Social selling: Yatsen sees Douyin channel as ‘very important factor’ for brand growth

The Chinese firm is a leading player in China's cosmetics market and owns multiple brands including Perfect Diary, Pink Bear, DR.WU and Eve Lom.

The company, which has previously broken records on Tmall, has been observing a sales decline on the Chinese e-commerce platform, which accounted of 40% of the company’s sales.

Conversely, Yatsen is seeing an increase on the Douyin, the short-form video-sharing app known and sister to Tiktok.

“Douyin, right now, is becoming a very important factor for brand growth,”​ said Huang Jinfeng, founder, chairman, and CEO of Yatsen Holdings.

“We see the percentage is declining [on Tmall] and our percentage in the livestreaming especially in Douyin is increasing. Looking forward, we think this trend will continue as well.”​

In the past three months or so, the company has been taking the opportunity to optimise its sales on Douyin.

“If you look at the recent development of Perfect Diary's ranking in Douyin, Perfect Diary's ranking is increasing really fast. If I remember correctly, Perfect Diary is ranking around number 3 or number 4 in Douyin colour cosmetics,” ​said Huang.

Douyin has also been instrumental in helping its newer skin care brands gain traction in the market.

“We see that the first stage of Douyin sales mainly comes from discounts. If you look at some of the skin care brands, the benefit from the first stage of the Douyin's livestreaming development is very deep discount for their skin care products,” ​said Huang.

He added that the firm is committed to investing further in the channel.

Tough competition

Meanwhile, competition on Tmall has been intensifying, especially during Singles’ Day, the mega-shopping festival that takes place on November 11.

This year, the company faced competition from the aggressive promotional and discount activities from global brands.

“We've seen is a lot of the prestige foreign colour cosmetics brands have offered deep discounts, really deep discounts for their products,” ​said CFO Yang Donghao.

For instance, he elaborated that a certain global brand in the masstige space offered 'buy one, get one free' type deals to generate sales.

Additionally, these brands also partnered with Chinese livestreaming influencers such as Li Jiaqi and Viya, who are both known to be very effective salespeople.

During this year’s Singles’ Day pre-sale livestreaming session on October 20, the pair collectively sold approximately RMB19bn (U$3bn) worth of goods within the first 12 hours.

Huang said the combination of aggressive discounts and the use of key influencers “significantly impacted” ​the firm’s sales.

Perfect Diary, which was ranked 11^th​ in Tmall’s Singles’ Day top 20 rankings last year, eventually found itself off the charts completely this year.

However, Huang added that the international brands could not expect to benefit from this approach in the long run.

“I think this is not going to be a sustainable tactic by the global brands because it will significantly hurt their premium brand image.”​

He also noted that that company has been working to gain more shares since Singles’ Day as the global brands sales have started to return to normal levels.