How to do the hair transplant business after abandoning the "flat - rate" model? | The Frontline

Caught in the contradiction between the "appearance economy" and "consumption downgrading", is there still a spring for the hair transplant market?

The hair transplant industry has been touted by capital as the "golden track in medical aesthetics". However, under the combined effects of internal and external factors such as the trust crisis triggered by the "price war", uneven service quality, and the concentrated outbreak of post - operative disputes, this industry, which once boasted a "market scale of over 100 billion", is falling into collective reflection.

When the traditional "hair follicle porter" model encounters a bottleneck, should hair transplant institutions continue to consume themselves in the marketing involution or return to the essence of medicine?

At the recent 8th China Hair Academic Conference, Cui Shaofang, the executive director of Damai Hair Transplant, shared her observations (edited) with 36Kr:

No longer competing on "flat - rate pricing"

Q In the past year, what changes have taken place in the hair transplant and hair care market?

A Two statistics we collected really shocked me. One is the number of hair transplant institutions. Currently, including large - scale chain brands, top - tier public hospitals, and single - store clinics, the number of hair transplant institutions in China has reached 3,000.

Over the years, the demand for hair transplants has always existed. But as more people enter the market, the price war has become extremely fierce. The price of hair transplant services is even lower than before the pandemic. If the price war continues, the industry will surely not last long. Services that used to cost 20,000 - 30,000 yuan in the past, now some institutions, without considering the unit quantity, directly offer a "package deal for a few thousand yuan". There is a certain amount of exaggeration in this, and it will inevitably affect the quality of professional services. Moreover, although the "flat - rate pricing" model simplifies the charging process to some extent, it easily blurs the value boundary of medical services, leading the hair transplant industry to become more and more marketing - oriented, operating medical institutions with commercial thinking.

We no longer want to attract customers with low - price promotions and then sell them high - priced services. Based on the current market situation, we no longer want to engage in price competition. We will quote prices as they should be. So, last year, Damai changed the "flat - rate pricing" model back to pricing based on the number of hair follicles.

This model also makes consumption more transparent. Every penny can be accounted for in specific hair follicle units, avoiding the ambiguity of "package pricing". We advocate diagnosing before treating, enabling consumers to determine the number of hair follicles they need to transplant based on professional diagnosis results, achieving precise medical treatment of "transplanting as many as needed".

Another statistic is that last year, we observed that pure lifestyle hair care and hair - nourishing brands were very popular in the market, but some of them disappeared this year, and both customer flow and revenue are declining. Against the backdrop of consumption downgrading, people tend to only choose "essential" projects, and these services do not have therapeutic effects.

Q You mentioned that hair care services may not be an immediate market necessity at present, but many hair transplant institutions are also expanding hair - nourishing products as a "second growth curve". For example, Damai has launched the 'Xiaomai' brand for hair - nourishing services. Why is that?

A It's different. Those services refer to pure consumer - oriented ones, such as hair washing and hair conditioning. The positioning of "Xiaomai" is to provide therapeutic hair - nourishing services with clinic qualifications, aiming to achieve hair - strengthening or hair - growing effects. This should be considered a semi - essential need.

Currently, we have opened the franchise window, focusing on finding partners who have experience in operating hair - nourishing brands and are willing to upgrade traditional consumer - level stores to medical - level stores. This type of partner has experience and a team, but lacks medical resources and brand endorsement. We can help them build a system.

We don't want to seek franchises blindly, so we are not in a hurry to expand. Our goal this year is to open 50 stores. Previously, the pilot store of "Xiaomai" in Nanshan, Shenzhen, has achieved profitability, and we hope to continue in this model.

Hair transplant business accounts for 70% of total revenue, and the store - opening speed slows down

Q How is Damai's overall business expansion going?

A Last year's business was generally the same as the year before. First - and second - tier cities are still the most important markets. The five cities of Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou account for 50% - 60% of the company's total revenue. Among them, the hair transplant business accounts for 65% - 70%.

In terms of stores, currently, Damai has 40 hair transplant stores globally (including 1 in Chicago, USA). It's enough to have up to 50 stores in China because most provincial capitals are already covered. In the past three years, we only closed one store in East China because the stores in surrounding cities were relatively dense. At the same time, we oppose blind expansion because customers only need to have this surgery once in a lifetime, so we don't need too many stores.

The average customer spending is showing an upward trend. Last year, we adjusted our business strategy. As mentioned before, we returned to the essence of medicine and were no longer affected by the market's "price war". We also followed the price - war strategy for a while, but we felt it deviated from Damai's original intention.

Originally, from a medical diagnosis perspective, doctors first diagnose, then provide materials and treatment plans, and finally determine whether to perform a hair transplant surgery or just do hair - strengthening. If we don't even conduct a diagnosis but directly quote a price and the number of hair follicles to be transplanted, it goes against the original purpose of medicine.

The hair transplant technology was initially introduced from overseas, and the earliest model was pricing by unit. So, we should have a reasonable income, neither raising prices nor excessively lowering them. We take into account the current consumers' willingness to spend and the differences compared to before the pandemic, while also respecting the value of medical services.

After a year of exploration, we found that the market is more willing to pay than before. Customers are price - sensitive, but they don't only pursue low prices.

In addition, we are also improving the diversity of services. In addition to medical - grade hair transplant projects, we are also exploring more non - surgical aesthetic projects, such as female hairline transplantation, eyebrow transplantation, male beard and temple hair transplants, and a "chronic disease management system" for hair loss problems.