Source | Zhixiang Network (ID:passagegroup)
Author | Lu Na
Edit | Xie Weiping
\ This article totals 4898 words, expected to read 12 minutes /
At the end of 2021, Kardashian released a video announcing that its tights brand Skims will enter the Chinese market and personally selected more than 100 products for Chinese consumers to be the first to be sold at Lane Crawford in Shanghai and Hong Kong.
Kardashian, who appeared in a Skims black turtleneck tights, also revealed in the video that China is only the first stop of Skims' globalization and will continue to expand in other Asian markets in the future.
In April 2021, Skims raised a new $154 million funding round, and its post-investment valuation soared to $1.6 billion, surpassing LVMH's Investment in Rihanna's personal underwear brand, Sage x Fenty.
A year later, Skims' valuation doubled to around $3.2 billion. The media revealed that both Skims and Savage x Fenty have started the listing process.
According to allied Market research data, by 2025, the global sales of the underwear market is expected to reach 325.36 billion US dollars, and domestic brands have sniffed market opportunities and have begun to lay out overseas business.
At the end of 2020, the lingerie brand built its own team in San Francisco inside and outside, and launched its official website in October. In July 2021, it also completed nearly $100 million in Series D financing at home and abroad, and said that it would continue to expand its domestic and foreign channel business.
In addition to doing independent stations overseas, the revenue effect on cross-border platforms is more obvious. Last year's double 11 Tmall Taobao overseas data showed that the underwear category accounted for more than half of the top ten national goods overseas growth list, and sales achieved more than 100% growth compared with the same period last year.
Underwear, a category with high unit price, low freight sharing cost, high scalability, and more frequent consumption habits of overseas consumers, have made them enter the market and use the advantages of the domestic supply chain to shop for cost-effective products. Although a number of emerging local brands such as Thirdlove and Knix have no star effect, they also fully compete in overseas markets with differentiated play and expanded product distribution models.
Global co-frequency: the underwear trend has changed
The main sexy Victoria's Secret was once the absolute aesthetic vane on the market, and the popular Victoria's Secret show was also the most watched fashion festival every year, along with the "world's most beautiful flesh" appearing under the negative influence of a single aesthetic and body gaze.
However, with the awakening of women's consciousness, women around the world share a set of female narratives about freedom and liberation, diversified aesthetics and self-acceptance have become the main theme, and underwear is a very representative symbol, showing women's attitudes towards body and beauty.
The dominant change in the cultural and psychological level is that the ratings of the Victoria's Secret show have plummeted since 2015, and the revenue of Victoria's Secret has also declined continuously until the 2019 big show is discontinued. That same year, Savage X Fenty began airing fashion shows on Amazon Prime Video, with hundreds of models of all sizes, ages, sexual orientations, and skin tones appearing, and people with disabilities and pregnant women may also be the protagonists in their shows. As a result, the show was also nominated for an Emmy Award for "Outstanding Choreographer in a Variety or Reality Show" in 2020.
From the perspective of consumers, the shift from pleasing to pleasing oneself has brought new demand to the underwear market. Most of the patterns and designs in the traditional lingerie industry are based on the standard model body, but not all women have the perfect body of Victoria's Secret Angel. Savage X Fenty emphasizes diversity and inclusion, and the bra comes in more than 50 sizes, covering the full size of the XS-XXXL. There are also emerging underwear brands such as ThirdLove and CUUP that exceed the size of traditional underwear.
In February 2019, ThirdLove bought an entire section of The New York Times to promote new products, most importantly emphasizing that her home had 78 yards to choose from, which was twice as many as Victoria's Secret. As the title suggests, ThirdLove can match every woman with the most suitable lingerie.
Third Love borrows the idea of half-size shoes to expand the number of yards to further calibrate the error, allowing customers to wear more suitable and comfortable underwear. Its products have a return rate of less than 30%, which is lower than the average return rate of 30%-50% for domestic e-commerce clothing products.
It is worth mentioning that although it is in line with the product trend of comfort and self-satisfaction, in order to solve the pain point of underwear fit, a domestic underwear brand has adopted a completely different size strategy.
"How to save decision-making time so that users can buy underwear as if they were ready-to-wear."
Finding this core pain point, Ubras innovatively launched the "size-free" series of underwear in 2018, which standardized the underwear output. Until the end of 2019, the brand began to exert efforts to build it into a real blockbuster category through marketing strategies. In 2020, Ubras' Tmall sales of unsized underwear were 780 million yuan, accounting for 50% of total sales, while Ubras' annual sales in 2019 were only 170 million yuan.
However, "no size" can not be used as a moat for Ubras, and the required technology has matured in China and does not constitute ubras patents and property rights. For example, the 500P sizeless bra in the banana, the cloud sizeless vest bra inside and outside, and the tree, Aimer's Huxi and other products have been released one after another. At present, Ubras is also actively expanding its categories horizontally and increasing its SKUs.
One of the main reasons why China can be on the same frequency as the consumption concept of European and American women comes from the improvement of the consumption level of major consumer groups - young women's participation in social and economic activities is increasing, and the demand scene and stage require more subdivision of underwear categories.
According to iResearch's "2022 China Women's Underwear Industry Research Report", 71.06% of the respondents' expenditure on underwear consumption has increased compared with the past. The change in consumption habits is first linked to the change in consumers' income, with the gradual increase in the proportion of middle-income groups, everyone's consumer demand is more diversified, and more quality products are sought after.
A group of traditional underwear brands represented by aimu and urban beauty are now moving closer to the current female narrative, moving towards free and liberating, light and comfortable product design. Product qualities such as cohesion and uprightness that were previously emphasized are being replaced by labels such as comfort, no steel rim, etc., and even the word sexy is constantly being redefined in a context that is constantly being updated.
Different from Ubras's explosive strategy, since its establishment in 2012, it has focused on emotional marketing and emphasized the concept of self-satisfaction, and its products are aimed at new middle-class female users aged 25-40, focusing on the concept of "comfort" and "no underwire".
Like the domestic underwear market, broadening the category is a common way for global underwear brands to play. Knix, which also focuses on comfort selling points, was founded in 2013, and is friendly to women of all sizes and pregnancies, and has now covered a full range of intimate clothing products such as bras, panties, tank tops, T-shirts, homewear, and swimwear. It is one of the fastest growing DTC start-up brands in North America.
At the end of 2020, Savage X Fenty also plans to use the funds raised for the development of the sports product line when seeking Series B financing. Although there are no physical product releases at present, it is already foreseeable that it will join the competitive landscape of existing sports brands. Skims is also currently positioned to provide body solutions, such as reinforcement, smoothing, lifting, shaping, etc., its main products in addition to underwear, as well as homewear and body shapewear.
Global underwear, 70% produced in Shantou, China
The global lingerie market has been dominated by Victoria's Secret for more than half a century, but since 2016, Victoria's Secret operating profit has fallen for four consecutive years, until Victoria's Secret first permanently closed 250 stores in North America during the epidemic, and then British companies were forced into bankruptcy liquidation.
In August last year, Victoria's Secret officially separated from its parent company, L Brands Group, and listed on the New York Stock Exchange as an independent company. While Victoria's Secret is trying to revive the dead, a number of emerging underwear brands overseas are also pouring out. Looking at the global underwear consumer market, although Victoria's Secret still has a market share of 40%, the strong impact of this underwear giant is still obvious to all.
In 2018, overseas lingerie brand Savage X Fenty was founded. Its founder is Rihanna, who has more than 200 million followers on social media such as Ins and Twitter. Relying on its star aura, Savage X Fenty has received many praises as soon as it was launched, and many overseas media regard it as a strong competitor of Victoria's Secret.
In January 2022, Rihanna completed a $125 million Series C funding round for its lingerie brand, Sage X Fenty. Two months later, Bloomberg reported that Sage X Fenty was seeking another IPO, valuing it at more than $3 billion. The lingerie brand, which was founded less than four years ago, is now growing at a compound annual growth rate of 150%, bringing new product experiences and aesthetics to more and more consumers around the world.
Skims, which will be launched a year later, also raised a $240 million Pre-A round in January, which was founded by reality TV star Kim Kardashian and Jens Grede, the founder of multiple fashion brands, and after raising funds, not only reached a valuation of $3.2 billion, but also is expected to add 2 million users by the end of this year.
For these DTC underwear brands with star effect, selling goods is not a problem, but more importantly, it is more important to ensure that the supply chain is smooth, the logistics is efficient, and the inventory is sufficient.
Some Little Red Book bloggers have shared their strategies for buying Sage X Fenty in China since 2019. Orders placed on the official website can be delivered directly, but due to the higher freight rate of the official logistics company Borderfree, the blogger will generally choose the third-party logistics company Buyanship, about 7-14 days to arrive.
Interestingly, more than half of the supply chains in North and South America, which are now sold overseas, come from China. Including Victoria's Secret, Savage X Fenty, Skims and many other first-line brands, as well as international supermarkets such as Wal-Mart and METRO, it has always been a big customer of China's underwear factories. This means that a piece of underwear is produced in China, crossed the ocean to the American continent, and finally returns to the hands of Chinese consumers.
Domestic factories helped overseas OEM workers in the early days, and under the accumulation of a long time, they accumulated the supply chain capabilities of the "world factory". The Chaoshan area has become a famous underwear industry cluster, of which Shantou alone has tens of thousands of underwear manufacturing enterprises, supplying 70% of the global underwear market demand. In March this year, Puning City also signed a contract with Guangdong Dachaoshan Underwear Industry City Company to jointly build the headquarters of the global underwear industry chain.
Going overseas, Chinese underwear brands are looking for a new growth curve
Domestic brands share the same supply chain as international brands, and the two sides soon meet.
At present, the domestic underwear market CR10 (market share of the top ten) has increased to 31%, such as inside and outside, banana and other domestic goods after the growth to a certain volume, have also begun to explore overseas markets, seeking new market increments. According to allied Market research data, by 2025, the global sales of the underwear market is expected to reach 325.36 billion US dollars, and domestic brands have sniffed market opportunities and have begun to lay out overseas business.
In July last year, one of the emerging brands in the lingerie market completed nearly $100 million in Series D financing inside and outside, and said that it would continue to expand its domestic and foreign channel business. As early as 2020, the overseas layout has been officially laid out overseas, and although the overseas first store planned to open in San Francisco has lagged behind due to the epidemic, the overseas official website was officially launched in October.
In addition, last year's double 11, Tmall Taobao overseas data show that underwear categories accounted for more than half of the top ten national goods out of the sea growth list, of which inside and outside, milk sugar pie, Ubras, banana, you tree are the new generation of underwear brands, sales compared with the same period last year all achieved more than 100% growth.
In addition to the advantages of the supply chain, there are also e-commerce operation experience forged under the full competition in China, and brands such as Milk Sugar Pie, Ubras, Inside and Outside, and Youshu tree are all rising rapidly with online traffic dividends. At the same time, domestic cross-border e-commerce platforms, independent stations and their service providers are also developing, and infrastructure such as payment, warehousing and logistics is also improving.
For domestic underwear brands, the existing market competition is already fierce enough, whether it is to broaden the category or break through the consumption circle, what is more important at present is how to find a new growth curve.
In the past year, keywords such as "soft fabric" and "comfortable fit" have appeared frequently in the comments of e-commerce platforms. Brands that emphasize comfortable and traceless size fits are all emerging, and the same cultural psychology overseas has opened up more space for brands to tell the same story, and domestic underwear brands have more possibilities to go overseas.
Neihe entered the New York boutique in 2014, but because he did not build a team in the United States, he did not continue to promote the brand's overseas business. In 2020, we refocused our attention on overseas markets, first determined the situation to open the North American market, and built our own team in San Francisco, USA, and launched the overseas official website in October.
After the establishment of the independent station, neither the inside nor outside did it invest in product research and development for North American consumers at the beginning, but more to serve the Asian community in the United States, and also accumulated a certain brand recognition in a small area.
But Liu Xiaolu said in March last year that the strategy will be shifted to localization. At the same time, aesthetics and style still adhere to the consistent brand tone inside and outside, but will be based on the figure of American women will make some version and other product adjustments. "In the United States, we will not tell the story of the body, but more will reflect our Oriental aesthetics and philosophy, like inner balance." This year, the core will launch some home clothes and simple and comfortable underwear to conform to the post-epidemic period in the United States. ”
For domestic underwear brands that want to go overseas, in addition to building independent stations online, they will also consider landing brand concepts and product characteristics offline, so that overseas consumers can have more real feelings about the brand. In 2020, Neihei had planned to open its first overseas store in San Francisco, but due to the impact of the epidemic, it could not be realized as scheduled.
As a particularly subdivided and professional field of clothing category, the category of underwear is faster and fashionable, and the unit price of customers is high, which can improve the turnover efficiency of all links of the industrial chain. Under the high international freight rates, underwear is more friendly because of its lightweight nature, making it more friendly to share the freight rate evenly. Under the premise that women's clothing competition is fierce enough, it is also a very ideal category choice for cross-border players.
Underwear out to sea, why hasn't there been a head brand yet?
Many practitioners who have previously done cross-border and independent station business have seen market opportunities and cut into the category of underwear and have entered the game. Under the cross-border investment in the first two years, many startups have also received financing. Everyone generally believes that the current market concentration at home and abroad is not so high, and there are some opportunities for emerging brands to come out.
Some entrepreneurs told Zhixiang Network that the company initially wanted to take advantage of the supply chain advantages accumulated by domestic factories for overseas underwear brands for a long time, to do cost-effective products for the North American market, benchmark Victoria's Secret, and sell unit prices of 40 to 50 US dollars. "We also considered fast fashion women's wear at the beginning, but the market was too rolled, and after evaluation, we felt that the lingerie track, although small, would be a very good emerging track."
But in fact, like all people who do cross-border business, many practical problems need to be solved in the process of advancement. "For example, if you want to enter the Amazon channel, you have to stock up first, how much?" What kind of money to prepare? What should I do if I can't sell it after going online? If you want money to be shipped back, you have to pay for freight, or you can only destroy all the goods. ”
Sellers who also do independent stations also have to worry about channels and delivery problems, but for many domestic brands, doing Facebook, Google and other delivery is completely different from domestic platforms such as Douyin, to some extent, "this is not our genes." Domestic e-commerce operation experience cannot be completely copied overseas, and all roads need to be re-walked.
Cross-border sellers who were previously platforms have suffered from the impact of Amazon's store closures, and merchants who do independent stations have also encountered the problem of rising traffic costs. Especially under Apple's IDFA privacy policy, the delivery efficiency is far less accurate than before. Compared with Sage X Fenty, Rihanna can make the brand ROI reach 21 by its own influence, but for most brands, spending tens of millions of dollars in marketing budgets, ROI can reach 8-10 is enough to be a good business, but the reality is that more brands ROI is even difficult to achieve 2.
"Some companies have raised more than 100 million yuan, and they can invest slowly, but we only get 20 million financing in total, which is not enough for their budget." Financing is definitely still talking, and at the same time, we can only continue to find other ways out. Guarantee to live first, we firmly believe that next year will be better, staying at the table is the most important thing. The above-mentioned person revealed.
Fortunately, for the domestic mainstream big brands, the domestic war is not saturated, the space is still very large, far from the point of overseas fighting, and for cross-border platforms such as Shein, the fast fashion women's wear industry is large enough, and it is not necessary to enter such a small segment of underwear, as long as it stays up, the opportunity to become the head brand in the future is still there.
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