Interpretation Of The Development Mode Of PPG Clothing

"Traditional sales are like a cumbersome person, and it is difficult for the body to move in a direction, and online direct selling is like a light little girl who can turn beautifully."

Zhao Yisong, chief marketing officer of Shanghai PPG Garments Co., Ltd. used such a metaphor when talking about the characteristics of network direct selling.

The rise of the male industry rookie, which has increased by 50 times in less than a year, has benefited from the direct marketing mode known as "light company".

This model has become a "star case" favored by venture capital.

In 2006, the two major international Vc firm TDF and JAFCO Asia jointly invested in PPG. In April of this year, they joined the internationally renowned VC KPCB for second rounds of investment in PPG, and the total capital injection of two rounds was close to US $50 million.

This shows that the rapid growth of enterprises brought about by light mode has been recognized in the minds of investors.

Some investment bankers pointed out that PPG can rely on the "light company" mode to achieve listing financing two years later.

PPG Clothing Co., Ltd. was founded in 2005 by overseas returnees David Lee (Li Liang), the name of the company is taken from the meaning of "Perfect Product Group".

Li Liang once worked in the largest mailing direct selling company in the United States. When he returned home and started his business, he spotted the blank of the domestic men's clothing market and decided to run a "light company" according to the "DELL concept".

The "DELL concept" is designed on demand, and direct customers are omitted. The business mode of PPG is similar to that of the commercial mode of the PPG: the brand design and production outsourcing by PPG, and the OEM production of some private enterprises in the company. The company sells products through direct selling, telephone ordering and product catalogue mail, and saves some traditional links such as wholesale and retail, so that the price of goods delivered to consumers is lower than that purchased by traditional way.

For the sake of "light", PPG has outsourced production and logistics links, retaining only the functions of design, quality control and direct marketing, and the company does not have a physical store.

According to media reports, all the operations of the company are concentrated in three small buildings outside Shanghai, with fewer than 500 employees, including more than 200 call people.

In addition to outsourced the upstream, PPG has developed an enterprise information management system that interconnects the upstream procurement, production and downstream warehousing, logistics, and delivery with IT system, enabling information to circulate quickly in this closed supply chain.

"By mastering these information, we can understand the demand of shirts customers through order figures and customer information, and adjust the quantity and direction of shipments in time, considering the factors such as region and season, and even adjust production and design in time."

Zhao Yisong said.

In marketing theory, the idea of marketing and adjusting production in time is called "just in time" (instant production).

In this way, the production cycle of PPG is saved to 7-10 days from the 90 day of traditional manufacturing enterprises, saving a large amount of stock and circulating funds, and the cost of products decreases accordingly.

Traditional sales mode promotes sales by opening stores, such as YOUNGOR stores, counters and franchised stores all over the country. But these stores need to maintain their inventory for at least 3 months.

And network direct sales, is the consumer through the network and telephone directly to the enterprise ordering products, inventory is only about 10 days, it is easy to adjust strategy in time.

Zhao Yisong said that the network direct selling enterprises can save the cost because they do not set up traditional stores, so as to expand the intensity of advertising.

"Advertising costs account for more than 10% of the total cost."

Why is venture capital so optimistic about the prospects of PPG? Wind analysts think there are three reasons: large market demand, good business model and strong management team capability.

PPG chose to start with men's shirts and gradually occupy the whole market.

According to the clothing report, men's shirts are probably one of the most popular clothing items in all costumes. Shirts are the most frequent clothing for men, and the speed of renewal and conversion is accelerating.

In addition, with the unprecedented expansion of workplace and business communication, the overall demand for men's shirts is expanding, and the consumption base is increasing.

The men's wear market is one of the most profitable markets. In this market, the demand of consumers is large, and there are still many market gaps left to fight.

Zhao Yisong said: "men generally do not like shopping, often buy things to go.

Once they are satisfied with the items on the Internet or on the phone, they will order everything from here and there, which will make them feel convenient and quick.

Because men have such consumption psychology, men's clothing network direct selling mode is easy to be popular.

According to the briefing, at present, 50% of the customers who order clothes in PPG are "repeat customers" or "friends".

Zhao Yisong claimed that the sales volume of the company increased by 50 times in June compared with the same period last year, and the sales volume in 2007 is expected to reach 10 yuan to 1 billion 500 million yuan.

According to statistics provided by PPG, YOUNGOR, the industry giant, sells 13 thousand shirts a day on average, while PPG sells 10 thousand shirts a day only through directory sales, Internet sales and call centers.

Marketing industry experts believe that traditional marketing operations, a lot of value is deposited in the channel link, and business owners do not pay attention to exploring the needs of consumers, but also ignore the effective communication with consumers, customers can not stimulate consumption, demand can not be released, and there is no purchase preference for a brand.

At present, there is not a leading brand in the Chinese shirt Market.

The entry of PPG brand is very advantageous. It has the opportunity to establish the positioning of the category representatives in the minds of consumers, and it wins the huge young consumers in Chinese cities.

From the "light mode" itself, we do not set up factories, control product quality through independent design and own brand, and control the downstream direct selling channel by information management system. This way completely subverts the traditional marketing mode.

Although Nike and other clothing brands also take the means of outsourcing, most of them have not completely abandoned the sales channels, but still choose the way of self building, affiliate and dealer establishment.

So, like PPG, a light enterprise that completely divestiture production, logistics and channels has indeed explored a new set of new models.

Some commentators point out that many enterprises are doing the planning and management of the whole industrial chain and the expansion of traditional marketing mode by using information system. PPG is the most lightweight but not completely successful.

As funds and channels are mastered by external institutions, PPG's control of all aspects of the industry's own industrial chain needs to be strengthened.

"The most important thing is to let strong quality control go through all the time. Otherwise, if any link is out of question, the network will magnify the discontent of consumers, and the credibility that the most direct basis for the existence of online direct selling enterprises will be vanished in an instant."