How does Proya, the leading Chinese cosmetics brand, develop its global presence? | Global Research

This article deeply analyzes how PROYA has achieved sustained growth through its global layout and secured its position as the leading Chinese beauty brand. The article details PROYA's successful practices in terms of younger customer base, omni-channel promotion, big single product strategy, digital marketing, etc., and explores new opportunities for beauty brands in the WeChat ecosystem.

In the beauty industry, there is a popular old saying: 5,000 cosmetics notes + 2,000 KOL Q&A + top anchors = a new brand. This is also the "universal formula" for the rise of new beauty brands.

However, at a time when the cost of brand planting is getting higher and higher, various e-commerce platforms are competing fiercely, and top anchors are gradually being eaten back by traffic, this "universal formula" is becoming ineffective. There are more and more variables on the left side of the equal sign, and for a brand that has gradually grown, the right side of the equal sign has also become continuous growth. So, is there a "universal formula" that can achieve this?

If we were to choose a brand as a sample to summarize the "universal formula" for beauty brands to maintain sustained growth, then this brand must be PROYA. Since its listing in 2017, PROYA has achieved stable growth in revenue and net profit. Generally, the growth rate of a company will slow down as its scale increases, but PROYA recorded the highest revenue growth rate in five years in 2023, which is nearly double the growth rate in 2020.

The revenue of the PROYA brand alone has jumped from 5 billion to 7 billion in 2022, surpassing the former cosmetics leader Shanghai Jahwa and firmly sitting on the position of the leading domestic cosmetics company. According to the existing public data, PROYA has become the first domestic cosmetics company listed on the stock market with revenue approaching 9 billion. At this rate, it is very likely to exceed 10 billion this year.

How did PROYA maintain its growth momentum and achieve profit growth? Behind the high growth, what capabilities did PROYA demonstrate in its global layout? For beauty brands, does a "universal formula" for achieving sustained growth really exist? What other growth possibilities are there for beauty brands? We will take PROYA as an observation object and try to present you some thoughts on the above questions, which are specifically developed as follows:

1. Research on PROYA brand and changes in the beauty industry;

2. Analysis of PROYA’s global layout;

3. The “universal formula” behind PROYA’s sustained growth;

4. Explore the possibilities of beauty brands in the WeChat ecosystem.

01. PROYA: Embracing change and advancing at a rapid pace

Let us first review several key nodes in PROYA's development history: Founding: In 2003, Hou Juncheng and Fang Yuyou, who were originally agents of beauty products, founded PROYA. They chose to place their channels in CS stores in the sinking market, that is, chain stores that collect beauty products, which were not penetrated by major beauty brands in time.

The first channel transformation: Since 2010, PROYA has frequently entered supermarket and department store counter channels, and at its peak, it had more than 20,000 outlets across the country;

The second channel transformation: In 2017, after seeing the dividends of online e-commerce, PROYA decided to resolutely transform online and abandon offline;

The third channel change: In 2019, live streaming e-commerce emerged, and PROYA began to contact leading live streaming companies. Not only did it create the online hit "Black Sea Salt Bubble Mask" through live streaming that year, but the online and offline revenue share also reached 1:1.

It can be seen that in the development history of PROYA, it has almost always been able to step on the key nodes of industry change, which has also brought PROYA sustained high growth. From its listing in 2017 to 2023, its revenue has achieved seven consecutive increases: from 1.783 billion yuan to 8.905 billion yuan, and its net profit attributable to the parent company has also increased from 201 million yuan to 1.194 billion yuan.

In the first quarter of this year, PROYA also made a good start. According to the financial report, PROYA's total revenue in the first quarter of 2024 was 2.181 billion yuan, a year-on-year increase of 34.56%; net profit attributable to the parent company was 303 million yuan, a year-on-year increase of 45.58%. Analysts believe that if PROYA continues to grow at its current high double-digit rate, it is a foregone conclusion that its revenue will exceed 10 billion yuan in 2024, and it is expected to reach 12 to 13 billion yuan.

However, while growing rapidly, PROYA is also facing "internal and external troubles".

From an internal perspective, although PROYA has achieved great success in marketing, such as taking the lead in seizing the minds of users who buy C products in the morning and A products in the evening, there have been different opinions on whether the development model that focuses on marketing is suitable for PROYA in the new stage. Judging from the recent resignation of PROYA's CMO Ye Wei, although PROYA did not respond much to the reasons for his resignation and whereabouts after his resignation, as an important promoter of PROYA in products and marketing, Ye Wei's resignation may have released some signals of strategic transformation, but also brought more uncertainty.

From the perspective of the external environment, since last year, Douyin has officially replaced Tmall to become the mainstream marketing platform for the beauty industry, but the ruthless algorithm has made the profit margins of brands' business on Douyin lower and lower; the simple approach of brands wanting to bind a super head to complete the start-up and achieve performance is no longer so effective, and has even begun to be full of risks; at the same time, online public opinion has become difficult to control, and beauty brands have never been like this, as they may at any time have direct conflicts on social media with the public opinion audience who control the mainstream discourse of society.

According to incomplete statistics, nearly 30 brands will close their official flagship stores on e-commerce platforms, adjust their business in China, or directly announce the liquidation of their brands in 2023. While old players are out, new players are also continuously entering the market, stirring up changes in the beauty industry. Behind this contrasting story, the cruel reality facing the beauty industry is obvious: According to data released by Qingyan Intelligence, the scale of China's cosmetics market in the first quarter of this year was 219.63 billion yuan, a year-on-year decrease of 0.28%, opening low and ending low.

Consumers have become more cautious. When domestic beauty brands face price questions, high-end products are already a thing of the past, but the road to "parity" has become increasingly difficult, especially for some brands that are neither up nor down. The situation is even more difficult. The industry has reached a new crossroads of change.

02. PROYA Global Disassembly

In the past few years of high growth, channel transformation and product marketing have been the key factors for PROYA's success. Today, channel layout and product marketing are both included in the concept of global operations. So, next, we will break down PROYA's global operations according to people, places, and goods.

People: Younger customer base and integrated membership operations

(1) Younger customer base

In the initial distribution model, PROYA first targeted the "rich ladies" group in 3-5 tier cities, and the age of users was mostly concentrated between 35 and 55 years old. However, with the layout of e-commerce platforms and full-area reach, PROYA has achieved a breakthrough in the past two years: the current customer base has expanded to 1-6 tier cities, and the first and second tier cities even account for more than half, and the age distribution is getting younger and younger. According to the Baidu Index in the past two years, PROYA's audience group in the entire network is 20-30 years old. Consumers account for the largest proportion, which is close to 50%. Growth Black Box mentioned in the report that if Douyin is taken as an example, in 2019, the highest proportion of people searching for PROYA products was 31-40 years old, and by 2023, it has become 18-23 years old.

(Source: Growth Black Box)

2) Global membership operation growth system

PROYA has integrated data from online and offline platforms to build a complete global membership operation growth system to establish more connections with users. It has deployed multiple touchpoints in official accounts, mini-programs, and stores, and attracted users to register as members through membership benefits, gift giving, and other hooks, thus realizing digital management of users.

Membership levels are as follows:

P Fan Members: Join for 0 yuan, and receive 150 points

Gold member: cumulative consumption of 300 yuan Platinum member: cumulative consumption of 900 yuan

Diamond member: cumulative consumption of 2,000 yuan

The benefits of membership include: member upgrade benefits, priority to try new products, irregular points-based flash sales, corresponding birthday benefits in birthday month, points earned through interaction and consumption, and the ability to participate in point redemption to receive corresponding member gifts.

By building a membership growth system, users are encouraged to convert from low-level to high-level membership, including points rules, differentiated membership rights, etc.

In addition, PROYA has also connected the membership data, levels and rights of the public and private domains. The points and level growth generated by users after completing orders on Tmall can be shared after entering the official account, which not only empowers the private domain, but also returns repeat users to the store, improving the membership experience and value.

Field: Omnichannel seeding

Online

Proya has launched brand TVCs on all platforms including Weibo, WeChat, Xiaohongshu, Douyin, Douban, bilibili, and Zhihu. Through the matrix of all platforms, it has achieved omni-channel promotion and built a complete communication chain, covering people from different circles to the greatest extent and penetrating people's minds in multiple directions. Proya's own media layout is mainly Xiaohongshu, Douyin, WeChat ecology, etc., and a media account matrix has been built on each platform.

(1) Xiaohongshu

Through in-depth communication with KOLs, PROYA was the first to notice the skin care trend of using C in the morning and A at night, and launched the C in the morning and A at the evening dual-antibody series in a timely manner. It also worked closely with Xiaohongshu to carefully select content based on user feedback, use the "funnel model" to create truly popular articles, and output hundreds of high-quality draft notes covering a variety of types and scenarios.

On this basis, PROYA selects high-quality notes with high interaction rates and return search rates as potential hot articles, and continues to promote super-head hot articles with high click-through rates to create hot products... This process has been in a continuous cycle, and high-quality content is also increasing and accumulating. By the end of 2021, PROYA had already seized the minds of users in the "early C and late A" track of Xiaohongshu.

(2) Tik Tok

When Douyin first entered the e-commerce market, PROYA was the first brand to sell goods on Douyin live streaming, starting its own live streaming, deeply binding with KOLs, and frequently appearing in the live streaming rooms of top anchors such as Li Jiaqi. Founder Fang Yuyou even personally selected anchors.

In 2023, PROYA will have 1,943 Douyin anchors selling products; 115 of them are professional anchors with the label "beauty"; and 9 anchors are labeled "celebrity", including Jia Nailiang, Cao Ying, Zhu Zixiao, etc. In addition to relying on external allies, PROYA has also invested in professional MCN agencies such as Hangzhou Wanyan and Xiongke Media to strengthen its control over online live broadcasts, increase the proportion of self-broadcasts, and reduce its dependence on influencers. According to statistics from Cicada Magic Cube, PROYA's brand self-broadcasts and store broadcasts will increase from 54% in 2021 to 61% in 2023.

(3) WeChat Ecosystem

Official Accounts: Differentiated Matrix Layout PROYA has created an official account matrix, in which each account creates different private domains for different types of user attributes, creates different private domain IP images, and implements more detailed hierarchical management of users. The content published by different accounts also has different focuses, but the purpose is to retain and convert users.

Taking [PROYA] as an example, the account focuses on new product promotion, event information, holiday strategies, and brand value content output. In addition to providing entrances to the official mini-program mall, anti-counterfeiting query, membership center, community, etc., the menu bar also has various welfare activities and stockpiling guides.

The [PROYA Culture] account mainly outputs the company's values, mainly to establish PROYA's corporate image as a socially responsible company;

【PROYA shares】is mainly based on corporate news and information, mainly conveying PROYA's development status to the outside world;

[PROYA Official Member Club] As the name suggests, the account is a gathering place for PROYA official members. The main content is the brand's latest discounts, member points, star products, and also provides member services.

Mini Program: Second Official Website

For beauty brands, the mini program is generally used for user relationship operations and private domain transaction operations. As the second official website of the PROYA brand, the mini program plays the role of carrying the brand's user mind and member operations in the WeChat ecosystem.

As for the member operation part, we have already introduced it in detail in the people section, so I will not repeat it here. Community: Delivering Brand Temperature [PROYA] The official account of PROYA has set up a private domain community entry in both the greeting message and the menu bar.

Specific path: Menu bar of the official account - Go to Discover - Enter the official community - Customer service invites you to join the group - Enter the community. Greeting message of the official account: Add Xiaoya as a friend to receive community benefits: Experience the hot product for 9.9 yuan and receive a 30 yuan coupon.

We noticed that in addition to the private domain entrance and related discount information, PROYA’s welcome message also included a paragraph that reflected the brand’s values ​​and social responsibility: In addition to deepening our presence in the skin care field, we also care about love and intimacy in society. This year, the fireflies lit up again.

This time, we want to pay attention to the group of people who have never been seen - the group with "school bullying sequelae" and provide help to the best of our ability. While providing benefits, the community also plays the role of conveying the value of brand warmth.

The PROYA community has fixed sections of content, including promotional information, product publicity, fan activities, daily draws, etc.

In addition, PROYA’s customer service staff will actively answer users’ questions and give corresponding skin care suggestions, so the overall retention rate and activity of the community are relatively high.

Video Account: Linking with WeChat Ecosystem

In the previous 3.8 Good Product Festival observation article "What do sisters like to buy on Video Account? | 3.8 Good Product Festival Observation", we also mentioned that unlike white-label brands that choose IP personalities to start accounts, beauty and personal care brands enter Video Accounts more by combining "Dabo + Self-broadcasting". In the early stage, they rely on Dabo to accumulate popularity during the promotion period, and in the later stage, they broadcast themselves to meet users' daily purchasing needs. Proya also chose this model in the layout of Video Account: during the 3.8 promotion period, Proya cooperated with the top influencers of Video Account to launch special live broadcasts, continuously improving its influence in Video Account.

Unlike its layout on TikTok, PROYA currently only uses the video account as a tool for public-private linkage within the WeChat ecosystem, exploring ways to link with the ecosystem, rather than simply positioning itself as a "live streaming e-commerce". As of now, PROYA's frequency of self-broadcasting on the video account is relatively low, and the account is mainly focused on building trust between the brand and users.

Offline: Targeted Advertising

In 2022, while launching the dual-antibiotic series, PROYA began to bet on Focus Media, and launched tens of millions of Focus Media advertisements starting from the "March 8th Women's Day", fully promoting the early C and late A dual-antibiotic series to ignite the market and form a greater social trend. PROYA saw that Focus Media has the ability to concentrate on 400 million mainstream people every day, and it is precisely a strong offline media that can be connected with Tmall Data Bank and can be re-invested and pursued.

In 2023, PROYA focused its brand core concept on "the scientific choice for skin", promoting it online and launching it offline through targeted marketing. It also connected the people it reached with Tmall data to achieve product and effect synergy.

Big single product strategy + digital marketing

In terms of products, PROYA adheres to the "big single product" strategy. PROYA's big single product strategy started in 2019, focusing mainly on the essence category, and launching high-quality big single products year by year in a restrained manner, such as double-anti-essence, ruby ​​essence, source repair essence, energy series, etc. Although the number of single products is not high, they can be matched according to their efficacy to form different SKU combinations. Last year on Double 11, PROYA had as many as 16 SKU combinations. Behind the big single product strategy is the global digital information system as support. It was also in 2019 that PROYA launched the "global digital information system" internally.

The system has realized the connection of 18 system links, including supply chain relationship management system SRM, warehouse location system WM, enterprise resource management system SAP, social membership system SCRM, e-commerce ERP, etc. It is essentially a middle platform system covering business, channels and products, including data middle platform and business middle platform. The data middle platform is responsible for cleaning and associating sales and delivery data of various channels to form a complete consumer touchpoint system. From transaction data such as keyword search, page collection, shopping cart addition, order purchase, etc. of online e-commerce platforms, to social data such as WeChat, Weibo, and Douyin, to KOL delivery data and content trend data, all of these are integrated into PROYA's user database. The accumulation of multi-dimensional user data provides a foundation for innovative marketing. By analyzing the potential rules of consumers and KOLs, it provides data support for business operations and product development and helps decision-making. The business middle platform promotes the flow of data between suppliers, production, warehousing and other links, improving the efficiency of production and circulation. It is precisely with this powerful middle platform system behind it that PROYA has strong support to ensure the timeliness and accuracy of decision-making.

03. PROYA's flywheel for sustained growth: content x social x commercialization

After analyzing PROYA's global layout and combining it with PROYA's marketing strategy in recent years, we found that the growth flywheel of content x social x commercialization can actually be used as the "universal formula" for PROYA's continued growth.

Content: Create all-round content touchpoints

By establishing its own matrix accounts on major content platforms, PROYA has further expanded its consumer touchpoints, strengthened its self-operated capabilities and optimized its profit margins. This is also the underlying reason why PROYA's online channel brand business contributes more than 90%. For the beauty industry, plots, hot topics, content-based live broadcast rooms and good brand content are the four key contents to drive business growth. PROYA has layouts in all four aspects. Taking good brand content as an example, from 2021 to the present, the PROYA brand has focused on multiple themes such as "gender equality", "love and intimacy", "mental health", "youth and growth" every year, and released content short films on Women's Day, the start of the school season, Mother's Day and other festivals to "support" female customers and continue to output the brand's values. These contents are also reflected in the video account.

In the past two years, PROYA has increasingly added some themed short videos on content marketing to its video accounts. For example, they tell how young people break through confusion to realize their dreams, how newbies who have just entered the workplace grow up, how to see the unknown efforts of mothers, as well as gender bias, school bullying, etc. At present, drama seeding has become a new bonus field for beauty brands to invest large amounts of money.

PROYA has sponsored and customized a number of short dramas. During last year's Double Eleven period, it sponsored the short drama "Full-time Househusband Training Program", which was broadcast on the Douyin platform. It ranked first on the Douyin short drama hot list in the first week of its launch. As of today, the total number of views of the feature film has exceeded 350 million, and all 16 episodes have been updated. PROYA's brand is exposed in almost every episode, and there are also oral announcements by the protagonists. In each episode of three or four minutes, the soft advertising time can account for more than ten seconds.

Social: Create a mechanism for KOC social sharing

Speaking of social gameplay, PROYA can be said to be the earliest beauty brand to implement the "big single product strategy" through the promotion of KOC on Xiaohongshu. From the initial "morning C and evening A" to the skin care "ABC formula", it has achieved the mental penetration of the three major single products, double-antibiotic essence, ruby ​​essence, and source essence, and achieved breaking the circle of the crowd by releasing KOC content.

According to incomplete statistics from Xinhong Data, in the Xiaohongshu brand seeding increment list in October last year, PROYA ranked second with 2,996 seeding experts, second only to L'Oreal. In terms of content x social gameplay, during this year's May Day, PROYA's "Infinite Space" pop-up store continued to strengthen the "morning C and evening A" skin care concept, drawing inspiration from the current popular social trends, combining different social personality attributes and brands, and creating two experience routes with different attributes: C attribute (brain hole type) or A attribute (action type). At the same time, PROYA also set up a "newborn" redemption station, where participants can participate in the #PROYA Infinite Space topic discussion by posting Xiaohongshu notes and redeem PROYA and "Things and Regeneration" joint gifts.

Commercialization: Combination marketing to achieve multi-link monetization

In the past few years, with the marketing combination of "omni-channel promotion + live streaming + Tmall to carry traffic", many domestic beauty brands have emerged, which also led to the rapid development of PROYA.

In 2023, PROYA's online channel revenue was 8.274 billion yuan, a year-on-year increase of 42.96%, accounting for 93.07% of the total revenue. Compared with 2022 and 2021, the proportion continued to expand. In addition, PROYA topped the Tmall Beauty, Douyin Beauty, and JD.com domestic beauty lists on Double Eleven last year. The mini-program mall built on the WeChat ecosystem, as PROYA's private domain transaction site, allows the brand to better reach users in a form that is closer to the native WeChat experience, improves user retention nodes after attracting new users, and brings more brand stickiness. Its main goal is to guide users' refined operations and increase repurchases.

At present, short dramas have undoubtedly become a new lever for beauty brands to leverage their marketing. "Short dramas + live streaming monetization/linking" has become a new way for beauty brands to achieve traffic conversion, and its commercial value has been verified. Take Hansu as an example. With an investment of 45 million yuan, it leveraged 5 billion views and converted them into 3.34 billion GMV.

In conjunction with content marketing, PROYA has also designed a closed-loop chain for monetization on the Douyin short drama. Click "#全年家老公训练计划" at the bottom of the video to enter the topic page. A clear jump path is displayed at the top of the homepage, and you can pull down to enter the official live broadcast room of the PROYA flagship store.

04. The potential of beauty brands in the WeChat ecosystem

The best testing ground for public-private linkage

As public domain traffic becomes more and more expensive, the linkage between public and private domains has become a new option for beauty brands to break through. Operating users in the private domain is the key to increasing repurchase, improving gross profit margin and improving customer service quality. From the perspective of the linkage between public and private domains, the industry has reached a consensus that "the next new opportunity should be in the video account." With the successful experience of Douyin e-commerce, the video account may become a high-potential field for PROYA to seek new growth.

As mentioned in the above analysis, PROYA has been increasing its investment in short video content on video accounts in the past two years. As a good way to communicate with users, short video content emphasizes resonating with users at the conceptual level, thereby deepening their favorability and trust in the brand. This is a reflection of the differentiated opportunities for beauty brands in the WeChat ecosystem: video accounts + short videos, a new traffic front for brands. Brands can amplify their brand influence through short video content and continue to attract user attention. Last year, when the Operations Deep Selection communicated with Wang Yi, the head of beauty at Tencent Advertising, she mentioned this opportunity. In addition, the opportunities for beauty brands in the WeChat ecosystem are also reflected in the following two aspects:

1. Video account + live broadcast, providing a relational live broadcast model. Brands can establish a centralized scene for interaction and conversion with users through live broadcast on video account, helping brands achieve the conversion from traffic to retention. Currently, PROYA has also established a brand live broadcast model on video account through the method of Dabo + self-broadcast.

2. Video account + content, providing multiple scenarios for breaking the circle. The video account + content ecosystem, such as video account + music live, video account + knowledge content, and video account + major events, provides more space and scenarios for brands. Brands can coordinate content and social touchpoints in the video account, and help brands break the circle and attract private domains with high-quality and diverse content.

WeChat ecosystem creates a new blue ocean of short drama traffic

Beauty + short dramas are considered to be the "new myth" of the growth of beauty brands. For beauty brands that want to develop short dramas, we believe that there will be another possibility in the WeChat ecosystem in the future: short dramas/mini program short dramas + video accounts.

On the one hand, the short drama marketing in Douyin and Kuaishou has begun to go inward, and the marketing cost will naturally become higher and higher, which is inevitable, and the direct conversion rate brought by the short drama will also become lower and lower. In terms of short drama marketing, the WeChat ecosystem is still a new and huge traffic blue ocean;

On the other hand, judging from the recent actions of the video account platform, there is also a tendency to accelerate the layout of short dramas. Tencent's 2024Q1 financial report shows that the monthly active accounts of WeChat and WeChat reached 1.359 billion, the total user time of mini programs increased by more than 20% year-on-year, and the total user time of video accounts increased by more than 80% year-on-year. Under the growth data, it can be found that the connection between various business touchpoints in WeChat is becoming closer, and a new ecosystem connecting the entire domain has gradually been formed.

The integration of WeChat ecosystem will further expand the touchpoints of micro-drama users and create a new platform for discovering short dramas. Users will be able to access a dedicated short drama content aggregation page and a list to easily track their favorite short dramas. In addition, the official account now provides a one-click follow function and a convenient option to embed videos directly into the micro-drama applet. While enjoying the short drama, the audience can also enrich their expression and interactive experience by liking and sending barrages. Not only can the short drama content be shared instantly, but also personalized sharing posters can be created.

Private domain will become the "king bomb" of the micro-short drama industry. In the past two years of the development of the short drama 1.0 era, most short dramas rely on channels such as Douyin and Kuaishou for traffic distribution, and they also face the problem of increasingly expensive traffic.

On March 15, WeChat Video Account began internal testing of paid vertical screen short drama mounting. While the short drama mounting function was being tested, news of new functions such as WeChat opening a short drama entrance, developing a short drama player, internal testing of group watching, and paid hot link content were also released. A series of measures show that the video account will be completely connected with short dramas, especially mini-program short dramas, forming a WeChat ecological closed loop that is beneficial to the short drama industry.

The imagination of the video account is still reflected in the gameplay of public-private linkage: the number of WeChat friends, the number of group chats, and the daily visits to the circle of friends can all be converted into the revenue of the short drama. The function of buying short dramas in groups with friends imitates the group buying model of Pinduoduo: after buying a short drama, you can invite your friends to buy it together, and the two people will enjoy a preferential price and the "price difference" will be returned after the group buying is successful. According to the prediction of industry insiders, the video account may also launch a top-level fission model such as "friends cut a knife and watch short dramas for free" in the future.