Li Ning Electric dealer low price promotion line distributor is forced to close the shop

October 9 News, Li Ning recently launched the campus agent recruitment, the goal is to further the consumer population spread to the student group, at the same time to the low price to drive the official website sales data, but caused some two or three line market distributor dissatisfaction.

"Most of the regional distributors are close to 60 percent, and now Li Ning's official website gives students 55 percent or even lower supply prices." "According to a Li Ning distributor from Shandong to billion power network, because the online channel discounts and prices have been lower than the distributor's purchase price, resulting in the pressure of distributors to survive, had to close some of the offline entity shop.

Distributor purchase price is not on line on the promotion price

The merchant said that, with the increasing attention of Li Ning to E-commerce, its line under the balance of the impact of the interests of some entity operators, especially to the three-tier cities or even the third-tier cities under the shock of distributors are most obvious.

In accordance with the sales system of Li Ning, divided into distributors and distributors two levels, of which dealers from the Li-Ning factory directly take the goods, responsible for the first line of second-tier city of the direct business, and then from the Distributor to the third line to the following market supply, development distributors.

"Normally, the ex-factory price of Li-Ning products can be controlled under 40 percent, dealers 45 percent take goods to distributors in the hands of discounts, depending on the size and sales situation." "The above businesses revealed that the 2012 distribution discounts in Shandong region for 52 percent-59 percent range, because they are the province's major customers, the annual average discount can reach about 53 percent," as for most of the other dealers, are all 60 percent supply. ”

In contrast, Li-ning Electric business channel is to sell the way, directly through the top dealers take goods, you can get a lower purchase price and price.

In addition, a series of promotional programs by Li-Ning in the second half of the year have also exacerbated the conflict.

Billion power network found that Li Ning's official website has begun to comb the membership system, unconditional membership in the case, you can enjoy the entire network of concessions, and the original members are directly promoted to a higher level, directly involved in the highest 55 percent discount.

On the other hand, Li Ning official website in the campus agent settings, in addition to 55 percent of the purchase price, but also according to the order collection, give a certain return point, the highest commission can achieve sales of 12%. This also means that if you can agent Li Ning's campus business, can 50 percent or even lower discount from the official website to pick up the goods.

The closing tide is coming

E-commerce robbed the job, distributors began to choose the appropriate scale to shrink to protect themselves.

For example, the merchant said, in the closure of the 2 Li-Ning stores, the original million profit, now can only guarantee break-even, at the same time with the dealer to take goods, bargaining power is not as good as before. "Forced, 2011 Hand of 7 stores total profit has slipped to about 200,000, next year, the expected order is not optimistic, not close the words may lose more." ”

and the third line of the city under the decline of the store is a direct threat to the one or two-line dealer's earnings. "The rents of the first-tier provinces and cities, the high cost of human resources, almost all the shops are operating at a loss, so most of the dealers through the three-line and third-tier city distributor profit to make up the loss of direct shop." ”

After a series of evaluations, the first half of this year, Li Ning has closed 1200 inefficient stores, the ratio of up to 15%, dealers also cut 5 to 52.

The other part of the physical store distributor in the interests of the driving unscrupulous. They have learned to take the goods at lower discounts from Taobao and other online channels to ensure that profits are not eaten by other sources.

Serial goods is a traditional brand has always tried to evade the behavior, a series of goods disrupted distribution system in all aspects of the distribution of benefits, and the confusion of the price system will also cause damage to the brand image.

"There is no way, forced out, the line under the various costs of stores are rising, only the same profit, orders even appear to decline, with the region's total generation and not get the right discount, or close the shop, or find other lower price channels for purchase." "For distributors, facing the line of the step-by-step press and open shop under the double pressure, have to take risks."

Li Ning Clearance Sale

Line of the next right and left is the traditional brand involved in e-commerce and inherent in the bottleneck, Li Ning is not unaware of the online channel of the chaos of the dealer management and even the negative energy of the brand.

In fact, Li Ning has done something about the restrictions on online channels. According to billion power network to understand that its official Taobao authorized shop number is decreasing by two or three a year, currently only 5 stores. And for unlicensed shops, Li-ning electric dealers also began to communicate with Taobao, the implementation of processing.

But now that the Li Ning crisis has not been lifted, high-profile change of Shuai can not in the short term to digest the internal management of runaway and mismanagement accumulated "debt." Data show that Li Ning 2012 in the first half of the average inventory turnaround period has risen from 72 days to 95 days, footwear clothing orders amount to show double-digit decline.

A survey from the annual China Online retail conference shows that the inventory problem is not unique to Li Ning, the traditional sports apparel brand in 2012 collective encounter Waterloo. Although these brands have been through the initial stage of the net, but in the line of coordination lines under the relationship, the focus on performance pressure, the clearance as the primary task.

To this end, in the second half of 2012, Li Ning still need to increase the clearance strength. For example, moving old stocks to discount stores, selling them at very low discounts, and increasing internet sales, such a strategy has been included in its planned agenda.

But in the release of inventory pressure, Li Ning in the balance between the line and offline interests is clearly not sufficient.

"Li Ning official website channel inventory accounted for the big head, the new few, to the current strength promotion, not enough to ease the total inventory pressure." "Insiders believe that in the electricity business channels accounted for its overall sales of about 1% of the situation, to improve the situation, still need to increase the offline entity shop Auxiliary."

From the answer given by Li Ning, the future focus is still on survival and accounting issues, such as the clearing channel will provide 49 percent discount. In addition, Li Ning also agreed to give the Distributor guidelines in 2013 to reduce the wholesale discount rate, the expected comprehensive discount rate of less than 1%.

This shows that Li Ning is going to give up more margin space, but it may be a boon to distributors.