Products want to channel, channels want to make products. So why is it difficult to achieve so far?
Editor’s note: This article is from WeChat public account “ Inspur New Consumption ” (ID: lcxinxiaofei), author: Liu Ziqi.
The beauty industry is probably the sparkle of fire this winter.
First, the beauty collection store HARMAY Huamei went offline to detonate Sanlitun, and then went to the perfect diary to win the Tmall Double 11 beauty list. In the next three years, it plans to open 200 stores in East China and 600 stores nationwide. Recently, WOW COLOUR, a subsidiary of MINISO, has proposed to open 1,000 beauty collection stores within 2 years. Obviously, the products and channels of the beauty industry have created huge opportunities.
In this, we found an interesting phenomenon: represented by the perfect diary, many product brands that have become popular online are building their own channels offline; on the other hand, a number of beauty channel brands It is also considering how to extend upstream to incubate its own product brands. At present, there are more than 1,000 domestic cosmetics chains involved in the development of private label brands.
Will beauty product brands and channel brands converge? From the internal perspective of the beauty industry, how to analyze the hidden opportunities behind this phenomenon?
Recently, in the internal activities of Inspur New Consumer Organization, we have conducted in-depth discussions with senior beauty industry entrepreneurs on this issue.
In his opinion:
1. From the perspective of “field”, Chinese beauty can integrate product brands and channel brands to the extreme, almost nothing. Because the capabilities required by the two are very different, it is difficult to break the organizational capability boundary.
2. From the perspective of “people”, the beauty industry has been analyzing consumers. Except for some institutions that have studied BA sales skills, few companies have studied the efficiency of practitioners. It is important to improve the efficiency of practitioners. Proposition. Ignoring the services provided by the practitioners can cause problems for outreach groups.
3. From the perspective of “goods”, the homogenization of beauty products is more serious. But China is a foldable market. No single product brand or channel brand can rely on a set of products to satisfy everyone.
4, countryThe biggest problem in the domestic beauty industry is that most beauty brands are meeting the emotional needs of young women, and few brands have in-depth research and development to meet the rigid needs of middle-class women.
5. From the perspective of the end of the industry, the ceiling of the beauty channel brand must be much higher than the product brand.
The following is the editing and finishing of Inspur’s new consumption:
I have been in the cosmetics industry for nearly 10 years. From the very beginning, I helped foreign imported cosmetics brands take care of operations in China, to become a Chinese beauty brand executive, and now I start my own business. At this point in time today, I really think this is a good industry, but there are a few points that may require your attention.
First, from the “field” perspective, there are too many people in China’s beauty industry as product brands or channel brands, but there is almost nothing that can integrate the two.
Many product brands are thinking about doing channel branding, such as Perfect Diary, which goes from an online product brand and now goes offline to open stores in order to establish their own independent channels. Similarly, domestic cosmetics brands such as Marie Dijia and Kazilan have also opened their own single-brand stores.
Countless brands have such ideals, but so far we judge that success is too early.
First, it’s financially based. For example, in the make-up industry, Mary Dai Jia does not ask for celebrity endorsements, does not do hard and wide, and sells on her own. In 2017, the annual sales of small mushroom foundation series products reached 500 million.
Even if the product is so excellent, in recent years, it has not been able to achieve large-scale success in offline self-built channels. I think the perfect diary will be very difficult to succeed in this area.
Perfect Diary said that its offline store positioning is not chasing sales results, but rather value the consumer experience. In fact, the profit of these single-brand stores does not have positive information.
Similarly, there are many beauty channel brands now. For example, in the past few days, Mingchuang launched a makeup collection shop, WOW COLOR. Previously, Mingchuang introduced innovative popular Chinese cosmetics brands, and its SKU share of less than 4% has created a monthly sales of 40%.
So, now it has taken out the beauty category and made a beauty collection store alone. In addition, KK also launched THE COLORIST colorist and so on last October.
I was asked just now, are you optimistic about them? In fact, the most critical point here is execution.
It is not difficult to make a good store in China, but it is extremely difficult to make a lot of stores. These channel brands have developed to a certain scale, and going forward are also building product brands. So obviously you will see that products want to go to channels, and channels want to make products. So why is it difficult to achieve so far?
Because the organizational capabilities of every enterprise are not borderless, not everything. To make a product brand and a channel brand, what they needCapabilities are completely different.
For example, a product brand goes offline to make a channel, its cost structure is different, and the rent of the channel brand venue accounts for a very large part. This cost is not like everyone sees, many of them are hidden.
For example, the space and decoration costs of general traditional retail stores will be shared according to 3 to 5 years. But today’s acceleration in commercial real estate and changes in crowd preferences will not give you space to share costs in three to five years. Before time is up, you may have to relocate and close the store. All the assumptions on the financial statements are false.
At the same time, the channels are becoming more and more fragmented. The turnover assumed in the shop opening and location in the past is difficult to appear on schedule, so your preset financial return is really difficult to achieve. Behind this is that the efficiency of Chinese retailers is still at a very low level today and cannot match the speed of change in this era.
So how to turn the immovable sunk cost into a variable cost? This is what we are currently exploring. It’s not that I suddenly want to start a business today, but I have verified many things step by step in the past so many years. Now we just extend these proven things.
Second, from the perspective of “people”, the key to problems in traditional channels is people. Our industry has been analyzing consumers. Except for individual institutions that have studied BA sales skills, few companies have studied the efficiency of practitioners.
Everyone who makes a brand knows the consumers carefully, but having this ability does not mean that you can do a good business. Doing business needs to focus on how to improve the efficiency of practitioners.
Take makeup as an example, today THE COLORIST highlights the concept of “de-BA”. Its purpose is to cater to consumers’ choice, improve efficiency, and increase human efficiency.
But you will obviously see that it can only sell low-price and low-price goods, because “de-BA” you will not be able to sell high-priced brands. Just like the products in the Ginza counter in Japan must be sold in BA, but when Matsumoto Kiyoshi does not need BA, they are all optional.
What is the reason? In fact, practitioners will play a role. When you “de-BA” sell cheap goods, the customer unit price of each consumer is not high enough. Without services, there is a problem for people who reach out.
So for the education of Chinese practitioners, I think it should be included in the study of “people”. The importance of people is extremely important at all stages of development before a brand can be made.
Third, from the perspective of “goods”, the homogeneity of Chinese beauty products is more serious.
Last night, I saw 3CE in Korea, Fauvism LittleB, British SPACENK, and so on. I have seen many such stores before. But I don’t think there is a single type of product combination that can be used all over the world.
The Chinese market is a foldable market,It’s not a one-person market. Therefore, no channel brand or product brand, you can not rely on a set of goods to satisfy everyone. The research behind it will be very complicated, and this is the problem we are going to explore.
To sum up, we have to reconstruct a set of solutions through research on people, goods, and markets to empower traditional beauty retailers. We are not a retailer ourselves, but we want to help everyone to iterate quickly to improve operational efficiency and economic benefits.
In the end, the ceiling of the channel brand must be much higher than the product brand. Therefore, from the perspective of capital markets, industrial operations, and corporate development, helping traditional beauty retailers to iterate should be our long-term goal.
In the short term, we are also building our own brand matrix. In fact, the biggest problem in the domestic beauty industry is that most beauty brands are meeting the emotional needs of young women, while few brands are meeting the rigid needs of middle-class women.
The importance of middle-class women is self-evident, they are the main force of beauty consumption. What are the rigid needs of this group of people? It is beauty products to satisfy their skin and facial features.
For example, the color, shape, and quality of the skin can be used to divide the crowd and launch corresponding products. This method is independent of all current market-based categories based on supply chain categories and color trends.
How to accurately match the beauty features of the skin products with the makeup scenes and styling styles can enable each middle-class female to be her own stylist, instead of relying on professional makeup artist services to choose products and Relying on trend trends to choose colors, there is a lot of knowledge behind these, these are the rigid needs of mature women.
Another point is that beauty products should make girls’ skin condition, and after using up, they will have a pleasant skin feeling, which is not achieved by many products today.
What is pleasure? For a simple question, why do people look so good when they laugh? Is it so ugly without a smile? This is pleasure. There is an important subject related to this, which is rarely studied in China, but it has been studied in depth in Europe, called neurocosmetics.
Like an aesthetic brand that we cooperated with, we have already researched this part with the flavor raw material factory and formula development laboratory, using active substances to stimulate the nerve cells under the stratum corneum of the skin to increase its activity, thereby allowing users Can look radiant. Therefore, it is a brand based on precise consumer insights, positioning fashion and eclectic New England style.
Therefore, our long-term and short-term plans are very clear. We do not define ourselves as a brand company or a supply chain company, but rather as a technology company in the life aesthetic ecosystem. There are many solutions to this technology, and I think everyone can wait and see in the future.