Perfect Diary and its Perfect Empire: Breaking 100M RMB 33 Minutes After Double 11 Began
For the first time ever, this year’s Double 11 is divided into two phases. The first presale period started on October 21. Consumers could see what products were available and put down a deposit to lock in the sale price then make the final purchase during the first sales period on November 1-3. The second presale phase started from November 4 with final sales taking place on November 11.
During the first sales period, domestic beauty brand Perfect Diary became the first cosmetics brand to break 100M RMB sales on Tmall. Two hours after the sales began, it broke 200M RMB.
Perfect Diary Parent Company Going Global with IPO & Acquisition
This achievement for Perfect Diary comes at an excellent time as its parent company Yatsen Global (逸仙电商) just filed on October 30 with the SEC to raise up to $100 million in a US initial public offering. The Guangzhou, China-based Yatsen was founded in 2016 and booked $658 million in sales for the 12 months ended September 30, 2020 between its three brands: Perfect Diary, Little Ondine, and Abby’s Choice.
The same day it filed for an IPO, Yatsen also announced the acquisition of high-end French skincare brand Galénic, the first non-Chinese brand in Yatsen’s portfolio.
If you’ve been following our content, this acquisition comes as no surprise. When I attended the launching event for Perfect Diary’s sister brand Abby’s Choice (完子心选) in June, Chen Yuwen (陈宇文), co-founder of Yatsen Global said they aimed to become “the L’Oreal of China” with ambitions for global expansion.
While Perfect Diary accounts for 80% of Yatsen’s revenue, Little Ondine and Abby’s Choice are growing at a rapid pace. Having only just launched in June, Abby’s Choice surpassed 10 million RMB in sales within the first 33 minutes of the November 1st 11.11 sales period, and over 20 million RMB by the end of the first day.
Yatsen’s Success Relies on a Massive Marketing Budget
Perfect Diary has been spending big recently. In fact, Yatsen’s marketing expenditures are more than 60% of its total revenue. To improve its brand image, Perfect Diary appointed top Chinese actress and former Chanel ambassador Zhou Xun (周迅) and the popular Australian singer Troye Sivan as its ambassadors. Hiring two celebrities of this caliber is extremely expensive, especially when Perfect Diary’s products tend to have a lower price point, for example the price of its lipstick is around 99 RMB, much lower than the other international brands these celebrities work with at 300-400 RMB.
But they seem to know what they’re doing. Perfect Diary is a marketing powerhouse, known for its innovative marketing strategies, ability to build online communities, and willingness to experiment with new platforms and content types.
Yatsen is an expert at understanding how to engage with China’s digitally native Gen Z consumers, leveraging an army of KOLs across nearly every Chinese social platform imaginable to spread information about its brands. According to this article by WeChat Account Global Netrepreneur, Perfect Diary alone has worked with over 15,000 KOLs. Among those, over 800 have over 1 million followers, but the majority of KOLs it works with are mid-tier and micro KOLs.
On the other hand, Yatsen allocates minimal budget for product development. In 2019, it spent 23.1M RMB on R&D and by September in 2020, it spent 49.9M RMB on R&D. Though the number rises, the budget spent on development only takes up 1.25% of Yatsen’s total revenue.
If we look at other international brands, Estee Lauder (from June 30, 2019 to June 30, 2020) spent 1.6% of its revenue on R&D while L’Oreal spent 3% to 4% (2004-2017).
Yet even with the smaller R&D budget, Yatsen is constantly launching new products. Perfect Diary has over 200 data analysts who analyze consumer behavior and preferences and use their findings to advise product development teams. Perfect Diary is fast to act on its findings and can create a new product from start to finish in less than 6 months. In comparison, many of its international competitors take anywhere from 7 to 18 months. In 2019 plus the first 3 quarters of 2020, Yatsen Global’s brands launched 1,500 new SKUs.
Transforming Perfect Diary’s Brand Image
What Perfect Diary is working on at the moment is to upgrade the brand image. It used to be mentioned as “the cheap version of xyz international brand” on Xiaohongshu and other social media platforms, and we know that Perfect Diary is a brand born from the Internet, so getting rid of the “wanghong” or “internet famous” title and upgrading the brand image are Perfect Diary’s next moves.
Appointing Zhou Xun and Troye is one of the big steps. Other than this, Perfect Diary is speeding up opening offline stores. At the beginning of 2019, it opened the first store in Guangzhou, and as of September 2020, it had 200 offline stores. On average the brand opens 10 stores a month, and currently covers nearly 90 cities in China.
Read more: Fictional influencer “Xiao Wanzi” is Perfect Diary’s Secret to Success
