In the 1990s, the sacred scene of Li Ning wearing a snow-white “Li Ning” sportswear and taking over the Asian Games torch was frozen. In the hearts of countless Chinese people, it was also at that time that the image of Li Ning as a domestic product took root in the hearts of the Chinese people.
After more than 10 years of drastic reforms, Li Ning has survived and achieved today’s ” The outstanding achievements of “domestic fashion brand”. 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 it almost fell below 1 yuan per share, and even fell into the situation of “selling your house to save yourself”.
Recently, Meibang Apparel announced that it will sell its subsidiary Shanghai Mold Industry 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.
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 of all sports brands after the Olympics. Dilemma, according to media reports, at the craziest time, there would be five to six stores of the same sports brand on a county-level street.
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 and attracted young consumers with their novel designs, following trends and high cost performance. Meibang has encountered The aging of the brand and the impact of e-commerce have caused difficulties both internally and externally. Since 2015, Smith Barney has turned from profits to losses, and the decline is out of control.
Omni-channel new retail platform VS self-built e-commerce platform
In order to get out of the predicament, the two Companies are simultaneously targeting the most urgent transformation path – digitalization.
How to create a sports brand that young people like, Li Ning has been thinking about this issue.
He gradually realized that due to the traditional distribution model, the company could only collect the needs of dealers and could not collect first-line consumers in the first place. Therefore, the company does not know the needs of consumers, and consumers do not like the products it produces. Coupled with the traditional distribution model, a vicious cycle of inventory backlog is formed over time.
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 “shock” and became one of the first domestic e-commerce clothing brands. 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 Li Ning brand has been in a slow exploration stage until Li Ning came back in 2015 and launched the “Internet + movement” The corporate strategy of “life experience provider” 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 e-commerce in 2013 business��Accounting for only 2%.
In addition, Li Ning also carried out digital transformation of more than 1,300 offline stores and collected information from offline consumers. All consumption behaviors behind the store form 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, integrating the company’s Data from product research and development, production design, online and offline sales, membership system, warehousing and supply have all been connected, and an omni-channel new retail platform has been built to truly accurately and comprehensively collect consumer data and information, helping Li Ning become the “Generation Z” today. “The foundation has been laid for the “national fashion brand” that consumers like.
Unlike Li Ning’s “omni-channel new retail” strategy, Meibang chose to build its own e-commerce platform. Digital innovation across 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 deeply rooted image of its casual clothing brand, numerous offline stores, capital and other advantages, and combined with the company’s current situation of “overstocked inventory”, Meibang sees the potential of e-commerce Considering the huge potential of retail, we plan to build our 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, who did not 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.
Why did the two companies take different paths?
Comparing the digital exploration of the two brands 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 the different starting points, it also brings Different results.
Regarding the failure of Bangou.com and “Youfan”, Meibang founder Zhou Chengjian also reflected, “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 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 has established an Internet company strategy from top to bottom, starting from channels, products, and supply chains. etc., carried out comprehensive digital transformation, and finally formed a “well-founded” “national fashion brand” positioning.
Digitalization is a major strategy at the company level. It 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. If you don’t think clearly about what digitalization is and what problems you are digitalizing to solve, the final measures taken will be very different. Naturally, the two companies will Went on two different paths.
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