Li Ning transformation encounters brand civil strife low prices force distributors to close shop

The leader of the domestic sportswear brand, Li Ning, is caught in a dilemma of hand-and-hand interaction. Since the beginning of this year in September online shopping mall to promote online stores, did not expect the online low-cost promotion but led to the offline distribution complain, forced to close the shop.

The contradiction between offline entity store and electronic commerce has become a big trap of traditional brand transformation in recent years, especially for Li-Ning company which is seeking to save oneself. I don't know how to deal with this tangled problem after Li Ning is back in the mountains.

Online price lower than store distributor "very hurt and chilling"

Starting from September 19 this year, Li Ning's All store sales system Epos machine out of the shopping ticket on the start with the "Welcome to Li Ning Official mall" and the words and its web site. This seemingly simple move but let Li Ning distribution throughout the country's distributors are filled with "depressed" and "disappointment."

A distributor in Haidian district, Beijing, said that at first it seemed to them that it was only a small propaganda tool in many of the changes in recent years, and could be logged on to the website of Li Ning's official mall and found that many commodities, including Li Ning's current 2012q3, were selling at 55 percent of the premium. This price is significantly lower than the current sales price and discount price of our stores, which let us distributors how good? ”

From Hubei, a Li Ning Distributor to NetEase financial introduction, because Li Ning Electric channel discount and price has been significantly lower than the distributor's purchase price, resulting in the pressure of distributors to survive, a lot of sales have to close some offline entity shop. "Most of the regional distributors are close to 60 percent of the price, and now Li Ning's official website has given 55 percent or even lower sales prices, we can not survive."

Shandong province, a Li Ning brand dealers pointed out that, under normal circumstances, Li-Ning products can control the ex-factory price under 40 percent, dealers 45 percent to take goods to distributors in the hands of discounts, depending on the size and sales situation. "2012 Distribution of supply discounts in Shandong region for 52 percent-59 percent, some major customers annual average discount can reach about 53 percent, most other distributors, all are 60 percent supply."

For the huge difference between the price of the two sides, NetEase finance has called Li Ning Official Mall's customer service representative, said the other side, because the official mall is the factory direct supply, and the entity shop is through the channel procurement, and the existence of store rents and sales staff costs, so the official mall price is lower than the

Li Ning brand involved in Network marketing began on April 10, 2008, when Li Ning in Taobao Mall opened the first Direct shop, and one after another in the shopping network, Pat, ebay through direct Battalion and the form of authorization to open an online store. Then Li Ning Company began to build the official mall, and in June 2008 launched the-Li Ning official mall.

For Li Ning's online mall, distributors believe that Li Ning group to increase the input of network pipelines they can understand, but the network pipeline should be as Li Ning "clear inventory" of a sharp weapon, rather than hit the distributor group "Oolong ball."

Some distributors to NetEase finance said "very hurt also very chilling", and said that because do not know how the future will develop, the current sales of Li-Ning brand products do not have any confidence, "in the future, we will reduce to a very conservative number, and do not exclude the corresponding part of the store will be closed."

By the end of the press, Li Ning has not made a public response to NetEase's financial inquiries.

Li Ning is in trouble to seek transformation of the storage pressure passed on to distributors

For Li Ning Online under the current outbreak of the great contradictions, well-known footwear industry observer Magang to NetEase Finance pointed out that the use of network pipeline sales is the future of apparel enterprises inevitable choice, "the future of the retail market will be based on internet sales, traditional sales methods are not completely effective, E-commerce is the most potential marketing way in the future.

Magang also said, "Li Ning's current practice is nothing more than to the outside world, the electricity business will become its future development of one of the important sections." He also pointed out that the main goal of the transformation of Li Ning is to lock the consumer group in 90, while the net shopping is one of the most enthusiastic consumption forms. "Li Ning's construction of the network side is no doubt in line with its brand transformation and customs strategy."

When it comes to the transformation of Li Ning, which goes back to June 2010, was affected by the decline in performance and the "ceiling" of brand development, Li Ning then proposed a rebranding plan and shouted a new slogan for making the change. But the incoming change is the product inventory backlog, pipeline is not smooth and other reasons caused by the decline in orders. At the same time, "the new" and "the brand of Li Ning" has been criticized by the industry marketing people.

As a result of the transition pains, inventory growth and other factors, Li Ning 2011 's sales fell 5.8% to 8.929 billion yuan, while the net profit was a sharp decline of 65.16% to 386 million yuan.

What followed was a continuing "jolt" from the top. In May 2011, Li Ning Chief brand officer Fang Shiwei, chief operating Officer Jianxin, and other five core executives were leaving the company. Li Ning's CEO, Zhang, who has been entrusted with the task, also resigned from July this year. As the founder of the company, Li Ning himself has been relegated to the background after many years to return to the mountains, leading the company out of trouble.

In addition, in February this year, Li Ning Company announced that it would launch a layoff operation. Li Ning Company in a written statement to NetEase Finance said, this is Li-ning company "active" organizational structure optimization and personnel adjustment.

In terms of inventories, Li Ning's 2011 earnings figures showed that the amount of inventory in 2011 was $1.133 billion, up 40.57% from a year earlier. So Li Ning Company also hoped to "increase the wholesale discount to dealers, take the measure of stock repurchase, and actively expand the Factory shop, discount shop construction", but the data show that as of April this year, the company's inventory still exceed 1 billion yuan.

Industry analysts pointed out that network sales is a clothing brand to eliminate inventory of one of the important means to strengthen the network platform sales can become Li Ning to save the performance of the important measures, but on the other hand, the low discount strategy will inevitably affect the interests of some distributors.

First half closed stores 1200 prices "mutual bo" or temporary phenomenon

According to the data, as of December 31, 2011, the number of shops of Li Ning brand is 8,255, 7,915 increased 340 from the previous year, the increase reached 4.3%, of which the franchise distribution shop 7,495, increased 162, the increase of 2.2%, direct shop 760, increased 178, Growth reached 30.6%.

In the first half of this year, Li Ning stores a net reduction of more than 900, excluding the first half of the new more than 300 stores, only the first half of this year, Li-ning company close offline entity stores more than 1200, most of which are distributors of franchise stores.

So 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," The direct store is the future of the next line of the development direction of the store.

Many garment industry watchers, including Magang, have different attitudes. Magang pointed out that at present, Li Ning Network channel sales in the year around 200 million yuan, accounted for the annual sales ratio of Li Ning only around 2%. Future online network channels are unlikely to replace the offline store model.

Magang also said that the Li-ning direct shop in the future will not replace distributors, "Li Ning's future focus will not be placed in the construction of direct stores, the cost of opening a direct shop in more than million, Li Ning will not be silly to put money into the face here."

For the current line of Li-Ning lines in the next two modes of "mutual" development, Magang that the current "mutual" phenomenon should be temporary, Li Ning's current electric quotient model is still groping, the future of Li Ning will certainly be online under the detailed separation, "goods, marketing methods, prices will be detailed separation, The current predicament of distributors should also be temporary.

In addition, Li Ning is also currently in the pipeline for its electric power to carry out a planned reform, the network authorized stores are significantly reduced. Li Ning Group, director of electric business channel Ongjingyi said that the number of Li Ning in Taobao authorized shop is to reduce the speed of two or three a year, "two years ago there are more than 10, now only 5."