A "Yelp" for Beauty, SoYoung Transforms Medical Cosmetology Industry
SoYoung closed its series E funding in September, which is its third financing in 2018. The change in cognition and the prosperity of the industry bring SoYoung and other participants chances and challenges.
SoYoung(新氧, Xinyang) is tech PaaS(Platform as a Service) company providing a UGC(user-generated contents) platform prevailed in China for sharing cosmetic surgery comments, reviews, and experience, as well as other derivative services along with its growth. In 2018, SoYoung completed three rounds of financing, closed series D and E. In recent series E closed in Sep 2018, Orchid Asia Group led the investment and followed by Matrix Partners China (MPC), BOC International Holdings, and Russia-China Investment Fund, in which MPC participated in every funding series of SoYoung.
Three rounds of funding in a row, the number of companies could attract investments like SoYoung is handful. The total financing activities in medical cosmetology industry have been declining since 2016.
SoYoung’s funding attraction is hidden in the grade slip it handed in 2018. During 2018, O2O cosmetic surgery transaction volume generated on SoYoung platform is over CNY 6 billion, 300% boost comparing to last year’s data and CNY 15 billion revenue in the whole cosmetic surgery industry driven by SoYoung. According to SoYound’s expectation, the medical cosmetology market size would hit CNY 224.5 billion in 2018 with domestic 20 million consumers. SoYoung’s business has spanned East and Southeast Asia in a total of approximately 350 cities and the expansion is ongoing. As forecasted by several agencies including 36Kr, MobData, Frost&Sullivan and Deloitte, China’s medical cosmetology market size in 2020 will lie within the range from CNY 315 to 334 billion.
The boost in medical cosmetology in China could be partially explained by the wakening cognition of feminism. In Deloitte’s report, the primary purpose of women consumers changed from professional consideration to pleasing themselves, from passive to active during the past five years. Besides, men consumer portion is ascending. From these changes, both women and men’s perception of beauty is different from years, and this change in cognition give a rise in medical cosmetology.
Above illustrate the trend of the industry but does not explain why SoYoung is the first medical cosmetology platform company who entered series E founding. Medical cosmetology is a market of lemon and the information asymmetry hinders the development of the industry. In SoYoung’s app, cosmetic surgery receivers share the process of their appearance change and help potential customers to acquire information when making decisions. The increase of information transparency and quantity crushed the market of lemon. Whilst, medical cosmetology market players could promote their business through consumers’ postings on SoYoung, which is accurate and effective – for a customer who wants to do a facial contouring surgery, she will not search for breast surgery reviews and facial contouring reviews on SoYoung could guide the potential customer to the surgery facilities. In a couple of years ago, the marketing cost for medical cosmetology facilities was as high as CNY 3,000 per customer, but after SoYoung’s intervention of the market, the cost has dropped to 1/10 of before.
SoYoung is a PaaS tech company, functioned like a GPS for customers and facilities. The rapid growth of SoYoung implies the vitality of the industry. However, medical cosmetology is not an ordinary type service. Similar to all other healthcare and medical services, any nuance of mistake occurred in the surgery process might bring severe damages. But unlike general surgeries, medical cosmetology service is more a commodity based on its nature acts like a luxury - nice to have but not must have. The uniqueness of the industry sets itself in an embarrassed state, at least from a juristic perspective. A lesson from the car-hailing service provider Didi, because homicides' victims hailed cars through Didi, Didi was harshly reprimanded for its act of omission. This is an alarm for all PaaS companies, not only car-hailing. After car-hailing homicides, the State Council published policies in Aug 2018 to urge the normalization of the car-hailing industry. Same for SoYoung, the unicorn who takes mobile app 90% of the monthly activity in the industry with a giant potential customer base, self-regulation is a must-to-do for it to prevent from following Didi's step. But lucky enough for SoYoung, B2C(business to customer) makes it easier for SoYoung to regulate the B side, while what Didi faced is a C2C(customer to customer) question when both C sides are huge.