Understand make-up, understand consumption.
Editor’s note: This article comes from the WeChat public account “financial graffiti” (ID: caijingtuya).
Author| Step Shake, Pang Shifan
Edit|tuya
When the ladies and sisters put on masks, the “lipstick effect” disappeared? it’s not true.
Since 2018, driven by social e-commerce, short video, live broadcast and other channel platforms, coupled with the stimulation of high-intensity beauty content of MCN and KOL, domestic cosmetics-especially makeup brands-have risen rapidly . According to the statistics of “Financial Graffiti”, the beauty industry is in a state of explosive but fierce competition, regardless of whether it is e-commerce platform sales or sales data.
Image source: Pixabay
According to statistics, before the explosion of beauty makeup, the sales ratio of domestic beauty makeup and skin care was 3:7. Obviously, people in the country prefer healthy and natural skin care methods, and even hope that they will make their skin shine without makeup. Muscle status. When did Chinese consumers start the fashion of universal makeup? How do domestic beauty brands differentiate their breakthroughs? How can online and offline integration reshape the makeup supply chain and brand?
“Financial Graffiti” outlined the transformative power of the make-up industry through interviews with professionals and persons in charge of R&D, supply chain, brand, distribution and investment in the make-up industry.
Background: tax reform, foundry and debut after 95
In 2016, the Ministry of Finance issued the “Notice on Adjusting Cosmetics Consumption Tax Policy” to narrow the scope of cosmetics taxation and cancel the consumption tax on general beauty and cosmetic cosmetics. At the same time, the name of the “cosmetics” tax item was renamed “high-end cosmetics” and a 15% tax was levied. The definition of “high-end” is further clarified in the notice, which means that the sales (tax-paid) price (excluding VAT) of the production (import) link is 10 yuan/ml (gram) or 15 yuan/piece (sheet) and above Cosmetics, cosmetics and skin care cosmetics.
Tracing back the history of consumption tax reform, in 2006 the Ministry of Finance changed the original skin care products 8After the consumption tax was canceled, skin care products gradually became a necessity for people’s daily lives, and various skin care brands gradually emerged. However, the tax on cosmetics is still divided according to categories. All cosmetics are subject to a 30% consumption tax. Compared with skin care products, the profit margin of the cosmetics industry is still low.
The 2016 tax reform is undoubtedly a major positive news for the beauty industry. L’Oréal also announced plans to cut prices immediately after the tax reform document was issued. This is even more true for local cosmetics companies. Domestic brands whose product prices will basically not meet the taxation standard will be further released after the tax reform. The new profit of the brand side can be released to the circulation side until it reaches the Consumer side.
Because of the relatively low concentration of the industry at that time, except for a small number of giants who chose to build their own factories, most domestic brands on the market chose OEMs. Therefore, after a previous wave of accumulation, the foundry companies have reached a relatively mature state and can quickly meet the production and iteration needs of new brands.
The growth in the size and number of downstream companies has allowed the foundry manufacturing industry to receive the first dividend from local beauty brands. Many foundry companies are not satisfied with OEM processing, and instead switch to their own brands, or seek to cooperate more closely with local brands in order to seek greater profits. For consumers, the maturity and rapid iteration of the upstream supply chain is bound to prompt consumers to speed up the use of makeup, which lays the foundation for makeup to become a fast-moving consumer goods.
The domestic beauty industry is developing rapidly, and the by-products have profoundly changed the upstream companies of beauty industry. The ability to iterate quickly has become one of the foundries’ competitiveness.
The development process of major European and American cosmetics generally takes one and a half years, and small and medium-sized brands generally take half a year, but domestic cosmetics are struggling to speed up and push new products. When Hua Xizi used a embossed lipstick PK perfect diary, its period is very short.
“Now the development cycle of many new online brand products is very fast, basically between 2.5 months and 3 months.” Colleen, a senior person in beauty R&D and supply chain.
The foundries are also cooperating with terminal changes. In the past, big-name foundries needed large orders to pick up, but now the feedback cycle of the entire foundry is shortening, and the minimum order quantity is also reduced. The foundry is also willing to work with some not so big brands. The whole The threshold of OEM is lowering, and the factory has adopted a more flexible mechanism. Natural customers are also more and more scattered, giving the new brand a good infrastructure support.
At the same time, young consumers as the main group of FMCG are also rising.
Compared with the previous generation, the post-95s have more makeup demands. After the age of 95 in the Internet age, they are more “millennials” than “indigenous people on the Internet.” Since they were young, they have had the opportunity to access various types of fashion information in various countries. Therefore, they prefer to chase fashion and have more consumption. Autonomy.
Huang Minjia, general manager of the offline channel of UNNY China, a brand specializing in the post-95 market, said, “The post-97s in South Korea and the post-97s consumers in China are very close. They go to their favorite places to buy their favorite products. Every consumer wears very fashionable clothes and chooses fashionable beauty to match fashionable clothes.”
At the same time, the “extreme hard work” of the previous generation has laid a solid foundation for the material life of post-95s. During the communication between “Financial Graffiti” and the heads of many beauty brands, they all believed that the post-95s price Not sensitive, they tend to pay more attention to their own feelings. A single reason like the packaging value and function of the product can prompt them to buy.
Colleen believes: “Young people after the 95s are not as strong in their recognition of international brands as they are in the 70s and 80s, and they do not need to take items that represent their own identity and status; they are smarter after the 95s. They will also recognize that in the era of flattened information, they are more advocating the concept of value for money.”
Without pursuing absolute big names, or pursuing absolute low prices, domestic products that have been attentively catching the attention of young people are gradually emerging. However, due to the mature technology of the foundry, many of the lip glazes of the national products have not lost the traditional big names in texture, color, and sense of use.
With the post-95s who have the ability to consume, young people who have no economic pressure and are not “kanu” continue to be planted and consumed online, the first year of domestic beauty in 2018 officially opened, Chinese-style makeup technology and The idea also began to be exported.
Because the new generation of consumers is sufficiently diverse and personalized, there is a high degree of freshness and curiosity about things, which has promoted the rapid iteration of domestic beauty brands and strengthened the concept of make-up becoming a fast-moving consumer goods.
“The acceptance level after 95 is higher, you can quickly have a strong willingness to try it after planting the grass, but at the same time you will quickly lose interest. If the effect is not satisfactory after the trial, you will not repurchase and quickly pull out (grass ).” An industry source told “Financial Graffiti.” This “quick trial and error, rapid iteration” behavior accelerates the pace of consumer trial and purchase of make-up, which in turn promotes the growth of the industry.
According to statistics, the total retail sales of cosmetics above designated size in 2019 was 299.2 billion yuan, an increase of 12.6% compared with the same period in 2018, which was higher than the growth rate of total social consumer goods of 8.0%, second only to the daily necessities of 13%.
The color cosmetics show an astonishing growth rate, with a year-on-year growth rate of nearly 40%, which is close to 50% for the November 11th warm-up concentrated marketing promotion, and the scale of a single month is close to 10 billion.
and 2018