According to information obtained from the Alibaba Asset Platform, yesterday morning at 10 o’clock, a batch of cosmetics and various types of small accessories under PRAYTY (Shanghai) Information Technology Co., Ltd. (referred to as “PRAYTY Information”) concluded their auction, but due to no bids being placed, all items were left unsold.
It is understood that this is the second time within a month that these two items have failed to sell. Looking at the reasons for the auction, this auction is part of the asset disposal after the bankruptcy liquidation of PRAYTY Information. Public information shows that PRAYTY Information includes the PRAYTY brand, which is a new generation beauty and cosmetics retail brand that integrates e-commerce, live streaming, and offline stores. It has also formed strategic partnerships with many well-known beauty and personal care brands both domestically and internationally.
So, why did PRAYTY Information enter bankruptcy liquidation?
PRAYTY, which previously received investment from Vipshop, has entered bankruptcy liquidation proceedings.
According to the National Enterprise Credit Information Publicity System, PRAYTY Information was established in 2017 with a registered capital of 1.08 million yuan. According to public information from Qichacha, Shanghai Caihua Culture Media Co., Ltd. is the largest shareholder of PRAYTY Information, holding a 50% stake. The second-largest shareholder is Wei Mingjie, who is also the founder and actual controller of PRAYTY Information, holding a beneficial interest of 68.13%. Additionally, Beihai Vipshop Investment Co., Ltd. holds a 2.49% stake.
Based on the founder’s background, Wei Mingjie previously founded the social e-commerce platform “Kaopu Xiaochengxu” and has years of experience in the e-commerce and retail industries. After the launch of Kaopu Haowu in 2018, it gained over 2 million new users on its peak day and achieved a monthly GMV of over 300 million yuan. It received investments from Newrank and Vipshop and became a leading company in WeChat’s e-commerce ecosystem. The core management team of PRAYTY Information has diverse backgrounds, with many members from the e-commerce, retail, and service industries.
In 2020, PRAYTY established its beauty and cosmetics retail brand “PRAYTY.” On December 11, 2020, PRAYTY’s official WeChat account announced the opening of its first store, PRAYTY Sinan Road Store. The opening ceremony was attended by Zhang Jiayi from Vipshop’s investment department and Xu Danai, the founder of Newrank. Thirteen days later, PRAYTY’s second store, located in Shanghai Guohua Plaza, was also opened. According to media reports at the time, the first week’s turnover of the PRAYTY pop-up store exceeded 1 million yuan, and paying members accounted for over 20%.
On October 1, 2021, PRAYTY opened its first offline flagship store at Shanghai Shimao Plaza (No. 829 Nanjing East Road). The new store covers an area of approximately 380 square meters. According to public reports, the PRAYTY flagship store is divided into nine sections, including boutique perfumes, branded skincare, cutting-edge personal care, trendy cosmetics, and fragrance workshops. It offers both domestic and international skincare brands and niche personal care products. In addition to international brands like Kiehl’s, Shiseido, and Lancôme, it also includes domestic brands like Dr. Yu and Kefumei.
PRAYTY also has its own brand, which accounts for a certain proportion of its product offerings. According to information, the “Fragrance Workshop” section of PRAYTY mainly sells its own perfumes and fragrances, with prices ranging from 69 to 399 yuan. The PRAYTY own brand also includes beauty devices, hair care products, and others, all priced below 100 yuan.
In terms of distribution channels, PRAYTY sells its products through offline stores, mini-programs, Douyin (TikTok), and WeChat communities. Public information indicates that PRAYTY has experience in supply chain operations and online operations. During the COVID-19 pandemic in 2020, before opening its first physical store, PRAYTY established a 2,000-square-meter live streaming base in Shanghai and cooperated with several mainstream MCN agencies. It had access to resources from many celebrities and top KOLs, achieving monthly sales of over 10 million yuan on Douyin for multiple beauty brands.
Despite initial success, PRAYTY faced financial difficulties and applied for bankruptcy liquidation less than three years after the establishment of the PRAYTY brand. According to information from the National Enterprise Bankruptcy Restructuring Case Information Network, on December 26, 2023, the Pudong New Area People’s Court in Shanghai accepted the case of PRAYTY Information’s bankruptcy liquidation and appointed the Shanghai branch of Jia Yuan Law Firm in Beijing as the administrator.
On the Alibaba Asset Platform, it was noted that a batch of cosmetics and various types of small accessories under PRAYTY Information failed to receive any bids in a second auction held today at 10 a.m. Additionally, on April 20, nine copyrights and 26 trademarks under PRAYTY Information, as well as a batch of cosmetics including the “C-Celebrity Essence Mask” and “Water Whispering Hair Care Set,” were successfully auctioned off with transaction prices of 990 yuan, 25,000 yuan, and 500 yuan, respectively.
Recently, attempts were made to contact PRAYTY Information for more details. However, multiple calls to the contact information provided in their 2022 annual report indicated that the phone numbers were not reachable.
Already heavily indebted, the founder is subject to high-consumption restrictions
From a capital-backed emerging beauty and cosmetics concept store to the parent company entering bankruptcy liquidation proceedings in less than three years, this may be related to poor management and losses incurred by PRAYTY stores.
According to the Chinese Judgment Documents Network, in the “First Instance Civil Judgment on the Contractual Dispute between Shanghai Yihedaoju Props Design and Production Co., Ltd. (referred to as ‘Yihedaoju’) and PRAYTY Information Decoration Contract,” Yihedaoju claimed that on August 30, 2021, regarding the construction matters of PRAYTY Information’s store located in Shanghai’s Huangpu District, Yihedaoju and PRAYTY Information signed the “Props Engineering Construction Contract” and “On-site Foundation Engineering Construction Contract” with respective total prices of 250,000 yuan and 700,000 yuan. On October 7 of the same year, after settlement adjustments, the plaintiff and defendant confirmed an actual increase in project costs of 45,000 yuan, resulting in a total price of 995,000 yuan. However, PRAYTY Information only paid Yihedaoju 715,000 yuan of the engineering fees and has yet to settle the remaining amount despite multiple reminders.
PRAYTY Information argued that it leased the store for cosmetics retail but closed it in June 2022 due to operating losses. They also claimed that Yihedaoju’s construction project was reduced, and Yihedaoju lacked qualifications for architectural decoration, rendering the signed construction contract invalid and no breach of contract occurred.
Ultimately, the Shanghai Second Intermediate People’s Court determined that on October 7, 2021, the plaintiff and defendant agreed on adjustments to the construction project and corresponding project fees, which represents a genuine consensus reached between both parties. Therefore, it was deemed legal and valid, and PRAYTY Information was ordered to pay Yihedaoju the remaining 280,400 yuan of engineering fees and overdue interest.
According to the “First Instance Civil Judgment on the Contractual Dispute between Shanghai Shuangliu Electronic Technology Co., Ltd. (referred to as ‘Shanghai Shuangliu’) and PRAYTY Information,” on September 22, 2021, Shanghai Shuangliu supplied PRAYTY Information with a set of indoor P2 full-color screens and 7 televisions, along with their installation, for a total contract price of 78,000 yuan. Despite multiple reminders, PRAYTY Information failed to pay the remaining 44,600 yuan of the contract amount. Consequently, Shanghai Shuangliu initiated legal proceedings.
It is worth noting that due to the overdue debt, PRAYTY Information has been listed as a historical defaulter twice, and the actual controller, Wei Mingjie, has been subject to high-consumption restrictions, with a total amount involved of 394,900 yuan.
Furthermore, according to CHAILEEDO’s investigation, based on publicly available information on branch organizations, PRAYTY Information has three companies, all located in Shanghai. Among them, PRAYTY (Shanghai) Information Technology Co., Ltd., Huangpu Branch, and PRAYTY (Shanghai) Information Technology Co., Ltd., Yangpu Branch, were both officially deregistered in June 2021 and December 2021, respectively. PRAYTY (Shanghai) Information Technology Co., Ltd., Huangpu Second Branch, is currently listed as “under the process of declaring business license invalid.”
In addition, CHAILEEDO’s investigation also found that all 10 mini-programs under PRAYTY Information, including Hubashang, Kaopu Haowu, and Comprehensive E-commerce Template Lite, have temporarily suspended their services. Furthermore, the latest post on the PRAYTY official WeChat account dates back to January 24, 2022.
The Two Extremes of Beauty Concept Stores
From its peak to its decline, PRAYTY has become a fleeting presence in the booming market of beauty concept stores.
In fact, the downfall of PRAYTY is not an isolated case. For example, on Alibaba’s asset platform, due to the bankruptcy liquidation of its parent company, Hangzhou Only Write Brand Management Co., Ltd., all six companies under its umbrella are currently being publicly auctioned with 100% equity. The starting price for five of the companies is 358,400 yuan, while one company’s equity is priced at 35,800 yuan. It is worth mentioning that initially, the assessed value for all six companies was 800,000 yuan, but the prices have plummeted since then.
Furthermore, public data shows that as of August 2023, nearly 170 stores have closed, including HARMAY, HAYDON, THE COLORIST, WOW COLOUR, and others.
In just a few years, emerging beauty concept stores have experienced a roller coaster ride. From the golden development period of 2019-2020 to the bursting of the bubble in recent years, well-known beauty concept stores have been closing one after another.
Regarding the reduction and closure of many beauty concept stores, Liu, a cosmetics distributor from Chongqing, said, “Beauty concept stores have high requirements for repeat purchases. Many emerging beauty concept stores focus on generating traffic and attracting new customers. They seem to emphasize marketing strength but weaken their ability to secure repeat purchases.”
Cui, the head of a well-known cosmetics chain store in China, stated, “Most beauty concept stores located in first-tier cities face higher offline costs such as rent and labor, and the competition is more intense. Additionally, many beauty concept stores operate on credit settlement models, so once they encounter operational issues, they can quickly face a situation where their expenses exceed their income.”
“After a brief dividend period, the development space for new-style beauty concept stores has become extremely limited due to high rent, labor costs, and other pressures,” said a senior professional in the cosmetics industry. Many emerging beauty concept stores lack the ability to sustain themselves and long-term competitive advantages. As capital valuation returns to rationality, the homogenized competition brought about by rapid expansion and the instability of sample product supply have become two major obstacles they struggle to overcome. Furthermore, young consumers attracted by new trends, due to their low loyalty, tend to leave, resulting in a rapid cooling of consumption for emerging beauty concept stores.
However, there are winners amidst adversity. For example, according to the latest announcement, the parent company of THE COLORIST, KK Group, achieved record-high revenue of 376 million yuan and operating profit of 376 million yuan in the first ten months of 2023. Previously, KK Group had been in a loss-making state for three consecutive years. Among its sub-brands, KKV remains the largest segment, with revenue of 3.27 billion yuan in the first ten months of 2023, a growth of over 60% compared to the previous year. THE COLORIST’s revenue was 756 million yuan, a growth of over 40%. The person in charge of THE COLORIST revealed to the media that they focused on adjusting the productivity of individual stores in 2022, reducing the number of loss-making stores from 115 at the end of 2022 to 35 by March 31, 2023. The adjusted THE COLORIST stores have become more standardized and have developed a systematic approach to individual store operations.
Regarding this, Cui, the head of the aforementioned well-known cosmetics chain store in China, stated that the burden behind THE COLORIST is relatively lighter, and there is more room for profitability.
“With capital shrinking in the cosmetics industry, it is no longer feasible for emerging beauty concept stores to continue pursuing a capital-driven path. If they choose an operational path, they must focus on solid management and enter a virtuous cycle,” said Liu, a cosmetics distributor from Chongqing.
