The remaining money-making opportunities in 2023 are all in these 10 categories

2023 is already halfway through, so which categories will be popular in the second half of the year? In this article, the author selects 10 categories with great opportunities and analyzes them from the perspectives of market size and prospects, profit margins, entry barriers, and industry competition landscape. It is worth reading.

2023 is already halfway through. If we use one word to describe the first half of the year, it can be said to be ups and downs. We started with the eager hope of consumption recovery, but were poured cold water by the 3.8 promotion. Then we ushered in the mid-year promotion 618, and there was a partial rebound. The consumption recovery was slower and more twists and turns than expected, but it is still moving in a positive direction overall.

According to the data from the National Bureau of Statistics, the total retail sales of consumer goods in the first quarter of this year was close to 11.5 trillion yuan , a year-on-year increase of 5.8% . What is more worthy of attention than the numbers is the consumption habits and market trends that have been changed by the macro environment. What opportunity categories will emerge in the second half of 2023 and in the longer-term business field? The Daofa Research Institute analyzed more than 20 industry reports and selected 10 major opportunity categories from the perspectives of market size and prospects, profit margins, entry barriers, and industry competition patterns .

The selected categories all meet the criteria of broad market prospects and large profit margins. In terms of development opportunities, some industries have no obvious leading brands and the market is still relatively blank, while some industries are facing a reshuffle and the giants are losing speed, giving newcomers the opportunity to overtake.

There are also some categories that, although they have great market prospects and profit margins, are eliminated because they are too popular or have high thresholds and risks, such as the extremely inward-looking beauty and skin care, pets and nourishing bird's nests, dental care and new energy vehicles with high thresholds, unclear business models, and gray areas such as old clothes recycling.

Daofa believes that no matter how cold the market is, there is always a hotbed for money, and any era is a golden age.

What other categories do you think are promising? Feel free to share with us in the comments section.

1. Mobile phone case

Fashion is a circle. A dozen years ago, almost every young person had a mobile phone chain to show their individuality and uniqueness. A dozen years later, young people's individuality still has nowhere to go, but mobile phone chains have become mobile phone cases.

According to the data from Betzers Consulting, the scale of China's mobile phone case market will reach 15.476 billion yuan in 2022, and the global mobile phone case market will reach 99.911 billion yuan. It is expected that by 2028, the global mobile phone case market will reach 129.068 billion yuan, with an estimated annual compound growth rate of 4.36%. Another data from the US market research organization NPD shows that the global demand for mobile phone cases in 2022 will be 1.49 billion, the transaction volume of mobile phone cases on the entire network will exceed one million, and 25% of users will buy more than one mobile phone case.

The gross profit of mobile phone cases is also considerable. The cost of a silicone mobile phone case is about 2-7 yuan, and the retail price can be sold for 30-50 yuan. With the brand premium, there are many cases where the price is over 100 yuan. However, due to the low entry threshold, the competition in the mobile phone case category is also very fierce. If there is no differentiation, there is a high probability that you will fall into a price war. As for how to shape mobile phone cases into lifestyle and fashion icons, CASETIFY is a typical case.

The price of CASETIFY mobile phone cases ranges from 200 to 500 yuan, with annual sales of 3 million units. According to ecommerceDB data, its sales in 2021 reached 120 million US dollars. Its popularity is mainly attributed to two factors:

1. Customized design to meet the user's individual expression

CASETIFY can provide customization services for mobile phone models, versions, styles, materials, colors, patterns, etc. After the user selects the parameters, CASETIFY will first display the 3D renderings, giving the user the most ample choice.

In addition, CASETiFY also recycles old mobile phone cases as raw materials, and the green environmental protection concept behind it has also gained support for it. Incorporating personality, emotions, and values ​​into the design of mobile phone cases is the basis of CASETIFY's brand premium.

2. Celebrity/IP collaboration, herd mentality

Its popularity is inseparable from the high-intensity joint actions. From film and television IPs such as "Pokemon", "One Piece", and "Squid Game", trendy brands such as Off-White, stars such as BLACKPINK and Billie, to the Louvre, M+ Museum, etc., CASETiFY's joint scope is extremely wide, but it accurately captures young people and fashion trendsetters. On social media, the recommendations and invisible Amway of many celebrities and KOLs have made CASETIFY the embodiment of a lifestyle that many people yearn for.

CASETiFY has proven to us the potential of the mobile phone case market. And we believe that CASETIFY will not be the only company in this market.

2. Wigs

In 2023, the global wig market will exceed US$10 billion , of which 70% of the output comes from China, and the Chinese market consumes more than 3 billion yuan of wig products each year.

According to the data from China Research Institute of Industry, in February 2023, the monthly sales of hair-related products on Tmall reached nearly 1.75 million pieces, with monthly sales exceeding 140 million yuan, a month-on-month increase of about 3%. At the same time, the number of brands, stores and SKUs related to wig products are all showing a positive growth trend, and the increase is large. In Xuchang, Henan, the "wig capital", there are more than 5,000 wig factories with an annual transaction volume of 1.5 billion yuan, and a giant in the industry, Rebecca, has emerged.

In 2003, Rebecca became the first listed wig company in China. Since its listing, Rebecca's revenue has increased by more than 3 times, and its net profit has increased by 5 times - in 2022, its revenue was 1.759 billion yuan, and its net profit was 170 million yuan, a year-on-year increase of 21% . From Rebecca's history of success, potential entrants can get a glimpse of the growth opportunities of the wig category.

1. Foreign trade export

80% of Rebecca's revenue comes from product exports, and the gross profit margin in overseas markets is higher than that in China, especially in the African market, where the gross profit margin exceeds 41%. Currently, Rebecca has 8 sales subsidiaries overseas, 6 of which are in Africa.

2. Supply chain integration and branding

The average price of Rebecca's products is over 1,000 yuan, but most wig companies are OEMs without branding, which limits the premium space to a certain extent. The wig category has opportunities for new entrants to reduce costs by integrating the supply chain and increase premiums through branding.

3. Collectible Card Games

Collectible card games, represented by "Magic: The Gathering", "Ultraman" and "Pokemon", are a niche but very profitable category. Take "Magic: The Gathering" by Wizards of the Coast, a subsidiary of American toy giant Hasbro, for example. Its volume reached $1 billion in 2022, becoming the company's most profitable IP. Due to its blind box gameplay and the krypton gold nature of the game, the market price of some cards can be as high as 200,000 yuan .

Under the temptation of high profits, Disney, which holds many IPs, also entered this industry last year. In addition to upstream card game publishers and designers, midstream distribution agents, downstream retail stores and player second-hand markets together form a complete business chain of collectible cards. For new entrants, opportunities are mainly concentrated in the midstream and downstream.

Taking the "Ultraman" cards as an example, Kayou Animation and Huali Technology have made a lot of money through distribution agents. In 2021, the revenue of Huali Technology's animation IP derivative products was 175 million yuan , a year-on-year increase of 156.52% .

The bigger profit margin is in the second-hand market. Because the issuer sets different levels for cards, some high-level cards have a serious premium. This has given rise to a second-hand card market similar to second-hand sneakers.

4. Earrings

In 2021, the market size of the jewelry industry exceeded 700 billion, an increase of 18%. Among them, earrings are a veritable high-profit category.

Take 925 silver needle earrings as an example. The cost price is generally no more than 10 yuan, and the lowest is only 1.5-2.5 yuan. The selling price can be as high as dozens or even hundreds of yuan. Because of the high gross profit, it is also the biggest profit of KKV, MINISO and other collection stores. In recent years, new jewelry brands such as abyb and YIN have also emerged in China. Although there is no leader yet, it is enough to illustrate the potential opportunities in this industry.

Among them, abyb's Taobao sales exceeded 30 million yuan in 2020, the year its first product series was launched. In the second year, Taobao's sales exceeded 100 million yuan and achieved profitability. The first single product launched by YIN was priced at more than 1,000 yuan, and the overall online customer unit price was about 2,500-3,000 yuan. With the expansion of offline stores, the customer unit price is still on the rise.

It can be seen that the cost of designer brands is naturally much higher than that of general products, but differentiation based on categories can also create sufficient profit margins.

5. Glasses

In terms of the degree of profit, glasses are even more profitable than earrings. Usually, the cost of a pair of glasses is between 60-200 yuan, but at the retail end, the selling price is generally more than 500 or even 1,000 yuan, with a gross profit margin of 50%-80%.

The market size is also considerable. According to the data from the National Health Commission, from 2012 to 2020, the number of myopic people in China increased from 450 million to 710 million . It is estimated that in 2025, the domestic lens retail market size will exceed 47 billion yuan . In addition, the aging of the population has also increased the demand for reading glasses.

It is precisely because of the large profit margin that Warby Parker, the originator of DTC brands, chose the eyewear industry. When the price of glasses generally exceeded $200-300, Warby Parker priced prescription glasses at $95, cutting the price in half. This year, luxury giants such as Kering Group and LVMH have set their sights on this piece of cake and laid out high-end glasses. In the mid- and low-end markets, there may also be great potential.

As the penetration rate of the Internet continues to increase, the proportion of people in China who are 3-10 years old and have started to use the Internet has reached 75.8% . The resulting demand for vision protection, anti-fatigue and myopia delay has become a new growth point in addition to myopia and presbyopia glasses.

6. Mid-to-high-end/outdoor children's clothing

According to Euromonitor data, the market size of China's children's clothing industry in 2021 is 256.361 billion yuan , a year-on-year increase of 15.60% . It is estimated that in 2027, the scale of China's children's clothing market will reach 459.7 billion yuan , with a compound growth rate of 9.81% from 2022 to 2027.

From the perspective of the market structure, the children's clothing industry is currently dominated by Balabala and is highly fragmented. In 2021, Balabala ranked first in China's children's clothing industry with a market share of 7.1%. Anta Children, Uniqlo and Adidas Children ranked second to fourth with market shares of 1.6%, 1.3% and 1.3% respectively, and the market share of other brands did not exceed 1%. Compared with adult clothing, children's clothing can be sold at a higher price at a lower cost, and the larger profit margin makes it a hot commodity in the clothing industry. There are both mature brands that rely on children's clothing business to increase revenue and net profit, and there are also many cutting-edge brands expanding children's clothing business.

In 2017, Balabala became the main business of Semir Clothing, and since then, the operating income has accounted for more than 50% of the total revenue, and has been rising year by year. According to several outdoor brands that Daofa has interviewed before, the sales of children's clothing have doubled in the past year, and will increase by 2-3 times this year.

It is worth mentioning that the children's clothing category is not only an opportunity for clothing brands, but also for maternal and child and lifestyle brands.

7. Wet toilet paper

Wet toilet paper is one of the few blue ocean categories at present. According to statistics from the China Household Paper Professional Committee, wet toilet paper currently accounts for less than 5% of the wet wipes industry, far lower than baby wipes and general wet wipes. The low popularity of the product also means huge market potential. According to data from the China Business Industry Research Institute, the market size of the wet toilet paper industry in 2021 was approximately 668 million yuan , a year-on-year increase of 36.05% . In 2022, the market size was approximately 752 million yuan , and it is expected to reach 867 million yuan in 2023.

In addition, due to differences in user groups, wet toilet paper is easier to be high-end than ordinary paper towels, and has greater room for premium. In 2021, high-end products in this category accounted for more than 74% , and the growth rate of online consumption of high-end products reached 63% . In the past three years, the growth rate of wet toilet paper consumption in online channels has exceeded 25% , becoming a representative product of paper product upgrades.

Although there are many leading players, the emergence of new categories also gives other players the opportunity to overtake. Deyou is one of the brands that has successfully broken through.

Deyou entered the wet toilet paper category in 2020, and its sales grew rapidly in 2021, with cumulative sales reaching 1.2 billion yuan. Euromonitor data shows that as of February 2023, Deyou wet toilet paper has sold 80 million packs, ranking first in sales on the entire network.

There are two key points for new entrants to seize the good opportunity to occupy the blank space in the category mind. The first is to do a good job in category education and increase penetration. For example, Deyou released a white paper on the wet toilet paper industry with CBNData and invited doctors and experts to endorse the product. The second is to accurately reach high-net-worth people and fully tap the high-end potential of the category. In addition, it is also a common practice to increase the premium through IP co-branding.

8. Light outdoor protective equipment

In March this year, Jiaoxia and iResearch jointly released the "Lightweight Outdoor Industry White Paper", proposing "Lightweight Outdoor" to distinguish from the traditional outdoor industry. The white paper shows that the current lightweight population has reached 500 million , and is expected to expand to 730 million in the future. By the end of 2023, the scale of China's outdoor products market is expected to exceed 200 billion yuan, and outdoor product consumers will invest 77.5% of the amount in the purchase of lightweight outdoor products, and the consumption investment in lightweight outdoor products will increase by 14.1% in the future.

From camping, frisbee, skiing, cycling, to the recently popular citywalk, the forms of light outdoor activities are changing rapidly, but the core demand remains largely unchanged - the overall penetration rate of sun protection products in lightweight outdoor products is as high as 88.9%, and sun hats and sun protection clothing are the two categories with the highest penetration rate . No matter what kind of light outdoor scene, "outdoor protection" and "sun protection" are the most prominent calls. This can be seen from the crowded sun protection clothing market this year.

The 2022 Taobao Live Sunscreen Report shows that from January to April, the sales volume of sunscreen products in live broadcast rooms increased by 40% , of which the sales volume of sunscreen clothing increased by 157.11% , far higher than the 62.17% sales volume of sunscreen skincare products. In April this year, the sales volume of sunscreen clothing and accessories on the platform increased by nearly 2 times year-on-year.

In addition to the need for sun protection, the needs of mosquito protection, cold and water protection, and anti-fatigue also need to be met urgently.

9. Kitchen/cleaning small appliances

From 2017 to 2021, the five-year compound growth rate of China's small household appliances industry reached 8.72%, and the market size is expected to reach 192.4 billion yuan in 2023. Among them, kitchen small appliances and cleaning small appliances have grown most significantly.

According to Euromonitor data, the scale of China's small kitchen appliance market reached US$28.51 billion in 2021, and is expected to further grow to US$33.55 billion in 2026. Specifically, traditional categories represented by rice cookers and slow cookers have accelerated their penetration. From 2007 to 2021, the sales of rice cookers increased from 5.567 billion yuan to 14.047 billion yuan, with a compound annual growth rate of 6.83%; the sales of slow cookers increased from 1.117 billion yuan to 2.436 billion yuan, with a compound annual growth rate of 5.73%.

Even in the first half of 2020, when the retail sales of China's home appliance market fell by 14.13% year-on-year, online sales of many emerging small kitchen appliances continued to grow. Among them, the sales of frying and grilling machines increased by more than 70% year-on-year, and sales volume increased by more than 80% year-on-year.

At present, the small home appliance category as a whole is in a period of industry transformation with new and old forces competing against each other, mature brands are transforming, and emerging brands are catching up quickly. When the industry needs innovation, it also provides equal opportunities for all brands. For example, in the category of cleaning small home appliances, emerging brands such as Dreame and Lifen have emerged.

10. Homes that are suitable for the elderly

Some time ago, a report by People magazine, "Can you still live in your house when you get old?", made many people start to think about the issue of home-based care for the elderly. This life issue that everyone will face is a huge opportunity at the business level.

According to Shangpu Consulting data, the market size of China's elderly care industry will reach 10.4 trillion yuan in 2022, a year-on-year increase of 22.3% . It is expected that the market size will reach 12 trillion yuan in 2023. Among them, home-based elderly care is the most mainstream way of elderly care. According to the data of the National Bureau of Statistics, in 2019, 94.1% of the population over 60 years old in China chose home and community-based elderly care.

As mentioned in the character report, when people get older, the home environment they used to be familiar with may become full of dangers. The adaptation of home products to the elderly is a market that is currently blank but has huge growth potential.

Author: Dao Fa Xing Yan, WeChat public account: "Dao Fa Research Institute"