Cosmetics electric Dealer, a fire in spring?

Intermediary transaction SEO diagnosis Taobao guest Cloud host technology Hall

In the vertical electric business concentration of the highest three areas, the earliest clothing outbreak, shoes first decline, cosmetics slowly hot but increasingly prosperous, this is why?

Article | Shaolin

After the Spring Festival Electric Circle of the first lively PK, from the three anniversary of the United States excellent products and Le bee nets "peach Blossom Festival." The end of the holiday to start the work of the workers, especially in Beijing, the eyeball is basically around the two companies: Take the subway, this station of the light box advertising is "for their own salt", the next stop is mostly "not beautiful"; missed the company downstairs advertising screen in the "full 50 percent", wrong but Hunan TV's "Breakdown price"; open Weibo, Is still the two people in exhausted, no lack of selling fake, fleeing goods, web site downtime, delivery delay and other hot spices, the outcome is their first day to achieve 500 million and 122 million sales.

This is not the number that can be tested, we do not intend to compare to distinguish between, just want to ask a question: In a lot of vertical electric trader Clip Tail In the moment, why the cosmetics market is still so lively?

Hardly involved in the electrical quotient of Cai wins, also cast a complete product line, in the days of cat make-up category to achieve the first name of the electrical Business Cosmetics brand PBA (Private Beauty Adviser, Patrick). His answer may have a certain reference: Taobao, Beijing-east and other electric business integrated platform has been set, the future opportunities belong to the vertical platform. Different vertical areas of the outbreak has successively, and the ranking of cosmetics is very high, because of its highly margin, and has a standardized, short supply chain, the audience young, heavy brand, repeat the purchase rate of high suitable for network sales characteristics. Whether the current attribute is a vertical platform or a brand is just a different pointcut and does not represent the final state. The trend of the platform to push own brand is already very obvious, the brand bigger also may prop up the platform.

So, high margin is the premise of the story. Whether gathers the United States or the Le Bee, all clearly indicated the on-line own brand The important reason is "sells other people's thing does not make money". In other words, compared to the company, brand electric dealers have greater margin space.

Not only the electric business, the whole cosmetics industry to give the outside world the most vivid impression is the high margin. But how high? deduct advertisement, promotion cost, Brand really make money? What is the difference between the cost and the profit structure of the electric dealer compared with the traditional offline brand? Taobao springing up on the small brands are too much, Japan and South Korea, Europe and the United States popular what to copy, it seems that everyone can do cosmetics. How are these products "saved"? is still the industry's secretive, Buzhi countless question marks.

In the past few months, "entrepreneurial state" reporters visited a number of cosmetics foundry manufacturers in the south, and with several electronic commodity licensing trader to talk, trying to find the answer.

100% generation work, average quality over line

First of all, this article discusses the cosmetics are limited to skin care, sunscreen, make-up, perfume and other narrow categories, does not include shampoo, bath, toothpaste and other washing type of large day. Because the latter's industrial organization, the value chain is very different, and the margin is very low, generally do not include the same statistical caliber.

Be familiar with the industry background. 2012, China's cosmetics market total sales of 122.7 billion yuan (source: Euromonitor), which Taobao sales of more than 30 billion. More than 80% of the market share belongs to foreign brands. Chinese products in the first three in turn is "natural Hall", "Bai Cao Set", Affordable herbal Medicine ", the first two annual sales are in the top 2 billion (source:" China Cosmetics Network "Research Center), the latter last year announced the listing of the number of the prospectus is 1.3 billion, all for the creation of more than 10 years of offline brands, However, all of them have entered the network channel. In the electric business brand, le Bee net last year announced its own brand annual sales of up to 400 million, in the lead position. Other well-known brands such as "Liv", "Royal Mud Square", PBA, volume in 100 million ~2 billion. In general, there are not many billion, large forces concentrated in tens of millions of levels.

The first question: How do you produce the electric dealer cosmetics?

At present, all of the electrical and commercial cosmetics brands do not have their own factories, that is, is to take the route of the foundry. Most of the factories in Guangdong, especially in Guangzhou Baiyun, Huadou, Panyu and other suburbs, a small number of distribution in Shanghai, Suzhou, Xiamen, Zhejiang. Basically are the local factories, I have a Taiwan-Hong Kong-Macau-owned or joint venture, there is no one with the Chinese cosmetics OEM multinational companies-Japan Colmar (Kolmar) Suzhou plant, South Korea branch Silk beauty Poetry (Cosmax) of the Shanghai factory to establish cooperation. Each factory generally only main individual categories, such as good at doing skin creams less will have a full set of make-up production line, do not usually touch the mask paste oil or perfume balm. This means that a product line rich brand needs to entrust a number of factory production, there are usually two kinds of models: oem--Factory is responsible for the production of content (including raw materials, formulations, processing, canned, very few brands will bring their own raw materials or participate in the formula), electrical goods Licensing is responsible for packaging materials procurement and package design; odm-- Factory-arranged complete product manufacturing, even including brand planning, positioning, product structure planning, electrical goods card with the design manuscript. #p # subtitle #e#

Does this mean that the power of the commodity brand is weak and unreliable? No conclusion can be deduced simply from the foundry, because this is the production organization which is widely used in the cosmetics industry, and it becomes more and more trend. At the operating point of view, the expansion of production capacity should always lag behind the growth of sales. No matter how big the brand, there are always some categories are not good, others can do better, or thin profits, and everyone can do. As long as the research and development control in hand, do a good job of supervision and quality control, part of the production outsourcing is completely reasonable, in fact, it is both international brands or offline products to varying degrees of use. In this regard, South Korea's cosmetics industry has gone a step further: every year, the government will come up with considerable funds to encourage innovation, promote the brand, manufacturers further division of labor-brand will be innovative focus on the design, planning, manufacturers are specialized in the development of content and technology, unite to fight for support funds. There is a lack of opposition in the industry that relies too much on foundry work to stop research and development from being applied, and basic research is shaky. But with the objective result theory, this really gave birth to "Han makeup" popular in Asia, affecting the world a wave of high-speed development market. This kind of thinking is deeply affecting China, especially the nascent, good internet marketing rather than production management of electric commodity cards. Of course, they are generally small, the financial strength is not enough to carry out large investment in fixed assets is also a reason, but this is not all, not even the most important.

Cosmetic industry is known as the sacred, mysterious chemical plant tradition: in advertising those who bathe in the morning dew in the flower is how to enter the pots and pans, can only imagine

More directly: What are the hottest cosmetics factories in the electric circle?

Our correspondent has tried to inquire many brands or factories, Ten's reaction is "kill not to say", "confidentiality agreement", even in the industry is already "open secret", even if the search for OEM company's promotional film can see many familiar logo, even if its workshop and display hall everywhere familiar names. This is not the electric business characteristics, cosmetics industry has been known as the sacred, mysterious chemical plant tradition: in advertising those who bathe in the morning dew in the flowers is how to become a magical effect of the essence into the pots and jars, can only imagine. However, after a large number of visits to the industry and field visits, we now intend to roll the name: Occupy more than half of the cosmetics skin Care category (such as make-up water, face cream), the most sought-after two generations of factories are located in Guangzhou Huadou District, Baiyun District "building Fang Ais-Saint" and "Ya-pure." The former by the "Building side", "AI San" two companies merged into a total of two skincare products factory, a makeup factory. If the product is 100 grams per bottle, one production line can produce 800,000 bottles of cream a day, and 8 other production lines, the number of workers peak about 1000 people. Its OEM electrical goods brand has the essence of oil, grass set, PBA, static Jia Jplus, 27 degrees 3 mask, etc., for the exclusive manufacturer of the oil, and is due to participate in the creation of this earlier successful electric business brand by the later pursuit. At the same time it is also under the line such as "St. Honey Lai Ya", Watson's best-selling "Zhen Mining source", retail chain "Ah Ah" of its own brand OEM. The latter has only one factory, a day of cream production capacity of about 100,000 bottles, another BB cream, powder, lipstick production line, the number of workers peak 400 people. Its OEM's electrical commodity card has PBA, porcelain muscle, poly-Mei Excellent products own brand, Lok Feng net own brand, but also in line for such as Overlord under the "Herbal Hall", Watson's sales King "in the United States", retail chain "Guerlain Beauty" of its own brand OEM.

The above data from each of the two factories provided, we do not have any research, but also do not intend to compare, but the caliber of integrated brands can be determined that they specialize in cosmetic foundry has been more than 10 years, Comprehensive strength in the entire Guangdong skincare OEM factory ranked in the top three (Foreign trade factory scale is much larger, but with the local brand very little intersection and thus not compared. Another number of offline brands of their own factories also use the surplus capacity to undertake the foundry, the scale is similar to, but less will become the direct entrusted object of the electricity commodity licensing, but through with this two indirect work. Guangdong Cosmetics production capacity of about 60% of the country, the level of software and hardware to lead other regions, means that the two factories to enlarge to the national level still top. Therefore, the first-line electric business cosmetics brand production conditions, in addition to may not be inferior to the first line of domestic Bai Cao set, the natural church of their own factories (only possible, and do not have sufficient public information to do comparison), has been the highest level of Chinese cosmetics manufacturing.

However, there are more than 2000 cosmetics factories in Guangzhou, only Baiyun district, there are more than 600, some alleys in a row several not listed manual filling factory. Smaller electrical goods--especially cheap to unbelievable--is it possible to entrust irregular "pheasant" factories to produce quality products? Maybe, but not as high as the average probability of offline brands. In particular, those in the beauty salon sales to quick-impact products, small range of quality accidents over the years, but negative reputation is more difficult to spread. But the spread of the network is too strong, once the large-scale quality problems, it is devastating. Therefore, the requirements of the product quality of the electrical goods brand generally in Watson, Wal-Mart's baseline above, the Commission is usually a larger, more standardized factory.

Stand in the factory's perspective, the line under the brand development is relatively stable, rarely ups and downs, to do a good job in the foundry plan. Anti-electric dealers, especially the small brands that have not yet stabilized and need to be tried and tested, more, less, today want to see new products tomorrow, the explosion of the sale of goods immediately to add orders, and low price (single product hundred yuan below, customer unit price of 80 yuan ~100 yuan), the factory to earn profit margins are also low. In other words, in order to obtain the same profits, for the electrical goods licensing OEM needs to pay more capacity.

That being the case, why is the factory willing to pick up and grab the orders from the power supplier? The director of the production of Accor told reporters that the long-term optimistic about the growth of electrical commodity licensing, with the help of the electric manufacturers to improve the efficiency of the factory operation, embrace the new trend is the first consideration. At present, the order of the electricity commodity brand is about 20%~30%, the trend is to increase, but from the angle of controlling the risk and balancing the production resources, it will not increase to the order only, but from the promoted winners of the long-term cooperation to improve profits.

This is a kind of balance through the two-way selection, it is not difficult to understand why many electric commodity cards with their words must be called "Industry benchmark" Kosmi poetry, but none of the cooperation. "There is a higher price for the poem, but the more critical difference is that the process is complex and does not meet our rapid response requirements." In addition, its advantage is the comprehensive ability, and our idea is to find in various areas of expertise in the ' small and beautiful ' type of factory to cooperate separately. "This is the explanation of PBA founder Suguijiang, representing a way of thinking." The founder of an unnamed electrical goods brand offers another way of thinking: "The introduction of new products by the branch of the United States and more than a year ahead of time to communicate is unacceptable." Also, we are small companies that are not dominant in one of its big clients, and are more willing to bundle up with a good, equally growing medium and small factory. ”

So how big is the gap between local factories and Kosmi poetry? A brand who inspected the latter's conditions of production shared his view with the journalist: there is a gap in hardware, but as the market develops it can catch up; the bigger gap is in software-the rigor of management, the standardization of production processes, the stability of quality control, It is not the use of money or airborne capable can ascend, need a process. Because the customer base is very few intersection, the price is very far away, now foreign OEM enterprises have not much influence on local enterprises. But in less than 35 years, with the cost of foreign factories falling, its rules more attractive to local customers, and the local growth of some can make big orders of the brand, competition is inevitable. #p # subtitle #e#

More than 80% gross margin, 10% net profit, can go far to see the brand

Understand the front-end production link, into the second question: cosmetics is really a "windfall" industry? The degree of "profiteering" of the electrical and commercial cosmetics under the line?

Suguijiang PBA was first in Shanghai near the end of the high-end offline brand, back to Xiamen, on the front, lower positioning, opened a new world

Look under the line first. Since 10 before the Shanghai home, Softto, White cat, such as a number of Japanese companies listed, has been no day, especially cosmetics companies landed in the domestic capital market. And the previous set of companies, in addition to home, or sell shell or years of losses. Once the local brands, such as Feather West, small nurses, Bao, Ding, have been L ' Oreal, Johnson, Coty and other foreign groups acquired. The newly-grown natural hall, Cooper Leia, beauty skin treasure and so on, are all in the eve of the newspaper meeting. The first to report the appropriate herbal prospectus, it is considered as the most fair material to interpret the current cosmetics market (although before the United States that is, Overlord, Frog Prince three companies listed in Hong Kong stock exchange, but the former category single, after both main washing, reference weak).

In this prospectus, its own cost, profit structure is: Gross margin 80.34%, advertising, promotions, terminals and other marketing costs accounted for 50% of sales revenue, net profit of about 10%. This in the line from the wire, engaged in cosmetics industry more than 10 years Suguijiang seems to be basically true, and represents the line live better brands of the general situation.

But there is a difference between the electrical commodity and the offline supply chain. Offline at the retail terminal will be eaten 30% of the profit. Before entering the terminal, but also through the large area, provincial and municipal agents three, each level should be deducted points. For netting dealers, fragmentation zone from one year to a quarter or even once a month to convene a fair, competition discounts, luxury cars, outbound travel, but also the burning money is criticized. These costs are natural for the electric commodity card to evade, internet marketing and traditional star endorsement, High-altitude advertising, program title is not a system. So, the net bad between the electric dealer cosmetics can be bigger than the line?

Not necessarily. A pregnant woman, who asked to be anonymous, the founder of the cosmetics brand. The ex-factory prices of cosmetics are often 1/10 of the market price, a few more than 1/20, but usually not directly to the price of sales, but always on the discount, so the actual gross margin is slightly lower than 90%, but will never be less than 80%; Employee Benefits if done better, staff costs will account for about 20%, office, warehouse rental and other administrative costs, 5%, Taobao advertising, traffic, Cat commission, such as marketing costs, 20%, the pursuit of user experience logistics use of your point, 12%; promotional activities, gifts, 10%; turnover over 800,000 theoretically to pay 17% Value-added tax, entry and exit items and various methods of reasonable tax, at least 10% of the remaining profit space remaining 13%, but also to ensure safe stock, cash reserves, the last net profit is more than 10%. The difference is not too big, who can squeeze more profits from the above cost, Lengnuanzizhi.

Need to explain that the ex-factory price to remove a "0" this rule applies not only to the electric business, covering all hundred or so cheap cosmetics, and the offline. Higher-end, more expensive products, the price system in the value of the product itself a lower proportion. So how much is the cost of producing these products? What role does the OEM plant play in this "windfall" chain? The answers to both sides of the brand and the factory are usually 4:6 of the value of cosmetic content and packaging. That is 100 yuan of products, the ex-factory price is 10 yuan, of which 6 yuan is packaging (usually by the brand from the company), 4 Yuan is the brand to pay the factory paste costs, including raw materials and processing costs. The processing fee is only enough to keep the factory running, and even a slight loss. The factory earns the difference between the cost of the raw material that is reported to the brand and its price, which is usually twice times the price quoted, which is why they usually do not agree with the brand's own raw materials. In this 4 yuan, OEM factory average can earn 0.5 yuan, deduct cost, net profit less than 5%, in line with the general Law of Industrial chain Division of labor-the more to the front-end profits thinner.

Since the production cost and net profit are similar to the offline, the electrical goods card has the advantage? At least the following:

1. Capital turnover is much faster. Offline market development ticket transfer, not arrears also need two or three months to receive money, and small brands almost escape the fate of default. And online, especially its own customers and Taobao, cat, such as the self-harvest silver platform, once the consumer confirmed receipt, the money will be immediately to the account, but a few days time. The difference between the two is too great. You know, the importance of cash flow to a long-term company cannot be overemphasized.

The ex-factory price of the electric dealer's cosmetics is usually 1/10, or about 10 yuan. One OEM factory can earn 0.5 yuan-1 yuan, the profit from the price difference between raw material price and cost

2. Use properly can quickly brand, online feeding line. Many of the electrical goods card development but only three or four years, the visibility has gone under the line to twice times or even longer to walk through the road. Originally online under Just a second-line brand of herbal medicine before the opponent to power the curve overtaking, is a good example. Although the online channel's absolute contribution to its sales is not much, only 15% (2011 figures, now likely to increase), the contribution to brand awareness is too big to estimate. Liv Essential oil also has similarities, originally online under the unknown, the line became famous again after the attack line, has become one of the industry leaders. Brand will have the opportunity to increase sales, enhance the capital with the upstream and downstream negotiations, the introduction of new products and improve pricing, these will expand the profit margins and profit margins, while diluted in the early stage to play the brand and investment in research and development, marketing and other sunk costs. Cosmetics is one of the categories of consumer goods that attaches great importance to the brand, its business logic has always been to create the brand at any cost, cultivate word-of-mouth and then profit by the scale effect of the brand. This is why L ' Oreal entered the Chinese market, Shanghai home to create Bai Cao set, the strategy is not to make money for ten years. and the electricity commodity card, if understands the brand, the time will be much shorter.

3. Avoid the channel and face the consumer directly. The success of many offline brands is not the success of the product, but the success of the channel. The disadvantage is that when you grow up will be controlled by the channel, than discount, advertising, than the star endorsement, than packaging, many times than to the consumer to see, is to channel. To increase product input, adjust pricing and even change the packaging, we must consider whether the channel can accept. If you want to streamline the channel, focus resources on the terminal to face the consumer, not so easy. A year ago, the natural hall to the channel operation, immediately in the industry "condemnation", because breaking rules affect too many people's interests. Electric commodity card In this area is very happy, natural supply chain short, can directly touch consumers. Even if Taobao no longer give traffic and flow more and more expensive, it is one-time, once the customer retention, two times, three times consumption will no longer have this part of the cost. And offline, the channel buckle point is eternal.

4. Low starting threshold. A number of front-line brands of cosmetics brand marketing director of the founder told reporters, a line of cosmetics brand start cost in about 30 million, including a complete set of packaging design and mold, production costs, open channels, please spokesperson and advertising production, do not include the launch. In the future, 30 million of the year's advertising can only be seen, 50 million, 80 million have their own voice. And online, 4 million or 5 million can start, early Taobao to resources may be lower. Mastering skills rather than throwing money into the market can improve the effect of promotion, and today's investment is profitable today. The scale of 10 million into the security period, 15 million break-even, a year in Taobao 20 million promotion fee has been very alarming, the basic guarantee of 80 million to 100 million sales. To grow again, you may not need to invest more online, but to get down to the wire. Although Taobao cosmetics one year sales 300多个亿, equal to 10 years ago the National cosmetics market total, theoretically enough to carry more than 1 billion of the scale of the brand, but if not into the line, only Taobao that circle of people know.

Because of these advantages and considerable gross margin, although by the capital favored by the electric dealer cosmetics brand is not much, we live all can also, not so anxious for money. So is it just a matter of time before a successful cosmetics brand grows in the electric business channel?

The core value of a cosmetic brand lies in its well-known star products and product innovations that continue to lead the trend. Compared with L ' oreal and Shiseido, the research and development laboratories in the life-like value, the Chinese offline brand research and development capabilities and awareness of the very very weak. One of the stars that made a little nurse. Sunscreen, perhaps the most senior cosmetic formula in China, Nishungjiang told reporters: China has independent research and development departments and research and development personnel, and occasionally with foreign laboratories listed under the line of cosmetics brand manufacturers estimated not more than owning 5. Electric business brand, have their own formula, even if only to tune the flavor or the factory formulation to put forward the direction of opinion, the number of fingers. Some categories such as cleansing milk, essential oil, BB cream, the market has a mature formula for circulation, slightly change the source of raw materials, flavors and proportions have become different products. Some newly popular products such as snail cream, find a bottle to study its ingredient label, with taste, color, tactile estimation ratio, high level can be imitation to 90% similar.

So, when a lot of imitation of your brand appears to fight the price war, or big brands to increase the investment power, push parity products to eat the mass market, rely on what to retain users? Because the market is big enough, the current competition is not so cruel. Then go back, within 35 years the forces began to clash, the industry began to integrate, the lack of advantages and characteristics of the brand will be doomed to a large number of extinction.