Make-up industry switching： how will those brands that can’t be killed become stronger？

Wen | Ju Meili Shu Xiuhui

In the past two years, Tmall double 11 has always been labeled as the "last one". Indeed, the smell of smoke in double 11 is getting weaker and weaker, and the brand battle report is getting colder and colder, but there are still some new ideas or changes that make people shine at the moment.

For example, this year’s make-up category, domestic make-up continues to challenge foreign authority in double 11: when Hua Xizi suffered from the black swan incident this year, Caitang, a subsidiary of Polaiya Group, rose suddenly and won the first place in Tmall’s domestic make-up category, which is second only INTO YOU of L ‘Oré al Group, while in Tik Tok’s list, Caitang beat YSL, second only to another white dark horse VC, and more importantly, it included Fangli, blank me, Tangduo and Tangduo.

We will lengthen the timeline a little longer: during the three years of the epidemic, Perfect Diary and Hua Xizi won the first place in domestic cosmetics during the promotion period, and also set off the banner of countering big brands in Europe and America; Perfect Diary in 2019, Hua Xizi in 2022, even more pressing many foreign brands, became the TOP 1 of Tmall double 11 makeup. Even Hua Xizi, who was under pressure during this year’s double 11, regained the position of Tik Tok’s one-month GMV champion in November, and his glory remained unchanged.

Today’s make-up category is really the second largest category besides skin care. To say that such a prosperous situation today should actually begin with the adjustment of cosmetic consumption tax by the Ministry of Finance in 2016. The biggest change is that the mass or low-priced cosmetic products that originally needed to be taxed with 30% consumption tax are no longer taxed, leaving more profit space for cosmetic brands to invest in product research and development and marketing. Adding to this, the rise of Pliocene users and the rising demand for cosmetics, as well as the wave bonus of social media platforms such as Xiaohongshu and Tik Tok, etc., led to the outbreak of many new cosmetics brands such as Perfect Diary, Huaxizi and colorkey in a short period.

In the past few years, we have seen an obvious switch in the bottom logic of the skin care industry, from the original daily chemistry and fine chemicals to dermatology, medicine, pharmacy, and life sciences including immunology, microbiology and synthetic biology, which have increasingly become new growth drivers.

We went back to the make-up track. After the rapid rise of cutting-edge make-up brands, with the capital cut off and the market turning to stock, countless players also fell. In this dynamic development and balance, how big is the gap between us and international brands, and is it gradually narrowing?

So, is the makeup category also undergoing a fundamental switch?

The above propositions are what this article wants to discuss with you.

01. The cutting-edge competition of make-up will also enter a large scale, and small and medium-sized brands will feel the cold winter earlier.

In the previous analysis article on the pattern of domestic brands this year, "Don’t stare at Polaiya, so that" L ‘Oreal "may queue up soon", we talked about an observation that the more intense the stock competition, the stronger the siphon effect of scale brands may be. Therefore, in this year’s beauty market, especially in the skin care market, there are more and more scenes of domestic scale enterprises, such as Polaiya, Kanshu, Winona, Fumei, Nature Hall and so on.

Similar to the competition of skin care track, the competition of make-up is increasingly entering the track of large-scale competition. Let’s look at the makeup list of Tmall double 11 this year:

In the TOP 20, in addition to the perfect diary and Hua Xizi mentioned repeatedly above, this year’s outstanding ones include Caitang, Mao Geping, Hua Zhi, INTO YOU, Tangduo, Love for Fire, Yeast Color and Fangli.

Tao Zi, co-founder of Fangli, revealed that this year’s GMV in Fangli will cross the 1 billion level. The Tangyi Group, which is driven by the dual brands of orange blossom and fermented color, achieved 1.76 billion in 2022 (orange blossom broke 1 billion and fermented color broke 750 million). According to reports, the group size is expected to exceed 2.5 billion this year. Therefore, the scale competition threshold of domestic brands of cosmetics category has also been raised to 1 billion level, and brands with a scale of 1 billion or more will get more resources and achieve the snowball effect of higher operational efficiency compared with echelon brands under their own refined operation.

Such a scale brand pattern is already obvious not only in the mature classic platform like Tmall, but also in the fast-developing platform like Tik Tok. International brands are gradually entering the market, and cutting-edge brands are also obviously changing, with more brand attributes. The threshold for entering TOP 10 has risen from several million to 50 million. It is foreseeable that Tik Tok’s makeup list will be seen again in 2024. Maybe the strongmen of traditional Tmall platforms, such as Estee Lauder’s make-up, Lancome’s make-up, Charm, and Mei Kefei, will gradually appear on Tik Tok’s TOP 10 list (have you seen which foreign capital head disappeared in Tmall and Tik Tok’s double TOP list? )。

Under such a clear competitive situation, it is also an important test topic whether the new cosmetics can evolve from the original local efficiency to a more perfect system efficiency and form a comprehensive competitive advantage from R&D, products, marketing, channels, organization and other business modules.

In the face of such a topic, we see that some cutting-edge brands are completing an excellent answer sheet. Tao Zi listed four factors when answering Fang Li’s outstanding achievements:

Continuous product and scientific research supply chain polishing. Since its inception, Fangli has paid great attention to the investment in product formulation and technology. This year, it has completed the acquisition of new york Laboratories in the United States. At the same time, in September, it officially announced Suzanne Davis Susanna, the top formulator in the industry and the former chief R&D division of Estee Lauder, as the brand’s global R&D VP recruit. Next, Fangli will take "new york and Shanghai Double R&D Centers" as the strategic starting point of global R&D, lay out global scientific research and build its own product moat;

The polishing of organizational ability. This year, we will continue to introduce professional talents from various modules in the field of make-up, and form an amoeba-like model, which will connect the original linear functional departments horizontally, so that the personnel in key positions can cooperate based on product life cycle management. "Just like pearls used to be scattered around the table, they are now strung together to form an effective closed loop of cooperation";

Polishing at the channel level, gradually recovering online and offline distribution, and conducting more self-controlled direct operation;

Since its inception, Fangli has exercised extreme restraint in polishing the traffic style, and opposed the violent marketing that holds high the fight and ignores the profit. Instead, it completed the first round of traffic accumulation through the way of "doing a good job in user experience and letting users help the brand spread". From the aspects of traffic health and long-term sustainability, Fangli has more room for imagination.

Therefore, it is not difficult to see that cutting-edge brands that can reach the scale level are frantically perfecting their own capabilities and becoming real "hexagonal warriors". At this stage, many outsourced capabilities will gradually begin to be internalized, such as production and supply links. For example, Perfect Diary invested 600 million yuan to build its first smart factory in cooperation with Cosme Meishi, and Juyi Group also completed the wholly-owned acquisition of the original cooperative factory.

When talking about the topic of self-built supply chain, Hu Huan, co-founder of Yeast Color, revealed that the categories of cosmetics are particularly subdivided and the production patterns are obviously different, so it is impossible to completely satisfy them by building a factory, and cooperation between some categories and external professional high-quality supply chains is still a more efficient solution. Automatic supply chain, on the one hand, ensures the stability of product capacity and quality of superior categories, on the other hand, it is a self-developed supply chain with high degree of cooperation, which can complete better independent innovation.

Of course, the market is cruel, and large-scale brands have more market dominance, which means that the brands in the latter echelon are facing a more severe competitive situation, and the brands that have fallen are far more than those in the previous position. In the beautiful article "Many first-generation cutting-edge" disappeared in October, where is the future of domestic cosmetics? ",we have not fully counted the makeup brands that have been shut down since 2018, and analyzed the reasons for the fall.

Then, how should the new makeup brands that are still in the growth stage deal with this situation?

As the saying goes, Chunjiang Plumbing Duck Prophet; In fact, the cold water in the winter river is also perceived by ducks in advance. There is no one who doesn’t want the business scale to expand rapidly, but in such a cold season, how to reduce the actions that are difficult to generate definite profits, how to find more efficient marketing investment in their own competitive ecosystem, and how to turn every investment into the cornerstone of the next stage requires the founders of this position to think more calmly and restrain their impulses.

Jin Le, the founder of SEVENJULY, a new base makeup, said that compared with some brands who felt more competitive pressure this year, SEVENJULY had a premonition of the reduction of hot money in the market and the unfavorable situation brought about by the market downturn earlier. SEVENJULY, which had a stable cooperation with Chaotou Li Jiaqi, decided to give up this path at the beginning of last year, because despite its considerable output, it faced more difficult challenges in working capital, product stocking, profit margin, inventory pressure and other aspects. Therefore, the main tone of SEVENJULY since last year is to get rid of the pain and build the transformation path of self-built little red book, especially the commercial transformation ability of the brand little red book official number. After a year and a half, it has basically formed the expected autonomy.

The stylized national makeup Girlcult, which has long been circled by Z generation people in a grotesque, romantic and adventurous style, has also experienced the pain of product inventory and live sales in the past two years. At the beginning of its birth, Girlcult was surrounded by many personalized users because of its niche, but it was also because of its niche that it was temporarily confused about the balance between unique positioning and market performance.

However, as we have repeatedly stressed, in the consumer goods business, as long as there is no card table, there is a chance to catch the headwind. From last year to this year, Girlcult gradually found a more comfortable business niche. This year, when Tmall gradually became a stock market, Girlcult shifted its focus to Tik Tok and Xiaohongshu in July. Especially in Tik Tok, we caught the wave of cheap make-up in the second half of the year, and the products with unit price ranging from 30 to 60 yuan, such as solid lip gloss and expanded highlights, are very popular. From the core Z-generation ethnic group, the crowd has penetrated into high-net-worth exquisite mothers and cutting-edge white-collar workers. Therefore, naturally, the overall marketing efficiency of Girlcult has ushered in a new round of improvement, and the ROI of October (sales undertaking mainly in Tik Tok) is twice that of July (sales undertaking mainly in Tmall).

The improvement of business efficiency will naturally lead to the improvement of team morale, which is actually particularly important at the moment. Lock Xiao, co-founder of Girlcult, used an interesting metaphor: It snows outside in winter, and we have heating in the room.

02. Unlike skin care that relies on life science, the underlying logic of makeup is still in fine chemical industry.

After briefly combing the current competition pattern of make-up, we need to further explore a problem:

Has the underlying competitive logic of the make-up category fundamentally changed, or is it still evolving under the previous logic?

What we have talked about a lot this year is that the underlying logic of skin care products has been switched, breaking through the original technical boundary. Today, the basic discipline of cosmetics has completed the transformation from fine chemical industry to life science and biomedicine. In particular, the key to the competition of efficacy skin care is to move from the formula to the raw materials, and the products should have the differentiation of core raw materials, and then wrap, penetrate the skin, deliver and upgrade the life utilization around the core raw materials. Rational verification, clinical data and scientific evidence are the key, and the factors behind this are of course brought about by the shift of consumer concern and demand focus.

This picture has also appeared in many articles and activities of Jumei many times. We even suggested that the competition of skin care products has entered the "live animal era" from the formulation stage. Of course, this "era of active substances" is an empty finger. Nowadays, there are successful cases of domestic brands in the research and development of active substances, the path of dermatology, and even the frontier basic research of life sciences, and they are not inferior to international brands in the face-to-face competition.

The bottom competition logic of makeup, from the point of view of many senior practitioners, is still concentrated in the field of fine chemicals. Whether it is base makeup or color, the core appeal of consumers in this category is still focused on makeup effect.

In this part, let’s disassemble a few points:

First, about the difference between skin care and make-up, one is a scientist and the other is a craftsman.

This is an image metaphor given by a senior makeup person in the industry when talking about category differences: skin care is a scientist, and it is essentially an innovation of formula and technology; Make-up is more like a craftsman. The difficulty is not the technology, but the part of the process, including the visual presentation, which is the combination of ideas and techniques.

In the category of skin care, it is normal for a single ingredient/raw material to be linked to a certain efficacy or even a certain brand, such as nicotinamide, hyaluronic acid, collagen, the concept of early C and late A, etc. However, in makeup, it is rarely heard that a certain mica or a certain film-forming agent has become a decisive decision affecting consumers’ purchase because it is a characteristic ingredient of a cosmetic product.

The improvement of products by technology often affects the direct experience of consumers and the actual makeup effect. For example, when Jumeili studied the makeup category last year, Hua Xizi’s team mentioned that the skin feel and makeup effect of its honey powder cake would be affected by the temperature control and water content control in low-temperature baking; In order to achieve better uniform coverage of fog and lock makeup, Berry’s star makeup spray has specially developed a uniform micro-pressure pump head with an internal pressurization system.

Therefore, it can be clearly seen that the product logic of skin care products gradually influenced by life science and biomedicine is different from that of cosmetics under the influence of fine chemical industry.

Second, the influencing factors of base makeup and color category

Going back to the make-up category itself, the base makeup category and the color category, a rational component is stronger and a perceptual component is dominant, so the two major sub-categories are also different in terms of the influencing factors of products on consumers.

Base makeup is a functional logic to modify skin color and cover up defects, so it is more closely related to raw materials, formulas and processes (it does not mean that color categories are not important in these aspects).

Among them, 01) Needless to say, the basic raw materials include powder, matrix and some new active substances. According to Wang Yihua, a senior supply chain expert and general manager of Huamei Kangyan, the competition of raw materials itself is in a translucent state, and there is no secret, but the advantages are all in foreign companies. Agatha, founder of Fangli, also mentioned that raw materials are the basis of the formula, and almost all international cosmetic companies have cooperative research and development on raw materials, because in terms of raw material research and development, foreign technologies, systems and scales are ahead of domestic ones, which is also the reason why Fangli adheres to the "global resource integration strategy".

It is hard to say whether this will become a bottleneck project in the category of make-up. After all, make-up does not belong to a sophisticated industry like chips that affects national competitiveness. To tell an embarrassing story, some time ago, Japan discharged nuclear waste water, and many make-up brands asked foundries to replace Japanese raw materials in their products. However, the best raw materials in base makeup are made in Japan, and international brands also use Japanese raw materials, even international brands can’t replace them at this stage.

02) Research on formula/technology, including the collocation of raw materials in the formula, the interaction between different raw materials, the microstructure of raw material formula, the mechanism of action, etc.

03) The difference of technology, as mentioned above, includes the exclusive raw material technology, formula technology, customized equipment and other factors that will affect the cosmetic effect of the product;

04) Consumers’ research, skin type, skin quality and skin color, as well as the complex external environment such as skin condition, region and climate, have an impact on the makeup effect, makeup feeling and makeup retention of base makeup products on consumers’ faces. Therefore, Tao Zi called the base makeup "a category more difficult than skin care", which was not only influenced by multiple factors such as consumers’ skin quality and external environment, but also coordinated with the previous skin care products.

The influencing factors of color category, if we observe the development and changes of this sub-category in recent years, we will find that there is obvious evolution logic.

The color category mainly modifies the outline of the five senses, which is more dominant than the makeup category. Therefore, raw materials, formula and technology are also influencing factors, but more importantly, the following factors are gradually evolving.

01) Color, back to the category take-off stage after the consumption tax was lowered, the first color category that broke out was lipstick. The original lipstick had only one kind of red, followed by "colorful red", so just eating the bonus of color made many brands get big market dividends at that time, such as charm.

Not only the lipstick category, but also other sub-color categories have grown under the color logic. For example, Girlcult’s micro-innovation in the blush category, in the process of building, Girlcult has insight that it is common sense for girls to have dozens of lipsticks, but the blush may be 1-2, but who said that different makeup and different scenes can’t match different blushes? In 2019, Girlcult’s multicolored emotional blush was born, and the IP joint name with Fart Peach reached 10 million in the whole network that year.

Later, the color of blush was rolled into "functional color", such as expansion color, contraction color and atmosphere color. "If the lightness is high and the gray level is low, you can expand, and if the lightness is low and the gray level is high, you can shrink." When Suo Zhi talked about this change, he mentioned that the logic behind it is to use blush as a highlight, repair capacity and give it the functions of other categories. Caitang’s explosive three-color repair disk also has the same feeling.

02) Texture, although there are other minority colors, after all, red is the biggest basic dish in China market, and colors always run out, so in recent years, the competition logic has turned to texture, and this has a reincarnation. For example, a few years ago, consumers paid more attention to the matte texture, reflecting a more natural sense of makeup, and INTO YOU’s innovation in the texture of lip mud got the biggest bonus of this wave; Nowadays, the trend has come to the demand side of bright face like a cycle, and through the innovation of formula and production technology, the bright face texture has been made the ultimate fermented color on lipstick, which has successfully won a large number of markets for bright face texture of lips.

03) Style, or the competition between aesthetics and taste, is an important factor for color categories to blossom now. Compared with the gradual convergence of skin care products in terms of efficacy and technology, the segmentation of color categories and the expression of brand personality will be more prominent, which is also the ultimate competitiveness of brands when the dividends of color and texture are reduced. Girlcult’s trend, new Chinese style, Lolita girl’s heart wind known by flowers, European and American sense of goggles, and modern and textured yeast color.

Third, the evolution of controversy: the efficacy of makeup development authenticity

Finally, there is still a controversial evolution about the makeup level, that is, whether the functional makeup will become the advanced direction of the makeup category.

No matter in the steps of foundation, priming or makeup fixing, major brands are claiming efficacy, and the logic of makeup efficacy+efficacy is gradually regarded as a feasible consumer decision-making influencing factor in makeup.

Why is it controversial? Because there are two schools of voices about whether the efficacy can have a scientific and empirical evidence chain in the category of makeup.

For the specific voice of the opposition, please refer to the article published by Zhenmei Blog, a beauty science blogger, as early as 2020, "By nourishing the skin with foundation?" Is this another hoax? (The views in the table also refer to the latest opinions of supply chain and brand). Among the supporters, Fang Li believes that the skin-care mentality of foundation makeup can take the efficacy path, because consumers are paying more and more attention to their own skin health. Fang Li also announced this year that China-US laboratory and the research institute of Betaine Group, an investor, will carry out strategic cooperation to develop foundation makeup products with sensitive muscle direction; Guo Yu, the representative of the supply chain and the head of Taihe Biotechnology Incubator, revealed that Taihe Biotechnology has been promoting a liquid foundation with a human evaluation report on acne efficacy.

From the consumer’s point of view, the efficacy of skin care does have a certain degree of decision-making influence. Therefore, the key still lies in whether the upstream supply chain and brand, as suppliers, can come up with more logically complete and uninterrupted evidence chains to convince the whole communication ecology.

03, the weakness and armor of domestic makeup, make up the gap and give play to the advantages.

After talking about the underlying logic, let’s finally look forward to the upcoming competition situation in the cosmetics market in 2024, and after more than seven years of category take-off, more and more excellent and well-labeled domestic cosmetics stand firm in the market, and what gaps still exist between us and international brands. Of course, today’s domestic make-up is also excellent. We can’t sell ourselves short. We need to give full play to our advantages and gradually develop system efficiency from local efficiency.

Regarding the competition in the make-up market in 2024, several guests gave their own judgments:

It can be seen that in a more competitive environment, the era that is more suitable for high-quality brands will come. Although we still lag behind international brands in many aspects, now more and more domestic cosmetics brands stand at the level of 1 billion. They know the current weaknesses (weaknesses) and know how to arm themselves with stronger armor (strengths).

The weakness is obvious, and it is also a natural gap created by time:

On the technical level, some brands admit that there may be a gap of 30-40 years between China’s base makeup and leading markets such as Europe, America, Japan and South Korea. "For the same formula, China brands can achieve 85 points, while overseas brands can achieve 100 points. It seems that the gap is only 15 points, and it may take 30 years to catch up." Numbers are only the dimension of measurement, and we need more "artisans" and enterprises to make up for this lesson.

Hu Huan told a story. She once visited an overseas makeup factory and walked into their office. Six grandfathers added her. "This scene looks like their granddaughter, and this (technical) experience is brought by time."

And the accumulation of brand equity brought by time:

Of course, we also have a solid armor in growth, which is the localization advantage in the Asian and China markets, and China’s rapid self-iteration and breaking its own genes can shorten the time gap:

Visual design: Lele

Editor in charge: @ Summer Children’s Shoes