ZhiKao DaaS Files IPO Prospectus: Revolutionizing Beauty Industry Operations with IoT + AI + Store + Training Model

A research report by Huatai Securities points out that China's beauty industry market is expected to exceed RMB 1 trillion in 2019, making it the second-largest global consumer of beauty products after the United States. There are nearly 2 million beauty institutions and more than 20 million employees in the industry.

Meanwhile, the beauty industry is characterized by low market concentration and a high turnover rate. Incomplete statistics indicate that 80% of entities are small and medium-sized institutions, and practitioners generally have lower educational attainment. Consequently, beauty industry institutions have reached a stage where refined management and operations are essential. As artificial intelligence, the Internet of Things, and big data technologies gradually mature, data-driven operational models are increasingly becoming the mainstream.

In July 2017, Zhikao Technology announced its establishment, dedicating itself to providing enterprises with DaaS-related products and business solutions by leveraging cutting-edge artificial intelligence technologies. By empowering sales through AI, the company aims to help its corporate clients and partners enhance commercial efficiency and value. What kind of enterprise is this? VCBeat interviewed Xu Zhao, founder of Zhikao Technology.

Xu Zhao, Founder of Zhikao Technology

In addressing the challenges faced by aesthetic medicine institutions, Xu Zhao believes that three aspects are crucial: sustainable customer acquisition with low cost and high quality, improvement of operational data, and integration of online and offline consumption scenarios. Therefore, digital transformation is an inevitable trend for aesthetic medicine institutions.

What Is Zhikao’s DaaS (Data-as-a-Service) System? DaaS essentially provides decision intelligence services to beauty industry enterprises. Zhikao DaaS integrates personnel, facilities, data, and systems, fundamentally transforming how enterprises analyze, understand, and process information. Domain knowledge in the beauty industry, application expertise, personnel and skills, processes, and technology platforms constitute the key requirements for Zhikao DaaS strategy.

“The essence of Zhikao DaaS lies in centralizing data management, freeing users from concerns about underlying data infrastructure so they can focus entirely on how to leverage these data,” Xu Zhao added.

Some of the beauty industry SaaS (Software as a Service) solutions currently available on the market “are essentially just cloud-based migrations of traditional enterprise OA systems, still relying on human judgment and interpretation of data for analysis and decision-making. They fail to account for the unique organizational structures and industry-specific characteristics of the beauty sector. In most beauty establishments, staff members often wear multiple hats, while management is primarily performance-driven; consequently, there is limited enthusiasm for improvements in office efficiency. As a result, SaaS systems have not been widely adopted within China’s beauty industry.”

In terms of marketing and customer acquisition, “the so-called ‘deep cultivation of customer value’ by most SaaS platforms refers to providing merchants with online micro-mall operations and managed services for customer communities. These platforms rely on crude marketing tactics such as flash sales, one-yuan purchases, group buying, and red packet distributions, which result in a subpar customer experience and, paradoxically, lead to the churn of high-value customers.”

How to Enhance Beauticians’ Insight into Customer Needs: “Zhikao’s advocated lean management primarily aims to drive the intelligent transformation of beauty institutions. By implementing data-driven, quantifiable tracking solutions, it systematically helps institutions analyze and identify problems and corresponding solutions, including strategies to increase customer stickiness and improve staff training. Furthermore, regarding data collection, Zhikao does not collect any telephone numbers of enterprise clients; all data undergoes desensitization processing, ensuring that cooperation between both parties is built on trust.”

Reporters have learned that Zhikao boasts a top-tier technical and industry team of over 100 professionals. Leveraging the expertise of its U.S. Silicon Valley team and extensive artificial intelligence resources, and backed by a group of AI technology experts from the Chinese Academy of Sciences, its founding team brings backgrounds from leading organizations such as Google, Microsoft, IBM, Oracle, JPMorgan Chase, Baidu, and Huawei. This endows the company with a profound understanding of the enterprise services market, along with rich industry experience and practical operational expertise.

Leveraging leading AI technology, R&D, and commercialization capabilities, Zhikao focuses on providing DaaS (Data-as-a-Service) enterprise solutions. Its professional team concentrates on the consumer services sector, creating a dual-engine drive model of “technology products” + “industry scenarios.” Currently, Zhikao Technology has secured nearly RMB 10 million in angel-round investment from institutions including Danshi Capital.

So, how does Zhikao DaaS drive marketing and refined operations in the beauty industry? It primarily follows a multi-step approach to propel beauty institutions toward an intelligent and efficient transformation:

First, business aspects. The core of Zhikao DaaS business analysis lies in business logic: analyzing issues based on the operational logic of aesthetic clinics to identify root causes; designing targeted solutions based on data analysis; and digitally tracking and quantifying the implementation outcomes of these solutions, while leveraging DaaS to monitor employee behavior in real time.

Second, customer lifecycle. Zhikao DaaS will help institutions collect user physical data through intelligent hardware, analyze customer data profiles, and build a customer segmentation system that fully aligns with business characteristics.

The benefits of this approach include first identifying potential upselling and upgrade opportunities to unlock customer lifetime value. For instance, by targeting “key development customers” and “high-value customers,” businesses can identify potentially high-value customer segments, engage them through multi-strategy precision outreach, deeply explore customer value, and ultimately maximize value across the entire customer lifecycle.

Secondly, this enables automatic early warning of customer churn risk and proactive retention actions. For instance, by analyzing the characteristics of customers at high risk of churning and defining scientifically grounded early-warning indicators, the system can automatically alert on potential churn segments, trigger retention tasks autonomously, and facilitate immediate proactive intervention.

Currently, Zhikao DaaS has partnered with over 100 beauty institutions in the Shanghai area, among which small and medium-sized stores account for nearly 80%. Through its data services provided over the past year, it has continuously identified the real needs of the beauty industry by analyzing store operations, thereby optimizing its data computation models and iterating its products nearly 1,000 times.

Notably, the company has established partnerships with institutions and stores such as Chlitina, Dr. Fit Anti-Aging Skin Management Center, Beauty Farm, and MODERN BEAUTY SALON. In terms of business scope, Zhikao covers all sub-sectors of the beauty industry, including anti-aging treatments, plastic surgery and cosmetic procedures, skin management, and lifestyle beauty services. “After adopting Zhikao’s DaaS solution, key partner stores saw an approximately 30% increase in revenue compared to the previous quarter, while customer visit frequency rose by around 20%.”

Applications of Artificial Intelligence in the Beauty Industry: "Zhikao is the first in China to adopt an 'IoT + AI + Store + Training' model, empowering medical aesthetics clinics with artificial intelligence. It leverages smart hardware to sense consumer demand and utilizes AI technology to unlock consumption potential, reduce customer churn, and extend customer lifecycle. Clinics strengthen sales process management, gain insights into consumption trends, and formulate refined marketing strategies and plans, thereby enhancing user activity and retention. Furthermore, through big data applications, it identifies skill gaps among beauty industry professionals and provides precise training to facilitate their professional growth."

In the future, Zhikao plans to expand beyond Shanghai, leveraging its accumulated achievements and experience to rapidly replicate its model across China. Chain institutions and beauty industry training organizations will be key partners for Zhikao DaaS as it enters the national market.