20 Feb Receding Hairline, Growing Business
Even if the planned movie “McClane” (a.k.a. “Die Hard 6”) ever gets made, there would be no more suspense about Bruce Willis’ hair. Die Hard 1-5 has been a complete cinematographic record of his hair change, measurable by Hamilton-Norwood Scale from Stage 1 to 7.
Bruce is not alone.
All of us trade our hair for life’s happy memories, sooner or later. It’s interesting that “receding hairline” has become a hot topic even among younger people in China.
Yimian’s analyst Yuqin recently scanned the e-commerce landscape of China’s growing industry of hair loss prevention and treatment. Using automatically collected data from tmall.com, she was able to
– Define the loosely defined industry
– Size the industry
– Identify interesting dynamics of players
1. How to define the industry?
First of all, Yuqin used Yimian’s Word Vector tool to identify all keywords related to “hair loss”.
Word Vector is a Natural Language Processing technology that places words sharing more linguistic contexts in closer vicinity in a vector space, which typically has a few hundred dimensions. Although the vector space is incomprehensible to human brains, the result is a list of words that collectively define a comprehensive concept, such as “hair loss prevention and treatment industry”.
Online vendors attempt to catch all consumers searching for keywords related to the target need. Therefore, they have been honing their SEO (Search Engine Optimization) skills by including the most relevant keywords in the product description. By peeking into the unfathomable vector space, Yuqin retrieved below keywords that are similar in their context in product descriptions:
– Hair loss
– Hair cultivation
– Hair shedding
– Seborrheic hair loss
– Genetic hair loss
– Early hair loss
– Alopecia areata
– Spot baldness
(Image source: Unsplash.)
2. What’s the size and growth?
The scale of the market defined by the above keywords was tallied.
Yuqin’s analysis showed that the hair loss market on tmall.com reached RMB 1.037b in 2018, compared to only RMB 454m in 2017. In contrast, this sector grew by more than 100% in one year, well above tmall.com’s 20% annual overall growth rate. If tmall were a multi-lane high way, the hair loss industry is definitely running in the fast lane.
How significant is RMB 1b? Among ~1300 categories on tmall, the size of the hair loss industry ranks between 200 and 300. It’s comparable to popular appliance categories such as soymilk makers, humidifiers, or drinking water dispensers.
3. Any interesting competitive dynamics?
Next, Yuqin discovered some interesting dynamics in this RMB 1b industry.
The online classification labels showed 7 sub-categories:
– Personal care, e.g. combs
– Hair care, e.g. shampoos
– Cosmetics, e.g. hairline cover-up powder
– Care equipment, e.g. laser hair stimulator
– Nutrition supplement, e.g. Hair-loss defying soft-gels
– Medication, e.g. Finasteride, an FDA approved drug to treat men’s hair loss
– Medical services, e.g. Hair transplant
Among these subcategories, hair care accounts for over RMB 700m of sales in 2018, representing the largest pie. It boasts three different selling concepts:
– Hair-cultivating shampoo
– Ginger-based shampoo
– Silicon-free shampoo
Among the trio, silicon-free suffered a 3% drop from 2017 to 2018, hair-cultivating and ginger-based grew by 26% and 9%, respectively.
Hair-cultivating shampoo has a higher barrier to entry, which is regulated by Cosmetic Hygiene Supervision Regulations, China’s Ministry of Health.
(Image source: Unsplash. )
Ginger is believed to have a positive effect on hair growth in Chinese culture. It’s very common for parents to squeeze fresh ginger juice onto newborn babies’ head in an attempt to stimulate new hairs.
In this subcategory, the market-share No.1 brand is Jackie Chan endorsed Hong Kong brand Ba Wang（霸王）, which focuses on hair-cultivating shampoo, claiming 27% of hair loss related hair care market. The No.2 is Bai Cao Shi Jia（佰草世家）, a brand interestingly withdrew from the hair-cultivating competition in 2018 and shifted focus to ginger-based.
As Estée Lauder Chief Executive Fabrizio Freda said on a conference call with analysts recently, “Demand for prestige beauty from Chinese consumers has remained strong in spite of macro issues and potential risks to the economy.” (WSJ article, Feb 5, 2019)
For brands looking for top-line opportunities, top of the head is an area of growth, not just for hairs.
Please contact me at zhangrong[at]yimian[dot]com[dot]cn for more information about how we scope, size, and analyze an online segment.
(Title image source: Unsplash.)