Traditional Brands Plus Online Sales: The Quiet Formation of a Direct Online Sales Model
Everyday Low Price Online Wholesale Mall / November 29, 2009
What kind of sparks will traditional brands and online sales create? This question made Wang Peide, the founder and managing partner of Bestseller Fashion (China), think for a long time. As a wholly-owned subsidiary of the Danish fashion company Bestseller in China, Lingzhi entered the Chinese market in 1996 and subsequently launched many popular young brands such as Jack & Jones, ONLY, VEROMODA, SELECTED, etc., from Shanghai to Yangcheng Lake Lianhua Island. However, in recent years, this traditional enterprise that has rapidly expanded on the ground has deeply felt the impact brought by e-commerce.
Taobao data shows that the series of Jack & Jones products reached a transaction volume of 3.7 billion yuan in just half a year on Taobao this year, an increase of 330% compared to last year, ranking first among all clothing brands. However, these sales were completed in a "non-official" way through the C2C model. In other words, under the condition that Lingzhi Company did not carry out e-commerce at all, numerous distributors had spontaneously formed an Internet e-commerce channel.
Such figures both delighted and worried Wang Peide. "Will this damage our brand image? We are concerned that consumers cannot buy genuine JACK&JONES products online." At the same time, one of Jack & Jones' competitors in China, Japan's famous clothing brand Uniqlo, also provided a "model". In April this year, Uniqlo opened a store in Taobao Mall, and in the first 11 days, its transaction volume and foot traffic equaled the sum of all offline physical stores in China, which was the result accumulated over nine years since Uniqlo entered China. Among them, two-thirds of the sales came from areas where Uniqlo did not have stores.
The huge transaction volume of e-commerce and the shift in young users' shopping methods attracted Lingzhi Fashion, known for its aggressive offline store openings, to accelerate its online plan. On October 15th this year, Jack & Jones opened its first official flagship store in Taobao Mall. Very soon, on the third day of opening, its daily transaction volume rose to 4.7 million yuan, selling more than 2,000 items, becoming the top clothing store on Taobao.
Jack & Jones' "online journey" is just a microcosm of many brand enterprises currently independently entering B2C. Not only in the clothing industry, affected by the financial crisis and the development of e-commerce, more and more traditional enterprises that have long focused on offline markets are starting to delve into the virtual platform of online shopping.
For these companies, before going online, they had already formed their own competitive strength in the market. Therefore, they tend to integrate the Internet as much as possible into their existing systems—either by building their own online retail stores or cooperating with third-party platforms, using the "mouse + cement" method to build a new business model.
Collective Jubilation
"Try it out, without too high task requirements." Most traditional enterprises venturing into e-commerce for the first time have this mindset. But what happens next is often "unexpected."
On April 10, 2008, Li Ning received over 200 orders on the first day of launching its official website on Taobao, far exceeding the expectations of the operations team. Although they had prepared, they were still caught off guard by the sudden high traffic. To quickly respond to buyers' inquiries, almost all the staff in the office, including the receptionists, joined in. According to Li Ning's 2008 performance report, the official store on Taobao became the sales champion among all Li Ning stores nationwide.
It can be said that traditional brands are winning the favor of more and more online shoppers thanks to the sale of 100% genuine products, direct services provided by manufacturers, preferential prices and promotional policies, and diverse payment options. Previously, Zhou Shaoxiong, chairman of Seven Wolves Clothing Brand, stated that Seven Wolves regards 2009 as a crucial year for developing e-commerce. "Seven Wolves will use 3-5 years to transform from a traditional enterprise into a new type of economic entity that coexists and integrates traditional marketing with e-commerce."
The online shopping market is facing rapid growth, and home appliance manufacturers are about to welcome a new era of sales. For a long time, the sales channels of home appliance manufacturers have been controlled by powerful home appliance chain stores, always lacking terminal discourse power. Now, how to build a complete channel distribution system, quickly respond to market demands, and improve channel utilization has become the key consideration for home appliance manufacturers.
The direct online sales model is quietly taking shape. In fact, apart from Dell, which takes direct online sales as its feature, Sony, Philips, Skyworth, Haier, Changhong, Lenovo, and other manufacturers have all connected to Alipay, vigorously developing their official online retail malls, and even forming new sales teams specifically for direct sales. Yang Dongwen, vice president of Skyworth Group, expressed his views on direct sales in eight words—"quietly coming, suddenly happening." "In 2008, the sales revenue from direct sales reached over 5 billion yuan, while in 2005, this figure was only 20 million yuan," Yang Dongwen said.
In the future, the trend of channel flattening and penetrating from traditional channels to new channels will inevitably lead to enormous development space and potential for online shopping. A typical example is that in August this year, Lenovo announced that its Taobao flagship store ranked first among all over 5,000 B2C stores on Taobao in terms of sales in July; if all the sales from Taobao, Dangdang, and the official mall are combined, Lenovo sells over 11,000 computers online every month. These figures undoubtedly indicate that the online mall built by Lenovo and other online sales methods have become an effective move in Lenovo's recovery.
In fact, besides proven e-commerce models such as clothing and 3C products, many old brands, specialties, agricultural products, and others are also seeking breakthroughs in e-commerce. For example, Yunnan Baiyao, a traditional Chinese medicine brand, is actively exploring an e-commerce operation model suitable for the pharmaceutical industry, Hangzhou China Silk City has launched an "Online Silk City," and COFCO Group has created a B2C food website called "I Buy Net," among others.
Meanwhile, data released by market research firm iResearch shows that China's B2C online shopping doubled in 2008 compared to 2007, reaching 8.71 billion yuan, and it is expected to double again this year. One noteworthy point is that the internet user coverage rate of B2C sites increased from nearly 30% at the beginning of the year to over 50% by the end of the year. This means that out of every two internet users, one has visited a B2C site, and more importantly, they are adapting and quickly accepting this online shopping format.
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