Author | Ari

Edit | Lu Yiming

Title map | vision china

Another top flow overturned.

On September 10th, Li Jiaqi introduced a 79 yuan Huaxizi eyebrow pencil in the live broadcast room. When he saw the barrage that the brand was getting more and more expensive, he immediately retorted crossly: "Where is it expensive? It has been this price for so many years. " "Sometimes I look for my own reasons. After so many years, my salary has not risen. Have you worked hard?"

Consumers evaluate the value of products, but the anchor, in turn, evaluates consumers high and high, which naturally arouses public anger. As soon as this was said, "netizens with goods in Li Jiaqi" quickly rushed to the hot search.

In the comment area, one of the most praised messages wrote: "You can explain why it is so expensive, because of raw materials or workmanship or other reasons, but you can’t attack consumers."

Li Jiaqi first explained his bad state in the live broadcast room, and then posted an apology in Weibo, but consumers didn’t buy it.

On the evening of September 11th, Li Jiaqi apologized in tears during the live broadcast. (Photo/Weibo screenshot)

Netizens noticed that the eyebrow pencil he recommended weighs only 0.08 grams, and the price per gram is twice as expensive as that of gold. Then, the unit price per gram of domestic beauty products and international brands in recent years was compared, and something was found.

"If you calculate by grams, how can domestic products be more expensive than international brands?" The new domestic beauty cosmetics always take "big brand replacement" as the selling point, and Li Jiaqi’s words that offended consumers even caused their word-of-mouth to bite back.

Online celebrity brand often sells eyebrow pencil of tens of dollars and lipstick of hundreds of dollars. Where is your price?

Take off the "domestic" filter, what’s left?

In recent years, the new brand of beauty that has been popular on the internet has been inseparable from the label of "domestic products" at the beginning of its debut.

Hua Xizi is positioned as "Oriental makeup, nourishing makeup with flowers" to create makeup that is really suitable for China consumers; The parent company of Perfect Diary, Yixian E-commerce, went public in 2020, and was praised as "the first beauty in China" and "the light of domestic products"; Tangduo is circled with cheap monochromatic eye shadow, and the key words of notes on planting grass are also "domestic products" and "big brand replacement".

Hua Xizi’s advertisement in Japanese drama. (Figure/"Animals")

It can be said that consumers were initially attracted by these brands precisely because of their "domestic" attributes. It is not only suitable for Chinese skin, but also relatively low in price, and can be used as a cheap substitute for big brands. "Domestic products are doing so well now" and "supporting domestic products" are often the reasons why consumers choose them.

How the beauty of new domestic products became popular has been reported by various commercial reports for countless times. Beyond the traditional supermarkets and e-commerce platforms, they seized the opportunity to preempt emerging social channels such as Little Red Books and short video platforms. Young people who play these softwares are more active and pay more attention to cost performance.

With the help of network marketing, it is the usual practice of many new consumer brands. (Figure/"Animals")

The perfect diary plays the slogan of "big brand replacement" and cooperates with many KOL and KOC on social software to reach the audience accurately. According to the prospectus when Yixian e-commerce went public, by December 2020, Perfect Diary had cooperated with more than 15,000 KOLs, of which more than 800 KOLs had more than one million fans.

Hua Xizi, who is often compared with the perfect diary, pays more attention to the image packaging. Around the concept of "Oriental", Hua Xizi invited Du Fu, kiku and other national beauties to speak for him. The packaging design is quite ancient. Lipstick and eye shadow are carved, and the shell should be made into Chinese locks and folding fans. Even the slogan imitates the style of ancient poetry: "Even the skin is like a gauze, and the original makeup is fixed."

However, if you take off the domestic filter, you can see that many brands rely heavily on heavy marketing.

The rise of new domestic products is indispensable for the promotion of grass. (Figure/Figure Worm Creativity)

In 2020, the revenue of Perfect Diary was 5.24 billion yuan, while the marketing expenses were 3.4 billion yuan, accounting for 65%. From 2020 to 2022, the sales expense ratio of domestic brand Polaiya was around 40%, while that of Mao Geping was over 40%. In contrast, the marketing expense ratio of L ‘Oré al and Estee Lauder, which have high domestic market share, is between 25% and 30%.

Hua Xizi did not disclose relevant data, but some media reported that Hua Xizi invested 20 million yuan per month on the live broadcast platform in the early days for marketing.

Burning money marketing can kill a bloody road in a red sea and let consumers know the brand quickly, but it may not be able to get a good reputation.

Whether it works or not will not be known until you try. (Photo/"Please Answer 1988")

In recent years, the growth path of many new online red new consumer brands has followed a similar formula: first, target people to build a brand, find a foundry to produce, and then use Internet marketing to build explosive products. However, it relies too much on marketing and packaging and is easily questioned by consumers.

Just like Hua Xizi, who is positioning high-end domestic products, the pricing strategy of single products is very particular, and it is often stuck in the blank range below international brands and above domestic brands. Take the explosive product air honey powder as an example, its price is 169 yuan, while the price of Chanel loose powder is 590 yuan. At first glance, Huaxizi is indeed cheaper, but their net contents are 8.5 grams and 30 grams respectively. After careful calculation, the price per gram of Huaxizi is even slightly higher than that of Chanel.

Netizens calculate the unit price per gram of different brands of loose powder. (Figure/Little Red Book screenshot)

No matter how clever the pricing strategy is, it can’t escape the eyes of consumers. Even if the notes on planting grass are overwhelming, there are still many netizens who have used them to give comments: "It starts with advertising, falls into value, and abandons quality." The lipstick is dried, the color is not good-looking, and the foundation takes off makeup, which inevitably leaves the impression of "low cost performance".

The gaudy products are harvested by straight men, and only girls are distressed by the cost performance. (Figure/Little Red Book screenshot)

The eyebrow pencil introduced by Li Jiaqi Live has caused controversy, not because it is expensive, but because consumers are unwilling to pay money significantly higher than the product value. Cheap and easy-to-use eyebrow pencil can be bought everywhere, but 79 yuan’s eyebrow pencil can’t make people intuitively feel whether it is better or not.

Chloe, a makeup enthusiast, told New Weekly: "There may be a gap in the durability of different brands of eyebrow pencils, but the eyebrows are mainly based on technology, and the products are really not much different."

Eyebrow pencils with different prices are not so different. (Figure/Figure Worm Creativity)

Chloe is used to buying cosmetics on her behalf. "Like TF eye shadow tray, the counter sells 700 yuan, and the purchase can be as low as two or three hundred yuan. The live broadcast room will not be lower than the purchase." Imported cosmetics need to pay customs duties, but domestic cosmetics don’t. They should have higher cost performance, which is why many consumers question whether the pricing of some domestic products is reasonable.

In fact, the raw materials and production technology of cosmetics only account for a small part of its cost.

According to China Business Daily, a factory OEM produces many brands of products, including Hua Xizi, and the cost of a single eyebrow pencil is below that of 10 yuan. In the documentary "Great Manufacturing", the production team visited the wholesale market and cosmetics factory, and learned that the lipstick sold in China is tens of yuan and hundreds of yuan. The production cost of the paste is almost four or five yuan, and the shell cost depends on the material. Between a few cents and five or six yuan.

The boss said that the cost of lipstick paste is four or five yuan. (Figure/"Great Manufacturing")

As a consumer, Chloe can also see clearly: "Makeup is a profiteering industry. Now many luxury brands have stopped selling their bags and started selling makeup, which shows that this money is relatively easy to earn."

In the final analysis, high-priced cosmetics are more expensive in brand premium, marketing and sales. After adding these expenses, a product with a cost of a few dollars can sell for hundreds of dollars.

The brand "working for KOL" is the consumer.

In fact, the new domestic beauty brand that spends a lot of money on marketing is often dubbed as "working for KOL".

Guojin Securities Research Institute has combed how the cosmetics industry chain distributes profits. A cosmetic, the brand takes most of the gross profit, and when it reaches the sales channel, it will be divided into a big slice. For the new domestic brands that started online, KOL, such as anchors and grass bloggers, must be given quite high profits.

Cosmetics, your brand and sales. (Figure/City Boundary)

Before March, 2019, Hua Xizi was hard to get into the top 20 in Tmall sales, but since it entered the live broadcast room in Li Jiaqi, its sales have increased rapidly, and it became the first GMV in Tmall on June 18th, 2020. Li Jiaqi was deeply involved in the promotion and even research and development of Hua Xizi, so that it was called "the brand promoted by Li Jiaqi". He repeatedly supported Hua Xizi in the live broadcast room, bluntly saying that "they just gave me their home". But this unintentional sentence also shows that the brand is KOL’s high profit.

As the head anchor, Li Jiaqi’s most famous phrase is "family, knock down the price". With his strict selection of products and "the lowest price in the whole network", he also publicly asked the brand to give him the most favorable price for the live broadcast room. Many people think that by keeping the price down to the lowest level, Li Jiaqi is striving for the interests of consumers.

Li Jiaqi asked the brand to give him the lowest price for the live broadcast room. (Figure/network screenshot)

Earlier, some media reported that Li Jiaqi’s commission rate for promoting Hua Xizi was 60%-80%, but Hua Xizi responded that the commission rate for cooperation with Li Jiaqi was the industry average.

But the head anchor did earn a very high commission. According to the report of the Overseas Business Research Group of Stanford University, in 2021, Li Jiaqi’s revenue ranked first in domestic anchors, reaching 1.8 billion yuan, exceeding the performance of 90%A-share listed companies.

Looking back at Li Jiaqi’s words, people finally have a different understanding.

"It is not because of Li Jiaqi that consumers can buy preferential goods, but because of a huge consumer group, Li Jiaqi, a brother with goods, has been created." Li Jiaqi certainly has his strength and luck to attract a large audience and become a head anchor, but his extremely high bargaining power for brand activities ultimately benefits from his huge fan base.

Top 100 annual net income list of network anchors in China (Mainland China) (part). (Photo/Stanford University Overseas Business Research Group)

Jiang Chacha, a well-known former advertiser, said that in order to enter the live broadcast room of the big anchor, the brand often has to spend a huge amount of money, hundreds of thousands of yuan and millions of yuan are possible. "When the beauty live broadcast battle is the fiercest, some brands will even give 100% commission, which is equivalent to losing money. It is a gameplay to burn money with Internet companies to seize the market."

However, after all, the wool is on the sheep. When the head anchor has too high bargaining power, the brand will burn money and grab the users, and the sales cost will eventually be passed on to consumers.

User comments. (Photo/Weibo screenshot)

Recently, many netizens have shared their shopping records, pointing out that the price increase of many domestic brands has been exaggerated in recent years-"A domestic cosmeceutical brand was originally a substitute for an international brand, but now the international brand has become its substitute." "39 yuan, a brand of eyebrow powder bought in 2019, now sells 79 yuan in the same paragraph."

More beauty bloggers pointed out: "A lip glaze has risen from 20 yuan to 60 yuan, and told me to grab two in the live broadcast room, and each one still costs only 20 yuan." From this point of view, the live broadcast room is still relatively favorable, but outside the live broadcast room, the price has risen.

"If the fire is on, the price will increase, which is really very low." (Figure /@real Li Zhizhi)

For brands, it is not necessarily a good thing to rely too much on the sales channels of one or two head anchors. Li Jiaqi’s phrase "What’s so expensive" can trigger a public relations crisis of the brand, and it may be a matter of an instant that the fire goes out of the circle and the reputation is destroyed.

Under the volume of the industry, the traffic is becoming more and more difficult to obtain and the price is getting higher and higher. The head anchor is harvesting both merchants and consumers. When people finally see the disadvantages of this model, the change of the industry is probably not far away.

With the change of consumption trend, people no longer just pay for the feeling that domestic brands are difficult. They clearly know that what is really difficult is the low-key old domestic products. Young people who are more and more careful will also confidently refute PUA’s words: "How difficult can domestic products be?"

Online celebrity products can’t escape the fate of "fire for a while". (Figure/"Animals")

Chloe said that the emerging online celebrity products are unsafe and useful, which can’t be seen in many notes on planting grass. For the sake of her own experience, she will still choose the classic products with big names.

"online celebrity brand depends entirely on product iteration, and the products made last year will not be popular this year. But those classic products with really good reputation have been selling well for so many years. "

In the beauty market, online celebrity brands are always changing, but consumers will not pay for packaging and feelings repeatedly. On June 18th this year, Hua Xizi fell out of the top ten in the makeup pre-sale list for the first time in five years.

Sooner or later, domestic products will step out of the mode of re-marketing, and rely on quality to precipitate word-of-mouth and brand value. Building classics should be more important than building online celebrity.

Proofreading: Zou Weiyun

Operation: Luzirui

Typesetting: Chen Zexin