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New knowledge of | science and technology
Major sports brands around the world are still pouring into the metaverse, using digital collections to expand their own territory.
On March 21, Xtep held a new product launch conference and launched a digital collection running shoe called "160X-Metaverse", so far, the top three domestic sports brands have invariably taken a similar first step towards the meta-universe.
According to incomplete statistics, Nike, Adi, Puma, Under Armour, Asses, New Balance... Including domestic brands ANTA, Li Ning and the latest addition of Xtep, it has "shown its fists" in the meta-universe through a series of actions such as joint signature, cooperation and acquisition.
Nike spent $200 million to acquire RTFKT, a company that specializes in NFT sneakers, and the most successful sub-brand, Air Jordan, partnered with Fortnite to launch virtual sneakers.
Adidas launched 30,000 "into the metaverse" series of NFTs and partnered with the Team Behind the Bored Ape Yacht Club, Gmoney, and Punks Comic.
Puma collected multiple feline NFTs, and on Twitter changed the previous PUMA to "PUMA.eth", and the "new name" itself soon became an NFT.
It is not difficult to understand the mind of sports brands to lay out the NFT business, and all business activities are ultimately aimed at profit. At a time when the metaverse is still just a noun concept, the launch of digital collections has been used as a marketing act.
This trait is even more pronounced in domestic brands. Although it belongs to the same crypto art system, foreign NFTs have stronger financial attributes, while domestic NFTs are not allowed to transact, and the significance of NFTs is mostly defined by digital collectibles. Not long ago, WeChat publicly stated that it has taken measures such as cracking down on digital collection transactions and banning the public accounts of digital collection platforms that speculate and sell digital collections for the second time.
This means that the launch of "digital running shoes" at this time is a precautionary layout meta-universe, but also a marketing test for young user groups, the eagerness of the millennium old three can be understood, but the use of NFTs to establish brand interaction with young users, is it really reliable for Xtep?
01, Xtep can not keep up with the pace of young people
As a member of the "Jinjiang System", Xtep is in line with the development of domestic sports shoes and apparel brands. From the foundry to the creation of its own brand, it has also contracted the CCTV prime advertising period with Li Ning, ANTA, Hongxing Erke, Peak, 361°, etc.
But now, the special step that has been chasing Anta Li Ning is also trending, and the two are thrown farther and farther away in various data.
In terms of revenue, ANTA Sports achieved revenue of 49.328 billion yuan and Li Ning 22.572 billion yuan in 2021, and Xtep's latest financial report shows that the revenue has just crossed the 10 billion mark, reaching 10.013 billion yuan.
In terms of net profit, ANTA's net profit attributable to its mother was 7.72 billion yuan, Li Ning's net profit was 4.011 billion yuan, and Xtep's was 908 million yuan; in terms of market capitalization, as of March 31, ANTA's market value was HK$262.628 billion, Li Ning's market value was HK$173.759 billion (Hong Kong stocks), and Xtep was 30.722 (Hong Kong stocks) billion Hong Kong dollars.
In terms of macro data, although Xtep has always ranked third, it is no longer in an echelon with Li Ning Anta. Several other data can also see the embarrassment of Xtep's confinement to second-tier brands.
First of all, in terms of the number of stores, the number of stores in the past three years has not increased much compared with previous years, mainly adopting the strategy of large stores and accelerating the opening of stores in second- and third-tier cities, consolidating core users and avoiding front-line brands, but brand upward penetration is also becoming more and more difficult.
The spread of emerging things in the digital field generally follows the law of top-down, and the virtual value and social attributes of NFTs are difficult to attract young users in the second and third lines. For leading brands, whether in the name of digital collections or NFT gimmicks are the icing on the cake, brand awareness can be seamlessly connected with digital assets, but non-first-line does not have this privilege.
Slow-growing gross margins are another major problem for Xtep. The financial report of the past five years shows that Xtep's gross profit margin has been maintained at 40% to 45%, and 361° flat. In contrast, Li Ning has risen to more than 60%, and Anta is about to break through 70%; in terms of net interest rate, Xtep is the lowest of the four major brands, only 10%.
Low interest rates are inseparable from Xtep's brand positioning, and the marketing strategy of focusing on cost-effectiveness has dragged down the hind legs of brand upgrading. Even with the blessing of the national tide, the vast majority of glory is divided by the head. There is the proud son of heaven Li Ning and the stride upward Anta in front, Xtep can only retreat to focus on the field of running, sponsoring marathon events can make Xtep more professional, but there is no way to be more fashionable.
In 2019, Xtep began to acquire high-end brands for the world, and Geswell and Paladin completed acquisitions during this period. However, like the growth and embarrassment brought by FILA to ANTA, relying on acquisitions to make up for high-end shortcomings has not helped the main brand much, the crowd of people who buy Xtep running shoes has not changed significantly, and small-town youth are still the core users of Xtep, and it is also a zone that NFT has not yet been wrapped up.
Consumers who divide their tastes by brand have begun to have a greater sense of trust in domestic products, which is one of the internal factors for the rise of the national tide. Li Ning's 1499 yuan shoes were fried at a sky-high price of 48889 yuan, and young people could not understand it, but they would realize that in the domestic brand, Li Ning could be fried. ANTA has not even been able to have the trait of "letting young people chase", let alone Xtep.
The development of NFTs, imperfect markets with a huge bubble swept in, the unfinished lesson is difficult to rely on the concept of the first virtual world to complete, Xtep's digital running shoes try to establish a sense of trust with young users at the same time, but also consume only the brand value of domestic products.
02. How to use NFT to cut a short path?
The more complex real problem of Xtep is that it is facing a brand battle that accompanies channel transformation.
The transformation of the traditional distribution system is a big test for every sports brand that started from the foundry.
Ten years ago, the huge inventory crisis that broke out in the sports market became the last straw that overwhelmed many shoe companies, and Li Ning Anta adjusted his thinking, gradually shifted the brand wholesale model to the brand retail model, and completed the transformation with difficulty.
But to this day, the large wholesale model is still one of the pillars of Jinjiang shoe enterprises. Muddy Waters has published five articles to short ANTA, repeatedly questioning ANTA's collusion with dealers to create a false prosperity in earnings reports; Li Ning immediately fell into an inventory crisis after catching up with Nike in the Chinese market in 2011, and also relied on large-scale repurchase of old goods to scrape bones and heal chronic diseases.
Xtep reacted more slowly than Anta Li Ning, and only put the three-year transformation plan on the company's strategy in 2015, and it was not until 2019 that it dared to say that it completed the strategic transformation from the brand wholesale business model to the brand + retail management model. At this time, Li Ning has occupied the highland of national tide cognition with the New York fashion show, and has come to the latest stage of domestic product competition.
That is to say, when others began to fight for design and brand influence, the focus of Xtep was still going around in the manufacturing and sales links. This has also caused the gap between the xtile and the head to be widened again, and it is still the role of a follower.
Li Ning took the lead in playing the label of "China", Xtep retreated to the second choice of "Chinese Kung Fu", cooperated with the Shaolin Temple, tried to create a new national tide IP; FILA turned a profit to help ANTA complete the high-end brand layout, Xtep acquired Geswell and Palatin, and created a multi-brand strategic matrix.
It is obvious that Li Ning's national tide strategy not only seized the opportunity, but also a series of supporting actions to incubate the sub-brand "China Li Ning"; ANTA reversed fila's losses and made it the pillar of the group, which took nearly a decade; and it was difficult to make a "qualitative" leap in the short term by rubbing the national tide and acquiring foreign brands in a big way.
At this point, the problem is clear and trickier. On the one hand, it is the channel transformation to the middle of the line, how to pass through or bypass the layers of distribution system to reach consumers directly.
On the other hand, it is the imminent brand upgrade, how to run into the consumption cognition of front-line young people. Thus, the digital running shoe "160X-Metaverse" was born.
Rather than the uncertainty of whether the digital collection is a meta-cosmic passport, Xtep firmly believes that this action has a high-level interaction with the user community, and the resulting more direct reach and brand image remodeling.
From the choice of the first NFT, you can also glimpse the intention of Xtep, the 160X series is the main style of Xtep's functional products, with technology to help racing as the selling point, is one of the few high-end products of Xtep, with a price of nearly 1,000 yuan.
As long as it is a place where young people gather, sports brands will not let go. The digital collection is currently a virgin land that can be reclaimed, and the difficulty of Xtep is the lack of digital genes.
Xtep's main line products are concentrated in the field of running, high-end product lines are mainly functional running shoes, sponsoring a number of marathon events has always been a measure that Xtep is proud of, which is also the crux of the release of digital collections for Xtep forms greater than the significance, the lack of collectible objects on the product line, in the NFT field for the purpose of scarcity and personalized collection, Xtep did not have a "traffic password" to hand.
03, NFT when self-improvement, or according to the gourd painting scoop?
The NFT platform seems to be becoming the new social venue.
This is also why Nike, Adi, and Puma are not willing to let go of this new opportunity. How to get out of a unique NFT development path is also a problem that brands must consider.
Nike, which has a keen sense of smell and is good at creating momentum, first acquired the virtual sneaker brand, and then in February this year, it airdropped the holders of the "Clone X" NFT as a virtual space PodX that can display the NFT collection, and a mysterious box called "MNLTH".
Nike airdrop mysterious box
Unknown along with speculation and pursuit, Nike's mystery box price continues to rise, the current "MNLTH" on OpenSea to sell for 4.5 ETH ($12325).
Not to be outdone, the 30,000 original NFTs sold can be redeemed in the store, and throughout 2022, these NFT holders have the opportunity to get 4 exclusive physical products for free, and when they choose to redeem the physical goods, the NFTs are destroyed and then a new NFT with a higher number (such NFTs are generally numbered and the higher the value). The interaction generated by this delivery is constantly spread along with the update of the gameplay, and it also improves Adi's user stickiness again and again.
Domestic brands are limited by their limited understanding of emerging things and the niche of the NFT market, and it is difficult to have a breakthrough in the gameplay, which also causes the marketing campaign in the name of NFT to be more like a self-congratulation that does not want to be absent.
Puma, the third largest international sports brand similar to Xtep, also has reference significance.
It continuously attracts NFT and Web3 enthusiasts with similar tastes on social platforms by collecting feline NFTs that echo the image of cheetahs on the brand logo, and further deepens users' awareness of the brand through the process of selective collection of feline NFTs.
The reason why Xtep chose the 160X running shoes is also that this running shoe carries the image of the "running shoe professional" that Xtep most wants to create, but the difference with Puma's NFT path is that this single product interaction does not have the circle breakthrough and brand imagination that non-figurative collections can bring.
Puma chooses three different circles of cat lovers, Puma users and NFT enthusiasts, and the resulting chain reaction. Xtep only has the connection between the two points of "running shoes - users", which seems to be greatly reduced in the transmission effect.
Exploring the rhythm that suits you on the gameplay demonstrations of many pioneering brands may be the only choice for Xtep for a long time.
It can be reasonably speculated that sooner or later domestic players will introduce the game of exchanging physical products with NFTs, and a collection, a joint name, and a redemption method have emerged too much, and emerging users also need to constantly stimulate and maintain FOMO emotions (Fear of missing out refers to the anxiety of always worrying about what to lose or miss).
How to bring value to users by NFTs that are not allowed to transact twice, domestic brands are facing the same problem, and it is particularly complicated for Xtep to solve. The strength of the non-frontline is both a cause and an effect, there are too many leaders, and the follow-up strategy can only continue to be executed.
Anta and Li Ning are no longer "poor boys", and it is still difficult to create an IP that has enough influence and can resonate widely. NFTs are sweeping the business world, rules, crowds, gameplay... Brands face more than one mountain.
Resources:
"Puma "renamed", the three major sports giants "turned to" NFT" - Tiger Sniff Network
"Leading in the field of running segmentation, multi-brand enters a new stage of development - the first coverage report of Hong Kong stock companies" - Open Source Securities