Yatsen Holding Limited (YSG): Business Model Canvas [Dec-2025 Updated]

You're trying to figure out how a major Chinese beauty player successfully engineered a sharp strategic pivot, and honestly, it's a masterclass in margin expansion. This Business Model Canvas maps out exactly how they shifted focus from mass-market color cosmetics to science-backed skincare, driving a massive 83.2% year-over-year growth in that segment for Q3 2025. Here's the quick math: that focus helped them report a 78.2% gross margin, even while spending RMB 682.3 million on selling and marketing to fuel that growth, resulting in total net revenues of RMB 998.4 million for the quarter. It's a tightrope walk between global R&D centers and intense digital marketing, so look below to see the nine blocks that built this new, high-margin machine.

Yatsen Holding Limited (YSG) - Canvas Business Model: Key Partnerships

You're looking at the network Yatsen Holding Limited (YSG) builds to fuel its innovation engine; it's not just about selling products, it's about co-creating the science behind them. This partnership structure is key to their strategy as a technology-driven beauty pioneer.

The core of their external knowledge base is the Open Lab ecosystem. This network connects more than 20 research collaborations across industry, academia, and medicine. This scale is important for generating proprietary insights.

Academic R&D collaborations are deep-rooted, specifically naming institutions like Sun Yat-sen University and Fudan University in their network. This academic tie-in supports their frontier research domains.

Clinical validation is also a focus, evidenced by partnerships for clinical research. These include institutions such as Ruijin Hospital of Shanghai Jiao Tong University School of Medicine and Hôpital Saint-Louis in France. For instance, Perfect Diary co-published the industry's first Makeup Skinification Report with Ruijin Hospital.

To support the sales infrastructure, Yatsen Holding Limited relies heavily on established third-party e-commerce platforms. The table below shows the specific sales volumes reported for major channels in 2023, which informs the current sales channel strategy:

Platform	Partnership Details	Sales Volume (2023)
Tmall	Primary online distribution channel	RMB 1.2 billion
JD.com	Secondary online sales platform	RMB 680 million

The reliance on these digital channels is significant; in 2023, Tmall alone represented 32.7% of Yatsen's total online sales channels.

The output from these R&D partnerships is quantifiable. Since 2022, Yatsen Holding Limited has published 32 peer-reviewed papers and filed 252 global patents, which includes 78 invention applications. Furthermore, the Group operates three global R&D centers and supports this network with six joint laboratories. The company has invested more than RMB 600 million to date in R&D, maintaining spending above 3% of annual revenue. As of mid-2025, skincare brands accounted for more than half of Yatsen's total revenue.

• Open Lab Ecosystem Collaborations: over 20
• Global Patents Filed (Since 2022): 252
• Peer-Reviewed Papers Published (Since 2022): 32
• Joint Laboratories: 6
• R&D Spending as % of Revenue: Above 3%

Finance: review Q3 2025 e-commerce channel contribution against 2023 benchmarks by end of week.

Yatsen Holding Limited (YSG) - Canvas Business Model: Key Activities

You're looking at the core engine driving Yatsen Holding Limited's current performance, which is a clear pivot from its color cosmetics roots to a science-backed skincare focus. Honestly, the numbers from Q3 2025 show this strategy is gaining traction.

Scientific R&D and product innovation to support clinical claims

Yatsen Holding Limited is definitely putting more capital behind proving its products work, which is key for the premium skincare segment. Research and Development Expenses for the third quarter of 2025 hit RMB 39.8 million (US$ 5.6 million). That spend represented 4.0% of total net revenues for the quarter, an increase from 3.7% in the prior year period. This investment supports the launch of clinically relevant products, such as DR.WU's PDRN Serum and Galénic's No.3 VB Serum during the quarter. The focus here is on building credibility beyond just digital buzz.

Here are the R&D investment figures:

Metric	Q3 2025 Amount (RMB)	Q3 2025 % of Revenue
R&D Expenses	39.8 million	4.0%

Multi-brand portfolio management and brand acquisition integration

Managing a diverse set of brands is central to Yatsen Holding Limited's structure, allowing them to target different price points and consumer needs. The portfolio includes established names like Perfect Diary, alongside acquired or developed skincare brands such as Galénic, DR.WU (specifically its mainland China business), and Eve Lom. This strategic mix is shifting the revenue mix significantly.

The success of this portfolio management is visible in the revenue split, showing the success of the skincare push:

• Skincare Brands revenue surged by 83.2% year-over-year in Q3 2025.
• Skincare Brands accounted for 49.2% of total net revenues in Q3 2025.
• Total net revenues for Q3 2025 reached RMB 998.4 million (US$ 140.2 million).

Direct-to-Consumer (DTC) digital marketing and content creation

The company heavily relies on reaching customers directly, which means substantial spending on digital channels and content. Selling and Marketing Expenses for the third quarter of 2025 were RMB 682.3 million (US$ 95.8 million). While this is a large absolute number, the key operational efficiency metric is its ratio to sales. As a percentage of total net revenues, selling and marketing expenses decreased to 68.3%, down from 73.0% in the prior year. This deleveraging suggests that the higher revenue base is helping to absorb the marketing spend more effectively, so you're seeing better returns on that DTC investment.

Supply chain optimization to maintain a 78.2% gross margin (Q3 2025)

Maintaining a high gross margin while scaling is a tough balancing act, but Yatsen Holding Limited achieved it in Q3 2025. The reported gross margin for the period was 78.2%, an improvement from 75.9% in the prior year. This margin expansion is supported by the higher sales mix of premium skincare products and specific operational improvements. The management specifically cited fulfillment cost optimization as a driver for the increase in gross profit. This points directly to supply chain and logistics efficiency efforts.

Here's a snapshot of the Q3 2025 financial context supporting these activities:

Financial Metric (Q3 2025)	Amount (RMB)	Percentage of Revenue
Total Net Revenues	998.4 million	100.0%
Gross Profit	780.5 million	78.2%
Selling and Marketing Expenses	682.3 million	68.3%

Finance: draft 13-week cash view by Friday.

Yatsen Holding Limited (YSG) - Canvas Business Model: Key Resources

You're looking at the core assets Yatsen Holding Limited (YSG) relies on to execute its strategy, especially that big pivot toward science-backed skincare. These aren't just line items; they're the engines of their current and future value.

The physical and intellectual infrastructure supporting Yatsen's innovation claims is centered in key global hubs. You see a clear commitment to R&D investment through their physical footprint.

• Global R&D centers located in Shanghai, Guangzhou, and Toulouse, France.

Intellectual property is a massive part of this resource base, especially as the company leans into scientific credibility. They've been filing aggressively to build a moat around their formulations.

The output here is significant, showing a clear focus on proprietary technology since the start of 2022.

• Intellectual Property: 252 global patents filed since 2022, which includes 78 invention applications.

The brand portfolio itself is a primary resource, representing established consumer trust and revenue streams, even as the mix shifts. You've got the legacy color cosmetics powerhouse alongside the high-growth skincare assets.

Here's a quick look at the key brands that make up this portfolio:

Brand Name	Primary Category Focus
Perfect Diary	Color Cosmetics (Flagship)
Galénic	Skincare (Premium/Science-backed)
DR.WU	Skincare (Premium/Science-backed)
Eve Lom	Skincare (Premium/Cleansing Focus)
Little Ondine	Color Cosmetics
Abby's Choice	Skincare/Beauty
Pink Bear	Color Cosmetics
EANTiM	Beauty/Skincare

Finally, the balance sheet provides the necessary liquidity to fund operations, R&D, and strategic initiatives. You need to watch this closely as they manage their path to consistent profitability. The cash position as of the end of the third quarter of 2025 gives them operational flexibility, though it's definitely lower than the start of the year.

The stated cash and short-term investments figure for that period is:

• Cash and short-term investments of RMB 1.16 billion as of September 30, 2025.

To be fair, the Q1 2025 figure was reported as RMB1.28 billion as of March 31, 2025, so this later figure suggests some cash deployment during the first half of the fiscal year, which is expected given their investment pace.

Yatsen Holding Limited (YSG) - Canvas Business Model: Value Propositions

You're looking at the core things Yatsen Holding Limited offers its customers, right now, based on their latest reported performance through the third quarter of 2025. It's all about balancing high-end science with mass-market appeal.

High-margin, science-backed skincare products (Galénic, DR.WU)

The shift to science-backed skincare is definitely paying off in the margin structure. For the third quarter of 2025, the overall gross margin for Yatsen Holding Limited stood at 78.2%. This is supported by the skincare segment, which is now a near 50/50 split of the business.

Skincare Brands net revenues hit RMB 490.8 million (US$68.9 million) in Q3 2025, marking an 83.2% year-over-year increase. This segment accounted for 49.2% of total net revenues for that quarter. You see the commitment to science in their product pipeline, with recent launches like DR.WU's PDRN Serum and Galénic's No.3 VB Serum being highlighted as drivers for the Double 11 shopping festival.

Trendy, affordable color cosmetics for mass-market appeal (Perfect Diary)

While skincare drives the margin, the mass-market color cosmetics portfolio, anchored by Perfect Diary, is back in growth mode. In Q3 2025, net revenues from Color Cosmetics Brands grew by 25.2% year-over-year. This segment is still important to the overall offering, even as the mix shifts.

For context, in the second quarter of 2025, color cosmetics revenue growth was 8.8%, and a key product, the Translucent Blurring Setting Powder, contributed to that momentum.

Fast-to-market product launches driven by consumer data insights

The ability to move fast from insight to shelf is a core value proposition, backed by dedicated investment. Yatsen Holding Limited reported Research and Development expenses of RMB 39.8 million for the third quarter of 2025, up from RMB 25.3 million in the prior year period. This investment fuels the robust product pipelines mentioned by the CEO.

The strategy focuses on disciplined execution of this R&D-driven approach to ensure they have fresh offerings ready for major sales events.

Multi-brand offering covering mass-market to premium segments

Yatsen Holding Limited offers a portfolio that spans the spectrum, from the mass-market appeal of Perfect Diary to the premium positioning of its acquired and developed skincare lines. This multi-brand structure allows them to capture different consumer spending levels.

Here's a look at how the two main categories stacked up in the most recent reported quarters:

Metric	Q2 2025	Q3 2025
Total Net Revenues	RMB 1.09 billion	RMB 998.4 million
Skincare Revenue Contribution	53.5%	49.2%
Gross Margin	78.3%	78.2%
Skincare Revenue YoY Growth	78.7%	83.2%

The company projects this strategy will continue to work, guiding Q4 2025 total net revenues to be between RMB 1.32 billion and RMB 1.49 billion, representing a 15% to 30% year-over-year increase.

You can see the breadth of the portfolio through the brands they manage:

• Perfect Diary (Flagship Color Cosmetics)
• Galénic (Science-backed Skincare)
• DR.WU (Science-backed Skincare)
• Eve Lom (Skincare)
• Little Ondine (Color Cosmetics)
• Pink Bear (Color Cosmetics)
• EANTiM (Brand)

Yatsen Holding Limited (YSG) - Canvas Business Model: Customer Relationships

You're looking at how Yatsen Holding Limited keeps its customers close in a competitive Chinese beauty market, which is defintely moving toward premium skincare. The relationship strategy is heavily weighted toward direct, digital-first interaction, which makes sense given their focus on brands like Perfect Diary, Galénic, and DR. WU.

High-touch digital engagement via social media and KOLs

Yatsen Holding Limited maintains an expansive presence across all major e-commerce, social, and content platforms in China to reach and engage customers directly. This digital intensity supports a business that posted total net revenues of RMB998.4 million (US$140.2 million) for the third quarter of 2025. While specific Key Opinion Leader (KOL) spend as a percentage of revenue isn't public, the strategy relies on this high-touch digital method to drive sales, especially for their color cosmetics and skincare brands. The broader e-commerce trend in 2025 shows that brands are leveraging social commerce platforms, which totally transform from simple photo sharing into digital storefronts where the entire journey from discovery to purchase happens in one spot.

Direct interaction through brand-specific e-commerce flagship stores

The company's model emphasizes direct interaction through its brand-specific e-commerce flagship stores. This direct-to-consumer approach helps maintain high gross margins, which stood at 79.1% in Q1 2025 and 78.2% in Q3 2025. Direct control over the online storefront allows Yatsen Holding Limited to manage the customer experience end-to-end, which is crucial as consumers increasingly demand seamless, personalized experiences across all touchpoints. For instance, the Q1 2025 results showed significant growth in skincare brands, with net revenues from those brands increasing by 47.7% year-over-year to RMB362.4 million (US$49.9 million).

Loyalty programs and personalized recommendations for repeat purchases

Building repeat purchases through loyalty is a core focus, aligning with industry benchmarks where loyalty program members generate 12-18% more incremental revenue annually. To foster this, Yatsen Holding Limited uses personalized recommendations. Industry data for 2025 suggests that 75% of consumers buy more from brands that have loyalty programs, and 72% expect personalization across all touchpoints. The financial health supporting this is evident, as the company held cash, restricted cash, and short-term investments totaling RMB1.16 billion (US$162.6 million) as of September 30, 2025, allowing for continued investment in these retention efforts.

The general impact of strong loyalty programs in 2025 includes:

• Loyal customers are 5x more likely to repurchase.
• Customers emotionally connected to a brand have 306% higher lifetime value.
• 60% of loyal customers are more frequent buyers.

Physical experience stores for brand immersion and trial

While digital is key, Yatsen Holding Limited also engages customers offline through physical experience stores. This omnichannel approach blends the digital and physical, a trend known as adaptive retail where the line between in-store and online shopping keeps fading. The use of technology like Augmented Reality (AR) in the broader retail space is showing tangible results, with AR experiences leading to a 25% drop in product returns and conversion rates jumping up to 20%. This suggests that physical trial points, enhanced by digital tools, directly support the company's revenue generation and customer satisfaction.

Here is a snapshot of the financial context supporting these relationship investments as of late 2025:

Metric	Period/Date	Value (RMB)	Value (USD Equivalent)
Total Net Revenues	Q3 2025	998.4 million	140.2 million
Gross Margin	Q3 2025	78.2%	N/A
Skincare Brands Net Revenues	Q1 2025	362.4 million	49.9 million
Cash & Short-Term Investments	September 30, 2025	1.16 billion	162.6 million

Finance: draft 13-week cash view by Friday.

Yatsen Holding Limited (YSG) - Canvas Business Model: Channels

You're looking at how Yatsen Holding Limited gets its products-from Perfect Diary to DR.WU-into the hands of Chinese consumers as of late 2025. Their channel strategy is a complex mix, leaning heavily digital but maintaining a physical footprint. The core idea is direct engagement across multiple touchpoints, which helps them manage brand equity and marketing spend more directly than traditional players.

Here's a quick look at the top-line financial context from their latest reported period, Q3 2025, which shows the result of these channel efforts:

Financial Metric (Q3 2025)	Amount (RMB)	Amount (US$)	Year-over-Year Change
Total Net Revenues	RMB998.4 million	US$140.2 million	47.5% increase
Skincare Brands Net Revenues (as % of Total)	N/A	N/A	49.2% of total revenue
Color Cosmetics Brands Net Revenues Growth	N/A	N/A	25.2% increase
Gross Margin	N/A	N/A	Increased to 78.2%

The company explicitly states they primarily reach and engage customers directly, both online and offline, with an expansive presence across all major platforms in China.

Major Chinese E-commerce Platforms (Tmall, JD.com, Pinduoduo)

The foundational digital sales engine for Yatsen Holding Limited still relies on the major marketplaces. These platforms are crucial for volume and broad market access, though the company has been refining its spending efficiency here.

• Yatsen Holding Limited entered Pinduoduo's e-commerce channel in 2019.
• The overall strategy involves an expansive presence across all major e-commerce platforms in China.
• Management noted continuing to see improving marketing efficiency driven by a higher skincare mix and more disciplined spending across channels.

Short-Video and Live-Streaming Platforms (Douyin, Kuaishou)

These content-driven channels are key for discovery and driving immediate sales, especially for their color cosmetics segment, though the shift to skincare is changing the marketing mix emphasis.

• Yatsen Holding Limited entered Douyin and Kuaishou's e-commerce channels in 2019.
• Customers can discover and purchase products through platforms like Douyin and Kuaishou.
• The company's flagship brand, Perfect Diary, achieved the No. 1 ranking among makeup brands on WeChat Video Channel during the quarter.

Offline Retail Presence via Select Brand Experience Stores

The physical channel serves as a brand experience touchpoint, though Yatsen Holding Limited has been strategically managing this footprint.

• The company established Guangzhou Yatsen Cosmetics Co., Ltd. in March 2017 to engage in offline retail business outside East China.
• As of December 31, 2020, Yatsen Holding Limited had 241 experience stores across over 110 cities in China.
• In Q1 2025, the company noted a decrease in revenue was partially due to the selective closure of offline stores.

Company-Owned Social Media Accounts and Mini-Programs

This represents the Direct-to-Consumer (DTC) core, allowing for direct customer relationship management and higher margin capture, which is vital for the premium skincare pivot.

• Yatsen Holding Limited built its platform on a digitally native DTC business model.
• The company's ability to directly engage customers across multiple channels differentiates it from traditional brands.
• The strategy focuses on continued development of clinical and premium brands, which aligns with a direct engagement model that supports higher-margin products.

Finance: draft Q4 2025 channel spend allocation review by next Tuesday.

Yatsen Holding Limited (YSG) - Canvas Business Model: Customer Segments

You're analyzing a company in a significant pivot, moving away from its initial mass-market success toward a more premium, efficacy-driven model, so the customer segments reflect this strategic shift in late 2025.

The customer base is clearly bifurcating based on the product category they purchase, with the higher-end, science-backed segment now representing nearly half of the total business.

• Chinese domestic consumers represent the primary market focus, as Yatsen Holding Limited is described as a leading China-based beauty group.
• The segment seeking higher-end consumers seeking clinical, science-backed skincare efficacy is driving the most significant growth.
• The segment of mass-market, trend-conscious young consumers, historically tied to the Color Cosmetics Brands, is still present but secondary to the skincare push.
• International consumers via cross-border e-commerce is a stated channel, though specific revenue contribution data is not broken out in the latest reports.

Here's the quick math on the revenue split as of the third quarter of 2025, which really shows where the money is flowing now:

Segment Indicator (By Brand Type)	Q3 2025 Revenue (RMB)	Q3 2025 Revenue Share (%)	Year-over-Year Growth
Skincare Brands (Higher-End/Efficacy Focus)	RMB 490.8 million	49.2%	83.2% increase
Color Cosmetics Brands (Mass-Market/Trend Focus)	Calculated Remainder	50.8% (Approx.)	25.2% increase
Total Net Revenues	RMB 998.4 million	100.0%	47.5% increase

The data clearly shows the success of targeting the science-backed consumer. For the first quarter of 2025, Skincare Brands already accounted for 43.5% of total net revenues, up from 31.7% in the prior year period. This trend accelerated into Q3 2025, where the skincare segment reached 49.2% of the total RMB 998.4 million in net revenues. To be fair, the Color Cosmetics Brands did see a 25.2% year-over-year increase in Q3 2025, but the growth rate of the skincare portfolio is the dominant story. What this estimate hides is the exact split between domestic and international sales, as the primary reporting focus is on brand category performance within the overall China-centric business structure.

The key customer groups driving the current financial performance are:

• Consumers prioritizing clinical results, evidenced by the 83.2% revenue surge in Skincare Brands in Q3 2025.
• Consumers purchasing products from the legacy color cosmetics line, which still contributed a significant portion of revenue, growing 25.2% in Q3 2025.
• The overall base remains concentrated in Mainland China, as the company primarily reaches and engages with customers across major e-commerce, social, and content platforms in China.

Finance: draft 13-week cash view by Friday.

Yatsen Holding Limited (YSG) - Canvas Business Model: Cost Structure

You're looking at the hard numbers driving Yatsen Holding Limited's operations as of late 2025. The cost structure is heavily weighted toward customer acquisition, which is typical for a digitally native beauty group.

Here's a breakdown of the primary expenditures for the third quarter ended September 30, 2025:

Cost Category	Q3 2025 Amount (RMB)	Percentage of Net Revenue (Approximate)
Selling and Marketing Expenses	RMB 682.3 million	68.3%
Cost of Goods Sold (COGS)	RMB 217.9 million	21.8%
Fulfillment Expenses	RMB 61.8 million	6.2%
Research and Development (R&D) Expenses	RMB 39.8 million	4.0%

Selling and marketing expenses were a major cost driver, hitting RMB 682.3 million in Q3 2025. That represented 68.3% of total net revenues for the period, which included a portion of planned upfront investments for the Double 11 shopping season.

The Cost of Goods Sold (COGS) is kept relatively lean, which helps support the high gross margin. For Q3 2025, the gross margin stood at a strong 78.2%, up from 75.9% in the prior year period. This margin improvement was mainly due to an increase in sales of higher-gross-margin products.

Here's the quick math on COGS based on the period's financials: Total net revenues were RMB 998.4 million, and the gross profit was RMB 780.5 million, meaning COGS was approximately RMB 217.9 million.

Research and development (R&D) investment totaled RMB 39.8 million in Q3 2025. As a percentage of total net revenues, R&D expenses increased to 4.0% from 3.7% year-over-year, primarily driven by higher payroll expenses from an increased R&D headcount.

For the Direct-to-Consumer (DTC) model, fulfillment and logistics expenses are a distinct line item. Fulfillment expenses for Q3 2025 were RMB 61.8 million. That figure, as a percentage of total net revenues, decreased to 6.2% from 7.4% in the prior year period, showing some cost optimization in logistics.

You can see how the operational spending stacks up:

• Selling and marketing expenses: RMB 682.3 million
• Fulfillment expenses: RMB 61.8 million
• R&D expenses: RMB 39.8 million

General and administrative expenses were RMB 80.2 million, representing 8.0% of total net revenues, down from 12.6% in the prior year period.

Yatsen Holding Limited (YSG) - Canvas Business Model: Revenue Streams

You're looking at the hard numbers for Yatsen Holding Limited's revenue generation as of late 2025. We focus strictly on the financial results reported for the third quarter of 2025 and the guidance provided for the final quarter.

The primary revenue streams for Yatsen Holding Limited stem from the sales of its distinct brand portfolios, namely Skincare Brands and Color Cosmetics Brands. The overall top-line performance in the third quarter showed significant acceleration.

Here are the key financial data points for the third quarter ended September 30, 2025:

• Sales of Skincare Brands grew a remarkable 83.2% year-over-year (YoY) in Q3 2025.
• Total net revenues for Q3 2025 reached RMB 998.4 million.
• This total net revenue represented a 47.5% increase compared to the prior year period.

The shift in revenue mix is notable, with the higher-margin skincare segment taking a larger share of the total.

Revenue Segment	Q3 2025 Net Revenue (RMB)	YoY Growth Rate	% of Total Net Revenue
Skincare Brands	RMB 490.8 million	83.2%	49.2%
Color Cosmetics Brands	Not explicitly stated	25.2%	Approximately 40% (Implied)
Total Net Revenues	RMB 998.4 million	47.5%	100%

Sales of Color Cosmetics Brands, which includes the Perfect Diary line, also contributed positively, showing a 25.2% year-over-year increase in net revenues for the third quarter. This segment's growth, combined with the skincare surge, drove the overall revenue performance.

Looking ahead, management provided guidance that suggests continued top-line momentum heading into the end of the fiscal year. For the fourth quarter of 2025, Yatsen Holding Limited projects total net revenues to fall between RMB 1.32 billion and RMB 1.49 billion. This projection implies a year-over-year increase in the range of 15% to 30%.

The revenue streams are clearly being shaped by a strategic pivot:

• Focus on higher gross margin products, particularly in skincare.
• Successful product launches, such as DR.WU's PDRN Serum and Galénic's No.3 VB Serum.
• Anticipation of strong performance during major sales events like Double 11.

Finance: draft 13-week cash view by Friday.