Image source @ Visual China
Text | Tang Bohu
Bo Hu nodded: "Category first" is it deserved, or is it a short carnival?
Some investors have summarized the way to play new consumer brands: choose a differentiated category, both to avoid the competition of the head, the category volume can not be small; then open up the supply chain, find the foundry, the packaging must have a tone; and then online large-scale marketing, quickly occupy the traffic and user mind.
Recently, Banana, who has just submitted a prospectus to the Hong Kong Stock Exchange, has used this logic to become a "sunscreen harvester" for young people.
The question is, is there a new consumption life under the banana, and will it get the "disease" of new consumption?
Entering the sun protection market, gross profit margin of nearly 60%
Banana Xia, founded in 2013 by the two founders Ma Long and Lin Ze in Hangzhou. It is reported that the word banana is taken from "under the banana leaf", implying that the brand focuses on sun protection needs.
Since 2013, banana has launched the first sunscreen product double-layer small black umbrella.
After 2017, the product structure has undergone new changes. Bananas began to launch non-umbrella hard sunscreen products, broadening the categories to sleeves, hats and other categories. In 2019, it will develop into accessories such as sunscreen clothing and masks.
Looking at its new products in 2021, including more than 10 new products such as shell hats, sizeless underwear, folding sunglasses, shark pants, thick-soled canvas shoes, etc., the product categories are constantly expanding, and the ambition to enter the footwear market and the urban outdoor market is very obvious.
Taking sun protection as a keyword and rolling out the development of multiple categories, behind this is the huge opportunity of the sun protection market. All kinds of data show that Chinese consumers are voting on the concept of sun protection with their feet. From the perspective of the cosmetics market, Euromonitor consulting data shows that from 2006 to 2020, the compound growth rate of China's defense sun products market size was 11.6%, much higher than the global average growth rate. It is expected that the market size will reach 24.4 billion yuan in 2024.
This category "migration", the current results are still optimistic.
It can be seen from the prospectus under the banana that the proportion of umbrellas is decreasing year by year, and the sales contributed to the banana from 2019 to 2021 are 86.9%, 46.5% and 20.8%, respectively. The proportion of clothing categories (mainly sunscreen series and warm series) and accessories series (including ink mirrors, masks, shawls, sleeves and gloves, etc.) has increased year by year, and in 2019, the revenue of the latter two accounted for only 0.8% and 5.3%, and reached 29.5% and 25.4% in 2021, respectively.
In 2021, the clothing category will become the first pillar category, and the accessories category will become the second pillar category.
Screenshot of prospectus
At the same time, since the clothing category and accessories category are high-margin products, the increase in the proportion has also greatly improved the profitability of bananas. According to its prospectus, the revenue from 2019 to 2021 was 380 million yuan, 790 million yuan and 2.41 billion yuan, and the gross profit from 2019 to 2021 was 190 million yuan, 460 million yuan and 1.42 billion yuan, and the gross profit margin was 50.0%, 57.4% and 59.1% respectively.
Under the rapid development, the banana is dividing the industry share. According to the data of China Insight Consulting, in terms of total retail sales and online retail sales in 2021, Banana is the largest sunscreen clothing brand in China, accounting for 5.0% and 12.9% of the market share respectively. In 2021, online retail sales of sunscreen clothing under bananas are 5 times that of the second largest brands.
"Big-handed" marketing, R&D "left behind"
When it comes to new consumption, it is naturally inseparable from traffic. Specifically, marketing and channels. Marketing generates traffic, and channels undertake traffic.
It can be seen from the prospectus that the expenditure on marketing under the banana is particularly "large-scale". From 2019 to 2021, the distribution and sales expenses under bananas were 125 million yuan, 323 million yuan and 1.104 billion yuan, accounting for 32.4%, 40.7% and 45.9% respectively.
Distribution and sales expenses under the banana mainly include advertising and marketing expenses, e-commerce platform service fees, transportation and logistics expenses, employee welfare expenses, commissions paid to retail store partners and others, other personnel costs, depreciation of right-of-use assets and travel expenses, of which advertising and marketing expenses account for 9.6%, 15.0% and 24.4% of revenue, respectively.
That is to say, in 2021, bananas will spend a quarter of their revenue on advertising and marketing. In 2021 alone, Banana worked with more than 600 KOLs that generated 4.5 billion views across the brand. In the Little Red Book search for "banana", there are more than 40,000 notes.
Banana also often patronizes the live broadcast rooms of big anchors such as Li Jiaqi and Luo Yonghao. According to Fatball data, Li Jiaqi brought goods for bananas three times from May 10 to June 10 last year, with 7 kinds of products on the shelf and sales of about 28.8 million. In the same month, Banana also cooperated with 63 anchors on Taobao Live, in exchange for 117 million sales.
In terms of channels, bananas also adopt the DTC model, similar to the recent domestic fires of lululemon. Its operating channels mainly include self-operated channels and distributors, of which, self-operated, channels include online malls, e-commerce platforms, offline retail stores and other sales, this part of the channel revenue for three consecutive years more than 80%. Among them, from 2019 to 2021, the revenue from online accounted for 74.31%, 77.81% and 80.86% of the total revenue, respectively.
Screenshot of prospectus
In terms of retail stores, as of 2021, Banana has 66 stores in 23 cities across the country, of which 35 stores are directly operated and 31 are cooperative stores. From 2019 to 2021, retail stores and other revenues accounted for 8.1%, 4.0% and 2.7% of the total revenue in the same period, respectively.
It is worth noting that the great contrast with marketing is the investment in research and development. According to the prospectus, from 2019 to 2021, the R&D expenditure under the banana was 0.19 billion yuan, 0.35 billion yuan and 72 million yuan respectively, and the proportion of R&D expenditure in total revenue decreased from 5% to 3%.
Behind this is inseparable from the FOUNDG model under the banana. According to the prospectus, in terms of production, banana outsourced all production to contract manufacturers in the next three years, and contract manufacturers set production by sales. The outsourcing model undoubtedly reduces the pressure of funds and costs in the early stage, but after the rapid development of the brand, it is still mainly outsourcing, which is easy to bring hidden dangers of quality and cost that are difficult to control.
Therefore, is this title of "category first" truly deserved, or is it a short carnival of marketing that will "wobble" before long?
Can you escape the robbery of new consumption under the banana?
The way the banana is played is the same as the perfect diary.
Last year, Perfect Diary's parent company, Yixian E-commerce, went public in the United States for an issue price of $10.50. In the past year, the stock price of Yixian E-commerce has plummeted by more than 90%. Relying on marketing to get out of the circle quickly, but eventually planting a heel in research and development innovation.
This has also led to speculation in the industry that bananas will become the next "perfect diary" and suffer from the disease of new consumption.
We can't give a definitive answer, but we may be able to get some ideas from the development process under the banana.
Compared with the "stagnation" of Perfect Diary in makeup, there are more gratifying changes under the banana, that is, obvious results in the development of the whole category. To a certain extent, this makes the product structure under the banana tend to be more stable and healthy.
In its prospectus, Banana mentioned that it insists on a unique methodology for creating selected items, so most of its revenue comes from a limited number of best-selling items. This "blockbuster style of play" has undergone some changes in the past three years. From 2019 to 2021, the revenue generated by the top 30 hot-selling selected items accounted for 99.8%, 88.6% and 74.1% of the total revenue, respectively, and the proportion decreased year by year.
To some extent, the decline in explosive income is more conducive to maintaining a stable product structure and enhancing the ability to resist risks.
However, it cannot be ignored that the playing style of "big single products" has great requirements for the professionalism and research and development ability of bananas. Product functionality is the basis for building differentiated competition under bananas.
In terms of research and development, Banana has 123 patents in China, and has also accumulated core technologies such as Airloop fabric, original yarn sunscreen technology and omnidirectional push-pull honeycomb technology. At the beginning of 2020, a sunscreen clothing using Airloop fabric launched by Banana has reached sales of 280 million yuan in 2021.
The problem is that the proportion of R&D expenditure in the total revenue of the past three years under bananas has decreased year by year. The data shows that from 2019 to 2021, its R&D expenditure accounted for 5.2%, 4.5% and 3.0% of the total revenue, respectively. Furthermore, the gradual reduction of the proportion of research and development can support the "big single products" under the banana to continue to break the circle?
As mentioned in the prospectus, if the popularity of a best-selling item decreases and it is not possible to launch a replacement product in time, or a new best-selling item cannot be launched, the sales and profits under the banana may be affected. All in all, a healthy and stable product structure is needed under the banana, but the "explosive single product" must be an indispensable big head.
In the prospectus under the banana, it can be seen that for the subsequent development, it has a clearer positioning - sunscreen is only the starting point for exploring the urban outdoor lifestyle, and the future focus is on the shoe and clothing market and the urban outdoor market, and position itself as an urban outdoor brand.
But in fact, in the field of sun protection, bananas can be called "the best". After stepping out of the market segment, the same rapid growth as the market cake is the players in the shoes and clothing and outdoor markets.
The prospectus also mentions that bananas intend to use the funds raised for product development and enhance research and development capabilities, improve brand awareness and awareness, strengthen omni-channel sales and distribution networks, improve supply chain management, and digital operations. It can be seen that Banana also understands that listing is not a victory, and enhancing research and development capabilities, creating more explosive products, and maintaining the healthy development of product structure are important measures after the "fire".
Whether it can escape the robbery of new consumption probably depends on whether bananas can continue to charge at the product level.
References:
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