Retail in Asia


The Beauty Edit: Chapter IV – What are C-beauty brands doing to storm Douyin: Key takeaways for global brands

China’s accustomization to the dynamic zero-Covid policy has allowed its beauty market to gradually recover following two years affected by the pandemic. The recovery was first observed in July 2022 according to data released by China Customs. The overall import of cosmetics and beauty products reached CNY 11.97 billion (USD 1.7 billion), up 5.18 percent year-over-year.

Despite significant retail sales shrink in March and April this year, major global powerhouse L’Oréal also achieved double digits revenue growth in June. The growth can be credited to an increase in new channel sales. In July the company ranked 4th for top brand sales on short-video social media platform Douyin, which has amassed 600 million active users.

SEE ALSO: The Beauty Edit: Chapter II – EXCLUSIVE INTERVIEW with President and Managing Director of L’Oréal Hong Kong

The revival of beauty retail sales significantly outpaced sales in other industries. According to Euromonitor forecasts, the penetration rate of e-commerce sales channels in the beauty industry is expected to increase to 40 percent in 2022, and will continue to expand.

Douyin has become an appealing platform for beauty brands advertising. According to data from Sinolink Securities, Douyin’s beauty GMV in Q1 2022 was CNY 9.6 billion (USD 1.4 billion), up 164 percent year-on-year, with the highest growth rate amongst all e-commerce platforms.

Chinese domestic brands contribute a significant portion of beauty product sales in Douyin. Feigua Analytics estimates that Chinese domestic beauty brands contribute around over half of the top 20 brands’ gross merchandise value (GMV). This article will detail the techniques that C beauty brands are using to stay competitive and how international brands can implement these.

1. HBN – Create a professional image and use ingredients to improve consumers’ awareness of the brand

HBN, founded in 2019, is the newest efficacious skincare brand. With the popularisation of the “Morning C and Evening A” skincare concept, HBN successfully penetrated the consumer market and created a positive brand impression with its retinol ingredient.

HBN has been actively advertising on Douyin for a year, with its main focus on ingredient skincare. In the past six months, the brand’s sales have reached CNY 219 million (USD 32 million), and the monthly sales in Douyin have remained consistent at CNY 35 million (USD 5 million) throughout the year.

According to statistics from the past six months, the sales generated solely from HBN’s live streaming were CNY 72.285 million (USD 10.5 million), accounting for 32.93 percent of the brand’s total sales. Meanwhile, sales of influencer livestreaming were CNY 146 million (USD 21 million), accounting for 66.69 percent of total sales.

In the same time period, HBN has prioritised its online collaborations with 1,099 Influencers, resulting in a total of 18,000 live streaming sessions. Sales generated mainly from live streaming accounted for 99.75 percent of total sales.

In its live streaming strategy, HBN chose to cooperate with a large number of influencers on Douyin through short video content. They conducted popular science and market education on the effect of retinol to consumers, and output brand value. The high-quality content and massive video exposure also precipitated some potential consumers who are aware of the brand, and led to sales for HBN’s follow-up live streaming, completing the full-link closed loop of Douyin’s marketing.

The vast majority, 94 percent, of HBN’s live streaming room fans are females aged 18-40 The HBN live streaming room is composed of two forms of traffic: paid (75 percent of total sales) and organic (25 percent of total sales).

HBN collaborated with Douyin to create an interactive challenge for the app’s users. The initiative has reached 1.24 billion views and gained huge exposure. This increased publicity and exposure has resulted in more than 5,000  short videos mentioning HBN in the past 90 days, and the total interaction volume exceeding 5 million individuals.

HBN focuses on collaborating with medium influencers in its business strategy. This is due to the fact that medium range influencers have more time and energy to produce content compared with celebrities and top influencers. Moreover, in comparison to small influencers, medium range influencers are considered more experienced and have access to a more appropriate fan base to drive the growth of brand sales and awareness.

HBN’s success with Douyin has been achieved as a result of the company’s focus on customer communication, promoting the efficacy of products, and establishing a brand image. They also gain customers’ trust by presenting the products’ most realistic effects through human efficacy testing Finally, HBN utilised Douyin’s rich creators’ resources to cooperate to increase the brand’s voice.

2. Winona – Creative marketing to achieve high exposure, optimize the platform keyword search to drive sales growth

Winona, a sensitive skincare brand, was ranked as the #1 beauty brand on the first day of this year’s Douyin 6.18 sales festival.

Consumer interest and demand in  the sensitive skin market is currently in a period of rapid growth. According to the white paper on sensitive skin market trends, the skincare market for sensitive skin in China will reach 29 billion CNY (USD 4 billion) in 2021, with a compound growth rate of 27 percent over the past three years. By continuously improving the brand positioning of “focusing on sensitive skin,” Winona precisely matches the individual needs of the target group.

In terms of e-marketing strategy, Winona has been using Douyin and social shopping platform Little Red Book as the main media platforms. Since the beginning of May, Winona has been cooperating with over 200 influencers to build brand buzz and continue to build the atmosphere of the 618 campaigns.

After Will Liu’s (Genghong Liu) at-home fitness livestreams went viral on May 20, the company appeared on popular live streamer Will Liu’s Douyin live streaming room. Will Liu gave his wife the Winona skincare gift box as a Valentine’s Day gift, innovatively creating a new form of joint brand live streaming seeding. In the meantime, Winona also became the first beauty brand to appear in Genghong Liu’s Douyin live streaming room, which not only gave Winona instant exposure in terms of brand communication, but also seeded many of Will Liu’s female fans.

Will Liu’s collaboration was invaluable for the development of the Winona brand. The influencer’s fan base is mainly upscale, white-collar women in first- and second-tier cities, similar to Winona’s consumer base. Hence, demonstrating the effectiveness of this creative marketing campaign on improving the company’s overall performance.

In addition to this, Winona realizes the increasing importance of search advertising within Douyin. The brand makes good use of popular keywords and does a good job of attracting traffic. When users find Winona through search behavior, they can enter the official account.

When the users enter their official account of Winona, if the account is hosting a live stream, they can directly enter the room to watch and discover the products they want to buy to directly place an order and complete the conversion.

3. Grain Rain Skincare – content and co-branded marketing help brands reach target consumer groups

Founded in 2016, Grain Rain Skincare is a domestic efficacious plant-based skincare brand and the only Chinese brand named after the solar terms culture.

Grain Rain focuses on the whitening skincare market segment and it has been creating quality whitening products with glabridin as the main ingredient since its inception. According to the Meilixiuxing (美丽修行) data forecast, the overall size of the whitening and light spot market will reach CNY 501.3 billion (USD 72.6 billion) in 2021, and China’s whitening and light spot market have grown by 42.6 percent in the past 6 years. However, there are many problems with the whitening and spot lightening market like the safety of the ingredients and suitability for sensitive skin.

In this context, only products with high safety factors and those able to meet the requirements of new regulations and policies can stand out in the whitening segment.

For emerging brands like Grain Rain Skincare, Douyin E-commerce has specially created a marketing IP to help emerging brands grow: “Douyin E-commerce New Release.” As the growth engine of new brands, this project has helped 100+ new brands achieve explosive sales growth.

In June of this year, “Douyin E-commerce New Release” and Grain Rain Skincare created a new beauty formula theme campaign, which set off a new trend in skincare among young people.

Recently, the Myers-Briggs Type Indicator (MBTI) personality test has been widely spread among Generation Z consumers. The topic #MBTI has reached 1.25 billion readers and 289,000 discussions on Chinese micro-blogging site Weibo. Skincare brand Grain Rain captured this opportunity and used MBTI personality as the entry point to create customized MBTI-themed content marketing, and establish a direct connection between the brand and consumers.

Grain Rain deeply explored the connection between the target audience and their ‘anxiety at office,’ and created the communication strategy of “MBTI + skincare”. Using the trending topic of MBTI during job-hunting seasons for new white-collar workers, Grain Rain Skincare had successfully converted relevant audiences into potential brand customers.

In addition, in order to reach different cohorts, Grain Rain also jointly released the ‘Grain Rain × Honor of Kings Cooperation Gift Box’ with the Honor of Kings game, a trending multiplayer online battle arena (MOBA) game among young consumers. Relying on creative content marketing strategies, Grain Rain achieved rapid sales growth.

The Honor of Kings game has been able to attract increasingly impressive co-branding cooperation in recent years due to the company’s huge group of young consumers. According to big data statistics, the Honor of Kings has more than 600 million users and 100 million daily active users. In the user age structure, users aged 20 to 29 account for 52.4 percent, and these young players are also the main force of future consumption that brands are looking for. What’s more, MOBA gaming content is extremely popular on short video platforms and reflects the targeted audience range on the platform.

Relying on Douyin e-commerce’s IP marketing and creative seeding communication, Grain Rain achieved rapid growth in sales on Big Day (Douyin’s official campaign), and the brand’s self-live streaming set a historical record, with the GMV of the single self-livestreaming exceeding CNY 1 million (USD 145,000), and the paid GMV achieving a 321 percent increase compared to the benchmark period.

The lessons learned from local competitors

With the increasing penetration of short videos and livestreaming, brands need to rethink their communication and sales channel strategies in China. Working with Douyin to adopt closed-loop operations from the content partnership and creative ads to generate exposure, and retaining and converting potential consumers in meaningful livestreaming events seems to be the successful pattern so far – but how can global brands do better?

We think Chinese brands perform extremely well at co-creating content with creators and influencers on Douyin, seeding campaigns and livestreaming events to quickly generate and convert to revenue. Exposure and conversion must go hand-in-hand as a seamless process to make Douyin sales work.

Also, the multi-content features on Douyin attract the attention and increase the participation of younger audiences, so international brands need to try a variety of Douyin IP marketing, topic challenges, and new ideas to capture this section of the market and leverage creators’ significant reach.

SEE ALSO: What can we learn from this Chinese brand’s customer loyalty program?

When dominant Western platforms are unavailable in China, the main driver of brand awareness happens within the unique Chinese digital landscape. International brands need to keep learning about the ever-involving ecosystem and appeal to digital-savvy Chinese consumers.

(Source: Azoya)