Before answering “Is it a good business to make lipstick smaller?”, we must first answer “Is lipstick a good business?”
Lipstick is a relatively cheap non-necessity. The “lipstick effect” in economics means that when economic growth slows down, people are unable to afford large expenditures such as buying houses and cars, and instead tend to use their “small spare money” for purchases. Some “cheap non-necessities” have led to lipsticks continuing to sell well.
Secondly, in the marketing era of KOL planting and live streaming, lipstick is a perfect “traffic item”.
When we look at those cosmetics brands that have successfully “out of the circle”, their ideas for promoting lip cosmetics all follow the same “traffic logic”: community planting – KOL endorsement – live streaming to bring goods. Products such as lipstick are very suitable for traffic generation. They are also promoted by KOL pictures, texts or videos. Compared with skin care products and even other cosmetics, lip makeup is easier to display and the visual effect is better.
Finally, and most importantly, as a traffic item in the traffic era, rapid replacement is a basic virtue, and lipstick is relatively easy to develop and iterate.
Li Dan, who has been working in the cosmetics industry for several years, revealed to Interesting Report that some leading cosmetics brands also use the ODM (Original Manufacturing) method, and the product development cycle can be compressed to 1 to 3 months, regardless of the new trend of color number and texture. Can keep up quickly.
To sum up, lipstick is indeed a good business that can “guarantee revenue during droughts and floods” and is very adaptable to the current traffic era. So, is it a better business to make lipstick smaller?
From a sales perspective, this is indeed the case: the smaller the lipstick, the better it sells.
Lipstick “sells better” in two dimensions: first, first purchase, and second, repeat purchase.
Generally speaking, after making the lipstick smaller, the cost for consumers to try it out will be reduced, and the first transaction will be completed more quickly. Xiao Yang, a white-collar worker in Shanghai, likes mini lipsticks very much: “No matter what brand of lipstick, the smaller it is, the cheaper it is. It is not burdensome to buy, and the appearance is either cute or exquisite, so it is difficult not to buy impulsively.” In addition, the repurchase situation is also the same
. Very important consideration. The repurchase rate reflects consumers’ loyalty to the brand; the main battlefield for domestic cosmetics is e-commerce, and on e-commerce platforms, the repurchase rate is also an important indicator that affects the weight of a store. And “making lipstick smaller” is a major move for cosmetics brands to increase repurchase rates.
Wang Qi, a senior practitioner in the beauty industry, said that consumers’ loyalty to makeup is far less than that of skin care products and other categories. “Firstly, this is because people usually have a taste for early adopters when consuming cosmetics, and their wallets will always follow new and interesting new products; secondly, cosmetics are too difficult to use up, even if they want to repurchase, they cannot do so.” Lipstick is an important part of the cosmetics industry. As a durable product, “No one can really use up a lipstick” has always been an open secret on the dressing table.
However, this curse is gradually being broken, and they will use their own existence to clearly teach you “what it is like to use up a lip gloss in 20 days.” And when a classic color lipstick is actually used up, consumers will naturally have the need to repurchase and place orders.
Although the lipstick category has many advantages, and making lipstick smaller can increase sales, the better a cosmetics brand’s lipstick sells, the better its business structure may not be.
”Putting eggs in the same basket” is inherently risky for brands. If this “basket” is still a product like lipstick, the risk is even higher. Of course, brands need “big single products”, but what they need even more are big single products with “long life cycle”, “high gross profit margin” and “high repurchase rate”, so that they can become the core of supporting the long-term and stable growth of the brand.
Lipstick is a typical high-traffic product with a short life cycle and requires continuous updates and maintenance. In addition, the marketing cost is extremely high, which severely squeezes the product profit margin. Even if you are careful about the “weight”, it will be difficult to achieve a high repurchase rate comparable to skin care products. The sales of lipsticks still mainly rely on the increase of new customers, rather than relying on the repurchase of existing old customers.
A high-volume route with small profits but quick turnover is easy to weaken and be replaced. This may give some inspiration to the cosmetics market: cosmetics cannot only be a volume business. The traffic coming from affordable and popular lipsticks also requires the layout of high-value core categories to be accepted and converted in the long term.