This year, there is a polarizing trend among domestic beauty brands, and this trend continues.
Affected by the &#34;618&#34; promotion, the growth rate of the beauty industry in the third quarter slowed down compared to the second quarter, and September entered the off-season.
Except for a few brands such as Pechoin, Han Shu, Kefumei, and Yuzhe, which have achieved growth of more than 30% in sales on Taobao and Douyin against the downturn, the overall market is still weak.
According to Qingyan data, the sales of Tmall beauty products in September 2023 were 9.291 billion yuan, a year-on-year decrease of 19.47%, with the skincare category declining by more than 20%.
When the industry's growth is weak and polarization coexists, how to break through the growth bottleneck and bring new growth momentum to the beauty market is a challenge for every domestic beauty brand.
At this critical juncture, the explosion of &#34;Douyin dramas&#34; seems to have brought a new direction to the beauty industry.
Since the premiere of the Douyin drama &#34;Dress Up with Growth&#34; in February this year, Han Shu has achieved double-digit growth on the Douyin platform for 7 consecutive months. This is an achievement that all domestic brands envy in the weak market environment, and it also provides a new way for all domestic brands to break through the circle in the era of internal competition.
<h2>Is the success of Douyin all thanks to &#34;down-to-earth dramas&#34;?</h2>
This year, although the beauty industry as a whole is under pressure, Douyin platform has shown impressive growth.
According to data from Chananma, the beauty section of Douyin continued to grow by 58.9% year-on-year in the third quarter of 2023, with a growth rate of 62.2% in September.
Many beauty brands have achieved considerable growth on Douyin, and the year-on-year growth rates of Shanghai Jahwa and Shangmei Holdings even reached three digits.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b96198a0-3d33-49f3-a18c-34e995779cb1.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b96198a0-3d33-49f3-a18c-34e995779cb1.png"/>
(Data source: Magic Mirror, Chananma, TF Securities)
The brand with the most impressive growth rate this year is Shangmei Holdings.
This domestic brand, which used to be &#34;Korean-style&#34;, has achieved double-digit growth on Douyin for 9 consecutive months after its online transformation, mainly due to the explosive growth of its brand Han Shu for 7 months.
In September, Han Shu's overall sales on Tmall and Douyin increased by 590% year-on-year, with the Red/White Waist Gift Set contributing 34% and 32% of the GMV respectively; Douyin's year-on-year growth was 695%, and the sales of the Red Waist Gift Set exceeded 100 million yuan.
The turning point of Han Shu's strong growth can be traced back to the series of dramas launched in cooperation with Douyin influencer Jiang Shiqi in February this year. Han Shu incorporated its star product &#34;Red Waist&#34; into the plot.
Although the audience's evaluation of this type of Douyin drama varies, the content format that is &#34;both down-to-earth and captivating&#34; indeed coincides with the needs of young people who pursue &#34;watching in N minutes&#34; long videos.
By integrating the product into the plot of the drama, it can enhance the authenticity and viewing experience better than simply forcing it in. With the help of the breakthrough of the drama, Han Shu's monthly sales have jumped from the previous 40-50 billion level to the billion level.
Interesting findings:
The first episode of the short drama &#34;Dressing Up with Growth&#34; received a high number of likes, reaching 787,000. As of September 26th, the total number of views has reached 650 million, successfully breaking through the young audience group.
In the following months of April, May, July, and August, other short dramas with different themes were released, with views mostly around 1 billion.
(Source: Douyin, Dolphin Research, Xinda Securities Research and Development Center)
Interestingly, Perlier previously stated in a performance meeting that after seeing Han Shu's short drama marketing, they believed it was not in line with their brand positioning and therefore decided not to adopt it.
However, in late September, Perlier also launched two short dramas, &#34;Behind the Resistance&#34; and &#34;Fight Back, Wife&#34; on the Douyin platform. They promoted the Double Resistance Water Milk Essence series (targeting young consumers) and the Ruby Water Milk Essence series (targeting anti-aging needs) based on the age of the main characters in the dramas.
This also reflects the dilemma faced by domestic brands at the moment: on one hand, the industry as a whole is experiencing weak growth after the dividend period; on the other hand, brand competition is becoming more and more intense without major innovations in raw materials.
All major brands are racking their brains to find new ways to break through the growth bottleneck.
When ordinary product endorsements are no longer as popular as in previous years, hosts are also finding it increasingly difficult to attract viewers due to commercialization controversies. To break through, beauty brands must come up with something &#34;new and exciting&#34;.
<h2>Continued pressure on the Taobao ecosystem, but not without highlights</h2>
If we only look at the prosperous growth of Douyin, it is difficult to reflect the overall situation of the industry. However, if we look at the main platform for e-commerce, the Taobao ecosystem, the growth challenges faced by beauty brands this year become more prominent.
According to Mirror Data, the total sales of beauty products on Tmall in the third quarter of 2022 decreased by 16.2% compared to the same period last year, with a further decline of 25.7% in September compared to the peak season of July and August.
In the overall sluggish environment, most brands are experiencing a decline in growth. However, there are still a few brands such as Perlier, Juzi Biotech, and Shangmei Corporation that have achieved counter-growth.
Specifically, the domestic giant Perlier has a similar presence on the Taobao ecosystem and Douyin, with its growth mainly driven by its makeup brand Caitang. Caitang's year-on-year growth on Douyin and the Taobao ecosystem exceeded 30%, but its revenue scale is still only a quarter of the main brand. As for the main brand Perlier, its growth in September was basically flat compared to the same period last year.
However, it is worth noting that the main brand Perlier launched the new version of its Ruby Cream 3.0 in late September, which quickly gained popularity after its release. Its sales have surpassed Olay's star product, the Purple Iron Eye Cream, and OLAY Anti-Sugar Small White Bottle Essence, ranking first in Tmall brand sales and second in Douyin's single product sales chart.
According to the calculation by Zhongjin Beauty, the Ruby Face Cream 3.0 contributed 12%-22% of the GMV in September.
Perlier's other star product, the Double Anti-Aging Essence, achieved double-digit growth in all three months of the second quarter after upgrading to version 3.0 in April this year.
Given the success of the Double Anti-Aging Essence 3.0 and the sales peak brought by the Double Eleven promotion in the fourth quarter, the Ruby Face Cream 3.0 is expected to continue its strong growth trend and sales performance in the next quarter.
Another outstanding brand on the Taobao platform is the &#34;rising domestic brand&#34; Giant Bio.
In today's increasingly competitive raw material market, Giant Bio has successfully occupied consumers' minds with its differentiated recombinant collagen products, driving strong sales performance. During the 618 period, its sales on the Taobao platform increased by 483% YoY.
In September, Giant Bio is still one of the few brands that maintain strong growth, mainly driven by its sub-brand Kefumei. Its star product, the Collagen Stick, has consistently ranked first in the sales rankings on Miaoqi and Douyin, and has also propelled the brand's GMV into the top 9 skincare brands on Douyin.
In addition, in September, Giant Bio launched new products, OK Water and Tonton Throw, but these two products have not yet gained traction and are still in the early stages of development.
The main selling point of Tonton Throw is no longer recombinant collagen, but hyaluronic acid, positioning it as a moisturizing and hydrating product. However, there is already a plethora of hyaluronic acid-based essences on the market, especially those developed by Huaxi Bio, which focuses on hyaluronic acid raw materials. Giant Bio needs to consider how to differentiate itself from its competitors in the future.
<h2>Summary</h2>
Most brands have felt the &#34;coldness&#34; of the beauty market this year.
The trend of impulsive consumption by consumers has faded, and the recent commercial controversies surrounding &#34;flower west&#34; undoubtedly weakened the value of live streamers in live streaming rooms.
Clearly, ordinary product promotion is no longer as attractive to viewers and does not generate excessive profits as it did in the past two years. Beauty brands need to have something &#34;new&#34; in order to break through.
The success of Han Shu's Douyin short dramas can be seen as a new breakthrough for brands in the context of the beauty industry's internal competition.
Breaking through and improving brand penetration is an important driving force for the long-term development of cosmetic brands. Brands need to constantly find new ways to break through based on changes in external channels, consumer perceptions, and demands.
In the short term, as Double Eleven in the fourth quarter approaches, brands that continue to enhance consumer awareness and educate consumers about new products will achieve better sales performance at key sales points.
However, in the long run, while brands are breaking through, they also need to keep up with product strength. Ultimately, it is consumers' recognition of the product that builds long-term competitive advantages. Otherwise, breaking through will only be temporary.

BYTED

When ordinary live-streaming sales can no longer achieve excessive profits, beauty brands must introduce some "new tricks" in order to break through.

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