Refund of 150 million, Douyin's "No. 1 Beauty Brand" was delisted after being exposed for counterfeiting, and once had 20 million fans

Why did the "beauty king" of Douyin, who once had 20 million fans, quit the Internet due to counterfeiting? This article will show you the reasons, and this article is recommended for companies or individual business operators to read.

Another top Tik Tok star has become the center of controversy.

After three months of hiatus, Douyin's "No. 1 Beauty Brand" Luo Wangyu posted a short video, saying that he would refund all users who purchased "CSS Olive Essence" on his account, and the amount involved may reach 150 million yuan. He also said frankly that he felt he was no longer needed and would leave for a while, "In fact, I am ready to leave forever."

At his peak, Luo Wangyu had more than 20 million fans on Douyin, many of whom called him "Auntie" and went on a shopping spree in his livestream and window displays. On social platforms, Luo Wangyu was called "the acid-swiping brother", "Douyin version of Li Jiaqi" and "Douyin beauty brother". As of April 15 this year, Luo Wangyu's estimated GMV (gross merchandise sales) for the past year reached 1 billion yuan, making him a well-deserved "head" on Douyin.

Like Li Jiaqi, the top beauty brand on Taobao, Luo Wangyu also started out as a "salesman". Both of them are also surrounded by a lot of negative controversies and are often mentioned in the same breath. But after becoming famous, the two chose different paths: Li Jiaqi embraced big brands, expanded product categories, created a matrix account, built his own brand, and explored the supply chain; while Luo Wangyu stuck to niche brands and domestic brands, and continued to be a beauty and skincare expert.

Different choices lead to different results. Luo Wangyu’s “quit the Internet” was due to a “failure” and also due to the change of the track he chose.

On the one hand, consumers are becoming more rational and cautious. The domestic beauty and skin care market, once regarded as a "panacea for entrepreneurship", has been cold, and many brands have begun to tighten their belts. On the other hand, live streaming has entered the second half, and several major e-commerce platforms are also competing fiercely for "low prices". The top anchors who used to be able to offer the lowest prices are gradually losing their price advantage.

The platform is permanent, but the anchors are transient. "Crash" incidents have occurred one after another among the top anchors and in various live broadcast rooms. It is not yet known whether Luo Wangyu has completely retired from the Internet, but his dignified departure announces the end of the era of "whatever the top Internet celebrities promote becomes popular."

1. "Douyin Li Jiaqi" will refund 150 million

After nearly five months, Luo Wangyu finally came up with a final solution.

In the latest video, Luo Wangyu said that he would refund all users who placed orders for CSS olive essence under his account, and said that the amount involved was very large, "This product sold for 150 million yuan here alone."

In other words, Luo Wangyu and the organization behind him may face a "sky-high" compensation of up to 150 million yuan. On social platforms such as Xiaohongshu, Douyin and Weibo, many consumers who bought related products in his live broadcast room or window have successfully refunded their money.

Luo Wangyu’s “fall” originated from a product he made popular and a brand that was deeply tied to him.

On February 24 this year, Douyin blogger "Da Hu Class Representative" pointed out that the content of hydroxytyrosol and oleuropein in some brands of olive essence products is not high, and there is even one brand of olive essence that did not contain these two ingredients. "That is to say, this olive product from Mr. C does not contain olive."

Netizens in the comment section soon discovered that this C-XX olive essence was CSS olive essence. Luo Wangyu, a top anchor on Douyin who had recommended this product, also became the focus of attention.

Facing the doubts, Luo Wangyu first responded in the early morning of February 25, hoping that consumers would be rational. There are dozens of olive leaf extracts, and the absence of these two substances in the product does not mean that there is no olive extract. On March 2, he released a short video response, saying that he had sent a lawyer's letter to the CSS brand and reported CSS to the Municipal Supervision Bureau for suspected false advertising, promising that "if I win the case, the brand will compensate consumers for their losses, and if I lose the case, I will compensate myself."

However, many consumers questioned him for "passing the buck" in the comments section. "Big Tiger Class Representative" also released another video, saying that this product had mentioned oleuropein many times during its promotion. Dad's Review also spoke out, questioning the falsification of CSS ingredients, saying that unlabeled brilliant blue pigment was detected in CSS Blue Copper Peptide Essence, and that another product advertised as containing 7.7% arbutin actually contained only one thousandth of α-arbutin.

Faced with various doubts, Luo Wangyu did not release three videos in succession until April 15, revealing that he and his studio had made 42 test reports in the past month, visited 9 experts, and released the content of his conversations with raw materials and testing experts.

The seemingly sincere operation still failed to satisfy consumers. In the comment area, many people called on Luo Wangyu to "return the money." "Big Tiger Class Representative" also released another video on April 19, saying that another test was conducted and found that CSS Olive Extract not only did not contain oleuropein, but also did not contain Centella asiatica extract, which ranked third in the ingredient list. Instead, butylene glycol was detected, which was not listed in the registration.

Faced with the renewed doubts, Luo Wangyu seemed to have chosen to deal with it coldly. After April 15, his Douyin account began to "stop updating", no longer posting short videos, and only live-streaming and selling goods and answering questions from fans in the live broadcast room.

It was not until five months after the incident that Luo Wangyu came up with a final solution for countless fans and consumers. Now looking through Luo Wangyu's account, the videos he posted on March 2 and April 15 have been deleted, leaving only the latest apology video.

2. Born as a "counter bro", he kept failing

There are these two sentences on Luo Wangyu’s homepage.

"We don't promote lotions or facial masks, we focus on functional skin care. Word of mouth is more important than making money."

If Li Jiaqi is the “No. 1 beauty guy” on Taobao, then Luo Wangyu is the “No. 1 beauty guy” on Douyin.

Like Li Jiaqi, Luo Wangyu was once a "sales guy". He worked in CHANEL and TOM FORD, and became the sales champion of TOM FORD in 2017.

In 2018, Luo Wangyu became one of the first perfume specialists of TOMFORD BEAUTY in China

In 2019, Luo Wangyu chose to start his own media business. He initially signed a contract with a medical beauty MCN. However, Wang Aoyan, the founder of White Rabbit Group MCN, where he is currently working, saw Luo Wangyu’s potential and said, “I promised him (Luo Wangyu) that I would make him a top internet celebrity.”

Luo Wangyu, who started out as a "salesman", did not disappoint his mentor.

In the early days, Luo Wangyu was still targeting the beauty industry, teaching people how to put on makeup, reviewing big-name lipsticks and loose powders, and even complaining about the Huaxizi loose powder that Li Jiaqi strongly recommended. At this time, Luo Wangyu still chose to explain various big-name, domestic brands, and cosmetics and skin care products, without too much emphasis, so it was only lukewarm.

Until 2020, Luo Wangyu's "acid brushing" video received 847,000 likes. Many consumers began to pay attention to "acid brushing" because of him, calling him "the acid brushing brother", and some people said "I escaped Li Jiaqi, but I didn't escape Luo Wangyu". It was also during this period that Luo Wangyu gradually changed his track, focusing on domestic brands and niche brand skin care products, and also brought in 13 million yuan in sales with a short video.

In addition to selling products through short videos, Luo Wangyu has not given up on selling products through live streaming.

According to the data from Chanmama, in 2023, Luo Wangyu's Douyin fans have remained above 20 million. He held four live broadcasts on Double 11 in 2023, two of which had sales of more than 100 million yuan, and the sales of the other two were between 50 million and 75 million yuan.

But Luo Wangyu's popularity was also accompanied by a lot of criticism.

On social platforms, many consumers said "following Luo Wangyu's acid brushing caused acne to burst/peel off", etc. Luo Wangyu's assistant responded in the comment section, "acne bursting is because the acid will ripen the underlying acne" and "reduce the frequency of using mandelic acid and increase the amount of CSS used."

In April 2023, Luo Wangyu used Goodnight Powder in a skin care video, saying that she had been using Goodnight Powder for 5 years, "The more you use it, the more you love it. Just treat it as your skin care product." She then released several videos to support the fact that Goodnight Powder can solve a series of skin problems.

In June 2023, Mao Yueping, deputy director of the Department of Dermatology at Sun Yat-sen Memorial Hospital of Sun Yat-sen University, released two videos, saying that from the perspective of dermatology, she did not approve of night powder, "it is just an IQ tax." Three months later, Luo Wangyu released a video saying that he could not swallow this breath, and took out an 80-page test to prove that night powder is not an IQ tax. In the video, he cried, "(You) ignored a person who works seriously."

This crying complaint has turned around Luo Wangyu's reputation. Many of his loyal fans "can't bear to see him cry" and praised him for "working hard" and "being trustworthy."

This is also the experience Luo Wangyu gained as a counter clerk. He once said that the "80/20 rule" sales logic of the counter can be reused in the field of short video and live broadcast e-commerce, "20% of customers contribute 80% of sales. In the field of short video and live broadcast, there are often only 20% of fans who help you create more value. If you don't serve these core fans who trust you well, but still want to capture more people, you will find that the original 20% will be lost."

But this time, Luo Wangyu was unable to capture the hearts of his core fans, nor was he able to convince other consumers. The professional test reports produced by many bloggers had already made him lose the most important "trust" of a live-streaming anchor.

3. The different paths of the beauty industry leader

The portrait of Luo Wangyu’s fans is that of people who regard beauty products as a necessity.

Image source: Cicada Mom

According to Chanmama data, 91% of Luo Wangyu's video viewers are women, and more than 50% are aged 18-23. In many of his live broadcasts, more than 80% of the viewers are women. Among Luo Wangyu's 20 million fans, the largest proportion is fans aged 18-23. "Entertainment Capital Theory" once reported that Luo Wangyu's return rate on Douyin is only 0.02%. The MCN White Rabbit Group behind Luo Wangyu once said that they use a two-level product selection system. After the product selection team selects the product, the influencer needs to try the product in person, and only those who pass the test will cooperate.

However, the end of traffic is monetization, and the ultimate goal of many bloggers and anchors is to sell goods.

Searching for lotion on Luo Wangyu's homepage, who "does not recommend lotions and lotions," we can see that he recommended CeraVe PM lotion in October 2023 and encouraged consumers to place orders in the comments section. Luo Wangyu's accumulated reputation and the "strict" product selection system of the organization were also destroyed by this ingredient fraud incident.

Looking at the paths that Li Jiaqi and Luo Wangyu took to become famous, they are somewhat similar, but the paths they chose in the end are somewhat different. Luo Wangyu's "fall" is also related to his choice.

Huaxizi is the Chinese brand made popular by Li Jiaqi

Li Jiaqi has helped many domestic brands become popular and sell well, but on Double 11 in 2021, the best-selling product in Li Jiaqi's live broadcast room was the Shiseido water and milk set priced at more than 1,000 yuan, with sales of 389 million yuan. It was also on Double 11 that year that Li Jiaqi became a hot topic because of L'Oreal's preferential price difference and temporarily "broke up" with L'Oreal.

As Li Jiaqi's scale grows, his live broadcast room has become a resource field for brands to compete for. Li Jiaqi has also chosen to embrace big brands: big brands tend to have stronger popularity, do not require additional promotion, and have better guarantees in after-sales and quality control.

But the popular Luo Wangyu still insists on choosing niche brands and domestic brands.

If you want to be the top “Beauty King” on Douyin, you need to be unique.

Luo Wangyu, who joined the self-media platform in 2019, did not start live streaming sales until 2020. The frequency of live streaming sales was not high at the beginning. The competition was already quite fierce at that time. Luo Wangyu and the institutions behind him did not have enough bargaining power when communicating with big brands. Niche brands and domestic brands were better entry points. Luo Wangyu can also use these product selections to differentiate himself from Li Jiaqi.

However, niche brands often come with certain risks. For example, the CSS that "crashed" this time was originally called a substitute for the big-name brand SkinCeuticals, but as a niche brand, its quality control and after-sales service are still difficult to compare with big brands. Luo Wangyu said in a response video that the matter has been delayed for so long because the brand is unwilling to refund the money, and the legal process itself will also take a long time.

At the same time, compared with the big brands that are mature, stable and have an economic foundation, many niche brands and domestic brands are not having a good time now.

As the consumption environment becomes more rational, consumers are becoming more cautious. It is like consumers now click on Li Jiaqi's live broadcast room to see "whether there are discounts on the things they want" rather than "whatever Li Jiaqi sells, I will follow him." The live broadcast room no longer puts up the "lowest price" sign. Li Jiaqi, who once angrily tore L'Oreal over the price difference, has also reconciled with L'Oreal. The demand for the beauty industry is decreasing.

According to the data from the National Bureau of Statistics, in 2023, the total retail sales of cosmetics above the limit reached 414.2 billion yuan, an increase of 5.1%, only higher than the -4.5% in 2022. According to Qichacha data, 8,990 cosmetics companies established within three years showed abnormal registration status - many cosmetics companies did not survive for more than three years.

Even domestic beauty brands with strong capital have begun to tighten their belts.

VNK under Lafang Home Cosmetics

Close the official stores on Tmall and Douyin

Yatsen E-commerce, which owns brands such as Perfect Diary and Little Autine, will have marketing expenses of 2.231 billion yuan in 2023, a year-on-year decrease of 4.2%. Shuiyang Co., Ltd., which owns brands such as Yunifang and VAA, will have sales expenses of 1.858 billion yuan in 2023, a year-on-year decrease of 8.61%. Huaxi Bio, which owns well-known domestic brands such as Runbaiyan and Mibeier, will have sales expenses of 2.842 billion yuan in 2023, a year-on-year decrease of 6.79%. Its sales expenses in the first quarter of 2024 will be 490 million yuan, a year-on-year decrease of 19.01%. VNK, a cosmetics brand under Lafang Home Cosmetics, just announced its "store closure" in June this year.

A beauty industry practitioner said that more and more domestic beauty and skin care brands are willing to spend money on building private domains, expanding product categories and creating big single products, and "marketing costs are shrinking."

As domestic brands reduce their marketing investment, those who are naturally impacted are the many bloggers who have been deeply involved in domestic brands, and Luo Wangyu is one of them.

Douyin is permanent, but the anchors come and go. The words and deeds of the top anchors often attract much attention. Luo Wangyu, who has always been accompanied by negative controversies, cannot escape the fate of declining traffic: starting from 2023, the likes of Luo Wangyu's multiple videos will not exceed 100,000; after the olive essence incident in 2024, during the first wave of 618 promotions, Luo Wangyu's sales fell by 75%. His most recent live broadcast was on June 4, and as of July 16, Luo Wangyu had lost more than 1.4 million fans.

Luo Wangyu's live broadcast will stop on June 4

Luo Wangyu felt that he was "unnecessary" and chose to leave with dignity. Perhaps he will come back, but the White Rabbit Group, which once stated that it would continue to increase its investment in the beauty industry, has begun to think about other development directions.

Bubugao Commercial Chain Co., Ltd. recently released a restructuring plan and will introduce a number of restructuring investors, including the White Rabbit Group. The White Rabbit Group will use Bubugao to complete the integrated online and offline sales of its own products and layout offline supermarkets.

The development of live streaming e-commerce has entered the second half today. The anchors no longer regard the live broadcast room as their only battlefield. They have begun to learn "Octopus", create matrix accounts, engage in cross-border e-commerce, create their own brands, and get involved in industry... There are fewer and fewer "wealth myths" in the industry. How to survive at this stage is a problem that many anchors need to consider.

Author: Wang Zhan

Source: WeChat official account: "E-commerce Online (ID: dianshangmj)"