What is the out-of-lap password for Perfect Diary?
Editor’s note: This article is from the WeChat public account “E-commerce Online” (ID: dianshangmj) by Yang Tingting , The editor asked. Released with authorization.
Back swaying forward, Zhou Xun in a black dress said in her signature voice: “Perfect Diary, beautiful, unlimited”.
This group of modern blockbusters in collaboration with the fashion magazine “ELLE” has recently appeared frequently in building elevator advertisements. Netizens described it as “like a Chanel blockbuster.”
The perfect diary endorsed by Zhou Xun has the background color of “the dark horse of domestic makeup”.
In the new round of financing in September this year, the valuation reached US$4 billion (about 26.8 billion yuan). Perfect Diary is so popular with capital because of its crazy growth.
In 2019, the revenue of its parent company Yixian E-commerce was 3.031 billion yuan, a year-on-year increase of 377%. In the first three quarters of 2020, the revenue was 3.272 billion yuan, which has exceeded last year. In the double 11 that just kicked off, Perfect Diary became the first Tmall cosmetics brand with sales exceeding 200 million.
But the impression of most consumers still remains on the international big-name “flat replacement” (the cheap alternative version of big-name beauty). Because the average price does not exceed 200 yuan, it is regarded as “pinduoduo in the beauty industry”. In terms of profitability, it is still burning money. Offline stores, brand promotion, and research and development all require bullets, and the loss in the first September of this year exceeded 500 million yuan.
On the track of Chinese beauty, high-end European and American giants such as Estée Lauder and YSL occupy the brand high ground, while the traditional domestic products such as Proya and Marumi reap the sinking market, leaving little room for new brands to grow.
What kind of exit password does Perfect Diary have, and what difficulties does it face? Some answers are given in the prospectus.
In the early morning of October 31, Yixian E-Commerce, the parent company of Perfect Diary, submitted a prospectus to the US Securities and Exchange Commission. If the IPO is successful, Yixian e-commerce will become the first Chinese beauty platform company listed on the US stock marketindustry.
The way out of “Perfect Diary”
On the last day of 2019, Hillhouse Capital CEO Zhang Lei said to Huang Jinfeng of Perfect Diary, “China must have a chance to create a new L’Oreal.”
This investment in Tencent, JD.com, Baidu, Shigekura Gree’s giant catcher, is now the biggest perfect diary External institutional shareholders.
Becoming “L’Oreal China”, Perfect Diary has its own role model.
In 2016, Huang Jinfeng, Chen Yuwen and Lu Jianhua who graduated from universities founded their own business: Yixian e-commerce.
Three boys chose a makeup track. One year later, the company’s first cosmetics brand “Perfect Diary” was born.
The brand is positioned to provide cost-effective makeup for post-95s. In the prospectus, Perfect Diary believes that the price range of competing products of the same quality is 109-630 yuan, while the price of the company’s products is 49-129 yuan. Cheap prices have brought explosive growth: In 2018, the sales volume of Perfect Diary was 630 million, and it reached 2.96 billion in 2019, and 2.61 billion in the first three quarters of this year.
But even the “price butcher”, the gross profit margin of Perfect Diary is still amazing. The prospectus shows that the gross profit margin of the parent company Yixian E-commerce in 2018, 2019 and the first three quarters of 2020 was 63.5% and 63.6 respectively. % And 63.1%.
One of the key reasons behind it is de-channelization. RecruitingIn the stock book, Perfect Diary disclosed its DTC business model and called it “the leading next-generation beauty platform.”
DTC is the abbreviation of (Direct To Consumer), which means that the brand does not use distributors, but directly sells to end consumers, “no middleman makes the difference.”
Take Procter & Gamble as an example. In the past, FMCG companies wanted to sell goods to consumers, with agents and distributors in between. However, in DTC, the traditional layered distribution model is omitted, and brands can directly interact with consumers in production, marketing, sales, feedback and other links.
On the production side, Perfect Diary found a foundry with experience in processing major brands such as Dior and Lancome. The advantage of this is that it is similar to the big names, but much cheaper. At present, Perfect Diary’s beauty products have more than 700 SKUs, most of which have a unit price of less than 100 yuan. Take the little black diamond lipstick of Perfect Diary as an example. The unit price is less than 80 yuan, which is only a quarter of the international brands such as YSL and Dior.
Perfect Diary is definitely a master of marketing. They are familiar with the shopping habits of Generation Z: it is easier to “plant grass” than marketing. In 2017, the Tmall flagship store was opened, and it was listed in Xiaohongshu, station B and other content social platforms Plant grass, and then return to the e-commerce platform for purchase.
As of October this year, Perfect Diary has accumulated more than 280,000 notes on the Xiaohongshu platform, and has reached cooperation with nearly 15,000 KOLs. Other traditional beauty brands such as Kazilan, Pechoin and other notes have only 20,000 to 20,000.
One of the performances of launching on Xiaohongshu regardless of cost is that a beauty KOL revealed to “e-commerce online” that there is a saying in the circle that if you have not received the PR package of Perfect Diary, you can’t Be regarded as KOL.
On the other hand, Perfect Diary is very good at using co-branded funds to “snap traffic.” Co-branded products with Discovery, British Museum, Game of Thrones, Oreo, etc., and even Li Jiaqi’s pet dog Never can also produce a co-branded “Puppy Eyeshadow Palette”. At the time of pre-sale, this 150,000 The eyeshadow is applied in seconds.
For a new brand like Perfect Diary, it is a good closed loop to grow grass while monetizing on platforms such as Tmall. Proprietary e-commerce companies have to purchase and sell themselves, and there will be inventory risks. Procurement of brands that already have scale advantages and mature supply chains, while platform-based e-commerce companies will give new brands more growth opportunities.
For the nine months ended September 30, 2020, over 85% of Perfect Diary’s sales came from DTC channels such as Tmall, the company’s WeChat channel, and experience stores.
As of September 30, 2020, the number of DTC purchase users of the parent company Yixian E-commerce reached 23.5 million, a year-on-year increase of 50.0%. The annual customer price per user has also increased from 114.1 yuan/person in 2019 to 120.7 yuan/person in the first three quarters of 2020.
The troubles of No.1 domestic beauty cosmetics
The rise of new domestic products has gradually become a force that cannot be underestimated in the industry.
In the latest cosmetics market trend report of Kantar Worldpanel in 2020, Pechoin ranked No. 1 in skin care brands, while “Dark Horse” Perfect Diary took No. 1 in the cosmetics category, Dior, Mei Ke, etc. International big names are ranked behind.
In this year’s Double 11, Perfect Diary broke 100 million in the opening 33 minutes, and Perfect Diary became the first cosmetics brand to break 100 million on Tmall. Three hours later, sales broke through 200 million. Successively, Huaxizi and Youshiyan’s first-day trading volume also greatly exceeded last year.
These “net celebrity” domestic beauty brands represented by Perfect Diary and Huaxizi have similar characteristics: they have emerged in content communities such as Xiaohongshu, with an average customer price of less than 200 yuan, and are good at KOL, KOC, Fancy marketing games such as private domain traffic.
Up to now, Yixian e-commerce has gradually built a matrix of four major brands: “Perfect Diary, Little Aoting, Wanzi Xinxuan, and Galénic”, covering different categories of skin care and cosmetics at a low price and high-end positioning.
Perfect Diary’s greatest strength is the rapid incubation of content grass and new brands in platform-level e-commerce. Brands such as Perfect Diary and Xiao Aoting have opened flagship stores on Tmall, and the Double 11 period ushered in a good start.
Taobao Tmall President Jiang Fan said this year, “The next 10 years are the 10 years for the Internet to create new brands. In the next 3 years, there will be 1,000 new brands with annual sales of over 100 million yuan on Tmall.”
With the content-based revision of the manual, DouyinKaishou short videos occupy more user time, and e-commerce platforms attach importance to new brands, perfect diary may be used Good way to find the perfect way to copy.
The perfect diary that started online is also laying out offline positions. Since 2019, offline experience stores have been opened across the country, with more than 200 stores. Most of these experience stores are located in high-end shopping malls in the first and second tier areas. “E-commerce Online” reporters visited Perfect Diary’s store in Xixi Impression City. The popularity of the store is higher than that of Innisfree, Sephora and other stores on the same floor.
A consumer walked into the store and said, “Help me find Saint Laurent’s big aunt .” The reason that prompted her to buy was “It’s not expensive anyway.” The low-price strategy that big brands have replaced, offline shopping malls still have strong competitiveness.
On the track from 0 to 1, Perfect Diary is undoubtedly the fastest domestic brand, but when a new brand goes out of the circle, how to achieve continuous brand growth from 1 to 100 has become a perfect diary The next problem to be overcome.