After more than 10 years of drastic reforms, PlayerUnknown’s Battlegrounds has achieved outstanding results as a “domestic fashion brand” today. Affected by the “Xinjiang Cotton” incident some time ago, Li Ning’s stock price also hit a new listing high, reaching a peak of HK$72.95, and its market value exceeded HK$170 billion.
At the same time, Metersbonwe, once the “Light of Domestic Products”, has been losing ground, and its stock price has been “falling and falling.” At its peak, the stock price exceeded 13 yuan/share. Some time ago, the share price almost fell below 1 yuan, and it even fell into the situation of “selling your house to save yourself”.
Recently, Meibang Apparel announced that it will sell its subsidiary Shanghai Mo Gong Industrial Co., Ltd. to Shanghai Bacchus Liquor Co., Ltd. It is reported that the industrial company is part of the real estate of its headquarters. Meibang Apparel has reached this point in order to obtain 250 million yuan in pre-tax profits from it to supplement the company’s liquidity.
Today I will discuss the different paths of two companies in “digital transformation”, hoping to bring some inspiration to business managers.
1 The same predicament of Li Ning and Smith Barney
In the 2008 Beijing Olympics, Li Ning lit the Olympic torch At the same time, the revenue of Li Ning brand was also “ignited”.
According to media reports, Li Ning had more than 8,000 stores in 2010, with a turnover of 9.778 billion yuan, becoming the top brand in the industry. At this time, Li Ning is only one step away from its revenue target of 10 billion.
However, what awaits Li Ning is not success, but the high inventory dilemma of all sports brands after the Olympics. According to media reports, at the craziest time, on a county-level street , the same sports brand will have five to six stores.
At this time, Li Ning spent 1.8 billion yuan to help dealers clear inventory, but the results were extremely low. In 2012, Li Ning suffered its first loss since its listing in 2004, and its stock price once fell from more than 20 yuan to 4 yuan per share. It has suffered losses for three consecutive years, with losses as high as 3 billion yuan.
In addition, Li Ning also faces the problem of “brand aging”. At that time, Li Ning adopted the company strategy of embracing the “post-90s generation” and directly benchmarking against international brands. It radically raised the prices of its products three times, with the price of some products rising from two to three hundred yuan to four to five hundred yuan. In the end, this strategy ended in failure, and the original mainstream consumer groups born in the 1970s and 1980s were lost.
At almost the same time, Metersbonwe, which is also a top domestic product, also faced the same dilemma.
Meibang went public in 2008. In 2011, its revenue reached nearly 10 billion yuan and its net profit reached 1.2 billion yuan, making it the pinnacle of Meibang apparel. In 2012, Meibang’s stores expanded to 5,220 stores, which was also followed by inventory backlog and overcapacity. Clothing inventory reached 2.56 billion yuan. In this year, Meibang’s performance also began to decline. Like Li Ning, its performance declined for three consecutive years from 2012 to 2014.
In addition, ZARA, Uniqlo, H&M and other international fast fashion brands have entered China, attracting young consumers with novel designs, keeping up with trends, and high cost performance. Meibang has suffered from brand aging and e-commerce. The impact of businessmen, internal and external difficulties. Since 2015, Smith Barney has turned from profits to losses, and the decline is out of control.
2 Omni-channel new retail platform VS self-built e-commerce platform
In order to get out of the predicament, the two companies simultaneously aimed at the most urgent transformation path-digitization.
Li Ning has been thinking about how to create a sports brand that young people like.
He gradually realized that due to the traditional distribution model, the company could only collect the needs of dealers, but could not collect the thoughts of first-line consumers in the first place, so The company also does not know the needs of consumers, and consumers do not like the products it produces. Coupled with the traditional distribution model, over time, a vicious cycle of inventory backlog is formed.
How to solve this problem? Li Ning chose to rely on comprehensive digital transformation to create an omni-channel new retail platform, comprehensively collect data from online e-commerce and offline store channels, and feed back to the design, production, and R&D departments to produce sporting goods that consumers like.
In 2008, Li Ning began to “get an electric shock” and became one of the earliest clothing brands in China to engage in e-commerce. In order to solve the inventory problem, starting in 2012, Li Ning drastically reduced the number of nearly 10,000 dealers to 5,000 and began to vigorously develop e-commerce channels.
Affected by high inventory, the online e-commerce channel of the Li-Ning brand has been in a slow exploration stage until Li-Ning came back in 2015 and launched an “Internet + sports life experience provider” “The company strategy truly clarifies the general direction of e-commerce development.
With the continued expansion and effective investment in e-commerce business, Li Ning’s e-commerce business accounted for 28% of revenue in 2020, while in 2013 the proportion of e-commerce business Only 2%.
In addition, Li Ning has also digitally transformed more than 1,300 offline stores, collecting all consumption behaviors of offline consumers after entering the store, thereby forming intelligent analysis and feedback to the terminal sales link. .
In 2016, Li Ning invested 0.5% of its annual revenue in digital transformation of its IT system. At the same time, it officially launched its own digital middle platform in 2017 to integrate the company’s product development and production. The data in design, online and offline sales, membership system, warehousing and supply are all connected to build a…�The omni-channel new retail platform truly accurately and comprehensively collects consumer data information, laying the foundation for Li Ning to become a “national trendy brand” favored by “Generation Z” consumers today.
Unlike Li Ning’s “omni-channel new retail” strategy, Meibang chose to build its own e-commerce platform and carry out digital innovation on channels.
In 2008, Meibang also opened a store on Taobao. However, Smith Barney’s focus was not on the Taobao e-commerce channel, but on the then relatively successful “Eslite” model. According to media reports, in 2010, Vancl sold more than 30 million pieces of finished clothing, with annual sales exceeding 2 billion.
Based on the popular image of its casual clothing brand, numerous offline stores, capital and other advantages, and combined with the company’s “backlog of inventory” status, Smith Barney has seen the huge potential of e-commerce retail potential, I plan to build my own e-commerce platform, hoping to solve the inventory problem worth more than 2 billion yuan within a year.
In 2010, Meibang launched its own e-commerce platform – Bangou.com. However, less than a year after its launch, Bangou.com had to go offline due to the inability to guarantee profits, dragging down Meibang’s financial results.
In 2015, Meibang, which was unwilling to give up, launched a mobile e-commerce platform for sharing clothing matching-“Youfan” APP. In the market at that time, major e-commerce platforms sprung up like mushrooms after a rain, and the market competition was fierce. Coupled with the extremely high operating costs of self-operated e-commerce and the lack of good strategy and product planning, “Youfan” was discontinued after less than two years.
Two failures in digital exploration further increased the difficulty of Meibang’s brand transformation.
3 Why did the two companies take different paths?
Comparing the digital exploration of Li Ning and Smith Barney, we can see that digital transformation is actually related to the life and death of the company, and due to different starting points, it also brings different results.
As for the failure of Bangou.com and “Youfan”, Zhou Chengjian, founder of Meibang, also reflected that “the fundamental reason is that he didn’t understand it.” He analyzed that these two attempts by Smith Barney actually seized the window period, but the mistake was in defining them as Smith Barney’s own channels rather than building them as a platform.
Comparing the digital transformation of Li Ning and Meibang, the success of Li Ning’s digital transformation actually grasped the fundamental problem, which is to find out what consumers need and produce products that consumers like. However, Meibang’s self-built e-commerce channels are more concerned with the issue of “destocking” and forget to consider the needs of consumers.
After clarifying the focus of digital transformation of “starting from consumers”, the Li Ning brand established an Internet company strategy from top to bottom, and carried out a comprehensive strategy from channels, products, supply chains, etc. The digital transformation finally formed the positioning of “national fashion brand” that is “well-founded and reliable”.
Looking at the digital transformation of American Barney, there is a feeling of “treating the head when it hurts and treating the foot when it hurts”. It is only transformed around the local problem of “inventory”. In fact, digitalization is the key to the company. A major strategy at the enterprise level is not just about purchasing a digital system or transforming a certain link alone.
“Talking about digitalization without problems” and “digitalization for the sake of digitalization” are mistakes not only made by Smith Barney but also by many entrepreneurs in digital transformation.
The market is so cruel. Without thinking clearly about what digitalization is and what problems it is used to solve, the final measures taken will be very different. Naturally, the two companies will take different paths. of two roads.
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