Source: Fruit Collection
"Chinese pearls are in Zhuji. "Chinese bags look at Guangzhou. ”
The source factory brand is becoming a new trend on Douyin e-commerce. More and more young people are falling in love with cost-effective "white labels".
Alibaba, Douyin, JD.com, Pinduoduo and other e-commerce platforms are gradually increasing investment in industrial layout. In order to adapt to this new trend, Make a Friend also launched a new live broadcast room brand "Factory Sales".
With the support of e-commerce platforms, how can the source factory realize the gorgeous transformation from "behind the scenes" to "in front of the stage"? How will this cooperation model reshape the future e-commerce ecology?
01 Source factory + live broadcast e-commerce, why did the flat girl fall in love with 1688?
On December 17 last year, the Make a Friend live broadcast room launched a new brand "Factory Sale", focusing on selling goods from the industrial belt through live broadcast channels, aiming to allow customers to buy products at factory direct prices.
According to official data, during the premiere, "Factory Sales" achieved sales of more than 1.03 million yuan, attracted more than 322,000 viewers, and sold 13,600 pieces.
Source: Make a friend
However, nearly a month after the start of the broadcast, the popularity of "factory sales" seems to have decreased. On Douyin, the official account has only grown to 28,000 followers.
Source: Feigua Data
Feigua data shows that since the start of the broadcast, the sales volume of the "Factory Sales" live broadcast room has shown volatility and has not shown a continuous growth trend.
Perhaps, this phenomenon reflects a reality: although source factories are gradually becoming a popular choice for e-commerce platforms and live broadcast rooms, it is becoming more and more difficult to achieve "landing on the beach" in the field of "factory direct sales".
In the past 2023, the low-price strategy has occupied a crucial position in the e-commerce industry.
Behind this trend is the ultimate pursuit of cost performance by young people, and the "flat replacement wind" is raging.
In addition to the consumer side, in terms of supply chain, the advancement of digital technology and logistics technology has made the supply chain more transparent and efficient, and the source factory can respond to market changes more quickly, realize small-batch and multi-frequency production, and meet the e-commerce model of "small orders and quick returns".
These changes have directly promoted the rise of the source factory brand in the C-end market.
Smart consumers began to place orders from factories on 1688, not wanting to pay the "IQ tax" to the brand anymore.
In Xiaohongshu, some people have directly sorted out the big-name source 1688 factory to facilitate everyone's "purchase".
Source: Little Red Book
This trend not only reflects consumers' re-examination of brand premiums, but also reflects their pursuit of the essential value of products.
In the small B-end market, the influence of 1688 should not be underestimated.
Advanced small and medium-sized retailers, such as Xiaohongshu bloggers, Taobao sellers, Douyin anchors, college student entrepreneurs, etc., usually face supply chain management challenges. They need a stable and efficient supply chain to support the rapid growth of their business. By integrating the resources of the source factory, 1688 provides these small B-end merchants with a centralized procurement and dropshipping solution, which greatly reduces their operating costs and risks.
Especially in live e-commerce, it has become a common form for anchors to sell goods without a source.
Anchors sell goods on platforms such as Douyin through a dropshipping model, and the standard products such as clothing and accessories, beauty and personal care products, and household and daily necessities that you usually see in Douyin influencer videos are often from 1688.
In the past, there were store visits, and now there are "factory visits", and these self-media bloggers will share their factory visit experience on social platforms to accumulate C-end buyers.
Source: Little Red Book
In order to retain them, 1688 also took a series of measures.
In September 2022, the 1688 platform launched a new feature called "1688 Strict Selection", which is an official certification label given to merchants after screening, mainly focusing on providing "brand replacement" products. These products are sometimes labeled as "Tmall New Product Same Model", "Sam Pingti", "Decathlon Pingti", etc., directly pointing to their similarity with well-known brands.
Source: 1688
The launch of this feature is due to the "fully managed" business model of the 1688 platform. In this model, those factories that lack traffic acquisition, marketing strategies, and C-end delivery capabilities only need to provide products, while marketing and sales are undertaken by e-commerce platforms.
Further, in September 2023, 1688 launched a membership-based "white label supermarket" PLUS membership store. Users who become PLUS members will be able to directly purchase products exclusively for well-known brands such as "Sam", "MINISO", "MUJI", and "ZARA".
According to public data, at the end of 2023, according to the data released by the 1688 platform, the number of 1688 merchant members exceeded 1 million, of which 600,000 were source factories. At the same time, the number of buyers of 1688 has also hit a record high in recent days.
Under this trend, Alibaba's 1688 platform has been mentioned to a higher strategic position. In the future e-commerce battlefield, the industrial belt has become a battleground.
02. E-commerce giants vigorously increase the industrial belt, how can the source factory gain a firm foothold?
In traditional markets, source factory brands are usually upstream in the supply chain, responsible for the production and processing of products, but often lack direct-to-consumer sales channels.
This puts them at a disadvantage when it comes to branding and marketing, making it difficult to establish a direct connection with consumers, as well as to obtain market feedback to guide product development.
In addition, source factories often rely on orders from large brands, which limits their bargaining power and market adaptability, making them vulnerable to market fluctuations.
How can factories leap into the era of live broadcast e-commerce, how to achieve a gorgeous turn from "behind the scenes" to "in front of the stage"?
Most notably, the factory's supply chain upgrade.
For example, from the foundry to the brand, "Shirt Lao Luo" has successfully implemented a flexible production model in the upgrade of the digital supply chain, which allows them to quickly adjust their production strategies and product development based on real-time data from e-commerce platforms and consumer feedback.
In the traditional production process, it takes at least two months from the acceptance of the order to the completion of the product.
Now, however, thanks to this innovative model, Shirt Lao Luo is able to reduce the time from the design concept to the delivery of the finished product to the consumer to just 15 days.
The digital supply chain upgrade of Shirt Lao Luo not only shortened the time from design to delivery of the product, but also provided strong support for its layout on the Douyin shelf.
Through a real-time data-driven production model, Shirt Lao Luo is able to quickly respond to market trends and consumer needs, ensuring that the products on Douyin shelves are always up-to-date and satisfying users' instant purchase desires.
Report: 2023 H1 Douyin Shelf Scene Opportunity Insight Report
According to the Guoji industry research report, Shirt Lao Luo has adopted three major strategies to increase sales in Douyin e-commerce: one is to optimize the main image of the store, enhance the visual appeal, and increase the click-through rate, the second is to enrich SKUs to meet diversified needs and increase exposure opportunities, and the third is to unify live broadcast and shelf prices to enhance consumer trust and promote conversion.
This innovative model, which combines live e-commerce and digital supply chain, provides a reference path for other source factories to transform
The explosion of the source factory in the small B-end and C-end markets also benefits from the strong support of the e-commerce platform for businesses in the industrial belt.
You must know that Pinduoduo relied on white-label products to fight a world in the gap between the two giants of Ali and JD.com.
According to public information, in the early days of Pinduoduo's establishment, more than 90% of its products were white-label products. As of November 2022, white label and new brand merchants accounted for 67% of GMV.
The white label on Douyin is also not to be underestimated. In March last year, a beauty white label named "Haijieya" broke out of the encirclement on Douyin, and even topped the list in all categories of Douyin, and its performance far exceeded that of well-known brands such as Proya, Estee Lauder, and Huaxizi.
At present, major e-commerce platforms are also actively expanding the layout of the industrial belt to seek new growth points. This trend has also put competitive pressure on the traditional 1688 platform.
In terms of Taotian, in December last year, the group's Tao factory and nearly 30,000 source factories in the industrial belt launched the first "Factory Goods Festival". Taobao has also launched a series of support policies, such as selected pallets and free traffic packages, to support the growth of new merchants with practical actions.
In terms of Douyin e-commerce, factory-type stores are forming a new business trend, forming a source industrial belt cluster, and actively exploring the C-end market. Douyin has released the "Douyin Industrial Belt Service Provider Rights", and businesses in the industrial belt can use Douyin's rich Internet celebrity and talent resources to promote products and increase exposure.
In terms of Jingdong, in the "9.9 yuan free shipping" channel, hundreds of industrial belts have been launched, and the sales volume of the source products of the industrial belt has exceeded one million.
As the popularity of the source factory continues to rise, the support of the e-commerce platform and its own efforts, the white label goods and the source factory are gradually getting rid of the negative image of the past.
The so-called "white label" does not refer to low-quality products, but refers to those products that are produced by small and medium-sized manufacturers and do not have a high brand awareness.
At present, many head live broadcast rooms, such as Dongfang Selection, Brother Xiaoyang, Make a Friend, etc., are taking the road of "self-built brands", and the essence of these brands is often high-quality white-label products.
However, as the source factory is moving more and more to the forefront, it will inevitably lead to a situation of "more monks and less meat".
According to the data, among the buyers of 1688, 48.8% of Gen Z are between the ages of 25 and 30, and 44.9% are among the new middle class between the ages of 30 and 35.
This data is enough to show that the current popularity of white brands is inseparable from the pursuit of young consumers, but this also buries a hidden danger: will young consumers choose "expensive substitution" after their purchasing power increases, so as to get rid of their dependence on white label source goods?
In addition, can the factory's direct sales to the C-end really bring higher profits, and does the factory have the ability to continue to compete at low prices?
Here, we can roughly guess that the future development direction of White Label may be to get rid of the label of "homologous factory" and strive to build a real brand.
There are already many successful cases, such as @shirtlaoluo, @东黎羊绒等.
At the same time, white-label products also need to become the strongest category of "brand replacement" products selected by small B-end buyers in the C-end market, so as to consolidate and expand market share.
Here, there is an interesting concept of "China's MUJI era".
The rise of white-label products in the Chinese market echoes the "no brand" philosophy advocated by MUJI.
By removing the brand logo, MUJI emphasizes the original value and utility of the product, which is similar to the market positioning of white label goods, which is to provide unbranded but reliable quality products.
Of course, the rise of white label merchandise does not mean the end of the era of branding.
In the era of comprehensive discounts, brands need to remove unnecessary premiums and offer truly valuable products to adapt to the fierce competition in the market. There are still opportunities for premium brands, but they must clearly demonstrate to consumers where the value of their products lies.
Live e-commerce reduces the cost of OEM branding, greatly shortens the path from marketing to transaction, and provides a new stage for white-label products to show their own value and establish brand stories.
But the thinking of being a factory and being a brand is different.
First, if the foundry wants to transform the brand, in addition to hard work in manufacturing, it must also keep up with the style design, service quality and scientific social media marketing.
Second, it is necessary to do a good job in data insight and analysis, understand consumer preferences, which is the key for e-commerce to grasp the success password.
At present, white label goods and source factories are standing at the crossroads of transformation. Through the emerging platform of live-streaming e-commerce, they are able to reach consumers directly, demonstrate the quality and cost-effectiveness of their products, and thus occupy a place in the market. However, to make the transition from producer to brand, factories must invest more in design innovation, service enhancement and marketing strategies to meet consumers' demands for quality and personalization.