Li Ning, a domestic sportswear brand, is caught in a dilemma of right-handedness. Since the online store was launched to promote the online store, it was not expected that the online low-cost promotion would cause offline distributors to agonize and be forced to close stores.
The contradiction between offline stores and e-commerce has become a major trap for traditional brand transformation in recent years, especially for Li Ning, which is seeking to save itself. I don't know how Li Ning will deal with this tangle of problems after he has returned to the mountains.

Online prices are lower than specialty stores Distributors are "very injured and chilling"

Starting from September 19 of this year, the shopping ticket issued by EPOS machines of all store sales systems under Li Ning began with the words “Welcome to Guanlin Lining Official Mall” and its website address. This seemingly simple move has caused Li Ning distributors distributed throughout the country to be filled with "depression" and "disappointment."

A distributor in Haidian District of Beijing stated that at first, it was just a small promotional tool for Li Ning's many changes in recent years. It can be found on Li Ning's official website after discovering that Li Ning’s 2012Q3 best sellers are in the current quarter. Many of the products in the list are priced at a discount of 5.5 percent. "The price is much lower than the current sales and discount prices of our stores. What makes our distributors better?"

A Li-Ning distributor from Hubei introduced to NetEase.com, because the discounts and selling prices of Li Ning's e-commerce channels have been significantly lower than the distributors' purchase prices, the pressure on distributors has increased dramatically, and many sub-sales have to close some offline lines. Physical store. "Most regional distributors are getting 20% ​​off the price tag. Now Li Ning's official website gives a sales price of 5.5 percent or lower. We cannot survive."

A distributor of the Li Ning brand in Shandong pointed out that under normal circumstances, the ex-factory price of Li Ning products can be controlled below 4 percent, dealers get 4.5 percent, and discounts to distributors, depending on the scale and sales situation. “Distribution discounts for distribution in 2012 range from 5.2 to 5.9 fold in Shandong, and some major customers can receive an average discount of 5.3% for the whole year. Most other dealers are all offered at a discount of 60%.”

For the huge price difference between the two sides, NetEase has called Li Ning official store customer service representative, the other said that because the official mall is factory direct supply, and the physical store is through the channel to buy, and there is store rental and sales staff costs, so the official The mall price is lower than the store promotion price.

The Li Ning brand's involvement in online marketing began on April 10, 2008. At that time, Li Ning opened the first direct online shop at Taobao Mall, and opened a network through shopping malls, pats, and eBay. shop. Subsequently, Li Ning Company began to build its own official mall, and in June 2008 launched - Li Ning official mall.

For Li Ning's online store, distributors believe that Li Ning Group's investment in increasing its network pipelines can be understood, but the network pipeline should be used as a tool for Li Ning's “clearing of inventory”, instead of hurting the “wulong ball” of the distributor group. .

Some distributors expressed to Netease that they were "very injured and very chilled." They also said that because they do not know how to develop in the future, they do not have any confidence in the sales of Li Ning brand products. "In the future, we will reduce orders to extremely conservative quantities. It does not rule out that the corresponding part of the store will be closed."

Before the press release, Li Ning had not made a public response to NetEase's inquiries.

Li Ning is in trouble and seeks transformation. The pressure of clearing the inventory is passed on to distributors.

For the huge contradiction that Li Ning is currently breaking out of the line, the famous shoe industry observer Ma Gang pointed out to NetEase.com that the use of online channels for sales is an inevitable choice for the future development of garment enterprises. “The future retail market will be dominated by Internet sales, traditional The sales approach is not entirely effective, and e-commerce is the most promising marketing method in the future."

Ma Gang also said that "the current Li Ning approach is nothing more than to the outside world that e-commerce will become one of the important sections of its future development." He also pointed out that the main purpose of Li Ning's transformation is to lock down consumer groups after 90, and online shopping is one of the most popular forms of consumption after 90s. "Li Ning's increase in network construction is undoubtedly in line with its brand transformation and clearing strategy."

When it comes to the transition of Li Ning, it should be traced back to June 2010. Affected by the decline in performance and the “ceiling” of brand development, Li Ning proposed a brand remodeling plan at the time and called for a new slogan for Make the Change. However, the changes that followed were the decline in orders due to overstocking of products and poor pipelines. At the same time, the new brand appeal of “Post-90s Li Ning” has also been criticized by industry insiders.

Due to factors such as transformational pain and increased inventory, Li Ning’s 2011 sales decreased by 5.8% to 8.929 billion yuan, while net profit dropped sharply by 65.16% to 386 million yuan.

What followed was a sustained "shock" at the top. In May 2011, Li Ning’s chief brand official Shi Wei and chief operating officer Guo Jianxin and other five company’s core executives left the company one after another. Li Ning CEO Zhang Zhiyong, who has been entrusted with Li Ning himself, has also left this position in July this year. As the founder of the company, Li Ning himself had to re-embark from behind the scenes many years later and lead the company out of its predicament.

In addition, in February this year, Li Ning announced that it will start layoffs. Li Ning Company stated in a written statement to Netease Finance that this time Li Ning’s “active” organization structure optimization and personnel adjustment.

In terms of inventory, data from Li Ning's 2011 financial report showed that inventory in 2011 was 1.133 billion yuan, up 40.57% from the same period last year of 806 million yuan. Therefore, Li Ning Company also hoped that “increased the wholesale discounts to dealers, adopted the measures of inventory repurchases, and actively expanded the construction of factory stores and discount stores,” but the data showed that as of April this year, the company’s inventory It still exceeds one billion yuan.

Analysts in the industry pointed out that online sales is one of the important means for apparel brands to eliminate inventory, and strengthening the sales of online platforms can be an important measure for Li Ning Qing Cun to boost performance, but on the other hand, the low discount tactics that are cleared will inevitably affect part of the distribution. Business interests.

Closed 1200 stores in the first half of the year

According to statistics, as of December 31, 2011, the number of Li Ning brand stores was 8,255, an increase of 340 from 7915 of the previous year, an increase of 4.3%, including 7,495 franchised dealers, an increase of 162, an increase of 2.2%; 760 directly operated stores, an increase of 178, an increase of 30.6%.

In the first half of this year, the number of Li Ning stores decreased by more than 900. In addition to the more than 300 new stores added in the first half of the year, Li Ning closed more than 1,200 stores in the first half of the year, and most of them were franchisees of distributors. shop.

Then there is a voice in the industry that Li Ning does not care about the "life and death" of distributors. "From a certain point of view, Li Ning may prefer distributors to close their stores." Direct stores are the future direction of offline stores.

For this statement, many clothing industry watchers, including Magang, have different attitudes. Ma Gang pointed out that at present, the sales of Li Ning's network channels are around 200 million yuan, accounting for only about 2% of Li Ning's annual sales. In the future, online online channels cannot replace offline store models.

Ma Gang also said that Li Ning Stores will not replace distributors in the future. “The focus of Li Ning will not be on the construction of directly-operated stores. The cost of opening a direct-operated store is more than one million. Li Ning will not be stupid. To get the money into it."

Regarding the future development of Li Ning's online and offline "mutual combat" modes, Ma Gang believes that the current phenomenon of "mutual combat" should be temporary. Li Ning's current e-commerce model is still being explored, and Li Ning will surely face it in the future. A detailed separation of online and offline will be carried out. "Products, marketing methods, and selling prices will be separated in a detailed manner. The current predicament of distributors should also be temporary."

In addition, Li Ning is currently undergoing planned reforms of its e-commerce channels, and its network of authorized stores is substantially reduced. Li Ning Group’s e-commerce channel director Weng Jinyi stated that the number of Li Ning’s authorized stores at Taobao is decreasing at a rate of two or three per year. “There are more than a dozen two years ago and now there are only five.”

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