commerce platforms. With the upgrading of China's residents' consumption, the rise of income level has also brought about the improvement of per capita consumption level, and the industry has great development potential. In addition, the consumption potential of the third and fourth tier cities is still waiting to be released, which will further boost the development of cosmetics consumption market.

According to Chen Qiu, more than 50% of the first-line local cosmetics companies will join pinduoduo's new brand plan by October next year.

Cosmetics industry has always been a hot topic for e-commerce platforms. Photo by Xu Hui

From OEM to brand

With the help of e-commerce, the prospect of China's cosmetics market is expected. According to the public data, the global cosmetics market has exceeded US $500 billion in 2019, and the Chinese market has reached about US $67 billion. However, in the global market share, high-end cosmetics brands and even medium and high-end cosmetics brands are almost monopolized by European and American international brands. L'Oreal, P & G, Unilever, Estee Lauder and Shiseido account for about 52.4%. Among the top 20 enterprises with market scale, foreign enterprises account for about 80%, while local enterprises only account for about 20%.

The implementation of pinduoduo's new brand plan has opened up a way for manufacturing enterprises in the industrial belt to rise their brands. Baiyun District of Guangzhou city has made full use of this bonus. At present, there are more than 1300 cosmetics related enterprises in Baiyun District, and there are more than one third of the cosmetics enterprises in this area in the 21st century.

In the dotted cosmetics industry belt, there are OEM factories hidden behind international brands, and there are also budding independent brands. Since the epidemic, with the gradual weakening of external demand, OEM factories have also taken the initiative to change. "Natural messenger" is a new brand of Guangdong Zhenyan Cosmetics Co., Ltd., and one of the first to take the e-commerce express.

On November 2, the 21st century economic reporter saw in the factory of Zhenyan cosmetics company that hundreds of workers were engaged in the work of repacking and packing in order on the neat assembly line, and the LED screen of the workshop flickered with product information. Zhang Furong, general manager of the factory, introduced that the company has formulated a high-precision production plan, and the products manufactured by the production line are changing every day.

In the early years, the company started by acting. Although it has strong manufacturing strength, it is difficult for the company to enter the fast lane of development because there is no well-known independent brand. "In the OEM production, the company only gets a few percent of the industrial profits by OEM for the first-line brands. After the products are labeled with the first-line brand trademarks, the value of the products has increased 10 times." Zhang Qinglin, chairman of Zhenyan, expressed this dilemma in an interview.

Brand building is the demand of enterprise upgrading. Strong brand premium enables first-line brands to put more resources into brand maintenance and brand marketing. This investment further strengthens the recognition of brand in the minds of consumers, promotes sales and forms a positive cycle. Zhang Qinglin realized that "if we don't break through the brand, we will only be wandering in the manufacturing field, unable to invest more capital in long-term product research and development, and can only cope with OEM orders from all over the country, which is not a long-term plan for enterprise development."

However, in the past years, there seems to be an "air wall" between traditional manufacturing enterprises and e-commerce. Zhang Qinglin found that the road to embrace e-commerce is not easy. The operation strategy and emphasis of different e-commerce platforms are different. The cost of obtaining traffic of e-commerce platforms such as tmall jd.com is too high. Its main traffic supplies international brands and first-line domestic brands. It is difficult for small and medium-sized businesses to make breakthroughs in these platforms.

"On the pinduoduo platform, there are not only international brands participating in the" 10 billion subsidy ", but also many small and medium-sized brands. The flow distribution mechanism of the platform enables small and medium-sized businesses and new brands to obtain good resource support. At the same time, pinduoduo has gradually standardized the market through various policies and rules to help consumers establish brand awareness. " Zhang Qinglin further explained.

After joining pinduoduo's new brand plan, pinduoduo's operation team has provided systematic help to natural messengers, including detailed guidance in product selection, product operation, advertising and other aspects. The most important thing is that its positioning of consumer groups is more consistent with the platform.

Zhang Qinglin revealed that the consumers targeted by nature messenger are students and junior white-collar workers. Therefore, in terms of product publicity, it is more important to highlight the composition and cost performance; in terms of pricing, it also relies on the advantages of factories and adopts the parity strategy. "We have seen a significant increase in sales. The re purchase rate of natural messenger products through e-commerce channels has exceeded 35%, and 70% of consumers are post-90s."

In addition, Zhenyan cosmetics company is also based on pinduoduo's consumption data to make product innovation in some sub categories. In the first two months of the month, the company's sales volume film has become more than 200000 yuan.

The data of e-commerce platform is pushing back the change of production side. Now, in the capital market, Huaxi biology, aimeko, perfect diary and other domestic beauty brands are all rising with the help of e-commerce platform.

"Now the new format of local cosmetics is the return of the king. With the promotion of new retail, consumers can realize zero distance contact with local brands or manufacturing end. After being familiar with local brands, the new generation of consumers will grow into a consumer group of cosmetics when they enter the society. Their cognition of cosmetics, including technology, their confidence in their own culture, and the constant search for subdivided products will provide new opportunities for local brands to achieve overtaking in corners. " Du Zhiyun, President of Guangdong Cosmetics Association, believes that after five to ten years of development, local cosmetics brands will inevitably be able to breed enterprises comparable to international brands.

For Zhang Furong, his most intuitive experience of e-commerce is that the sales channels have become flat, the intermediary business links have been greatly reduced, and the goods can be directly from the factory to the users. In addition, in the production process, with the data support of the e-commerce platform, the company has a more accurate allocation ability for raw materials and production plans, so as to reduce production costs.

Flow cost ice breaking

At present, in the global market, high-end cosmetics brands and even medium and high-end cosmetics brands are almost monopolized by European and American international brands. The latter is also expanding its territory in the Chinese market. Most of the local cosmetics brands can only rely on the characteristics of "high cost performance" to compete in the low-end market. In addition, in the first half of this year, the performance of domestic brands was hit by the epidemic.

For a long time, in the cosmetics industry chain, the brand side occupies a dominant position. The gross profit margin of cosmetics brand is generally 60% - 70%, and the net profit rate is 5% - 10%, which is the highest profit link in the whole industry chain. In this context, pinduoduo's "new brand plan" focuses on the domestic cosmetics industry. In 2018, pinduoduo launched this plan to focus on the growth of small and medium-sized manufacturing enterprises and provide R & D suggestions, big data support and traffic tilt for enterprises. And support 1000 factories in 5 years.

However, in the link of brand building, the marketing cost of hundreds of millions of Yuan often worries many manufacturing enterprises focusing on products. The cost-effectiveness of traditional products is often reduced due to the huge cost-effectiveness of traditional products.

Chen Qiu said frankly that the purpose of the new brand plan is to break this cycle, let "marketing expenses flow into the research and development laboratory", and let the cosmetics enterprises focusing on products not suffer losses.

In October this year, pinduoduo announced a plan to upgrade its new brands in an all-round way. In terms of cooperation mode, it has changed from helping OEM enterprises to incubate their own brands, upgrading to four modes, namely, independent brand cultivation of OEM enterprises, brand building of well-known brands, support of new and sharp brands, and reconstruction of old domestic brands.

"Do men need to make up? In the early days, only a small number of men were not satisfied with only applying facial cream. Now men's plain cream is selling very well. I think the most important thing is to understand the needs of consumers. The same is true of the sinking market. Young people account for a large proportion. They are willing to taste fresh food and like new brands. This is an opportunity for domestic cosmetics. " Zhou Xin, founder of the new national cosmetics brand "skin food", told the 21st century economic report that with the help of pinduoduo's consumption big data, they chose to use soap to enter the field of body care. At present, the monthly sales of sea salt soap and milk soap exceed 300000.

It is understood that the brand, founded in 2011, is a cosmetic brand focusing on skin care products. It is mainly used as an e-commerce channel. In its early years, it has also achieved good sales performance on the e-commerce platform. However, with the change of traditional e-commerce platform strategy, the resources of new and sharp brands are gradually reduced. At the same time, the threshold of cosmetics brand construction is increasing year by year, and hundreds of millions of advertisements are often put in, which makes the brand construction become a huge burden.

"International big brands and domestic first-line brands are pouring in one after another. The cost of obtaining traffic has increased, and the transformation effect has become worse." Said Zhou Xin, founder of skin food. As a new brand, the growth rate slows down, which is not a good phenomenon in the fierce market competition.

In the view of industry insiders, pinduoduo's spelling mode and recommendation algorithm, to a certain extent, enable small and medium-sized brands to better attract customers and accurately reach consumers.

"It can be said that pinduoduo has built the infrastructure, and small and medium-sized brands rely on e-commerce channels, so that they have the opportunity to reach the vast number of consumers with low cost and promote brand building." Zhou Xin further said.

Batch incubation of domestic brands

With the rapid development of mobile Internet and e-commerce, the "consumption gap" between the low-level cities and the first and second tier cities has been further shortened. China's cosmetics market has become the main consumption venue for the youth groups in the third and fourth tier cities. According to the public data, the growth rate of cosmetics consumption in cities from the third tier and below will reach 1966% in 2019.

According to the consumption data of tmall 618 in 2019, from June 1 to 2, orders for more than 50 million items from tmall came from third to sixth tier cities. Especially in the field of beauty, only in the first two days of 618, the sales of juhuasuan beauty products from third to sixth tier cities increased by 143% year-on-year, far exceeding expectations.

Some domestic brands of traditional time-honored brands also smell new business opportunities. As a time-honored cosmetic brand born in the 1970s and 1980s in Shanghai, Beili brand of baiqueling started to cooperate with pinduoduo in September this year to launch brand-new products by creating customized products as channel special supply.

In an interview with the 21st century economic reporter, the relevant person in charge of baiqueling group disclosed that pinduoduo has given a large number of consumer portraits, consumer demand and big data analysis suggestions, which makes the whole brand have big data support from the naming, tonality, packaging color and even the addition of later product ingredients.

Driven by Beili, the sales volume of baiqueling brand goods in pinduoduo increased nearly 10 times in the first half of this year. This is not an example. According to the official data of pinduoduo, as of September this year, 1500 enterprises with new brands participating in customized R & D have launched more than 4000 customized products and 460 million orders for ordered products.

Du Zhiyun, President of Guangdong Cosmetics Association, believes that the current cosmetics industry is still in the "Warring States" era. The sales volume of China's whole market and the per capita consumption of cosmetics are much lower than those of South Korea and Japan around us, as well as Europe and the United States. However, the capacity and development space of the whole market are very large. This is an "empire" market. "There are more than 1300 enterprises in Baiyun District, accounting for 63%. However, there are 35000 brands in the country. Although it seems that the scale is more than one billion, there are not many brands with tens of billions. Compared with international giants, it is still a baby. "

According to the data of BCG consulting and Hua'an securities, in 2013, the market share of international brands in China's cosmetics was about 50% - 70%. In 2018, the market share of domestic cosmetics had increased to 56%, accounting for the majority of the country.

"In 2015, foreign countries occupied the high-end market. In 2016, domestic cosmetics brands launched a new domestic product movement. From 2025 to 2030, I think local brands will be able to replace a large part of foreign brands. Of course, we have to work hard. Now we use e-commerce as a channel to focus on consumers, and local brands can also get new opportunities to overtake on corners. " Du Zhiyun further analyzed that domestic brands need to do a good job in basic research, technical research and product research.

At present, the local beauty brands of pinduoduo, including both main brands and sub brands, cover a number of price bands. However, in addition to high-end boxes, the average price of most products is within 100 yuan, which is consistent with pinduoduo's "multi affordable" platform positioning.

The e-commerce platform eliminates the intermediate links and faces consumers directly, which brings opportunities for small and medium-sized cosmetics enterprises to emerge. In the face of the ever-changing consumer market, data feed back production, so that enterprises can more accurately analyze the path of consumer purchase, in order to achieve brand growth.

Previously, according to the financial reports of the fourth quarter and the whole year of 2019 released by pinduoduo, the annual Gmv of the platform reached 1006.6 billion yuan in 2019, an increase of 113% compared with 471.6 billion yuan in the same period of the previous year. This is undoubtedly a great attraction for the beauty enterprises which are trapped in the bottleneck of growth.

In the view of industry insiders, the impact of the epidemic on the entire cosmetics industry, whether in terms of revenue or in the reform of development mode, is relatively large. It is very important for cosmetics enterprises to grasp the post epidemic change and recovery rhythm. By taking advantage of the characteristics of online platforms, using digital operation to mine the psychological changes and unique interests of different consumers, and customizing differentiated crowd strategy for in-depth operation, and strengthening the brand's own influence.

At the same time, only by balancing the online and offline channels and strengthening the coverage of all categories of products can domestic brands welcome the opportunity of overtaking on the curve.

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