The difficulties of the Antarctic

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Editor's note: This article is from WeChat official account BohuFN (ID: bohuFN), and the author is Lingling. Chuangye Bang is authorized to reprint it

In 1997, the Antarctic entered the thermal underwear industry. At that time, there were Yu Zhaolin, Hengyuanxiang and Beijirong who joined the industry in the same year as the Antarctic.

With innovative technology, the Antarctic has replaced the "fiber+plastic film" thermal underwear with "cotton+lycra" material, thus making the Antarctic stand out and become a well-known brand in thermal underwear.

As brands such as Antarctica have opened up a path of thermal underwear, the latecomers have followed suit.

According to public reports, from 1998 to 2005, the thermal underwear industry in China accelerated its development, from few brands to nearly 500, and the sales volume increased from hundreds of thousands of sets to more than 30 million sets.

The entry of many participants will either elevate the industry to a competitive stage or involve the industry in a bad homogenization. The thermal underwear industry at that time belonged to the second kind.

At that time, under the influence of the industry, large enterprises were seriously injured, and small enterprises had to close their doors. The gross profit rate of the Antarctic was once lower than 10%.

disasters pile up on one another. In 2008, the textile industry was also hit hard by the financial crisis.

In this case, the Antarctic began to take the route of light asset, cutting off the production and sales links, and only retaining the brand, which is what we often hear about "the business of selling tags".

The Antarctic closed their own factories, sold their trademarks to suppliers and dealers for production and sales, and charged their own trademark royalties.

Since then, with the rise of e-commerce, the Antarctic people have joined forces with suppliers and dealers to form an Antarctic community and focus on the power line.

In 2010, the company changed its name to Antarctic E-Commerce and backdoor landed in A-share market in 2015.

By 2021, Antarctic E-commerce has authorized 10311 dealers, opened more than 13000 online stores and covered more than 60 product categories under its brands such as "Antarctic Man", "Cartier Crocodile" and "Jingdian Teddy".

Among them, underwear, home textiles, women's clothing, children's clothing and other categories have maintained the first sales volume on e-commerce platforms all year round.

(Antarctica has all kinds of authorized products)

In addition to considerable sales, profits are also very attractive. For the comprehensive brand service+dealer brand authorization business of Antarctic people, the gross profit rate is more than 90% all the year round, and the average net profit rate is about 75%. Even if Maotai comes, we should "give three points of courtesy".

However, with the change of the market environment, it is difficult to win the Antarctic tag business.

The Antarctic tag business has become difficult to do. The most obvious performance is that the revenue and profits have begun to decline.

In 2021, the revenue of Antarctic e-commerce will be 3.888 billion yuan, down 6.8% year on year, and the net profit will be 477 million yuan, down 59.8% year on year. In 2020, the operating revenue is about 4.172 billion yuan, and the net profit is about 1.188 billion yuan.

The performance of related businesses was slightly inferior. In 2021, the comprehensive service business of Antarctic e-commerce brand will decline by 47.63% year on year, from 1.246 billion yuan last year to 652 million yuan, directly leading to a decline in the company's annual performance.

In addition to the revenue from selling hanging tags, the number of dealers and stores cooperating is also declining.

In 2019, there were 4513 Antarctic e-commerce cooperative dealers, with the year-on-year growth rate dropping to 8% for the first time; 5800 authorized stores, the year-on-year growth rate dropped to 5% for the first time.

It is obvious that the growth rate of the main business on which Antarctic e-commerce depends is declining.

Perhaps in order to save this situation, since 2016, Antarctic e-commerce has successively acquired high-end brand Cartier Crocodile, mother baby brand Jingdian Teddy and beauty brand Pony.

However, the acquisition does not seem to have had a significant effect. In the first half of 2020, the GMV of the Antarctic brand will reach 12.926 billion yuan, and the total amount of Cartier Crocodile and Jingdian Teddy will be only 1.381 billion yuan. The new brand acquired is still in the incubation stage. Whether it can become the next supporting brand is still unknown.

In order to find new growth points, Antarctic e-commerce also extends its tentacles overseas. It is understood that Antarctic E-commerce has set up a cross-border E-commerce business department, which plans to target the consumer markets in Europe, America, Australia, the Middle East, India and Southeast Asia.

However, for Antarctic e-commerce, whether developing new brands in China or looking for new markets overseas, they have to face the current pain points and urgently needed upgrades of the tag business.

In the past, the reason why Antarctic e-commerce could make the tag business prosper was that it chose a track with low competitiveness but considerable opportunities.

Antarctic e-commerce only focuses on the low concentration of industry brands, and there are a large number of categories that users do not care about brands. In these categories, Antarctic e-commerce mainly competes in the market of pure and white brands.

In essence, the name of an Antarctic is a business idea of reducing dimension and striking. At this time, the value of the brand does not lie in identity and value proposition, but in the basic guarantee of quality.

Based on such positioning and value, Antarctica's tag business has been smooth.

However, the Antarctic e-commerce, which starts from the "basic guarantee of quality", is difficult to be consistent in quality.

Because the most difficult thing for brand authorization is to control the quality.

One of the hidden dangers of brand authorization is that the product quality of authorized merchants is uneven. Once the product has quality problems, it will face customer complaints, legal disputes and public opinion, which will damage the brand reputation and defeat the authorization system.

Especially with the increase of authorized categories, the difficulty in quality control gradually increases, and brands are more likely to fall into quality crisis. This is also the current brand status of Antarctic e-commerce.

Up to now, the number of complaints about Antarctic people in black cat complaints has reached 527, of which "quality problems" are a major complaint content of consumers.

(Tuyuan Black Cat Complaint APP)

A manufacturer who purchased the "Antarctic" trademark in 2013 believed that "although we have brand endorsement, the credibility of the brand has gradually decreased due to the fact that there are too many stores authorized by the brand side. In addition, it is difficult for the brand to control the quality of authorized stores one by one. Once a store has problems, everyone will be affected“

In order to avoid the impact of negative brand events, the manufacturer began to build its own brand stores from 2020. At present, she no longer uses the "Antarctic" trademark.

In the opinion of industry insiders, brand authorization is no longer a simple authorization. For the licensor, it must be consistent with the community of brand authorization in terms of quality, service and experience, so that consumers can maintain continuous trust in the brand.

In other words, brand authorization is similar to the modern catering franchise mode, which should be comprehensive authorization in supply chain, operation and brand.

In order to avoid developing into a springboard of white and miscellaneous brands, Antarctic e-commerce may need an effective and comprehensive upgrade of the licensing model. After all, sewing and patching can never solve the core problem.

Reference source:

1. Enter Bobo Finance: Why are all brands authorized, and only the Antarctic people are the most successful?

2. BT Finance: Antarctica, can't lie flat?

3. Radar Finance and Economics: Why are the "king of tags" Antarctic people no longer popular?