One glory may not be all glory, but one loss will certainly be all loss. Hua Xizi, who once deeply bound Li Jiaqi, probably didn’t expect this day, or that this day would come so early. On September 13th, Li Jiaqi’s public opinion events were still fermenting, and Hua Xizi was more like a victim, who was hung on the hot search list for three days. Investigate its reason, more is the fruit of Li Jiaqi’s deep binding of Hua Xizi in the past. As the head anchors roll over one by one, the traffic brought by deep bundling has become a double-edged sword, and many domestic beauty products have to face the problem of how to maintain sales and open the market after leaving the big anchor.
Bundled exchange flow
The relationship between Hua Xizi and Li Jiaqi dates back to 2019. Hua Xizi, who has just been established for two years this year, is still groping, and the arrival of the live broadcast outlet has made Hua Xizi see hope.
The founder of Hua Xizi once said that in early 2018, Hua Xizi made great determination on the live broadcast after doing a lot of research and analysis. In the early days, Hua Xizi took some detours when exploring the live broadcast, and only regarded the live broadcast as a channel to bring goods, which did not achieve the expected results. At that moment, Li Jiaqi appeared. In 2018, US ONE Company reorganized its business and promoted the live delivery business to operate around the IP of "Li Jiaqi". In the second half of 2018, Li Jiaqi’s popularity soared because he completed the Guinness World Record challenge of "the largest number of people wearing lipstick in 30 seconds" and promoted to sell lipstick with Jack Ma on the same stage at the double 11.
Li Jiaqi, who burst into red, hit it off with Huaxizi, who wanted to be red. In March, 2019, Huaxizi air honey powder entered the live broadcast room in Li Jiaqi. According to the research report of Guoyuan Securities, this new product became the first in the sales volume of "double 11" stores that year after it was first launched in the live broadcast room in Li Jiaqi, and sold over 20,000 pieces. This result also strengthened Hua Xizi’s idea of holding a heavy position in Li Jiaqi.
Rumor has it that Hua Xizi’s rebate to Li Jiaqi is as high as 60%-80%, even more than 100%. Regarding the commission, Hua Xizi denied it, and said that "the cooperation rate between Hua Xizi and Li Jiaqi belongs to the industry average".
There is no way to verify the exact number, but judging from the number of times Hua Xizi appeared in the live broadcast room in Li Jiaqi, the relationship between the two is very deep. According to the statistics of Guoyuan Securities, in 2020, Hua Xizi entered the live broadcast room in Li Jiaqi for 71 times. At the same time, Hua Xizi and Li Jiaqi started a brand co-creation plan. It is understood that Li Jiaqi has participated in the co-creation of Huaxizi’s "Miao Impression" and "Dai Impression" series products.
The flow brought by Li Jiaqi to Huaxi is visible to the naked eye. In 2019, the sales of Huaxizi was 1 billion yuan; It exceeded 3 billion yuan in 2020. The Western Securities Research Report pointed out that in 2021, Huaxizi achieved sales of 5.4 billion yuan, which was more than 100 times higher than the sales of about 40 million yuan in 2018. According to the Shanghai Securities Research Report, the share of Huaxi City increased from 0.3% to 6.8% in 2017-2021.
Fei Man, co-founder of Hua Xizi, also admitted in an interview that the sales growth of Hua Xizi is inseparable from the cooperation with Li Jiaqi. There was a certain sales base before, but it was not as high as the follow-up.
The development of Hua Xizi was once called phenomenal, and it can also be said that the development model of Hua Xizi’s exchange of traffic for sales was a microcosm of the development of domestic beauty at that time. You can see the shadow of many domestic beauty brands from Hua Xizi. For example, Shuiyang Co., Ltd. once relied on the cooperation with Li Jiaqi, Viya and other head anchors, and its performance achieved substantial growth.
According to public data, in 2019, Shuiyang Co., Ltd. cooperated with Li Jiaqi Live 47 times, with a total viewing volume of over 40 million; In 2019, it cooperated with Viya Live for more than 30 times; In 2019, we cooperated with more than 1,500 online celebrity anchors such as kiki of Jie Chen and Lieer Baby, and the total number of live broadcasts exceeded 8,000. Shuiyang Co., Ltd. said that from January to September in 2018 and 2019, the sales amount of products involved in online celebrity anchor cooperation accounted for 0.99% and 4.02% of the company’s operating income, respectively, with a large increase.
According to statistics, Li Jiaqi returned 109 days after leaving the live broadcast room, and the number of viewers of the first live broadcast reached 6,247. During the "double 11" in 2021, Li Jiaqi’s sales amounted to 21.8 billion yuan. This is the traffic that Li Jiaqi, as the super-head anchor, carries. Even though it is rumoured that the percentage of beauty cosmetics with goods in the live broadcast is basically 30%-40%, there are still many beauty brands scrambling to enter the live broadcast room in Li Jiaqi, which is the function of traffic.
Jiang Han, a senior researcher at Pangu think tank, believes that the gradual increase of the right to speak of the head anchor brings benefits to the brand, but also carries certain challenges and risks. The brand should realize the importance and value of the head anchor, at the same time, strengthen its own brand construction and development, and reduce its dependence on the head anchor.
Urgent need for transformation
In the past, many cutting-edge brands started online, gained consumer recognition through private domain and planting grass, and then endorsed by big anchors to expand their product sales. However, with Viya’s tax evasion overturned, Sydney was also fined for tax issues, and now Li Jiaqi is facing the crisis of public opinion, domestic beauty cosmetics may have to consider the development after leaving the big anchor.
The brand side is also aware of this and consciously unties the big anchor. Take Hua Xizi as an example. In June, 2020, Hua Xizi went out of Taobao, set up brand matrix accounts in Tik Tok and Aauto Quicker platforms respectively, and conducted self-broadcasting in stores every day, and the monthly self-broadcasting number quickly exceeded 50. According to public data, in 2020, the GMV of Hua Xizi’s live broadcast room in Li Jiaqi accounted for 15.55% of all sales; In the first quarter of 2022, Hua Xizi’s chief product, Guan Shanglu, publicly stated that this figure dropped to only 5%.
At the same time, Hua Xizi started an article in research and development and offline. In March 2022, Hua Xizi announced that Li Huiliang was the chief scientist, and publicized it to the outside world. In the next five years, Hua Xizi will invest more than 1 billion yuan to spread out the layout in many fields of product innovation, basic research and applied basic research, and create a comprehensive and technologically advanced Oriental beauty makeup research and development system.
Not only Hua Xizi, but also many domestic beauty products are trying to transform and get out of the dilemma of exchanging traffic for sales. It is understood that Polaiya is building the sustainable development ability of enterprises through strategic strength, brand strength and product strength, and realizing "long-term doctrine", including R&D investment. In 2022, the R&D expenses of Polaiya increased by 67.15%. Similarly, in order to cope with the current new situation and increase investment in product development and innovation, in 2022, Betaine’s R&D expenses increased by 124.96%, and the R&D rate reached 5.08%.
Yixian e-commerce, the parent company of Perfect Diary, has also continuously increased its investment in research and development in the past few years. It is understood that in 2022, Yixian e-commerce invested 130 million yuan in R&D throughout the year, reaching 3.4% of revenue, and its expense rate ranked first among domestic beauty groups.
Betani also said that in the future, enterprises will pay more attention to product quality, technological innovation and brand building, which is very important for improving product competitiveness and brand influence. It is not only the response of enterprises to market and consumer demand, but also the adaptation to increasingly fierce competition in the industry.
Wu Daiqi, CEO of Shenzhen Siqisheng Company, believes that online celebrity brands such as Hua Xizi really benefited from Li Jiaqi’s appeal to fans and superior ability to bring goods before. However, there is still a long way to go before online celebrity brand can be transformed into a well-known brand and become an evergreen brand, mainly because it is very difficult to build offline channels, and the complexity of channels will also bring about an increase in various operation and management costs. Therefore, the early development of Hua Xizi certainly has its advantages and characteristics, but it still needs a set of measures.
Beijing business today reporter Guo Xiujuan Zhang Junhua
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