The beauty Sector presents prominent structural opportunities, with platforms extending the promotional period for 618, simplifying play methods, and increasing support for merchants. Domestic products are focusing on product innovation and upgrades, optimizing the Operation matrix, and brands are expected to achieve multiple bursts of growth.
According to the Zhitong Finance APP, Guotai Junan released a Research Report stating that compared to previous years when the pre-sale times for each platform were staggered, this year, the three major platforms, Tmall, Douyin, and JD.com, have all set the first day of the major promotion to start on May 13, intensifying the competition for traffic. Since the beginning of the year, Douyin and Taobao Tmall have successively introduced beneficial business policies, including service fee reductions and rebate incentives. The platforms are transitioning from a low-price model to a stage that balances user experience and merchant growth. Domestic brands are driving product innovation and upgrades, optimizing operational matrices, and can achieve multi-point explosions with the support of traffic, with leading brands expected to continue their impressive performance during the promotion. The beauty sector has prominent structural opportunities, with platforms extending the promotion cycle, simplifying gameplay, and increasing support for merchants during the 618 event. Domestic brands are pushing for product innovation and upgrades, optimizing operational matrices, and brands are expected to achieve multiple explosions.
The main points of Guotai Junan are as follows:
The marketing rhythm is continuously advancing, and platform competition is becoming more intense.
From the perspective of the activity cycle, compared to previous years when the pre-sale times for each platform were staggered, this year, the three major platforms, Tmall, Douyin, and JD.com, have all set the first day of the major promotion to start on May 13, intensifying traffic competition.
Tmall: Canceling the full reduction and changing to a direct reduction, the core strategy is "integrated content and seed harvesting." The platform will restore pre-sale forms in 2025, with the first wave of pre-sale starting on the evening of May 13 at 8 PM. The payment for the final payment and the rush purchase time will be from 8 PM on May 16 to midnight on May 26, starting a week earlier than in 2024.
Douyin: The goal is "larger scale, better goods, and better experience." The first phase of the event will be from May 13 to May 26, and the official period will be from May 27 to June 18, starting a week earlier than in 2024.
JD.com: The promotional event starts on May 13, 18 days earlier than in 2024, featuring six surprise days of activities.
Expanding external traffic sources and providing internal subsidies to support brands.
Taobao's ‘Red Cat Program’: Taobao and Xiaohongshu have signed a strategic cooperation agreement to co-build a tri-party account, allowing brand merchants to observe the full chain effects from seeding to order. Additionally, Taobao will increase investment to boost seeding notes for merchants, and both sides will jointly add an 'advertising link' feature below notes, enabling brand merchants to drive direct seeding within Xiaohongshu. Merchant subsidies will involve a 3 billion yuan red envelope subsidy, including red envelope incentives, influencer commissions, and traffic boosts.
JD.com's 'Jingchuang Double Hundred Plan' and 'Navigator Plan': The former focuses on the content ecosystem, planning to invest over 10 billion in traffic and 2 billion yuan in cash by 2025 to help merchants achieve rapid sales growth through live streaming and Short Video; the latter supports advertising placements during the 618 period with hundreds of millions in advertising incentives. Additionally, JD.com’s platform launched a takeaway business this year that will become a high-frequency traffic entry point.
Douyin: In addition to the nine merchant support policies launched by the platform at the beginning of the year, during the 618 period, a zero-commission product card activity will be opened to all merchants (covering the entire year of 2025), providing traffic tilt and platform consumption coupon support for participating discounted and direct-reduction items. The beauty sector, as an SS category, can enjoy rebate rewards of up to 6% and 15% during the pre-launch and official periods respectively.
Focus on product explosion and brand profit recovery.
Since the beginning of the year, Douyin and Taobao have successively introduced merchant-friendly policies, including service fee reductions and commission incentives. The platform is transitioning from a low-price model to a phase balancing user experience and merchant growth, with local brands driving product innovation and upgrades, optimizing their operating matrix to achieve multiple points of explosion under traffic support, and leading brands are expected to continue to perform well during promotions.
Investment advice.
In 2024 and the first quarter of 2025, there are significant structural opportunities in the beauty care sector, and a bullish outlook on the long-term growth potential of beauty and personal care companies driven by product innovation. During the 618 shopping festival, various platforms have extended the promotion period, simplified strategies, and increased support for merchants. Domestic brands are focusing on product innovation upgrades and optimizing their operation matrices, which is expected to lead to multiple points of explosive growth for brands. It is recommended to invest in symbols that possess product innovation capabilities and benefit from track dividends:
1) Personal Care Sector: Recommended companies that leverage new channels to assist product innovation, including Guangzhou Ruoyuchen Technology (003010.SZ), Dengkang Oral (001328.SZ), Runben Co., Ltd. (603193.SH), and Lafang China (603630.SH).
2) Beauty and Medical Beauty Sector: Sub-segments based on ingredient innovation and emotional value are expected to see high growth. Recommended brands driven by high-end domestic products include Mao Ge Ping (01318), restructuring giant in the collagen field, Biotech (02367), Jinbo Biological (832982.BJ), Marubi Biotech (603983.SH), CHICMAX (02145), Proya Cosmetics (603605.SH), and Shanghai Jahwa United (600315.SH), among others.
Risk Warning
Competition in the industry is intensifying, and the incubation and promotion of new products are not meeting expectations.