Chinese membership-based platform Yanantang, a hit with Key Opinion Consumers for its expert skin care tips and products that catering to Asian skin
In China’s cosmetics market, where demand for skincare is robust, a new service that provides specialized skincare information is fast gaining recognition. This is none other than membership-based platform Yanantang that utilizes both owned media and an e-commerce site.
According to a report by Dongguan Securities, China’s cosmetics market in 2019 was worth 477.72 billion yuan (US$72.9 billion), and over 50% of that — 244.41 billion yuan (US$36.9 billion) — was skincare-related.
In 2020, when China was hit by the Covid-19 pandemic, the increased usage of masks and the added stresses of stay-at-home lifestyle threw skin issues such as dry complexion into the spotlight, and overall interest in skincare has increasingly grown. In particular, consumers became concerned about issues surrounding the safety and ingredients used in products. According to a report by CBNData, since February 2020, the inter-net searches related to cosmetics ingredients have been increasing. Under these circumstances, a service that has recently been gaining attention is Yanantang.
Yanantang was launched in 2016 by Yanantang Shidairui Biotech (Shanghai), a venture firm started at Fudan University. Applying his experience from research and development at Unilever, founder and CEO Guoqing Zhao worked as a general manager at Huida Biopharmaceuticals (Suzhou), a Chinese corporate body of American ODM/OEM company Dermaceutical Products. Afterward, he earned his MBA from Fudan University and subsequently launched Yanantang.
Yanantang started their business posting information relating to skincare using a WeChat subscription account as ‘owned media’. They post articles written by experts, including formulators who design and develop cosmetics and beauty dermatologists, that explain ingredients and talk about how to choose cosmetics, while also citing such sources as scientific data from overseas.
In the subscription account, they also announce their “Yat Best of Beauty Awards” that annually gives out awards in different cosmetics categories. First, they shortlist over 500 products that achieved good sales or that became hot topics, then the “Yanantang Skin Control Research Institute”, a research division of the company, narrows them down to 160. Then a panel of 20 made up of experts and consumer representatives give the products scores out of five for each of the five aspects of the brand philosophy, consumer reviews, usability, product appeal, and consideration of the environment, and the five to ten products that get the highest scores are chosen.
However, large profits cannot be gained simply from posting information. The company’s main source of revenue is from e-commerce. Straight after launching their owned media, they established the e-commerce site “Yanantang Optimize” which sells over 300 carefully-curated products both in and outside China.
Compared to the regular e-commerce sites in China, Yanantang Optimize has more detailed categories — for example, beauty lotion is divided up into “moisturizing / soothing”, “oil control / acne control”, “skin whitening / brightening” and “lift up / wrinkle control”. Some product descriptions also contain explanations of the ingredients from the formulators.
The e-commerce site also launched Yanantang’s own brand “diary” in 2017. This brand was developed jointly with American OEM company L’Onvie based on data from over 150,000 users — including users of mini-programs and members of their WeChat company account (mentioned below). The mission of “diary” is to solve skin problems of Asian women in particular, and development involved direct input from consumers. According to local media, the brand’s facial mask sold a million units within 18 months, and their annual GMV (Gross Merchandise Value) is over 60 million yuan (US$9.2 million).
On WeChat, along with a subscription account, Yanantang also runs a company account: “Yanantang Member’s Club”. Rather than posting information, this club places more emphasis on services for members, offering questionnaire-type skin and hair diagnoses and online classes that teach about ingredients and skincare techniques as per a curriculum created by the Yanantang Skin Control Research Institute. These classes also come with exams for testing members’ comprehension and based on the grade they achieve members can receive benefits such as free samples and coupons.
The Yanantang Member’s Club also makes use of WeChat “communities”. This is a group chat function, and the club currently runs up to 280 communities, with overall participants numbering over 56,000. In these communities, users can receive one-on-one counseling and be diagnosed by medical specialists. Along with collecting data, Yanantang is using these communities to energize intercommunication between users and thus raise customer loyalty.
The company is also laying more importance on KOC (Key Opinion Consumers) rather than KOL (Key Opinion Leaders). Word-of-mouth by KOCs has led to increases in followers and members and in turn to sales on their e-commerce platform. The conversion rate (CVR) of Yanantang’s WeChat followers is apparently 10%, close to double the CVR of the average WeChat mini-program, which is just over 5%.
Coming into 2021, Yanantang attained a Pre Series-A round of funding of 10 million yuan (US$1.5 million). Armed with this funding, the company is aiming to scale up even further.
Text: Chig Li Tor
Original text (Japanese): Team Roboteer
