White-label beauty market collapses as traffic costs rise

Enhanced Key Takeaways

• •The collapse is primarily driven by the 'traffic-first' business model, where customer acquisition costs (CAC) on platforms like Douyin and Kuaishou have surpassed the profit margins of low-barrier white-label products.
• •Supply chain transparency regulations in China have tightened, forcing white-label brands that previously relied on OEM/ODM 'factory-to-consumer' models to invest in R&D or face regulatory delisting.
• •Consumer sentiment has shifted toward 'rational consumption,' with users increasingly prioritizing ingredient efficacy and brand heritage over the aggressive influencer-led marketing that sustained white-label growth.
• •Many of the 900 closed stores were part of a franchise-style expansion model that lacked centralized quality control, leading to a rapid erosion of brand equity once initial marketing hype faded.
• •The industry is seeing a bifurcation where mid-tier white-label brands are failing, while high-end niche brands with proprietary formulations and strong community-based private traffic (private domain) are maintaining stability.

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