The "king of tags" Antarctic e-commerce turned around

Zebra consumption Chen Biting

There is never a one-size-fits-all business model. No, the Antarctic people, who were once famous for selling tags, have started to sell goods in person again.

In 2008, Antarctic people, who encountered a business crisis, transformed from a thermal underwear brand to brand licensing, and grew into the "king of tags" of A-shares with this one-dollar business model.

However, as the e-commerce dividend fades and the tag model is disenchanted by the market, the brand licensing business of Antarctic e-commerce has encountered the pressure of declining year after year, and the acquisition of multi-brand model replication will not help.

As a result, Antarctic e-commerce began to turn around, restart its self-operated retail business, and launch men's clothing, women's clothing, underwear and other products under the Antarctic brand.

The key is, can this old national brand, which has earned quick money for more than ten years, win back everyone's favor with a younger attitude and self-operated products?

The king of tags

Like the Sanyang brand, the Antarctic brand was also born in that era of "Flowers".

In 1998, Zhang Yuxiang founded the underwear brand Antarctic people, and with the help of intensive advertising, it became the first brand of thermal underwear in China. In those cold winters, wearing a set of Antarctic thermal underwear is just a luxury for most ordinary people.

However, within a few years, the footwear and clothing industry has entered the industrial counter-cycle, the competition in the underwear industry has intensified, and many brands such as Antarctic, Yu Zhaolin, Hengyuanxiang, and Arctic Velvet have competed on the same stage, and the price war has intensified, and the good days have come to an end.

In desperation, in 2008, Antarctica began to transform the brand licensing model: closing its own factories, authorizing cooperative factories to produce, and signing cooperative distributors to authorize them to sell "Antarctic" brand products. This business model is commonly known as "selling tags".

With the rapid development of e-commerce, Antarctic people, as a brand comprehensive service company, went public in 2015 through the backdoor of Xinmin Technology, and transformed into Antarctic e-commerce (002127. SZ）。

Antarctic people have more than 60 product categories and more than 100,000 SKUs, including not only traditional underwear, underwear, and socks, but also small household appliances such as juicers, electric fans, massagers, and even Internet celebrity food snail powder. At its peak, it gathered thousands of suppliers, tens of thousands of dealers and tens of thousands of online stores, completing tens of billions of yuan in GMV.

This one-size-fits-all business model has enabled the company to have super profitability, with the gross profit margin of its core business exceeding 90% all year round, and even approaching 95% at one point at one point. At the peak of its performance in 2019, Antarctic e-commerce had a revenue of less than 4 billion yuan and a net profit of more than 1.2 billion yuan.

In fact, the brand licensing model is not the first of its kind in Antarctic e-commerce. It's just that in the golden age of e-commerce, the Antarctic people completely transformed earlier, taking advantage of the right time and place, and becoming the master of this model. Later, many brands in the footwear and apparel industry that encountered business difficulties, such as Aukang, Saturday, La Chapelle, etc., regarded it as a reference for transformation.

Business bottlenecks

However, when many brands are engaged in the tag industry, Antarctic e-commerce itself has fallen into business difficulties. After the peak period from 2019 to 2020, Antarctic e-commerce encountered a bottleneck period, with the number of dealers, suppliers, stores, and e-commerce GMV all declining, resulting in a decline in the scale and performance of listed companies.

The direct reason is that the industrial dividends of traditional e-commerce are fading, while there are more and more brands selling tags. Only in the underwear market where Antarctic people were originally located, Yu Zhaolin, Hengyuanxiang, Arctic Velvet, Cat People and other peers have successively set foot in the brand licensing business, and they are becoming more and more popular.

Of course, the most fundamental reason is that the charm of the tag of the Antarctic brand is no longer there.

In the early days, there was a gap in information in the market, and consumers at that time were not too entangled in who made the products of the Antarctic brand; as long as the price was high and cheap, and there was a brand endorsement, they could be favored by everyone.

However, as the "secret" of the tag model is well known to the public, coupled with the new e-commerce era, a large number of white-label goods are conquering the city with the blessing of traffic, and the attractiveness of tag goods naturally declines.

In addition, in the brand licensing market, if the control power is reduced, the tag product will consume the brand reputation. In other words, authorized brands actually have a life cycle - this also reminds everyone that if you can't enhance the value of your brand, you will eventually go downhill one day.

In order to solve this problem, Antarctic E-commerce acquires more brands for business replication. In 2016, it acquired Cadilla Crocodile and Classic Teddy, and in 2022, it acquired BASIC HOUSE, Mind Bridge, JUCY JUDY, etc.

On the other hand, on the basis of the brand licensing business, value-added services are launched to enhance the overall value of the brand business. To this end, the company also acquired the Internet marketing company Time Internet at a price of 1 billion yuan.

Judging from the performance in recent years, simple business replication has not solved the problem of the company's deep business bottleneck. In addition, due to the performance of the acquisition target being less than expected, goodwill impairment was provided, resulting in a huge loss for the company in 2022.

Turn around and come back

Zhang Yuxiang, the helmsman of Antarctic e-commerce, realized that it was difficult for the company to return to the top by selling tags. If you don't adjust your strategy quickly, I'm afraid that you will fall deeper and deeper.

In 2023, the readjustment of the business model of Antarctic e-commerce, the former "king of tags", has deepened.

In the past few years, the main business of Antarctic e-commerce was divided into two parts: the brand licensing business of the company's headquarters, which is small in scale but responsible for profits, and the time interconnection division, which is mainly based on mobile Internet marketing business, is the company's largest source of income, but its profitability is average.

Last year, Time Internet contracted its business line, resulting in a loss of nearly 500 million in revenue from the mobile Internet business. This is the main reason for the decline in Antarctic e-commerce's operating income in 2023.

On the other hand, the core force of the brand licensing business has become the fashion licensing business dominated by BASIC HOUSE and its brands. Last year, it achieved 2.5 billion GMV on the whole platform and entered the top 10 of Douyin's annual women's clothing rankings.

In addition to the strategic cooperation and licensing business of brands such as Antarctic People and Cadilla Crocodile, Antarctic E-commerce has also opened its own retail business, focusing on men's wear, women's wear and underwear under the Antarctic brand. At present, the first phase of Antarctic milestone series sunscreen clothing products has been launched.

In other words, after selling the tag for more than ten years, Antarctic people choose to return to their own brand business and want to transform into a trendy home clothing brand that embraces the lifestyle of young people.

In 2023, the revenue of Antarctic e-commerce's brand licensing business will decline sharply, and the product sales business, which is dominated by self-operated retail, will become a small growth brightspot.

Last year, the operating income of Antarctic e-commerce was 2.692 billion yuan, a year-on-year decrease of 18.66%, and the net profit attributable to the parent company was 117 million yuan.

Antarctic e-commerce is finally trying to get out of the comfort zone of brand licensing, but can the brand value of Antarctic people still take on the responsibility of the company's transformation?