Halfway through 2021, have internet celebrity brands collectively “collapsed”?

The excitement in the new consumer track reached a new height in the first half of 2021. The density of investment and financing is unprecedented, Internet celebrity brands are booming, and there is fierce competition for the "first stock". At the same time, the frequency of "crashes" is also quite high.

All Cotton Times, which sells cotton wipes, Ubras, which sells underwear, and Cha Yan Yue Se, which sells milk tea, all want to capture female consumers, but they all failed because of their "creative" marketing advertisements that were suspected of offending women.

Yuanqi Forest, which advertises itself as "zero sugar", actually contains sugar; Zhong Xuegao, which advertises itself as high-end, is mediocre; and Xiaoxiandun, which advertises itself as healthy and nutritious, has been repeatedly questioned. All food and beverage brands have fallen due to false advertising.

Pop Mart, the "first blind box stock", Perfect Diary, the "light of new domestic beauty products", and Nayuki's Tea, the "first milk tea stock", which were all scrambling to rush for IPO, all died on the spot after listing, with their share prices falling all the way and their market capitalizations shrinking continuously.

Growing amid doubts and moving forward while “rolling over”, is this the fate of new consumer brands? The root cause is that new consumer brands are mass-copying a set of strategies used by internet celebrities: selecting product categories, telling stories, positioning themselves at the high end, and the marketing trinity of “anchors bringing products + KOLs promoting products + celebrity endorsements.” However, the aggressive and hasty tactics of internet celebrities have not only exposed the shortcomings of the brand when it "crashed", but also made consumers sober and no longer easily "tricked".

At the same time, when new consumer brands entered the post-Internet celebrity era, problems such as low repurchase rate, high degree of homogeneity, and heavy pressure on corporate organization and management gradually emerged. Whether they want to be an Internet celebrity or want to remain popular for a long time, each company wants to find a feasible methodology from successful or "fallen" pioneers.

Some people are fighting a war of scale, some are obsessed with GMV sales, and some are imitating Yuanqi Forest to create concepts. The new consumer track driven by capital is still moving forward in the melee of brands that continue to fight, and it seems difficult to cool down in the short term.

1. Internet celebrity brands have experienced various setbacks within half a year

If the keyword for new consumer brands in 2020 was "Internet celebrity", then in the first half of 2021, the keyword for Internet celebrity stories became "crash".

Looking back at the "accidents" of internet celebrity brands in the past six months, we can find that most of the problems lie in marketing. Among them , the most controversial ones are: one, involving false propaganda; the other, suspected of offending women and gender discrimination .

In a makeup remover wipes advertisement video released in January this year by Cotton Era, a lifestyle care brand that became popular during the epidemic, a young woman was followed at night. When the stalker approached, the woman took out Cotton Era wipes to remove her makeup and "changed her face", scaring off the stalker. This advertisement was accused of being based on women's fears and was suspected of promoting the "original sin theory of appearance." The China Women's News commented that the majority of offended female consumers will not pay for insulting "creativity".

Screenshot of the "makeup removal" video advertisement of Quanmianshidai

Not long after, the marketing copy of the new underwear brand Ubras involving gender issues also "crashed". A promotional copy that Ubras collaborated with talk show artist Li Dan reads: Equipment that allows women to easily win in the workplace. This copy was accused of being offensive to women and "too malicious", and was suspected of violating the Advertising Law, which stipulates that "advertising spokespersons shall not recommend or endorse products or services that they have not used or received."

Coincidentally, Cha Yan Yue Se, a popular tea brand from Changsha, was also criticized on hot searches in February for allegedly objectifying women. The slogans on the peripheral mugs, "There are many beautiful women who come to Cha Yan to buy milk tea. If you happen to meet one, you can whisper to our friends: I picked up a basket", and "Sir, I want it" on the tea bag packaging, have been accused of taking "being witty" as creativity, objectifying and disrespecting women.

The "Picking up the Basket" text on the tea-colored and joyful mug

If the "borderline" in marketing copy can be explained as "inappropriate wording" and "failure to grasp the scale" as the brands said in their apology statements, then the trendy toy brand Pop Mart was exposed to require applicants to fill in "whether they have plans to have children in the near future (only for women)" and the planned time, which directly links gender discrimination in the workplace with corporate culture, and the brand image is damaged more seriously.

In order to create selling points, the "concept card" is used, which leads to "crash" incidents involving suspected false advertising, which often occur in food and beverage brands.

Yuanqi Forest, which has always used "zero sugar and zero fat" and "healthy and safe, you won't get fat after drinking" as its product selling points, issued an apology statement in April this year, saying that its previous milk tea product logos and promotions did not clearly state the difference between "0 sugar" and "0 sucrose". In the future, the packaging will be changed from "0 sucrose and low fat" to "low sugar and low fat". In other words, the product was previously advertised as "not making you fat", but it actually contained sugar. This move is considered to be a serious deception of consumers.

The controversial packaging of Yuanqi Forest milk tea

Immediately afterwards, an administrative penalty against the "Internet celebrity" bird's nest brand Xiaoxiandun was exposed, stating that 10 indicators promoted by Xiaoxiandun on the product parameter interface, including instant bird's nest ingredients, dry bird's nest content, product origin, food additives, etc., did not match the actual situation and were identified as false advertising.

In June, Zhong Xue Gao, a domestic high-end ice cream brand known as the "Hermes" of the Chinese ice cream industry, was also exposed for false advertising and was accused of collecting "IQ tax" from consumers. Zhong Xuegao, an "Internet celebrity" whose highest price for a single product is as high as 88 yuan and whose scalpers drive up the price to 200 yuan, was actually fined twice in 2019 for publishing false advertisements. For example, the ice cream that claims to be made with premium red grapes is actually of the regular grade of bulk/level one; the ice cream that is advertised as using only Japanese Yabukita tea is actually made with fresh leaves from a variety of tea varieties, including Jiukeng, Longjing, and Yabukita. All of these are tantamount to directly tearing off the "high-end" domestic product label of Zhong Xue Gao.

In fact, today's internet-famous foods and beverages that play on the "concept" card often cannot escape the controversy of "whether it is just a tax on IQ" because of their generally high prices and efficacy that has not yet been recognized by the market, and are at risk of "crashing" at any time. For example, plant-based foods, which are hotly pursued by capital, received global investment and financing of over 8 billion yuan last year. A large number of new brands have emerged, including Xingqiling, Weishida, Green Monday, Zhouzi Future, and Hey Mae, but sales have always been not optimistic.

There are also some consumer brands that finally rushed for IPO with their prospectus , but were quickly beaten back to their original state by the market. Pop Mart, the "first blind box stock", saw its share price fall sharply three months after its listing; Perfect Diary, the "light of new domestic beauty products", its parent company Yatsen E-Commerce, exposed its over-reliance on marketing in its first financial report after its listing, and its market value has now shrunk severely; Nayuki's Tea, the "first milk tea stock", broke its issue price on the first day of listing, and its valuation of up to HK$30 billion has been questioned.

This situation certainly cannot be considered a real "crash", but for the brand, it is more difficult to deal with than a marketing "crash" that can be dealt with with a public relations apology statement.

2. Consumers are not so easy to cheat

The high frequency of marketing failures of new consumer brands is closely related to their usual “Internet celebrity” strategy.

In the view of Wang Sheng, partner of Inno Angel Fund, the internet celebrity strategy of new consumer brands has become sufficiently standardized to be able to be replicated in batches .

“First, choose a category. This category needs to avoid the top track that has been occupied by big brands and be differentiated. At the same time, the category size should not be small and the growth rate should be relatively fast. Then, open up the supply chain and win over the ODM factory. The packaging should be very particular and it is best to tell a story. Then, plan the online traffic strategy: you must do live streaming to sell goods, and it is best to enter the live broadcast room of a big anchor, and then put KOL information flow on various platforms to rapidly expand the scale of marketing.” Wang Sheng concluded.

"Most internet celebrity consumer brands have relatively shallow roots and do not have many stories to carry, but they need frequent exposure to maintain brand exposure. Therefore, they are naturally more eager and eager to capture hot topics ." Gao Jianfeng, founding partner of Shanghai Bogai Consulting, analyzed to Kaibo Finance.

However, it is difficult to grasp the right degree of using hot topics to create exposure opportunities for brands. This also makes it easy for young brands to "crash" when they try to "ride on the trend" .

Take Ubras as an example. In its publicity, one can often see phrases such as "express yourself", "be true to your heart" and "break free from constraints". The purpose is to win the favor of users in terms of concepts by matching the self-awakening ideas of the younger generation of women. However, the social context of gender topics is complex. Ubras's copywriting of "equipment that allows women to easily win in the workplace" may have been intended to emphasize that women can also keep their clothes comfortable in the workplace, but the multiple meanings of "winning easily" in the context of the Internet have undoubtedly touched the minefield of many female users.

Li Dan's Ubras promotional copywriting "failed"

Although Ubras quickly issued an apology statement after the controversy and removed the relevant content as soon as possible. But this undoubtedly greatly damaged the brand image and even caused boycott by some consumers.

In Gao Jianfeng's opinion, the domestic consumer group and even the entire social public opinion are actually more tolerant of brands than in Europe and the United States . "For example, some domestic brands were suspected of offending women and engaging in gender discrimination in their marketing. They apologized and the matter was resolved. After a while, they continued to sell well. But in some European and American regions, such stains would continue to be boycotted by some non-governmental organizations."

Ubras still achieved a GMV of over 300 million yuan during the 618 shopping festival this year, ranking first in real-time sales among underwear brands on Tmall. Zhong Xue Gao and Yuanqi Forest, which were accused of deceiving consumers due to false advertising, are still on the sales list and frequently appear in the live broadcast rooms of big anchors.

Although the "black history" including marketing "failure" does not affect the "Internet celebrity" brand's continued profitability, the brand image is undoubtedly damaged.

An industry insider believes that the external reason why many brands’ marketing “failures” may be excessive marketing to attract attention and gain popularity, leading to out-of-control public opinion. But to some extent, marketing style also reflects the values ​​of a corporate team, founder and brand. “ Frequent failures mean overdrawing the brand’s credit limit .”

Judging from past events, once a "crash" causes public controversy, the long-criticized problems of Internet celebrity consumer brands, such as "too high pricing but mediocre products" and "high-end positioning but too low technical content", will be brought to the table again.

Zhong Xue Gao ice cream is positioned as "high-end"

The "high-end" trend that indirectly causes new consumer brands to "crash" is actually their inevitable choice.

Gao Jianfeng believes that, on the one hand, high-end means high pricing and high gross profit margin, and brands can tell more sexy stories to investors; on the other hand, high-end brands create a status symbol for the target audience by segmenting consumer groups. "I can afford it, which means I am fashionable and I have a certain economic strength."

Wang Sheng told Kaibo Finance that Internet celebrity consumer brands drive GMV through heavily subsidized sales and low-price sales. Low-gross-profit products have poor premium capabilities, cannot impress investors, and cannot open up offline channels. "Offline terminals need to make money, and middle wholesalers also need to make money. If the pricing ratio does not exceed 3 times, the business model will not work at all, such as electronic consumer products with relatively high barriers to entry."

However, today’s consumers have become aesthetically fatigued by the mass-copied strategies of influencers mentioned above, and the brand shortcomings and product problems exposed by frequent “crashes” have also made some rational consumers begin to wonder whether high-end products are worthy of the excessively high prices .

"The raw material costs, technology costs, and supply chain costs of daily consumer goods are not high, and most of the money is spent on marketing. Just like Perfect Diary, I spent money comparable to that of international brands, but bought a mediocre product. Am I working for the brand and the internet celebrities?" a consumer asked.

To put it bluntly, the internet celebrity brands that have been "forced to grow" by capital have not yet established real brand value, but consumers are not so easy to "cheat" .

3. Do internet celebrity consumer brands have a future?

An undeniable fact is that the shortcomings of internet celebrity brands have begun to emerge.

"The top internet celebrity consumer brands often adopt a single-point breakthrough strategy, such as relying on a certain product, a spokesperson, or a name concept. At the same time, they will have obvious shortcomings in other aspects, which will definitely be exposed in the future." Gao Jianfeng used the "barrel theory" to explain this problem.

In other words, the new consumption track has gone through the life cycle of Internet celebrities under the heating of capital, and will now have to face the cruel test after cooling down .

So, in the post-internet celebrity era, where do the problems lie for new consumer brands?

The inability to maintain freshness and low repurchase rates are the primary challenges currently faced by most internet celebrity consumer brands.

Wang Sheng pointed out that brands spend a lot of money on marketing in the early stages in order to reduce repurchase costs, but the repurchase situation of consumer goods is not ideal nowadays, which means that the logic originally set by investors and brands is not valid. In his opinion, the reasons are complex and may be that the technology is not advanced enough, the product is not perfect enough, the positioning is not accurate enough, or it may be that a certain category itself does not have a high repurchase rate.

What is more serious is that under the protection of a sufficiently mature supply chain, very few consumer brands can build barriers and moats through technology, products, and supply chains, resulting in a high degree of homogeneity in consumer categories, which are extremely easy to copy and serious "involution" in the track .

"As an early-stage investment institution, when we invest in new consumption, we will definitely look at the products and supply chain first, such as electronic consumer products with relatively high barriers to entry. Otherwise, we will fall into vicious competition for capital, where everyone competes to see who can spend more money," Wang Sheng said frankly.

Gao Jianfeng believes that in addition to the above-mentioned problems, after the emerging Internet celebrity brands grow up, their entrepreneurial teams will definitely encounter the organizational management pressure that all companies need to face . “It’s hard to say whether the decline of many internet celebrity brands is due to problems with basic management capabilities or the ineffectiveness of the internet celebrity’s approach.”

As the drawbacks of the internet celebrity approach gradually become apparent, some brands say they do not want to be internet celebrities, but they also want to draw out a set of long-term methodologies from internet celebrity brands .

“Nowadays, new consumers are superstitious about ‘impulse volume’, thinking that once GMV increases, consumers will trust the brand and be loyal to the brand, and future repurchase costs will be greatly reduced, so they can dominate the category and then convert private domain traffic.” Wang Sheng analyzed to Kaibo Finance that this set of story templates is difficult to fully implement for most consumer products, consumer platforms and consumer markets.

However, the quick-acting influencer strategy is a route that new consumer brands have to take and it may even be more effective.

In Wang Sheng's opinion, Yuanqi Forest is the most solid among the Internet celebrity consumer brands. It combines offline distribution with online marketing and continuously optimizes the model to form a self-consistent model. "Many brands also want to copy Yuanqi Forest's strategy, especially typical fast-moving consumer goods such as food and beverages, but it is difficult to copy it completely." Wang Sheng explained that after the time window has passed, the benefits of such a strategy have been greatly diluted, and capital does not support the brand to slow down.

The new consumption track is large enough, and more refined categories can be divided within it. From Internet celebrities to long-term celebrities, it is basically impossible to find a "universally applicable" methodology.

Many investors and analysts pointed out that in the new consumer track where the entry threshold is low and technology and supply chain cannot build a moat, if a brand wants to go from being an Internet celebrity to a long-term success, it must first achieve two effects: one is the brand effect, and the other is the scale effect .

Challenger Capital partner Zhou Hua explained the brand effect in this way in an interview with the media: A brand can be measured by one standard, that is, whether it can provide a premium and whether it can form mental property rights in the minds of consumers . "For example, when you mention sparkling water, you might think of Yuanqi Forest." He believes this is cognition and branding.

The scale effect is to occupy the market. The larger the scale, the higher the valuation . The most typical case is the tea beverage industry, where leading giants such as Heytea, Nayuki Tea, and Lelecha are all competing in speed and scale.

"The only way for a new consumer brand is to replicate itself until the brand can truly achieve a breakthrough with its products or complete a nationwide layout. Only then will the demand for Internet traffic decrease." Gao Jianfeng believes that this was the case with Yuanqi Forest, which initially focused on functional beverages, and is also the case with the emerging coffee brand Manner.

In Wang Sheng’s view, new consumer categories will continue to be popular in the next one or two years. "Overheating of the market and blind investment will cause many brands to gradually die out. However, as the market enters a new stage of development, the market will shift from insufficient supply to oversupply, and 'people looking for goods' will become 'goods looking for people'. Consumers will have absolute right to choose and control, and new brands that can adapt to consumer needs will surely emerge."

Author: Wu Jiaoying

Source: Kaiboluo Finance (kaiboluocaijing)