Lining Electricity Supplier Promotion Discounts Pressed Downline Distributors Forced To Close Shop

Lining started the campus agency recruitment, the purpose is to further spread the consumer group to the post-90s student group, and at the same time to drive the official website at low price.

Data, but it has caused some two or three line market distributors dissatisfaction.

"Most of the regional distributors are close to 40 percent off, and now the Lining official website gives students 45% off or even lower supply price."

According to a Lining distributor from Shandong, because the discount and selling price of online channels are lower than the distributors' purchase price, the distributors' survival pressure is aggravated, so they have to close down some offline stores.

A list of discounts enjoyed by members of Lining's official website

The distributor's purchase price is not equal to the online promotion price.

The businessman said that with Lining's increasing attention to e-commerce, the trade-off between online and offline has touched the interests of some of the entity operators, especially for the distributors who are sinking to three line cities or even three line cities.

According to Lining's sales system, it can be divided into two levels: distributors and distributors. The distributors take the goods directly from the Lining factory, take charge of the direct line store business of the second tier cities, and then supply them from the three line to the three line below, and develop distributors.

"Usually, the ex factory price of Lining products can be controlled below 60 percent off, and the dealer 55% off takes the goods and discounts them in the distributor, depending on the size and sales."

The above businesses revealed that the distribution and discounts in Shandong ranged from 5.2 to 41% off in the year 2012. Since they are big customers in the province, the average annual discount can reach about 47% off. "As for most of the other distributors, they are all supplied by 40 percent off."

In contrast, Lining's e-commerce channel is based on the way of consignment, directly through the top dealers to get goods, can get lower purchase price and price.

In addition, a series of promotional schemes adopted by Lining electric providers in the second half of this year have intensified the conflict.

Reporters found that Lining's official website has begun to comb the membership system in an all-round way. Under the condition of unconditional admission, the whole network can enjoy preferential treatment, while the original members are directly promoted to a higher level, directly participating in the highest 45% off discount.

On the other hand, Lining's official website set up a campus agent in addition to 45% off of the purchase price, but also according to the order collection situation, give a certain rebate, the highest commission can reach 12% of sales.

This also means that if you can represent Lining's campus business, you can get 50 percent off or even less discount from the official website.

Closing shop tides

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After grabbing the rice bowl, distributors began to choose the right scale to protect themselves.

For example, the merchants said that after the closure of 2 Lining stores, the profit that had been over a million can only be guaranteed to break even. At the same time, bargaining power is not as good as before.

"Forced to do so, the total profit of 7 stores in 2011 has slipped to about 200000. Next year's orders are not optimistic. If we do not shop, we may lose more."

The shrinking of the shops under the three line city line directly threatens the profits of the second tier dealers.

"The rent and manpower cost of the first tier cities and towns is high, almost all shops are operating at a loss. Therefore, most dealers make up for the loss of Direct stores by distributing profits from three line and three tier cities below."

After a series of assessments, in the first half of this year, Lining has closed 1200 low efficiency stores, up to 15%, and dealers have cut 5 to 52.

Another part of the physical store distributors are driven by interests, by hook or by crook.

They have learned to get goods at a lower discount from online channels such as Taobao, so as to ensure that profits are not shared by other channels.

It is a behavior that traditional brands always try to avoid. The first step is to disrupt the distribution of interests in all aspects of the distribution system. Secondly, the confusion of the price system will damage the brand image.

"No way to force it out, all kinds of costs of offline stores are going up. Only if profits remain unchanged, orders will even decline. They will not get the right discount with the total generation, or close stores, or find other cheaper outlets."

For distributors, faced with the double pressure of online stepping and offline shop, they have to take risks.

Lining clearance sale

Online and offline mutual fight is the bottleneck that traditional brands are involved in e-commerce. Lining is not not aware of the negative energy of online channel confusion to dealer management and brand.

In fact, Lining has been acting on the constraints of online channels.

According to the reporter, the number of Taobao official authorized stores is decreasing by the number of two or three stores per year, and there are only 5 shops left.

And for unauthorized shops, Lining electricity supplier also began to communicate with Taobao, to implement the treatment.

But at the moment, the Lining crisis has not yet been lifted, and a high-profile replacement can not digest the debts accumulated by the runaway internal management and poor management in the short term.

Data show that the average inventory turnover period of Lining in the first half of 2012 has risen from 72 days to 95 days, and the order amount of footwear and clothing has shown double-digit decline.

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According to a survey conducted by the seventh annual China online retail conference, inventory problems are not unique to Lining. The traditional sportswear brands collectively encountered Waterloo in 2012.

Although these brands have already passed the initial stage of the touches, when clearing the relationship between online and offline, they are entangled in the pressure of performance.

Therefore, in the second half of 2012, Lining still needs to increase the intensity of clearance.

For example, pferring old inventory to discount stores and selling them at a very low discount price; increasing the intensity of network promotion, such a strategy has been included in its planning agenda.

But when releasing inventory pressure, Lining is obviously not enough to weigh the benefits between the online and offline businesses.

"Lining official website channel inventory accounts for a large number of new small, with the current intensity of sales promotion, is not enough to alleviate all inventory pressure."

The industry believes that, in the case of electricity supplier accounts for only about 1% of its total sales, it is necessary to improve the situation and increase the assistance of offline stores.

From the answer given by Lining, the focus of the future is still on the question of survival and account period, for example, a 51% off discount will be provided for the clearance channel.

In addition, Lining also agreed to give the distributor guidelines in 2013 to reduce the wholesale discount rate. The overall discount rate is expected to be less than 1 percentage points.

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