Huaxizi Marketing Methodology

In July 2011, the Beijing News published a news story about three elderly people who planted 140,000 trees in 15 years to green the Great Wall. Due to the severe drought in 2011, they watched a large number of trees on the mountain almost die. When they were extremely anxious, they were defrauded of 300,000 yuan by scammers. The initiator of the tree planting was so angry that he suffered a cerebral congestion and was paralyzed in bed. The youngest elderly person broke 8 ribs when he was transporting water with a tractor...

This heart-wrenching story touched Hong Kong movie star Karen Mok. On August 18, she attended the "Repay the Kindness" charity sale organized by Pechoin for free to raise funds for the elderly. The "Repay the debt of gratitude" charity sale not only helped the old man dig a well in the mountain and solved his urgent problem, but also made Pechoin successfully break out of the circle and its sales soared.

In December, Hua Mantian (real name Wu Chenglong, Hua Mantian is his nickname), operations director of Pechoin's Taobao flagship store, shared at the forum how he planned the event and introduced his "eight-step marketing method" that increased the online store's daily sales from 4,000 yuan to a maximum of 210,000 yuan in three months.

However, some netizens mocked him: "You seem very powerful. You spend other people's money and use other people's resources. Are you happy? If you really think you are awesome, go build a brand yourself."

Wu Chenglong was also very tough. Six years later, in 2017, the brand Hua Xizi, which he created, came into being.

What’s even more amazing is that in just three years, Huaxizi transformed from a newbie in the industry to a leader in the beauty industry. Its sales reached 1 billion in 2019 and exceeded 3 billion in 2020, following a nearly vertical growth line. In addition, the activities planned and operated by Hua Xizi also attracted praise from CCTV and People's Daily.

So, how did Wu Chenglong create this miracle from 0 to over 3 billion in four years?

Wu Chenglong was born in the 1980s. He majored in landscape architecture in college and has extensive knowledge of oriental aesthetics, classical gardens, landscape design, flowers and plants. "Since college, I have had a dream: to create a brand that can carry Chinese culture and oriental aesthetics," said Wu Chenglong.

After graduation, he joined a company and worked in brand marketing. He has served companies such as Gulong Group, China Green Group, Yinxiang Group, and Mary Kay. In 2010, by chance, Wu Chenglong began to be responsible for the operation of Pechoin's Tmall flagship store, and since then entered the field of "beauty + e-commerce". The "Repay the Kindness" campaign mentioned above was his first integrated marketing campaign.

As an expert in integrated marketing, he likes to tell the story of "How to Become Mr. Rockefeller": How to turn a farmer's son into the vice president of the World Bank and Mr. Rockefeller? First, go to the World Bank and recommend a vice president to them, introducing him as Rockefeller's brother, and the World Bank will surely agree; then go to Rockefeller and tell him that this young man is the vice president of the World Bank and wants to marry his daughter, and Rockefeller will also agree.

Therefore, in his opinion, the secret of integrated marketing is to "set the stage first and then invite the actors." First, use a keen eye to discover high-value resources, then use a marketing plan as a "thread" to "string" the resources together, and then use this plan to convince the resource provider. He said, "When it comes to resources, you must be like a bloodthirsty wolf, have a keen sense of smell, and be greedy enough; secondly, you must remember two words - win-win!"

For example, in the "Repay the Fountain of Gratitude" campaign, he took advantage of the needs of elderly tree planters, got big stars to endorse him, realized users' emotional investment, and solved the problem of media coverage; he also persuaded Pechoin to insert the Tmall logo in its TV commercials, in exchange for Tmall's advertising resources worth 600,000 yuan; and in the Pechoin flagship store, he hung a banner of Manzi stockings in exchange for socks worth 800,000 yuan as sponsorship to give to users... Resources were activated, and every participant in the event received tangible benefits.

Wu Chenglong also achieved unexpected success in promotion and investment. Taobao Affiliate was the method with the highest input-output ratio among paid promotions at that time. The standard commission was 10%, but Wu Chenglong directly increased the commission to 100%. It means you can earn as much as you promote Taobao, and get a facial mask worth millions for free from the company. This news immediately caused a sensation in the Taobao community, and Taobao's daily transaction volume quickly increased from 5,000 to 60,000 yuan. By choosing the weak links to launch saturation attacks, Wu Chenglong used the wisdom of "attack the enemy's yang as opposed to the enemy's yin" as stated in the Thirty-Six Strategies.

Wu Chenglong is also a master storyteller, with his “Hand Protection Action” of delivering hand cream to couriers, his “Amber Project” of searching for oriental beauty, and his “More Beautiful Than Huang Yongling” that whets users’ appetite… He allows users to participate in every story, accumulate emotions for the brand, and finally fall in love with the brand.

During the four years he was at the helm of the Pechoin Tmall flagship store, daily sales soared from 4,000 yuan to 2.1 million yuan.

Wu Chenglong, who felt he had mastered the marketing strategy, founded his own planning company in 2014 and was tasked with operating the WaterCode Tmall flagship store. Under his management, in just three months from August to November, the monthly GMV of the Shuimi store increased from 2.7 million yuan to 15.4 million yuan, and it also entered the top 20 of the Tmall store rankings.

In the fierce competition in the market, Wu Chenglong gradually summed up the "Three Generations of Operations Theory": the first generation is operation and maintenance, that is, to do a good job in a series of store management and maintenance from listing to after-sales; the second generation is promotion operation, that is, to use tools and platforms such as Through Train, Diamond Exhibition, Taobao Affiliate, Taobao Trial for marketing; the third generation is marketing operation, that is, on the basis of clarifying the brand and store positioning, comprehensively apply various marketing methods, use various marketing plans to integrate resources, and make it easier for customers to remember and even fall in love with it. "Marketing-style operation" is the secret of Wu Chenglong's successful operation of Pechoin and Water Code.

Marketing-style operations are not just about organizing activities in a crude way. In order to maximize the effect, Wu Chenglong regards the store as a wooden barrel. DSR (Seller Service Rating System), conversion rate, average order value, repurchase rate, collection rate, linkage rate, etc. are the planks of the barrel, and sales are like the water in the barrel. To ensure the water level is high, someone must be watching every wooden board, so he divided the work among the personnel in a detailed manner to avoid shortcomings in the wooden barrels. In 2014, when Wu Chenglong was in charge of operating the WaterCode flagship store, 130 employees were involved in the operation of various sections, which was relatively rare at the time.

As his wings grew stronger, Wu Chenglong's desire to create his own brand became stronger and stronger. In July 2016, Hangzhou Yige Enterprise Management Co., Ltd. was established in West Lake. Wu Chenglong held 99% of the shares and he started his own brand practice.

In Wu Chenglong's eyes, "whether a brand can grow into a big brand is often determined by its DNA - brand positioning."

Wu Chenglong is well aware of the importance of accurate "positioning" and differentiated competition. In the early years, some netizens asked Wu Chenglong to recommend introductory books to new operators. He recommended "Positioning", "Blue Ocean Strategy", "Competitive Strategy", "The Art of War", 4P Theory, etc.

In 2017, the global color cosmetics market size reached US$72.5 billion, accounting for 13.18% of the total cosmetics revenue. The United States, Japan and South Korea ranked the top three in the world with 18.21%, 17.78% and 15.99% respectively, while China's color cosmetics market share was only 9.22%, leaving huge room for growth.

Wu Chenglong once said, "Sun Tzu's Art of War says: Therefore, those who are good at fighting seek it from the situation, not from people, so they can choose people and take advantage of the situation. The success or failure of a business war is often a foregone conclusion from the beginning, and the decisive factor is the situation!"

At that time, among the top 20 cosmetics brands in China, there were only four domestic brands: Mary Kay, Hansu, Lancer, and Hanhou, but their combined market share did not exceed 8%. The pursuit of natural ingredients and the rise of Chinese aesthetics are major trends in the cosmetics industry. Therefore, Wu Chenglong decisively positioned the product category in the blue ocean of "Oriental cosmetics".

Before determining the brand positioning, he and his team spent more than a year reviewing a large amount of historical documents. He recalled, "We found that thousands of years ago, the ancient Chinese used natural ingredients such as plants, flowers, and animal fats to modify their faces. Ancient books from all dynasties also recorded many ancient beauty recipes. We hope to use flowers and Chinese herbal ingredients to create a brand that uses flowers to nourish the skin."

In March 2017, the Huaxizi brand was officially launched and entered Tmall in August of the same year. However, if Hua Xizi, which is positioned as "Oriental cosmetics, using flowers to nourish makeup", wants to support such category positioning and brand positioning, it must let the products speak for themselves.

They have creatively applied many Chinese elements to their brand and products - reliefs, small windows, traditional Chinese colors, Miao silver, Goddess of the Luo River, peonies, dressing boxes... The use of these elements all highlight Hua Xizi's identity as an "Oriental makeup company." The ancient recipe of Hualu Rouge is reproduced in the lipstick, and the eyebrow material of Luozidai is used in the eyebrow pencil. In addition, Hua Xizi uses hormone-free flowers and plant formulas that are suitable for pregnant women, which also reflects the positioning of "using flowers to nourish makeup".

"We want to make a product that no one has ever seen before." In order to achieve differentiation, Wu Chenglong proposed to do micro-carving on the lipstick. "There was no supply chain, no technology or standards, and no one had ever done it before. A series of problems needed to be solved from idea to implementation. Just figuring out the hardness and softness of the lipstick to achieve a perfect micro-carving effect took a lot of time." It is no exaggeration to say that the failed products could fill an entire table. "The R&D staff exclaimed.

In order to polish differentiated products, Huaxizi does not set an upper limit on product research and development costs. It cost tens of millions of yuan just to make the mold and polish the formula of the Concentric Lock lipstick. Because he had never raised funds before, all these initial investments were made with Wu Chenglong's own money. Huaxizi also launched a "user co-creation" project, inviting more than 100,000 users to become product experience officers, participate in the evaluation of each product, and provide real feedback on their usage experience, which also took a considerable amount of time.

It is time-consuming, costly and energy-consuming, but Wu Chenglong said, "We have to go slowly because we need to adjust the skin care formula bit by bit, polish the product design bit by bit, and put it through tests layer by layer. So it's very slow."

Perfect Diary has more than 2,000 products, but Huaxizi only has one-third of it, so much so that users are urging Huaxizi to release new products.

Some people think that Hua Xizi is not enterprising, but judging by Wu Chenglong's playing style, it seems more like it is intentional. In the early stages of a brand’s rise, maximizing the effectiveness of promotion and focusing on creating hits and flagship products (rather than following the trend and releasing large quantities of products to grab popularity) is the only choice to stand out.

As for creating a hit product, he did not choose a conventional category, but chose a small and blank category, and expanded this category through investment on his own. For example, we can popularize loose powder from a niche category to a well-known category, and then gradually break through from loose powder and eyebrow pencil to lipstick and eye shadow. Therein lies the wisdom of “enemy yin”.

Pricing is also an art of positioning. If the price is too low, not only will the profit margin be low, but it will also cause consumers to question the quality of the product; if the price is too high, most consumers will be kept out. Hua Xizi cleverly chose a price vacuum zone.

Taking its best-selling air powder as an example, international brands such as Givenchy, Nars and Make up for ever on the market mainly sell loose powders priced above 300 yuan, while domestic brands are mostly priced below 150 yuan. Huaxizi has set the price in the blank range of 150-300 yuan.

As a veteran "e-commerce player", Wu Chenglong has a unique understanding of e-commerce. He not only sees e-commerce as an emerging sales channel, but also as a platform for secondary derivation of brands.

Just as he had once targeted Taobao customers, Wu Chenglong keenly discovered the huge traffic pool of live streaming. He and his team spent a whole year collecting live broadcast data and studying information about major anchors, and finally established a complete list of Internet celebrities.

In September 2017, Wu Chenglong offered a high rebate of 60%-80% despite the industry practice of 20% commission. More than 300 small and medium-sized anchors, KOLs and UP hosts were deployed within 3 months, but the results did not meet expectations.

"In the early days, Huaxizi took some detours when exploring live streaming. In the beginning, we only regarded live streaming as a channel to sell goods, but it did not achieve the expected results. This made us realize that the live streaming '1.0 sales model' could not provide enough room for imagination for the long-term development of the brand." Wu Chenglong said.

On November 11, 2018, after Li Jiaqi won the PK against Jack Ma in the live broadcast room, he became famous in the beauty circle as the “Lipstick King”. This news shocked Wu Chenglong so much that almost the moment he heard the information, he decided to take the initiative to visit Li Jiaqi. After reaching a "deep binding" with Li Jiaqi, Wu Chenglong began to update the live broadcast model of Huaxizi, taking advantage of the momentum of being the "No. 1 Lipstick King" and "selecting people according to the situation."

It is not easy to convince the popular Li Jiaqi, but Wu Chenglong is a marketing expert. He successfully intertwined Hua Xizi's ambition and Li Jiaqi's dream, and of course, there was also a share of real money. There are rumors that Hua Xizi gave Li Jiaqi 100% commission, which means that the brand does not take a penny from the sales of a live broadcast, and all goes to Li Jiaqi. This is exactly the same as his previous "One Million Facial Masks for Taobao Customers" campaign, but this time the scale is much bigger.

Wu Chenglong is never stingy when it comes to "win-win", and he is indeed keen on discovering high ROI resources.

In March 2019, Li Jiaqi began to promote air loose powder, and Hua Xizi ushered in its first explosion point. For Huaxizi's "Huayin Starry Sky Carved Lipstick" which was launched in April, Li Jiaqi continued to create suspense and distribute coupons in the live broadcast room. After a month of fermentation, it became a hot item on Tmall, with monthly sales exceeding 5.948 million yuan, a month-on-month increase of 165%.

On September 28, 2019, Li Jiaqi became the chief recommendation officer of Huaxizi. Seeking Li Jiaqi's opinion before Huaxizi's products go into production has become an important part of the cooperation between the two parties. The "Li Jiaqi + Experience Officer" model has built a complete experience chain from internet celebrity recommendations to amateur experiences. This is not only conducive to improving product quality, but also can stop product defects in the experience stage, and accumulate a good reputation for the company after the product is launched on the market.

Li Jiaqi spared no effort to attract traffic, making Huaxizi the big winner of Double Eleven 2019. The GMV on that day reached 220 million yuan, making it the second largest domestic beauty brand. Tmall data shows that around Double Eleven, Li Jiaqi’s live broadcast room contributed nearly 80% of the total traffic to Huaxizi’s Tmall flagship store, and more than 64% of the transaction volume came from Li Jiaqi’s live broadcast room.

The huge sales figures and 100% commission make people say that "Hua Xizi is working for Li Jiaqi." But Li Jiaqi is just one step in Wu Chenglong's marketing. Huaxizi’s marketing strategy since 2018 has been: deep binding with Li Jiaqi’s top product promoters + celebrity matrix Amway endorsement + KOL and KOC seeding.

In 2019, the "4000-year-old beauty" Ju Jingyi became the brand spokesperson for Hua Xizi. This year, Hua Xizi also began to increase its KOL and KOC investment on Douyin, Xiaohongshu, and Bilibili. In 2020, Hua Xizi only participated in Li Jiaqi's live broadcast when launching new products and during key consumption cycles, and began to insist on "self-broadcasting". In February 2020, Du Juan became the brand spokesperson. In June, Zhou Shen’s new song "Hua Xizi" was officially launched, and Hua Xizi continued to launch "break-the-circle" campaigns.

Therefore, the claim that Wu Chenglong is working for Li Jiaqi is completely untenable. Even in 2019, the year when Huaxizi and Li Jiaqi were deeply bound, the sales of its live broadcast room never accounted for more than 20% of the total sales of the Huaxizi brand. By the first half of 2021, this proportion was only around 5%.

During his time at Hua Xizi, Wu Chenglong did not lose his ability for marketing-style operations. He integrated national cultural elements with product research and development, mobilized resources from multiple parties, and enjoyed holiday marketing and brand linkage. Taking the Miao "Silver" Fire Transmission Activity as an example, he combined Hua Xizi with Miao girls' education assistance, national trend overseas, intangible cultural heritage aesthetics display, makeup blockbusters, fashion week, Li Jiaqi and other elements, and also attracted reports from "People's Daily" and "Xinwen Lianbo", making Hua Xizi the center of attention.

Conclusion

As a marketing expert, Wu Chenglong has attracted traffic for Huaxizi, and the brand's growth in the past four years is indeed amazing. However, on Huaxizi's official flagship store, Weibo, Douyin and other platforms, there are also many complaints about "eye shadow caking and poor ductility", "old-fashioned color matching", "marketing with heart and product making with feet", and "lax quality control and low cost performance".

As a pure e-commerce brand, good-looking appearance is the catalyst for Huaxizi's sales surge, but its products mainly rely on OEM factories, and the products on the assembly line make some users feel that they are just buying packaging at a high price, which is obviously extremely unfavorable for user repurchase.

The general market trend seems to be changing as well. Haitong Securities shows that compared with the pre-sale sales of "Double Eleven" in 2020, the sales of Perfect Diary, Huaxizi, and Yiyezi in 2021 decreased by 45%, 30%, and 42% year-on-year respectively. In the 2021 Tmall cosmetics brand TOP transaction list, YSL Saint Laurent and Estee Lauder took the first and second places, while Perfect Diary and Hua Xizi ranked fourth and fifth respectively.

International brands have also joined the discount army. In addition, new domestic brands with high cost-effectiveness, such as Juduo and COLORKEY, are eyeing the market, which makes the road ahead for Huaxizi no longer smooth.

In fact, quickly launching new products through OEM factories was once the forte of Korean brands, but now those Korean brands that were famous for their speed have withdrawn from the stage of history due to homogeneous competition. Hua Xizi cannot ignore such lessons.

In 2021, Huaxizi won the first battle in the Japanese market, achieved good sales, and also attracted copycats from Japanese companies. But after the novelty brought by the packaging, issues such as product strength, user evaluation, user retention and repurchase, and brand reputation are still the key for Huaxizi, which is less than 5 years old, to defeat the century-old international brand.

Author: Lishi Business Review

Source: Lishi Business Review