MG Beauty King Exits Online Channels Amidst Channel Adjustments

Recently, the beauty brand MG announced that its official online store will close on October 30th, and from September 30th, the store will stop accepting new orders. Reporters from China Business News noticed that MG was founded in 2003 and once held a significant share in the domestic facial mask market for a long time. In 2010, it became the first facial mask company to go public in China, and in 2013, it was fully acquired by L'Oréal Group and delisted from the Hong Kong Stock Exchange in 2014.

Looking back at the development process of MG, L'Oréal and MG have made many explorations to achieve performance growth, such as establishing a dedicated facial mask research and development center, withdrawing from Watsons, and focusing on entering online channels. However, in the current situation where new products are frequently launched and the competition is fierce, they finally announced their withdrawal from online channels. Regarding the closure of MG's online channels, a person in charge of L'Oréal told reporters that it was due to strategic adjustments. The MG brand plans to close its online stores, and consumers can continue to purchase products through offline channels.

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The "Mask King" with "Ups and Downs"

MG facial masks have been the true "Mask King" for a long time.

Once established in 2003, MG facial masks quickly captured the market with its "affordable facial mask + single-piece sales" business model. Through cooperation with Watsons and other retail channels, it quickly rose in the market. In 2007, MG became the brand with the highest sales volume of facial mask category in Watsons.

In 2010, MG successfully went public on the Hong Kong Stock Exchange, becoming the first facial mask company in China while being oversubscribed by 784 times, becoming the "stock king" of the Hong Kong Stock Exchange that year. Public资料显示 that in 2011, MG's sales performance was 957 million Hong Kong dollars, and in 2012, it climbed to 1.349 billion Hong Kong dollars, a year-on-year increase of 41%, with a net profit of 205 million Hong Kong dollars.

At that time, the excellent performance of MG facial masks attracted the attention of giants. In 2013, the international beauty giant L'Oréal acquired the MG brand for 6.538 billion Hong Kong dollars, and in 2014, MG delisted from the Hong Kong Stock Exchange and officially became a brand under L'Oréal Group. However, in 2016, L'Oréal Group's interim financial report showed that MG's impairment loss in the first half of the fiscal year reached 213 million euros.

According to the data provided by Star Chart, from January to December 2016, among the top 10 online facial mask brands, MG ranked 8th with a market share of 2.1%, lagging behind rising star brands such as Yizhi, Mofashijia, and Yunifang.

Data from related platforms shows that in the first half of 2024, the total transaction amount (GMV) of MG on a certain social media platform was between 100,000 and 250,000 yuan, ranking 4,176th in the beauty ranking of the platform. In the past few years, its performance on the platform has also been unsatisfactory. From 2021 to 2023, its GMV was between 1 million and 2.5 million yuan, 5 million and 7.5 million yuan, and 2.5 million to 5 million yuan, all ranking outside the top 1,000.

Until this year, MG's "MG Mall" on WeChat Mini Program issued a store closure announcement, stating that it will close on October 30, 2024, and the store will stop accepting new orders. All previously ordered goods will be shipped as normal. At the same time, after October 30, member points will be cleared to zero.Ling Yan's Chief Consultant Lin Yue told reporters that the success of MG's facial masks at that time depended on the strategy of affordable pricing and single-piece sales, and turning facial masks into fashionable fast-moving consumer goods. Finally, by leveraging strong channels such as Watsons, rapid growth was achieved. However, in recent years, losses have occurred, and market share has declined. Failing to seize the benefits of e-commerce channels, lacking social media marketing capabilities, and weak product innovation are all issues that have led to the closure of online stores.

Industry insiders believe that compared to the popular brands in the facial mask market at that time, Dr. Morita mainly focused on hyaluronic acid ingredients, Yi Ye Zi mainly focused on plant enzyme concepts, and Han Hou mainly focused on hydration concepts, but at that time, MG did not have a clear selling point.

Pangu Think Tank Senior Researcher Jiang Han also said that although MG was once the leader in the facial mask market, it lacked highlights in product innovation and failed to launch competitive new products to attract the attention of young consumers. At the same time, other brands have continuously researched and innovated, launching many "hit" products that are popular in the market, further squeezing MG's survival space.

Jiang Han further mentioned that with the popularization of mobile Internet, live e-commerce has become a new growth point for the beauty industry. This model has not only changed consumers' shopping habits but also provided brands with a brand-new sales channel. Many beauty brands have achieved explosive growth in sales by cooperating with well-known hosts and leveraging the power of social media platforms. However, in the tide of digital transformation, MG's pace has been relatively slow. It has not established an advantage in the field of live e-commerce in terms of product display and interactive experience, leading to the erosion of market share.

"Troubles" of being acquired

In fact, looking back at the period since being acquired by L'Oréal, MG has also been exploring correspondingly. Public information shows that after being acquired by L'Oréal, MG proposed the "facial mask philosophy", changed the brand logo, established a facial mask research center, and launched new products, such as the original moisturizing, flowing gold silk language, colorful series, and in 2016, it launched a new black fermentation mask product.

In 2016, MG also invited the internet celebrity Papi Jiang to visit and experience the MG facial mask laboratory, and boldly tried new marketing in the form of a live broadcast on Taobao and Meipai. In addition, in Papi Jiang's "Monday Broadcast" video, MG facial masks also embedded a 10-second hard advertisement, which was personally dubbed by Papi Jiang. However, these attempts did not achieve much noise.

In 2018, MG was completely removed from Watsons, and at that time, L'Oréal stated to the outside world that MG's withdrawal from Watsons was a strategic decision of the brand, and e-commerce was made the main channel of the brand.

The above actions also had certain effects. The whitening milk mask that was launched in the first half of 2019 once ranked first in Tmall's whitening mask; the SOS first-aid gauze mask that was launched in December 2019 rushed into the top 2 of Tmall's repair mask category as soon as it was launched.

At the same time, in 2019, MG also began new attempts in the skincare field, launching essence and cleansing products; and then in 2021, it entered the WeChat official mall.However, by 2022, MG underwent another strategic upgrade, announcing a "return to offline channels" and launching a specialized salon care series. In 2023, the brand released its 20th-anniversary logo and promotional short film, expanded its product categories, and continued to transform in the whitening track.

Jiang Han believes that MG facial masks once had a high market recognition and a large number of consumers. As a beauty giant, L'Oréal should have brought more resources and development opportunities to MG after acquiring it. "L'Oréal has its own mature marketing system and channel layout, but when integrating MG, it did not integrate well, which made MG, although 'married into a wealthy family', did not form a real advantage. On the one hand, L'Oréal's acquisition changed MG's original brand positioning and development strategy to some extent. MG originally had its unique brand image, which was loved by the public for its affordable and convenient facial mask products. After being acquired, it gradually lost its direction in L'Oréal's overall layout. On the other hand, MG also faces challenges in marketing and channel management," Jiang Han said.

Lin Yue also mentioned that with the emergence of facial mask brands in the market, the production threshold of facial masks continues to decrease, and industry competition intensifies, making it difficult for many mid-to-low-end brands to survive. There are many examples of local beauty brands that have declined after being acquired, mostly because the overall strategy and resources of foreign giants may not be particularly inclined, coupled with a long decision-making chain, which slows down the market response speed, making the wild growth of local brands unadaptable to the market.

Regarding the strategic positioning of MG facial masks within the L'Oréal Group and issues such as resource support, L'Oréal did not respond.

Abandon the vast online market

From the data, when MG closed its online flagship store, it gave up a vast market.

Data from the Prospect Research Institute shows that, taking the sales situation of the facial mask market from January to September 2023 as an example, the sales of the facial mask market in online and offline channels account for almost half each, and the proportion of online sales continues to rise. Consumers prefer to buy facial masks online, and among online channels, the largest contributor to sales is the Taobao platform.

MG, which closed its online channel, has re-arranged offline. Relevant media reports said that in 2022, MG announced a return to offline channels and launched salon-level care services. Some agents revealed that some medical beauty institutions are still purchasing MG facial masks.

On the other hand, new skincare trends have been continuously updating and iterating in the market with a sweeping momentum. The "2024 China Skincare Consumption Trend Report" released by the Chinese Academy of Social Sciences mentioned that with the development of skincare concepts, consumers are no longer satisfied with "one set of products to rule the world", but pay attention to the real effects of products, such as whitening, anti-wrinkle, anti-aging, etc.

In the process of the industry scale's continuous expansion, many new skincare concepts have emerged, such as pure skincare, oil-based skincare, emotional skincare, etc. Some of these concepts show a trend of increasing strength, which also shows that the innovation vitality of the domestic beauty industry is continuously strengthening. A group of new domestic brands such as Zhi Ben, An Xiuze, Ke Fu Mei, LAN Lan, Fu Yu Man Pu, etc., have rapidly risen, continuously meeting consumer diversification needs with excellent products and scientific skincare concepts.Jiang Han stated that the decision for Meiji (MG) facial masks to completely withdraw from online sales is both surprising and regrettable. In today's market where online shopping has become the mainstream, online channels are crucial for the development of a brand. However, Meiji has chosen to completely close its online channels. Even though there are still offline channels to rely on, facing the increasingly fierce market competition and the changing consumer demands, there is still certain pressure on future development.