Summary of Key Points
This year's 618 shopping festival saw a rare negative growth in the beauty category for nearly a decade, but this is not due to overall weak consumption. Instead, it reflects a structural adjustment within the industry: low-end, licensed, and unlicensed products have been cleared out in large quantities; domestic beauty brands have cooled down from the hype of relying on traffic to build their reputation, while international luxury brands have returned to the top; offline sales channels have seen their growth rate surpass online for the first time; the industry is shifting from being driven by marketing to focusing on compliance and research and development. Leading domestic brands still hold an advantage in niche segments and are entering a phase of healthy competition.
1. Negative Growth in Beauty Sales During 618: It's Not That People Stop Buying, but Low-End Products Are Hard to Sell
Many might assume that the negative growth in beauty sales indicates a decline in demand for cosmetics, but the data reveals the truth:
- Overall consumption has not declined: According to the National Bureau of Statistics, retail sales of cosmetics above a certain threshold increased by 4.9% in the first five months of 2026 (although the growth rate dropped from 8.3% in March to 2.5% in May), indicating that people are still buying cosmetics, but they are choosing different products.
- The decline is concentrated in the mid-to-low-end market: Data from Magic Mirror shows that mid-range skincare products priced around 100 yuan are under the most pressure—this price segment is crowded with domestic, licensed, and unlicensed brands. Analyst reports directly attribute this to the clearance of unlicensed and low-quality products, not a lack of consumer interest.
- International luxury brands are making a comeback: Previously, domestic brands dominated the market with their low prices and traffic; now that these low-end products have been eliminated, international brands are reclaiming their leading positions due to their brand strength and compliance.
2. How Did the "Hype" around Domestic Beauty Brands Arise?
The apparent prosperity of domestic beauty brands in recent years was actually a bubble created by low barriers to entry:
- Easy Brand Creation: There was no need to build factories or invest in research and development; companies could simply use contract manufacturers (such as those in Guangzhou Baiyun and Huzhou Daixi, which specialize in producing affordable face masks) and repackage the products for online sales. The number of cosmetic trademark applications surged from 2021 to 2023, with many unused trademarks being activated due to the low entry barriers.
- Traffic-Driven Growth: Three factors fueled this model: groups in Xiamen invested in short-video advertising, those in Hefei produced affordable, claims-based licensed products (e.g., claiming whitening and anti-aging effects but only providing basic hydration), and those in Hangzhou mass-produced products for e-commerce platforms. These brands relied on traffic to attract new customers but failed to retain them, with an average lifespan of less than 8 months—more rapid turnover than clothing.
- Capital's Role: 2021 was a peak year for financing (over 130 deals), with investors focusing solely on online sales volume (GMV). They invested heavily in traffic-driven brands, fueling the industry's hype. However, capital has cooled since 2023, and now investment is shifting to upstream areas such as raw materials and synthetic biology, leaving licensed brands struggling for funding.
3. Strict Regulations: No Escape for Low-End Players
The bubble burst because of stricter regulations and platform actions:
- New Laws: In September 2023, the "Measures for the Supervision and Management of Online Cosmetic Business" were implemented, prohibiting the multiple use of licenses and the misuse of registration information, tightening compliance requirements legally.
- Production Capacity Reduction: Regulatory authorities have inspected contract manufacturers like those in Guangzhou Baiyun and halted non-compliant small-scale orders, leading to the clearance of low-end production capacity.
- Stream Distribution Restrictions: Major platforms have taken action:
- Douyin has linked its database with the drug regulatory authority, preventing non-compliant products from advertising (cutting off the lifeline for traffic-driven brands).
- Pinduoduo is removing low-priced, unlicensed products from sales.
- Taobao uses image recognition technology to identify counterfeit luxury brands and has raised the requirements for individual store listings.
- Cross-Platform Bans: Violating companies, even if they change their trademarks or open new stores, are banned across all platforms.
4. Industry Transformation: Offline Sales Surpass Online, and Leading Domestic Brands Achieve Genuine Growth
This adjustment has brought about three significant changes in the beauty industry:
- Offline Channels Gain Ground: FBeauty data shows that offline beauty retail sales grew by 11.8% in the first quarter of 2026, compared to only 5.5% online—this is the first time offline sales have surpassed online in five years, indicating that consumers prefer in-person experiences (such as product trials and texture checks) over online ads.
- Leading Domestic Brands Break Free from Competition: Previously, domestic brands relied on low prices to drive sales; now that low-end products have been eliminated, leading brands like Perlaya, Maogeping, and Kefume are no longer competing on price. For example, Perlaya ranked third in Tmall's 618 beauty sales, Maogeping led in Douyin's makeup category, and Kefume and Vinona dominated niche segments such as sensitive skin care and medical beauty treatments.
- International Brands Adapt: International luxury brands, which were strong in physical stores, have learned to use content marketing (e.g., live broadcasts on Douyin and influencer promotions) to convert their offline presence into online sales, thus reclaiming their leading positions.
5. Future Trends: From "Traffic Hype" to "Product Quality": New Opportunities for Domestic Brands
The changes during 618 indicate a healthy transformation of the industry:
- Compliance Is Essential: Brands without proper qualifications or false advertising can no longer survive; they must comply with regulations and provide genuine products.
- Research and Development Are Key: Capital is now investing in upstream areas like raw materials and synthetic biology, indicating a shift from marketing-driven to technology-driven growth. Domestic brands need to focus on quality (e.g., Perlaya's Ruby Essence and Vinona's sensitive skin care ingredients) to sustain long-term success.
- Niche Segments Offer Opportunities: Not all domestic brands are failing; those focusing on specific markets (e.g., sensitive skin, makeup, men's skincare) can still find growth opportunities if their products are of high quality.
In summary, the negative growth in beauty sales during 618 is not a sign of decline but the beginning of a healthier industry. The elimination of low-end, licensed products has exposed brands that rely on product quality. Domestic beauty brands that move away from traffic dependence and focus on research and compliance will have a solid future in the market.
(End of translation)