Online traffic has reached its peak, while offline consumer vitality is gradually recovering. Therefore, offline channels have become a battleground for brands to gain business increment. However, although the importance of offline channels to brands goes without saying, there are still widespread difficulties for brands in terms of how to enter offline channels and for offline stores in selecting brands. Both parties often find themselves in an awkward situation where “stores fear sluggish sales, while brands fear excessive distribution.”
Recently, MeiDD’s founder and CEO, Wen Min, gave an interview to CHAILEEDO, explaining how MeiDD has empowered offline stores and built bridges between stores and brands over the past 10 years.
According to publicly available information, MeiDD Technology (Shenzhen) Co., Ltd., founded in 2014, is an industrial internet company focused on serving the cosmetics stores industry. It provides SaaS tools, import supply chains, and new retail marketing services to the upstream and downstream sectors of the Chinese cosmetics stores industry.
Wen Min stated that the original intention behind creating MeiDD was to use internet methods to help the cosmetics stores industry undergo digital transformation as an “engineering and technology-oriented man.” He mentioned that MeiDD’s strategic goals were primarily driven by three reasons: first, online will never replace offline; second, consumption in third- and fourth-tier cities will gradually upgrade; and third, the desire to find a vertical industry that aligns with “sunrise industries, long lifecycles, and potential for stimulation.” “Based on these three fundamental principles, we firmly chose offline cosmetics stores channels as the entry point to serve the entire industry chain of the cosmetics stores industry, known as industrial internet. The ultimate goal is to serve the consumption needs of female consumers and their families in third- and fourth-tier sinking markets.”
Furthermore, Wen Min stated, “Although our strategy was set 10 years ago, it remains unchanged throughout the journey. Even in the next 10 years, there will be no major adjustments. We strive to achieve sustainable growth in performance for stores and brands, promote upstream and downstream collaboration, complete the digital upgrade of the cosmetics stores industry, and provide consumers with a better life experience.”
Over the past decade, upholding the mission of “making beauty retail simpler,” MeiDD has developed multiple products and tools, including MeiDD cosmetics stores Chain ERP System, MeiDD Mobile Marketing Tools, MeiDD Social New Retail Platform, and MeiDD Intelligent Supply Chain Platform. These solutions help offline cosmetics stores stores solve issues related to store management, member operations, and product procurement, achieving the integration of online and offline through a comprehensive upgrade of people, goods, and scenes.
So, what specific empowerment can MeiDD provide for stores?
Wen Min explained that the first is SaaS tools, which help stores complete digital infrastructure construction, achieve full digitization of store management and sales activities, and optimize people, goods, and scenes management. This allows stores to easily connect with consumers through major internet platforms such as Meituan Waimai, covering traffic, marketing, and services across all channels. Additionally, MeiDD provides new retail marketing services to help stores better attract local traffic to their physical locations or provide home delivery services. Furthermore, MeiDD has developed an intelligent supply chain system that includes intelligent product selection, one-stop procurement, and distribution. “Except for store displays and specific sales processes, we can provide services for all aspects of store operations.”
For stores, choosing MeiDD for new retail upgrades results in evident improvements in performance and efficiency. Wen Min gave examples such as a certain cosmetics stores chain reducing warehouse personnel from over ten to six after implementing MeiDD’s Warehouse Management System (WMS), and a cosmetics stores store increasing pure profits by thousands of yuan per month through MeiDD’s new retail operation empowerment for online delivery orders.
It is worth noting that since 2020, MeiDD has also launched an import supply chain business, aiming to provide a complete new retail solution for cosmetics stores stores, including supply chain, software, and marketing services. MeiDD’s Intelligent Supply Chain has introduced the upgraded “Beauty is Sincere” mini-program, which has already partnered with 350+ well-known cosmetics stores brands, encompassing over 4,000 SKUs, including imported European and American products, popular Japanese and Korean items, and emerging online brands. The number of partnering merchants has exceeded 3,000+.
MeiDD’s Intelligent Supply Chain can provide a full range of services from product selection to procurement, sales, management, and operations for cosmetics stores stores, aiming to accelerate the transformation of the traditional retail supply chain in the cosmetics stores industry towards a digital new retail model.
Wen Min stated that overall, in the first eight years of MeiDD’s development, they have helped 35,000 cosmetics stores stores complete the digital infrastructure construction, essentially building a “cosmetics stores retail expressway network.” In the future, MeiDD’s goal is to solve supply chain efficiency issues for stores and enable brand owners to connect with offline stores through this “expressway network.”
On March 19th, the 2024 (9th) Conference on China Cosmetic Trends, hosted by CHAILEEDO with MeiDD’s support, was held in Hangzhou. With the theme of “Offline Reconstruction,” MeiDD’s founder and CEO, Wen Min, delivered a keynote speech titled “Empowering 1000+ Brands to Reconstruct cosmetics stores Stores,” sharing MeiDD’s vision of making beauty retail simpler through internet tools.
Here is the speech transcript:
Hello, everyone!
As we all know, in addition to the impact of the pandemic, the global economy has undergone significant changes in recent years, which has had a tremendous impact on the cosmetics stores, especially cosmetic stores. So, I think it’s a suitable time to talk about offline today.
This year also marks the 10th anniversary of MeiDD’s establishment. We have experienced nearly 10 years of industry development and have been in communication with many insiders and outsiders of the industry. As a third-party platform in the industry, we sometimes see things differently from what others perceive.
Over the past decade, we have consistently adhered to the mission and vision we set ten years ago, which is to “make beauty retail simpler.” And until today, we are still doing business within the strategic direction we set ten years ago. Being able to survive and continue doing what we love, I think we are much luckier than most startups.
Up to today, we have provided SaaS tools and supply chain services to the industry, as well as local business district operations services, without significant changes. The only small change in the past ten years was the transition from “Youlipai” to “MeiDD” in 2018. In 2021, we officially became a company under the control of Meitu.
Many people wonder if offline customer service stores are still viable. We also had this question in mind and visited many stores during the pandemic. The answer we found was that “this industry is still doing fine.” Before coming here, we also gathered some data on this industry: comparing the average monthly sales per store from 2019 before the pandemic to December 2023, we can see that although the overall average sales of cosmetics stores stores have shown a downward trend in the past five years, the decline is not significant. If we compare it with the development of the Chinese economy and overall consumer trends, this curve is relatively normal. Additionally, we looked at the situation of both the mid-tier and top-tier businesses. We found that over the past five years, it has been relatively stable, with not much fluctuation. If we exclude the fourth quarters of 2020 and 2022, the changes in the top-tier businesses were almost insignificant.
Why is the overall market data performing well, but many people believe that businesses or cosmetic stores are shrinking?
If we take a closer look, we can understand the reasons. Who is saying that business is bad? When we look at the two sides of the curve, we see a stark contrast. The curve we see is a rapid decline in the mainstream brands that dominated the cosmetic stores in the past five years, so we can understand that these brands have indeed been going through tough times. In terms of these brands, it is true that the cosmetic store channel is shrinking in terms of volume. On the other hand, the curve on the other side, represented by emerging brands, is rising rapidly. So it’s not that the business is bad, but rather that some people’s businesses are struggling. Not all stores are doing poorly. We can see that traditional brands in the traditional channels may have a harder time.
After examining traditional domestic brands and emerging brands, many people might think, “Top-tier brands should have reached their peak in offline sales as well.” With this question in mind, we also looked at the data, and the reality is different. Top-tier brands are still on the rise in the entire cosmetics channel, and the growth is not insignificant. Additionally, we have also observed that high-end brands in the cosmetics channel, such as household, fashion, and cosmetic tools, are also experiencing rapid growth.
So, who is declining? If the total volume remains unchanged and both ends are growing, then the middle must be declining. Therefore, the conclusion we draw is that in the past few years, there have been fundamental changes in both the categories and brands within the cosmetics channel. If we continue to look at this channel with the same perspective and the same brands as before, it may seem like the channel is declining or shrinking. But is that really the case? My answer is no. Therefore, for brand owners, we need to reassess this channel because it has undergone significant changes. Furthermore, in the midst of these changes, apart from brands and categories, we need to acknowledge another significant transformation.
Recently, there’s a trendy term called “instant retail” that has been rapidly growing in the fields of catering, daily necessities, and electronics over the past few years. We can see that from 2021 to 2024, the growth rate of “instant retail” in the personal care product category is remarkable. Especially in 2023, the growth of “instant retail” in platforms like Meituan, JD Daojia, Douyin’s local life, and offline cosmetics stores reached a staggering 50%.
From the perspective of stores or brands, it may seem that takeout and cosmetics are unrelated, and we initially believed the same. We also initially thought that “instant retail” was only for immediate needs, like suddenly needing makeup remover or a face mask and ordering takeout. But is that really the case?
If consumers can use takeout to purchase high-end cosmetics worth thousands of yuan, it means that consumers’ entire purchasing behavior has undergone significant changes. Based on this, we believe that “instant retail” is about to have a disruptive impact on cosmetics stores. In the future, the cosmetics industry will definitely undergo significant changes, just like the catering industry, by intercepting consumer intentions through online platforms during the “consideration” phase. Just as today, when we go out to eat, in most cases, we have already decided which restaurant to go to while we are still at home, rather than deciding when we reach the street. Therefore, I believe that with the development of “instant retail,” the entire flow of customers, cosmetics stores will undergo tremendous changes.
Because individual offline cosmetics stores are small and the market is large, and they are particularly scattered, they used to rely on in-store customers to support their sales. With the digitization of the entire industry, the reconstruction of the entire category, and the development of local life platforms like Meituan Waimai, cosmetics stores are about to undergo two major changes: comprehensive integration and comprehensive fusion.
First, let’s talk about comprehensive integration, which means that many digital platforms are integrating scattered stores together. In the future, individual stores, unless they are small family-owned businesses, will inevitably face integration.
Next, let’s talk about comprehensive fusion. From now on, the customer traffic sources for cosmetics stores will be fully integrated. Previously, online traffic acquisition was incremental, but now, if online traffic acquisition is not done well, the stores won’t survive. Currently, whether it’s store traffic, WeChat group traffic, or public domain traffic on online platforms, all of them are indispensable, requiring overall and comprehensive integration.
What does this mean for brands? Especially in an era where online traffic growth is reaching its peak, how should we view this channel? My opinion is that in the process of overall restructuring of product offerings and customer flows, brands will encounter a significant opportunity. We believe that “offline channels + sinking markets = brand growth.”
According to a survey conducted by MeiDD in collaboration with CHAILEEDO Intelligence, over 90% of cosmetics stores are dissatisfied with their product categories. We have done a lot of research and found a problem: “Stores fear slow sales, brands fear extensive distribution.” So what should be done in such a situation? Brands cannot supply all stores, but stores are afraid to purchase products directly because they fear slow sales, especially for online brands or unfamiliar brands. Therefore, many times, stores want to adjust their product categories but find no solution.
Another issue is that for many brands, when they want to enter the offline cosmetics channel, they immediately encounter problems. The first issue is how to make store owners accept and sell their products. Furthermore, after the products are stocked, how to ensure sales becomes another problem. And once there are sales, brands are most afraid of “price chaos.” Since brands cannot see or touch the products and don’t know their location, they worry about whether the products will be bought by consumers or remain in the warehouse.
These fundamental problems may seem unsolvable, but MeiDD believes that there are solutions and people who can solve them. This brings us back to MeiDD’s overall positioning.
For the past decade, we have been committed to serving the cosmetics industry. We position ourselves as “a role in the cosmetics industry’s internet platform, providing a complete set of digital channel operation solutions for the upstream and downstream.” In other words, “empowering the real economy and improving overall industry efficiency.”
MeiDD focuses on three core areas: new retail SaaS tools, intelligent supply chain services, and traffic services based on local business districts. While serving the cosmetics industry, we also connect with major internet platforms, ultimately providing the same service to brands and stores, which is digital operation services. Based on these, MeiDD has terminals, channels, capabilities, and resources within the offline cosmetics channel.
Having terminals means we have over 35,000 digitally operable cosmetics stores. Our team has gradually covered almost every county-level city in China. I believe that the most important aspect of terminals is not just the stores themselves, but that these storesserve as touchpoints for consumer engagement and sales.
Having channels means we have access to various online platforms and local life platforms, such as Meituan, JD Daojia, and Douyin’s local life. These channels allow us to intercept consumer intentions and drive traffic to the stores.
Having capabilities means we have developed SaaS tools and intelligent supply chain services to help brands and stores manage their operations more efficiently. For example, our SaaS tools enable inventory management, sales analysis, and customer relationship management. Our intelligent supply chain services help streamline the supply chain and ensure timely delivery of products to stores.
Having resources within the offline cosmetics channel means we have established relationships and partnerships with brands, distributors, and other stakeholders in the industry. This allows us to facilitate collaboration and provide comprehensive solutions to address the challenges faced by both brands and stores.
In summary, MeiDD’s overall positioning is to provide digital operation services and solutions to the cosmetics industry. Through our terminals, channels, capabilities, and resources, we aim to empower brands and stores, improve industry efficiency, and navigate the changing landscape of “instant retail.” By leveraging digital platforms, integrating offline and online channels, and optimizing the supply chain, we believe that brands and stores can seize the opportunities presented by the evolving retail landscape and drive growth in the cosmetics industry.
I have a metaphorical expression: “MeiDD is like a road builder, we’re constructing highways to every cosmetics store’s doorstep.” When we say “having a pathway,” it means we have direct access to the intelligent supply chain open platform for cosmetics stores, being highly open to both upstream and horizontal partners.
Another aspect is having resources, which refers to MeiDD’s long-term deep collaboration with major traffic platforms. We have accomplished a lot through extensive cooperation with various payment systems and internet traffic platforms. Every year, WeChat Pay awards MeiDD the “Industry Operational Innovation Award,” recognizing our continuous innovation in the industry, similar to what we do with WeChat Pay.
Lastly, having capabilities refers to our ten years of industry accumulation. We have a presence in 35,000 stores nationwide, possess sales capabilities, and have established deep collaborations with over 350 brands. These brands include international and domestic brands, emerging brands, as well as top-tier luxury brands.
In summary, MeiDD has one foot in the internet industry and the other in the traditional cosmetics field. Through our ten years of accumulation, we can provide brand owners with unified access. In other words, if a brand wants to enter the offline channel and connect with MeiDD, they can directly reach a certain scale of stores at a lower cost. Enjoy unified operations and professional online-to-offline integrated operational services.
Furthermore, we organize the YOUNG Beauty Festival as a unified event for stores. Every month, we carry out various promotional activities offline, empowering them with various tools and resources from brand partners, as well as subsidized traffic support from the platform. This is something MeiDD excels at doing.
If brands want their products to sell well in stores, winning over the store owner is just the first step. The most crucial aspect is winning over the store employees, empowering them to truly contribute to selling the brand’s products. Therefore, MeiDD has a task system that directly engages store employees to ensure the products are sold effectively.
To sum up, for offline operations, you can turn to MeiDD. We also provide a very low threshold for emerging brands that haven’t previously ventured into offline stores. With an investment of 10,000 yuan, you can open the door to offline operations. Brands can apply for entry, but we will conduct a selection process because not every brand is suitable. If it’s not a good fit, it’s better not to pursue this opportunity. Based on our understanding of the overall cosmetics store landscape, including pricing and online-offline comparisons, we analyze the situation and consider cooperation if the conditions are met. After signing the contract, we will require the brand to send goods to our warehouse, as this reduces logistics costs. Finally, to address the issue of “stores fearing unsold inventory and brands fearing extensive distribution,” we will select ten carefully chosen stores for trial sales.
Moreover, we also hold training sessions specifically for cosmetics store owners offline: MeiDD Academy. Each training session attracts 50 store owners from the local provinces, facilitating in-depth face-to-face discussions and insights into physical retail. MeiDD welcomes more emerging brands to enter the offline cosmetics store market because stores need brands, and brands need offline stores to generate incremental growth.
In the next 1-3 years, we hope to assist 1,000 brands in entering 35,000 stores, multiplying their performance. For MeiDD, our current role is mainly empowering the entire industry’s upstream and downstream as a third-party platform. Whether it’s SaaS digital tools, supply chain pathways, or the various traffic platforms we collaborate with, they all serve one purpose — making beauty retail simpler. MeiDD’s positioning remains unchanged: we are the “digital operator for the beauty industry’s physical channels.” Our ultimate goal is to improve the entire industry and provide better services to all consumers, offering convenience and contributing our modest efforts to the industry’s development.
That concludes my sharing for today. Thank you!
