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Perfect Diary: a once-thriving cosmetics brand’s decline and lessons learned

Perfect Diary, a cosmetic brand originating from China, achieved early success in its global expansion efforts. The brand’s initial popularity in China was fueled by effective marketing strategies, including KOL (Key Opinion Leader) marketing, co-branding, and private traffic pools. However, despite its standing as a leading makeup brand in China, Perfect Diary’s success has waned over time.

Perfect Diary’s rise between 2017 and 2020

Perfect Diary is a young Chinese makeup brand established in 2016 targeting women aged 20-35, with a relatively high spending power. In March 2017, it set up flagship stores on Taobao and Tmall. Half a year later, the brand opened an official account on Xiaohongshu, launched its own WeChat store, and inaugurated three pop-up stores in Shanghai. During the 2018 Double 11 festival, the brand generated over 100 million RMB in sales in just 90 minutes. For its outstanding performance, this C-beauty brand has been included in the Tmall Golden Makeup Award list. Since then, Perfect Diary has become one of China’s top beauty brands.

During the Double 11 promotion in 2020, the brand sold over 600 million products during the promotion, imposing as the highest-selling makeup brand on Tmall. The company’s annual net income exceeded 7.23 billion RMB in 2020.

tmall during Double 11 promotion in 2020
Source: Tmall, Perfect Diary ranking No. 1 among makeup brands on Tmall during Double 11 promotion in 2020

How Perfect Diary in China gained popularity?

1.     Co-branding collaborations with popular IP

In the makeup industry, co-branding collaborations are a valuable tool to create buzz and boost sales. According to the CEO of Perfect Diary in China, Huang Jinfeng, a new brand can get more exposure by co-branding with other popular IPs. The brand leveraged Chinese breathtaking natural landscapes to inspire the color combinations in the eyeshadow palette. This unique approach to makeup design has captured the interest and excitement of a large number of consumers, resulting in the product winning the prestigious 2021 Top 10 Annual National IP Crossover Collaboration Award.

Perfect Diary and National Geographic
Source: Weibo, Eyeshadow launched by Perfect Diary and National Geographic

Another successful collaboration was the one with Oreo in 2020. Inspired by the shape of Oreo cookies, the Chinese makeup brand launched two limited-edition air cushion creams, Classic Black and Cherry Blossom Pink. This partnership not only provided consumers with a unique shopping experience but also generated significant buzz, expanded the brand’s influence, and empowered the brand to stand out in the competitive beauty market.

Perfect Diary x Oreo
Source: Weibo, Perfect Diary x Oreo’s air cushion creams

2.     Effective KOL strategy

Celebrity endorsement and KOL marketing played a key role in Perfect Diary’s strategy in China and abroad. By collaborating with celebrities, the C-beauty brand capitalized on the Chinese idol economy. In October 2020, the brand declared Zhou Xun, a renowned actress in China, as its first global spokesperson. Zhou Xun was the first Chinese actress to win the most important national cinema awards (Golden Horse Awards, Golden Academy Awards, Golden Rooster Awards). The brand chose Zhou Xun as its global spokesperson to convey the message of “beauty has no limits” to young women worldwide, as she is regarded as a symbol of beauty and accomplishment by the Chinese audience. This collaboration between the brand and Zhou Xun sparked a lively discussion on social media platforms such as Weibo, attracting a significant number of audiences.

 Zhou Xun
Source: Weibo, Perfect Diary brand global spokesperson Zhou Xun

Moreover, KOL marketing helped the brand create momentum on the internet in China. Since 2019, the Guangzhou-based beauty brand has started cooperating with Li Jiaqi, one of the most famous Chinese live-streamers. During the 2019 Double 11 festival, this collaboration helped the brand to garner the most attention among all Chinese cosmetics products, and brought its brand awareness to new heights. In February 2020, Perfect Diary and Li Jiaqi’s pet dog Never jointly launched a collection of animal-themed eyeshadows, which sold 160,000 units in just 10 seconds. By leveraging the bandwagon effect, this C-beauty brand was able to reach a wider audience of potential consumers.

Perfect Diary and Li Jiaqi's pet dog Never
Source: Weibo, the new line of animal eyeshadows jointly launched by Perfect Diary and Li Jiaqi’s pet dog Never

3.     Leveraging intensive promotions on social media

This Chinese makeup brand relied on intensive promotions on social media to accumulate high-quality user reviews, improve its brand reputation and reach younger users. For instance, it leveraged the community advantages of Xiaohongshu and Bilibili, which have a significant user base consisting of individuals born in the 1990s and 2000s. The brand’s official account on Xiaohongshu boasts over 2 million followers, and a search for the brand on Bilibili yields dozens of positive reviews and titles, such as “best value products” and “high-quality domestic cosmetics”.

Overemphasizing marketing over quality

The turning point for the brand came in 2021. During the 2021 Double 11 festival, the Chinese beauty brand fell from its top spot and ranked fourth on the Tmall makeup sales list. In 2022, the company achieved 3.71 billion RMB in revenue in 2022, a 36.5% from 5.84 billion RMB in 2021. The result was not only due to the impact of the pandemic, but also the brand’s tendency of emphasizing marketing over quality.

In 2020, the brand’s marketing expense amounted to 3.41 billion RMB, accounting for 65% of the total revenue. In other words, if one Perfect Diary lipstick was 100 RMB, then the marketing cost of it was 65 RMB. In contrast with the heavy marketing investment, the product research and development costs were lacking. According to its financial statement, from 2018 to 2020, its research and development expenditure rate was 0.4%, 0.8% and 1.3%, respectively. Such low research and development expenditure generated quality issues, then sparking consumers’ outrage.

user complaining about Perfect Diary’s lip gloss
Source: XHS, user complaining about Perfect Diary’s lip gloss

The brand risks disappearing in China’s competitive beauty industry

The brand’s sales have been continuously fallen since 2021 and it dropped out of the top 20 brand during Double 11 2022, despite the cosmetics market in China has never stopped growing. According to Goldman Sachs, the sales volume of cosmetics in China are expected to reach 145 billion US dollars by 2025, which is twice the size of the market in 2019. It is expected that an increasing number of brands will enter the market in the future, and the competition will be fiercer.

Therefore, maybe the biggest problem for the Guangzhou-based beauty brand was that it is started by large-scale traffic marketing, with high cost and low profit. As competition heated up, the brand faced great development pressure. Moreover, in 2021, the live commerce industry faced a “big reshuffle” following a crackdown on tax inspections. This posed significant challenges for brands that relied heavily on KOL marketing. The impact of this challenge is evident in the company’s performance, with revenue growth dropping sharply from 337% in 2019 to 11.6% in 2021.

Why Florasis is still at the top while Perfect Diary goes down

Florasis and Perfect Diary, two Chinese domestic cosmetic brands competing for dominating China’s cosmetics market, have quite different business strategies and use different marketing approaches for attracting consumers. Compared to Perfect Diary, Florasis focuses more on product quality, user experience, and social responsibility. The Hangzhou-based cosmetics brand built many research and development laboratories in China and establishing strict quality requirements. In contrast, Perfect Diary paid less attention to product quality and focused more on digital marketing, which was not enough to build long-lasting consumer loyalty. Thus, while Perfect Diary’s initial rise to fame was faster than that of Florasis, it also experienced a quicker decline into recession.

What can we learn about Perfect Diary ’s decline?

  • The brand leveraged KOL marketing, co-branding, and digital marketing to get to the top of the Chinese cosmetics market.
  • However, this Guangzhou-based beauty brand put too much emphasis on marketing but not enough on quality. As a result, it started losing ground and now risks disappearing.
  • Compared to Perfect Diary in China, Florasis focused more on product quality, user experience, and social responsibility, which is revealing a wiser way to gain long-term success.

Author: Lyu Ai

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