Chinanews.com client, Beijing, March 21 (Zuo Yukun) In November 2020, Yixian E-commerce, the parent company of the beauty brand Perfect Diary, rang the listing bell on the New York Stock Exchange. A halo of "the light of domestic products" and "L'Oreal China" flooded in one after another.
In March 2021, the first financial report of Yixian e-commerce after its listing was made public, but it was described by the industry as "horrible".
When the perfect veil of the perfect diary is ruthlessly torn off, how does the "top student" in the eyes of the capital face his imperfection?
The product of Perfect Diary.
Image source: Weibo @PerfectDiary完美日记
The 5-year-old perfect diary has a huge loss but wants to acquire "Hermes
" in the makeup remover industry
In early March, the news that "Perfect Diary's parent company will acquire Eve Lom" attracted a lot of attention.
Although these two brands are not unfamiliar to makeup enthusiasts, many people consider this transaction to be a "marriage."
why?
Eve Lom, a skin care brand that was born in the 1980s, is known as the “Hermes of Makeup Remover”.
Judging from the flagship store's price of 490 yuan and 50ml, even if it is not high-end, it is at least a light luxury brand.
Screenshot source: EVELOM official flagship store
On the other hand, Perfect Diary, this domestic beauty brand that has been established for less than 5 years, focuses on parity and cost performance. You can buy 500ml of makeup remover for less than 60 yuan.
Therefore, many netizens sum up this acquisition as: another Geely acquisition of Volvo, or the acquisition of Adidas.
Soon after, on March 11, the first financial report after the listing released by Yixian e-commerce pushed it to the forefront again.
This financial report data is summed up in twelve words: revenue growth, loss expansion, and cost surge.
Behind Yixian's total revenue of 5.23 billion yuan in 2020 is a net loss of 2.68 billion yuan. The surge in marketing expenses is one of the main reasons for the expansion of the loss.
More netizens are confused: Buying while losing money, perfect diary, where is the courage?
For cosmetic brands named "e-commerce", advertising costs account for 60%
Perfect Diary can be said to be well-known in the beauty industry, but the name of its parent company Yixian e-commerce is rarely known.
After all, why is a beauty company called an "e-commerce"?
In fact, behind the perfect diary is "three men in one play".
The soul figure Huang Jinfeng has worked in Procter & Gamble and Yunifang.
Perhaps it was realized that women's money is really good. After leaving his job, Huang Jinfeng and his two alumni of Sun Yat-sen University founded Yixian e-commerce, whose name is also named "Yixian" by Mr. Sun Yat-sen.
"Straight man of steel" makes beauty, and his style of play is also extraordinary.
For the tens of thousands of KOLs (influential bloggers, UP owners, Internet celebrities, etc.) stationed in Xiaohongshu, Station B, Douyin, etc., Perfect Diary is their common "gold master dad".
A Xiaohongshu blogger once said that most of the time he received 10 advertisements in a month, 4 of them were perfect diaries, because working with perfect diaries "talks less, is refreshing, and gives money directly without saying anything, which is very worry-free. ".
Image source: Weibo @PerfectDiary完美日记
Doesn't Perfect Diary feel bad when you burn money like this?
In fact, this is precisely the unique idea of perfect diary highlighting the encirclement.
Perfect Diary likes to use one word to describe its innovative business model-DTC, or Direct-to-Consumer, directly facing consumers, eliminating the need for layers of "exploitation" by traditional beauty distributors, improving efficiency and saving cost.
In 2018, Perfect Diary discovered the traffic breakthrough of Xiaohongshu, and acquired new users through KOL content marketing and realized the first realization of monetization.
In the prospectus, Perfect Diary also regards the in-depth cooperation of KOL resources as the company's core competitiveness.
After stepping on the two emerging channels of Xiaohongshu + live broadcast, Perfect Diary outperformed the last mile of the new brand.
This way of seizing the market through the Internet is indeed worthy of its "e-commerce" name.
But the money-spreading marketing reflected in the financial report is not so good.
The financial report shows that in 2020, Yixian E-commerce has a total revenue of 5.23 billion yuan and a net loss of nearly 2.7 billion yuan.
Combined with the previous prospectus, the total marketing expenses of Yixian e-commerce for the whole year approached 3.5 billion, accounting for 66% of total revenue.
In other words, the price paid for advertising in order to allow you to see these products is much more valuable than the cosmetics you buy.
No wonder some netizens commented that Perfect Diary’s crazy marketing is "marketing with heart and products with feet".
Under the heavy foundry mode, the "definite loop" of the perfect diary
Perfect Diary has always been against the target L'Oréal Group, and its founder Eugene Schueller is a chemistry major.
Compared with Huang Jinfeng, who started the P&G market research department and went to Harvard Business School to study for an MBA, Perfect Diary and L'Oreal’s natural "gene" are quite different.
The money is spent on advertising. Corresponding to Perfect Diary’s high proportion of marketing expenses, it is a serious shortage of R&D expenses.
Data shows that the R&D expenses of Yixian e-commerce in the fourth quarter of 2020 are 25.6 million yuan, which is about 1.3% compared with 1.96 billion yuan in revenue for the quarter.
According to L'Oréal's previous 2020 financial report, its research and development expenses accounted for approximately 3.4%.
The product of Perfect Diary.
Image source: PerfectDiary WeChat public account
With such limited R&D expenses, Perfect Diary was able to obtain financing at the end of 2016, and the product will be launched three months later.
how did you do that?
The reason is that Perfect Diary didn't build its own factory at all, but chose the heavy foundry model.
According to the prospectus, its main foundries include Cosmic, Interco and Comar, and they also OEM for some products of major international brands such as L'Oreal, Dior, and Lancome.
From the international big-name Estee Lauder to the domestic product Pechoin, the foundry has become the "secret" in the industry.
It's just that most brands have their own factories, and some of the things are processed. The perfect diary of "born in a foundry" is heavily dependent on the foundry.
These mature cosmetics OEM leaders in the supply chain can indeed produce products that meet market expectations for Perfect Diary, reducing the risk and cost of building a new production line in the local area.
But the shortcomings are also obvious. Without mastering the core technology and converging with the quality of other foundry products, it is inevitable that they will eventually compete for the market through high marketing expenses, forming a "dead loop" that is difficult to break through.
"Economics of beauty" rises together, can marketing exchange flow become a moat?
"Although we are still far away from the international beauty giants today, to be honest, we still know ourselves in our hearts, but we will never admit defeat when we need to fight, and we must invest when we need to invest." On the eve of the launch of Yixian e-commerce, Huang Jinfeng once said so.
The perfect diary that never admits defeat is indeed a win.
In 2019, the champion of the Tmall Double 11 makeup brand is not L'Oreal or Estee Lauder, or the perfect diary of this Chinese brand.
At that time, L'Oreal has 112 years of history, Estee Lauder has 73 years, and the perfect diary is less than 3 years old.
The success of Perfect Diary makes its gameplay a compulsory course for competitors.
In recent years, new players such as Huaxizi, Judou, Colorkey, etc. have begun to rob KOL with heavy money, which has directly led to the continuous increase in the price of KOL traffic.
International big names have also begun to change their strategies. Starting in 2018, brands such as MAC, Lancome, and YSL have successively made vibrato, Xiaohongshu, and live streaming products, and tried to cooperate with grassroots KOLs.
According to data from the CICC Research Institute, through the above traffic ends, the sales growth of Shiseido, L'Oreal, and Estee Lauder will all exceed 60% in 2020, while the sales growth of Perfect Diary in the same period is only 22%.
Data map: Consumers are shopping in a beauty store.
Photo by Luo Yunfei
In this era of "beauty brand companies are working for KOL", Perfect Diary will retreat if it doesn't advance.
Therefore, Perfect Diary is eager to tell the next new story after "DTC". The current problem-solving idea is "open offline stores + acquire companies". This has resulted in 200 stores nationwide in a year and a half. The perfect diary store, and the acquisition of the high-end brand Eve Lom mentioned at the beginning.
Chen Haiquan, a professor at the School of Management of Jinan University and dean of the Guangdong Asia-Pacific E-Commerce Research Institute, once said that as marketing shifts from traditional advertising to digital marketing, marketing psychology and consumer behavior are changing.
"But marketing cannot be separated from products. No matter what kind of marketing model, product capabilities are the most basic. Digital marketing is more precise and should make products better."
But there is also a voice that believes that the Chinese manufacturing behind these foundries have been making wedding dresses for foreign brands to monopolize the Chinese beauty market for the past 20 years.
Today, the introduction of independent brands to the forefront may also be the beginning of China's seizure of international consumption and trend decisions.
Are you optimistic about the new story of "Perfect Diaries"?
(Finish)