In 2024, entering the final quarter, the pace of brand closures has not stopped.
Today (October 10th), CHAILEEDO learned that the Chinese emerging cosmetics brand HEDONE announced that it will officially cease operations on November 9th. As of now, only one lip gloss product remains on sale at the HEDONE brand’s Tmall official flagship store. This means that this once well-funded emerging cosmetics brand is about to come to an end.
It is worth mentioning that since the beginning of this year, there have been continuous announcements of brand closures, clearance sales, and exits from the Chinese market. Is this a case of brands struggling to adapt to the market, or is the industry’s “late frost” not yet over?
Three years without new products, innovation exhausted?
This morning, the emerging cosmetics brand HEDONE posted an article titled “HEDONE’s Farewell Letter” on its Xiaohongshu and WeChat official accounts. At the same time, according to the homepage of the HEDONE brand’s Tmall official flagship store, HEDONE will officially close on November 9th, with store services ending on November 30th.
Upon the release of the above-mentioned article, it sparked thousands of comments and attention on social media platforms like Xiaohongshu. While expressing regret, many brand fans mentioned using multiple products from HEDONE such as lip glosses, eyeshadows, contours, which left them with good user experiences. Some fans even stated that HEDONE still occupies a significant place on their makeup tables.
Regarding the impending closure, CHAILEEDO attempted to contact the brand for verification, but as of the time of writing, no response has been received. The official customer service of the HEDONE brand’s Tmall flagship store informed CHAILEEDO, “After careful consideration, the team has decided to cease the operation of HEDONE. During this final period, HEDONE will maintain its quality and service until the last package is delivered.”
It is understood that currently, only one lip gloss product with five shades is available for sale on the HEDONE brand’s Tmall flagship store, priced at 89 yuan per item, with over 100,000 units sold as shown on the product page. It is noteworthy that this product still ranks 7th on Tmall’s lipstick repurchase list.
So, why did the HEDONE brand suddenly announce the termination of its operations?
In fact, unlike the positive sales feedback of the brand’s Tmall official flagship store, HEDONE’s social media operations seem to have gradually stagnated. Prior to this announcement, HEDONE’s Xiaohongshu account had not been updated since 2022, while content on Weibo and WeChat public accounts even remained stagnant since 2021.
At the same time, starting from 2023, many users have been searching for sold-out shades of HEDONE on social media platforms, only to receive responses stating that these products will not be reproduced once sold out.
“The last time HEDONE released new products was in 2022.” In the “Farewell Letter,” HEDONE openly admitted, “Since then, we have not been able to find the answer to ‘what needs to be created as a new product’ despite several attempts. Adding embellishments can bring some novelty, but there are already many better and cheaper products.”
“Any creative act with genuine intentions cannot rely on ‘concept that looks good,’ ‘market promotion that seems impactful,’ or ‘company that can continue operations’ as the original intention and reason to create something beautiful.” HEDONE stated, “Therefore, putting a complete end to it and wrapping up is the only expectation for each of us as HEDONE comes to an end.”
From the brand’s own account, the reasons that led to HEDONE’s ultimate closure may stem more from the lack of internal innovation and growth driving force, as well as the increasing competition from more competitive makeup products in the market. Compared to these products, HEDONE lacks advantages in both product innovation and pricing.
It is important to note that compared to skincare products, makeup products require higher levels of product iteration and innovation while having lower barriers to entry. “The emergence of some low-priced brands has disrupted the price ‘anchor’ of makeup brands, which has to some extent affected the overall pricing of makeup products in the market,” a makeup industry professional candidly told CHAILEEDO.
From this perspective, HEDONE, with its insufficient innovation and internal drive, indeed finds it challenging to establish a firm footing in the market in this era where makeup fashion trends iterate rapidly.
Originating from nail polish, HEDONE received 3 rounds of funding.
Public information shows that the name HEDONE comes from the Greek mythology of the goddess of pleasure, Hēdonē, aiming to inspire each unique individual to become themselves, unleash vitality, and enjoy their most unrestrained and vibrant self.
According to media reports, the two founders of HEDONE, Jason (Zhou Cheng) and Rachel (Qu Xin Zhe), graduated from the Department of Electronic Engineering at the University of Oxford and the Financial Mathematics and Management program at King’s College London, respectively. Jason previously worked at Bain & Company and Xiaohongshu, excelling in category operations, business development, and strategic planning; Rachel worked at L’Oreal in London and Guidepoint Innovation Consulting in Shanghai, with rich experience in user insights, product innovation, and marketing.
CHAILEEDO noted that although HEDONE’s main business is cosmetics now, at the beginning of the brand’s establishment in 2014, HEDONE’s main business was nail-related products, including nail polish and nail wraps.
After three years of preparation, HEDONE officially entered the cosmetics arena. Rachel, the founder of the HEDONE brand, stated in a public interview that compared to skincare products, cosmetics require more direct appeal. In the early stages of entering cosmetics, HEDONE formed a video team and launched an MCN business, creating the initial EXISTENCE promotional video for HEDONE cosmetics, attracting many bloggers to try and promote the products.
In 2018, HEDONE officially announced the launch of cosmetics products, using classic TV works as makeup concepts and releasing the 1986 Journey to the West eyeshadow palette. In August of the same year, HEDONE entered Tmall and participated in the Tmall Double 11 event for the first time.
According to public information, without pre-sales, 35% of HEDONE’s UV comes from user-initiated visits, with the Seven Deadly Sins lip gloss, 1986 Journey to the West eyeshadow palette, and 1986 highlighter becoming the top three best-selling products. Subsequently, HEDONE launched the Modern Times series and the Wong Kar-wai style series, which also received praise, with many fans still requesting a restock in the comments section. However, many of these early popular products have already been discontinued.
The strong performance of the recently launched products allowed HEDONE to secure investment from Sequoia Capital six months after the cosmetics products were launched. It has also won several platform awards, including being named one of the “Top 10 Influential Brands in Social Retailing 2018” by Tiger Sniff, “Top 12 Emerging Brands in Tmall Beauty and Personal Care” by OIB x Tmall, a “Tmall Beauty Key Account Merchant,” and an “E-level Merchant on Xiaohongshu.” Currently, HEDONE has received a total of 3 rounds of funding, including from Pengpai Capital, Hongshan Capital, and S·Capital.
Additionally, CHAILEEDO observed that the operating entity of HEDONE, Shanghai Hena Industry Co., Ltd., still has 236 product filing information (including those already deregistered), with five lip gloss products filed this year and the rest from 2022 and earlier.
Where is the way out for cosmetics?
Data from CHAILEEDO shows that in 2023, the domestic cosmetics market in China reached 170.9 billion yuan, a year-on-year increase of 13.5%, with growth rates on platforms such as Kuaishou reaching as high as 81.8% and on Douyin reaching 75.3%. According to data from Xiaohongshu, in the first half of 2024, searches for cosmetics in China increased by 36%, outperforming the market, and the growth rate of Chinese brands was significantly faster than the overall market growth rate, indicating a strong new market vitality.
From this perspective, the growth momentum of the cosmetics market is even higher than that of the skincare market, and there is still room for market expansion. However, as stated in the “farewell letter” released by HEDONE, innovation and pricing remain obstacles that many brands cannot overcome.
In terms of pricing, Chinese cosmetics brands still focus mainly on affordable cosmetics, making it difficult for high-priced Chinese cosmetics to stand out. CHAILEEDO data shows that among the top 5 brands in the cosmetics and perfume category on Tmall in September, only two are Chinese cosmetics brands, MAOGEPING and Carslan, while the rest are international brands. The top 5 brands on Douyin are Florasis, Sanzitang, YSL, Xiaoshumei, and Funny Elves.
Cosmetics professionals mentioned that many consumers are accustomed to affordable and frequently updated cosmetic products, making it challenging for them to accept new high-priced Chinese products. A representative from a cosmetics company once told CHAILEEDO, “The pricing range for Chinese cosmetics products is mostly under one hundred yuan, making it not easy to create a product that has advantages in both technology and price.”
It is worth noting that today, the representative brand of high-end Chinese cosmetics, MAOGEPING, has updated its IPO prospectus. According to the prospectus, in the first half of this year, MAOGEPING’s revenue increased by 41.0% from 13.99 billion yuan in the same period of 2023 to 19.72 billion yuan, while net profit increased by 41.0% from 3.49 billion yuan to 4.93 billion yuan.
Additionally, Timage, now the second growth curve of Proya, has shown impressive performance, with brand revenue reaching 582 million yuan in the first half of this year, a significant increase of 40.57%. In the second-quarter main operating data report, Proya explicitly mentioned that “Timage has become the main reason for the price increase of its beauty and cosmetics products.”
Regarding innovation, a representative from a cosmetics company mentioned, “The cosmetics category is relatively fixed, making it difficult to create innovative products, but without innovation, it is challenging to impress consumers.”
However, CHAILEEDO has also noticed that many cosmetics brands are now actively seeking breakthroughs. For example, this year, the Naturaglace Group carried out a comprehensive iteration of its entire cosmetics line, gradually discontinuing previous individual cosmetics products to create the first batch of the “Born for Better Skin Quality” original cosmetics series.
Furthermore, a group of brands has begun focusing on concepts to build more unique brand awareness. For instance, RED CHAMBER has chosen the “Pure Makeup” track and launched the “Pure Makeup White Paper” this year to further strengthen the connection between the brand and the concept of “Pure Makeup.”
Perfect Diary has now started to abandon the affordable route, opting instead for technology and “makeup and skincare combined,” introducing the “Biomimetic Membrane Essence Lipstick” series. Huang Jinfeng, the founder, chairman, and CEO of Yatsen Group, mentioned at a product launch event that the new brand positioning caters to the current changes in consumer mindset and pursuit.
During market visits, CHAILEEDO has had many industry insiders express that “sunscreen base makeup,” “natural makeup look,” and “makeup and skincare combined” are all important trends in the current cosmetics track, driving market growth.
In this rapidly evolving cosmetics market, some brands may struggle to keep pace with market changes and exit quietly, but at the same time, many brands are exploring more innovative possibilities to find a more suitable direction for development in the end.
