Is It True That The Development Of Self Owned Brands Is A Flash In The Pan Or A Real Spring?

" Online retailers "Has always been a hot topic. Especially in recent years, a number of big brothers have been trapped in the embarrassing situation of "losing money and making money", which makes people feel very worried about their prospects. Not long ago, the well-known website launched its own home brand "Dangdang top quality" and its own on its front page. Brand of children's wear "DangDang Baby", a number of other mainstream electricity providers have also invested in it or ready to go, which made some depressed business circle seem to have seen the dawn. Is "private brand" just a flash in the pan or a real spring?

　　 Clothing is popular under the tide.

In fact, regardless of the website, or China's earlier B2C, are actively exploring new mode of e-commerce development. In recent years, most of their operational trajectories are from simple network channels to open platforms to self built platforms. But so far, the major electricity suppliers are still facing a loss situation. This makes profit a common problem before them.

From the perspective of profit space, the private brand has higher gross profit margin than the agent brand. The electricity providers seem to see the dawn of getting out of the dilemma, so that they can develop their own brands and seize the market quickly.

In the early April, the well-known website had its own home brand Dangdang superior products on the home page. The page shows that Dangdang products have launched many products such as sheets, quilts, pillows and so on. The famous website says that because "enter the Dangdang warehouse from the factory, save many intermediate links, reduce the cost", the price is cheaper than the market similar brand 30% or even more than 50%. This is a well-known website in the establishment of the first book B2C, offensive department store sales, joined the Gome joined the 3C area, and then the next city, accelerate the layout of its own brand plan.

In fact, it is not new for B2C to create its own brand. Before that, many electric providers have this intention, and in the near future, there are more frequent electronic business moves. Some media reported that Liu Qiangdong, a well-known CEO, had the idea of distributing his own brand as early as a few years ago. A few days ago, it was also revealed that well-known electric providers will soon join in the scramble for their own brand clothing. Rosewill, a private brand owned by foreign electric providers, was launched in China in January of this year. Suning.com, a traditional home appliance chain giant Suning Appliance's electricity supplier platform, is still planning to launch its own brand clothing business in the second half of this year, while it challenges the existing pattern of the domestic electricity supplier industry with more vigorous promotions. Li Shubin has also changed his mind when he publicly stated that he would not develop his own brand, so he bought CEO. In recent days, he revealed the good news that it is necessary to buy its own brand.

The electricity supplier has grabbed the "private brand" site, and has become an indisputable fact. In the process of choosing the type of independent brand, people are particularly fond of clothes. A year ago, Dangdang CEO Li Guoqing told reporters that Dangdang had to make its own brand of basic funds, and had hired the managers who were originally engaged in WAL-MART's own brand to build.

"The gross profit margin of clothing is 60%, much higher than that of books." Li Guoqing said. It is understood that Dangdang has entered the design and production of clothing, Home textiles And home 3 categories. The first batch of private brand clothing will reach 70~80 style. Home textiles are mainly bedding, and furniture supplies will include daily life, kitchen supplies and so on. According to Li Guoqing's statement, Dangdang's own clothing is to take the route of UNIQLO, which belongs to the basic market, but its positioning will be higher than that of all customers, and at the same time, it will build a fashion department store mode. "Dangdang sells its own brand clothing, shoes, schoolbags and so on in three different fields. The first is basic funds, the lowest price, the lowest cost, and the gross profit margin is very good. The second is classic, and the style remains unchanged for many years, so we are not afraid of backlog. The third is fashion money. It needs a very fast response. It will soon be over and easy to cause backlog. Dangdang CEO Li Guoqing has made a list of well-known websites to launch its own brand clothing program. "Definitely no fashion style will be chosen, it will be more conducive to controlling costs. We will win on the scale."

　　 The greatest temptation - profit

We should be familiar with "private brand", especially in the traditional offline retail platform. Watsons, WAL-MART, Carrefour... They all do well in the private brand market.

In March 2007, Watsons announced that it would focus on its own brand management, including Watsons's own brand and Watsons's naming products, as well as its exclusive agency brand. According to media reports, at present, Watsons's own products include skin care, bathing, hair care, styling, men's care products, health care and so on, a total of more than 2000. WAL-MART has 13 series of more than 2400 kinds of single products in its own brand, but it has not been named WAL-MART brand. It only focuses on cultivating three brands, "Hui Yi", "Mainstains" and "Simply Basic". Similarly, Carrefour also takes the form of "customized products" to "buyout" a certain source of goods, so as to achieve "exclusive" effect. Although it belongs to its own brand, it does not have to bear the quality risk of the brand. There is a view that as an online retail platform, the reason why electric providers favor the private brand market is inspired by the excellent example set up by the offline retail platform. Referring to the electricity supplier's own brand, it is impossible for anyone to go beyond it. According to data released by customers, the company has sold more than 100 million clothing products in 4 years since its establishment. Its CEO has publicly stated that selling clothes is much more expensive than selling books. This view coincides with Li Guoqing's understanding. Correspondingly, at present, the electricity providers are generally in an embarrassing situation of losing money and making money, and lack of hematopoietic capacity. Public information shows that in 2011 Dangdang net gross profit margin was 13.8%, Jingdong gross margin was 5%, plus product costs rising, low price competition and other factors, the electricity supplier's profit space has been compressed. Data from the world's network operators show that the gross profit margin of other brands of Internet dealers is less than 3%, while Dangdang CEO Li Guoqing said that the gross profit margin of its own brand clothing can reach 30%~60%. With independent pricing power and more than 10 times the profit of the agent brand, the layout of the electricity supplier's own brand has become logical.

At the same time, the development of its own brand will help to enhance the core competitiveness of the e-commerce platform, differentiate it from other similar businesses, and use its own brand to reflect the platform value and enhance customer loyalty. From the price war to the burning money war, the electricity supplier market has been through the blind expansion period after many twists and turns, looking for more mature and stable development. In the electricity supplier market, we can see that the loyalty of consumers to a specific electricity supplier is very low, because there is not enough difference between the comprehensive e-commerce platform types, consumers usually choose the more affordable ones. But even through the increasingly fierce price war for consumers, these business tycoons are also hard pressed to create brand loyalty for consumers. If we develop our own brand, we can form a differentiation advantage in the electricity supplier market.

Whether it is a well-known electricity supplier or other electricity providers, these comprehensive B2C websites are essentially an online shopping mall. The essence of this mode is to sell other brand products, but for such comprehensive electricity providers, because they sell other brand products, they can not build customer preferences through product cards, only by creating enough sales and market share to lead the market. And the launch of its own brand is conducive to the formation of a stable user group, reflecting the unique value of the brand. The development of private brand is actually an innovation of business mode for these providers. For the ubiquitous homogenization competition of the electricity supplier industry, its own brand is also one of the ways for enterprises to take differentiated routes and brand.

ASOS.com is currently the largest online fashion retailer in the UK, providing customers with its own brand (ASOS products) and other well-known brands of fashion products (through its Designer store). The 2000 officially launched company in 2008 has become the second largest fashion retailer in the UK (including traditional fashion shop), ranking only after the Next of the old fashion shop. So far, ASOS has become the leader of online fashion products sales in just a few years. It is such a seemingly immature brand, which has created miracles in the clothing industry, which has many brands, but the brand effect is obvious. This attracted the traditional retail platform of Watsons, which is a good seller of researchers. It has also done a good job on the "private brand". It has also brought inspiration to the online business, and summed up several key innovations. One of the important points is the launch of its own brand.

In 2004, four years after its launch, ASOS launched its own women's clothing brand. In 2007 and 2009, the men's wear brand and children's wear brand were launched respectively, making the brand develop rapidly to the whole series. A simple understanding, the introduction of private brand, first of all, can greatly increase its sales profits; secondly, as a retail platform, the sale of its own brand can reduce the risk of excessive reliance on other brands to a certain extent, and improve its own ability to ask other suppliers. Third, private brand helps to enhance and strengthen the overall image of ASOS in the minds of consumers, and is conducive to displaying its comprehensive strength and long-term development ability to consumers, and establishing the long-term confidence of consumers in ASOS.

　 The road is always hindered.

Dangdang, from the book heavy B2C mall, expanded to the integrated B2C mall and open platform, total revenue in 2011 reached 575 million US dollars, an increase of 59% over the same period, but a net loss of about $36 million 300 thousand over the same period, compared with a net profit of 30 million 800 thousand US dollars in the same period last year. "Compared with books, department stores and 3C, the gross profit margin of private brand can reach more than 30%." Some analysts believe that for Dangdang, such a comprehensive B2C to enter its own brand, more consideration is still "to expand trading volume and raise gross margin" purposes, especially for Dangdang listed companies.

"From the current situation, private brand is mainly used as a supplementary business to reallocate existing resources." Some analysts pointed out that the use of existing channels to sell their own brands, effectively saving logistics costs and market costs, commodities synergy, is conducive to improving profit margins. "However, this kind of electricity supplier will not easily mention its own brand and the strategic level of B2C, which is also as high as the comprehensive category, because this means that the reconstruction of a" Van guest "will involve" strategic transformation ".

Now, the clothing industry is now facing the problems of rising raw material costs and rising labor costs. How to choose a guaranteed foundries and guarantee low prices? Moreover, large scale foundries usually use cash settlement mode, coupled with large scale R & D costs and difficult to control inventory risks, which will require high cash flow for enterprises. Even those who already own hundreds of suppliers have successfully restructured the production line of clothing standardization, and have not made profits. It is hard to see the profit margin of the Internet's own brand in the short term.

Unlike the comprehensive B2C, which focuses on "selling", private brand is more emphasis on the "product end" operational capability. This is not what comprehensive B2C is good at grasping users' fashion needs, controlling product quality from production, transportation to sales, and brand shaping of products. The advantage of Dangdang and Jingdong lies in the overall operation advantages of flow, logistics warehousing, distributors and suppliers. In fact, although the gross profit margin of private brand is high, its market investment in brand building is very large. In the short term, platform earn more than private brand. The development of private brand goods requires a lot of capital investment. Product design, R & D, processing and packaging, product operation and other links require a lot of capital. For most of the business enterprises that are already short of funds, the risk of operation will undoubtedly increase greatly. Once the brand has not started, it will bury the "bomb" which is overstock and cash flow difficulties. Dangdang leader also said that the difficulty of developing its own brand is not in the procurement, the foundry manufacturers and other production links, but in planning, marketing, product planning, product design, which requires a professional team to operate. Although Dangdang has established its own brand operation team and has full confidence in product end operation capability, the development of its own brand involves a few details such as the design, processing, packaging cost, brand marketing planning and so on, and the establishment of its own brand operation team is not so easy.

In addition, the birth of private brand means the extension of product line. Enterprises need to face a series of problems, including selecting OEM enterprises, controlling product quality and product design. "Private brands are mostly direct cooperation between network operators and production enterprises. How to control the quality of the products of OEM enterprises has increased uncertainty for the development of their own brands. In the developed European countries with their own brands, the operation rules of their small and medium-sized enterprises are that the retail enterprises control the whole process from the design, production to distribution, to the private brand enterprises of the foundry, which is difficult to achieve in China. Therefore, it is a long road for domestic electricity suppliers to develop their own brands, quality, platform and positioning are equally important.

Some people say that the private brand is the manifestation of the collective rationality of the electricity suppliers, and it may become an export for the profit of the electricity supplier. Some people also say that the private brand goods may be only the supporting role on the platform of the electricity supplier, so they can be used to "patch holes". But in the final analysis, no one dares to say too much.