OEM Business Model Is Overdraft Of Intangible Assets For Mature Brands

It's getting colder and colder, and it's time for a few sets of thermal underwear.

However, the products that Yu Zhaoling and beizhaoling have not been authorized to produce in the market have not been sold in the market!

In fact, in addition to these brands, the OEM market is still expanding, and all the OEM products can be seen everywhere. Today, let's explore the "unknown" OEM world together with Ye Chuan!

Everything can be OEM, the OEM market is expanding!

How big is the OEM market? Most of the well-known brands such as Adidas and Nike are made in China, and they are only responsible for OEM. Among them, Disney is the originator of brand authorization!

Taking the well-known label maniac Antarctica as an example, we can clearly find that in the major e-commerce platforms, the business of the Antarctic has already involved underwear, latex pillow pad, mask, electric blanket, underwear, diapers and foot washing bucket. On the major social platforms, although the word-of-mouth of the famous brand of Antarctica has been swept to the end, as the owner of the Antarctic brand, the external disputes have not prevented the rapid development of Antarctic e-commerce on the road of wealth.

What's more surprising is that the market seems to buy the company abnormally. According to the Antarctic e-commerce financial report, its revenue in 2018 and 2019 were 3.35 billion and 3.91 billion respectively, and the net profit was 886 million and 1.21 billion respectively. In 2019, the gross profit rate was as high as 93%. Only relying on the "Antarctic" brand service fee, the Antarctic e-commerce created more than 500 million profits in 2017.

According to the 2019 financial report data, there are 1113 cooperative suppliers, 4513 cooperative distributors and 5800 authorized stores. Brand licensing alone accounts for 33.2% of the company's revenue. General strength of e-commerce!

In addition to flagship stores, the official stores, enterprise stores, exclusive stores, direct selling stores, self operated stores and factory stores of these enterprises selling brands are also dazzling. Which of the hundreds or even thousands of OEM shops in Linlin? The answer may be unbelievable: they are all true, or "fake.".

Not only do Australians have no underwear, Hengyuanxiang has no sheep. Yu Zhaolin and polar fleece are just brands now. This kind of behavior and pattern is a commercial gamble for entrepreneurs. If I win, I will be a big winner. If I lose, I will quit the market.

Behind the increasing market demand is the "helpless move" of consumers and small factories

The scale of OEM business continues to expand, and the enterprises selling brands have gained a lot. Today, ye Chuan will analyze the main reasons behind the "terror" expansion of the OEM market!

1. In order to avoid risks, consumers will give priority to familiar brands

In marketing, there is the "two eight principles" of marketing, that is, 80% of the performance comes from 20% of the regular customers. In this case, consumers are less sensitive to the price and are willing to pay higher prices for high-quality products / services, even proud and willing to make greater contributions to the brand.

The popularity of OEM also captures the psychological weakness of consumers. When shopping online, consumers are more willing to choose a well-known business in the face of a large number of goods. Based on this kind of trust, consumers are willing to bear a certain brand premium in order to avoid risks.

2. The helpless move of small factories to enter the e-commerce Bureau

For the manufacturers relying on traditional channels, it is far from easy to do e-commerce, especially once they miss the initial good opportunity, it becomes not so easy to enter the Bureau. In the e-commerce circle, there was a saying: as long as the merchants are flexible enough, they can buy an authorization from the Antarctic e-commerce and sell them quickly after hanging the tag.

According to a previous report by Southern Weekend, two pairs of jeans produced by a family clothing company in Guangdong sell for 79 yuan at its tmall flagship store. However, after hanging the tag of the Antarctic, the price of two items in the Antarctic exclusive shop is 129 yuan. In addition to the standard fee of 8 yuan, the profit is increased by 42 yuan. But we have to understand that the consequences of OEM means that you can make money by lying on your back. Who is willing to do original research and development? The survival space of other original small brands has been constantly squeezed.

This may be in line with the Matthew effect. The stronger the stronger, the weaker the weaker. But in the end, in essence, it is nothing more than bad money driving out good money and blocking the liquidity of commercial society. The result is that the development of the industry continues to stagnate, isn't it?

How long can the quality problem be solved?

It is also a public secret for big brands to own their own OEM factories. However, in OEM business, the most important thing is "brand". If you want to keep "brand", the key is quality control.

However, due to the fact that category stickers are too open, the quality control of Antarctica has long been "in name only". They have no ability or willingness to supervise the production mode and standard level of each manufacturer. According to media reports, in the past few years, Antarctica has been on the blacklist of substandard products issued by the national quality supervision department and local consumer associations more than ten times. From silk quilt, underwear, electric push scissors and curler, all products have been listed on the blacklist. The quality control of Antarctica is just the tip of the iceberg of all OEM industries. Hengyuanxiang, beijirong and Yu Zhaolin have found different degrees of quality control problems!

In the short term, this kind of OEM business model has indeed achieved success; but in the long run, if we only rely on the word-of-mouth and feelings accumulated in the past, but we do not control the quality strictly, the brand management is not good, and the authorization is casual. In this way, the brand will be paralyzed one day, and now it is seriously overdrawn brand value.

However, the same is OEM production, the rights madman Disney has done quite well, Disney brand authorization has strict quality control requirements. For example, the factory inspection process will include attendance records, payroll, labor contract, fire drill records of the past year, and Disney will not grant authorization if there is a slight failure.

What's more, Disney's licensors have to pay hundreds of thousands of dollars of authorization deposit. By the way, production, sales and other fields require more than five years of experience. If the manufacturer sells the product without permission from Disney, then it will receive a letter from the legal department of Disney!

Without quality, it is impossible to have a brand. It is often said that "Rome is not created overnight", and so is a well-known brand. However, "the dike of a thousand li is destroyed in an ant's nest". The future road of these enterprises selling brands will not be too easy.