“OEM” is nothing new nowadays. The most typical one is Antarctic. There are so many Antarctic products on the Internet that it is hard to tell which ones are produced by Antarctic itself. There are many brands like Nanjiren that rely on “trademark licensing” to do business with almost no capital and huge profits, and there is also a trend of spreading from the clothing and textile industry to other industries. It is understood that with the emergence of new retail models and the decline in brand reputation caused by “OEM”, the “trademark licensing” business seems to have entered the red ocean stage.
Phenomena: Antarctic people’s annual income exceeds 1.3 billion through licensing
Beijing suddenly cooled down. Consumer Mr. Yang decided to buy himself a pair of warm clothes. Based on his simple impression of the brand, he searched on the e-commerce platform, but he was a little confused. . “The brands are all from Anjiren, and it’s impossible to tell which one is the genuine Anjiren,” said Mr. Yang. There are many consumers who are confused like Mr. Yang. Many consumers say that they often search a lot of underwear products like Antarctic on the Internet. The quality varies, and it is difficult for people to believe that they are products of the same manufacturer.
This kind of situation not only exists in Antarctic’s underwear. Recently, a search on the e-commerce platform found that not only thermal underwear, but also Antarctic’s curtains, down jackets, and bed sheets can be found online. Supplies, even breast pumps, mini washing machines, electric massage chairs, tables, etc., it seems that “everything can be used by Antarctic people”.
Why is this happening? According to public information, Nanjiren is an underwear company established in the last century. It pioneered thermal underwear products. After more than 20 years of development, Nanjiren has achieved good results in underwear, maternal and infant, clothing and other product lines. But since 2008, Nanjiren has started the transformation of the company. It no longer needs factories and dealers, and only does “trademark licensing” business. On December 28, 2010, Anjiren launched the “NGTT” community business model and is committed to establishing an e-commerce ecological comprehensive service system. In 2015, Jiangsu Xinmin Technology was listed on the backdoor, and the stock market was referred to as “Antarctic E-commerce”.
Nanji people have taken this “trademark licensing” business with a gross profit of more than 90% to the extreme. In 2020 alone, Nanji e-commerce’s main brand licensing and comprehensive service business The total revenue was 1.327 billion yuan, accounting for about 1/3 of the company’s total revenue that year.
Survey: “OEM style” has spread to other industries
In fact, Anji people are not the only ones who have engaged in trademark licensing, commonly known as “OEM” business. Many established domestic brands in the textile industry have also embarked on this path.
It is worth noting that some merchants said that they only need to pay a few tens of thousands of yuan in brand usage fees every year, and then pay to use the hangtags according to the sales volume, and the other licensors basically have no involvement. In some industry segments, brand usage fees can even be as low as less than 10,000 yuan.
On some brand authorization websites, some famous brands that are familiar to the older generation are also listed, such as Pierre Cardin, PLAYBOY, Cartier Crocodile, etc. The types of products involved in “OEM” are mainly clothing, but also include shoes, accessories, bags, daily necessities, maternal and infant children’s clothing, and home textile products.
In addition, not only the textile industry, Antarctic e-commerce also plans to enter the food, catering and other industries. According to the Qichacha APP, Shanghai Nanheng Network Co., Ltd. was established on September 15. The legal representative is Zhang Yuxiang, with a registered capital of 10 million yuan. Its business scope includes: engaging in technology development in the fields of network technology, software technology, and logistics technology. , technical services, technical consultation, technology transfer; catering management; domestic cargo transportation agency; wholesale of edible agricultural products, etc. Qichacha’s equity penetration shows that the company is jointly held by Anji E-commerce and Hu Jiamin.
Not only is Antarctic e-commerce, this “OEM trend” is also popular in the cosmetics, health care products, food, and small household appliances industries. Among them, Renhe’s cosmetics and health products, modified cosmetics, and some small home appliances from Joyoung and Philips have also adopted this model.
Observation: OEM business is difficult to do under the new retail model
Is OEM a good business? Judging from the journey of Antarctic e-commerce, it was indeed a good business with “no capital and huge profits” before. In the year of backdoor trading in 2015, Antarctic e-commerce achieved operating income of 389 million yuan and net profit of 172 million yuan. By 2020, the company has achieved operating income of 4.172 billion yuan and net profit of 1.188 billion yuan. In the past five years, operating income has increased nearly 9.5 times, and net profit has increased nearly 6 times.
According to the 2020 financial report of Anji E-commerce, the gross profit margin of its brand comprehensive service business reached 93.26%, and the gross profit margin of its dealer brand licensing business was 94.37%. During the same period, the gross profit margin of “goods” Sales” gross profit margin is only 1.17%. The profits of the “OEM” business are evident.
However, with the changes in the market, the “OEM” track has become a red ocean. The reporter noticed that most of these OEM products are only sold on e-commerce platforms. The same e-commerce platform is already saturated with “OEM” stores of the same brand and purpose, and some platforms can no longer even approve the opening of a new “OEM” brand store in a certain category.
In recent years, some brand licensing companies have neglected to pay attention to “OEM” products.The industry is strictly controlled and quality problems occur frequently. Among them, in the past few years, the Nanjiren brand has been on the black list of regulatory authorities or consumer associations for many times due to quality or random inspection problems, which has greatly affected the reputation of the brand. In the minds of consumers, the favorability of such “OEM” brands will also be greatly reduced.
In addition to the risks of quality and brand reputation, analysts said that changes in the market environment have also made it increasingly difficult to do “OEM” business. Under the new retail model, supply chain enterprises have an increased voice, and coupled with changes in consumer shopping patterns, using brands to support sales is no longer the only option for manufacturing enterprises. More companies are choosing new marketing models to “make money on their own,” among which the S2B2C model is the most prominent. This model means that large suppliers organize the supply of goods, and channel providers serve as bridges, connecting large suppliers to customers, completing the cycle of commodity circulation and user demand feedback. Under this model, merchants can even provide customized services and products to consumers.
It’s no wonder that the former “trademark licensing” king also had a difficult time. According to Antarctic E-commerce’s 2021 interim report, the company’s main operating income in the first half of this year was 1.661 billion yuan, a year-on-year increase of 2.15%; the net profit attributable to the parent company was 246 million yuan, a year-on-year decrease of 42.85%. Prior to this, in the fourth quarter of 2020, its net profit had already declined significantly, from 582 million yuan in the same period of 2019 to 443 million yuan. </p
