The industry return rate is 80%? What else can practitioners who refuse to accept their fate do?

Faced with the challenge of high return rates in the apparel industry, this article explores in depth how to achieve a win-win situation for brands and consumers through quality-price ratio and innovative strategies. It is recommended for apparel industry practitioners and e-commerce operators to read.

It seems to be increasingly difficult for consumers to buy a piece of clothing that satisfies their needs. Faced with problems such as high return rates and difficulty in grasping the trend of hot-selling products, many clothing brands have had to close their e-commerce channels. Some even jokingly warned latecomers: "If you want to lose money quickly, start a clothing e-commerce business."

However, on the Pinduoduo e-commerce platform, clothing merchants have shown a completely different picture: they are not only actively expanding their stores, but some brands' single product sales have repeatedly exceeded the million mark, and their performance has steadily increased; some brands have taken advantage of the opportunity to "upgrade", adjusting their pace to provide more cost-effective clothing products. This issue of Micro Story will enter the world of three clothing brands: NetEase Yanxuan, Kocotree, and Xiongjiashe. Among them are national brands, old brands that have gone through 15 years of offline and online ups and downs, and emerging brands that will only focus on 2022 but will have sales of over 100 million in 2023.

In their stories of "how to help consumers buy clothes that they like", we will witness the profound changes that are taking place in the clothing industry - the era of price-performance ratio, which was based on "price" as the only criterion, is gradually replaced by a new era dominated by "quality-price ratio". In this process, e-commerce platforms are no longer just a virtual trading space, they must also devote themselves to this change and create real value together with merchants and consumers. The tide of the times is like a torrent, surging forward, and no one can stay out of it.

Here are their true stories.

1. I will never be able to buy the clothes the anchor is wearing

Complaints from clothing consumers on social media platforms have been rising one after another, forming a wave that cannot be ignored. Some people are disappointed that the goods do not match the descriptions. They lament: "I can never buy the one the anchor is wearing." They say that the goods they actually receive are often very different from the promotional pictures:

There are complaints about uneven quality. Even if the pants are marked with the same waist size, the actual size may be very different. Even products of the same brand may have inconsistent sizes:

Figure | Three pairs of pants with waist circumference of 76cm

Some people call the comparison after purchase "photo cheating". Those clothes that look bright and beautiful on models, once consumers get them and remove the filter, often only get a reply of "difficult to evaluate", and eventually become part of the return order.

Some consumers thought that price might be the problem, but they soon discovered that even expensive clothes could not guarantee quality. Many expensive clothes are 100% polyester - polyester is a synthetic fiber and a relatively cheap material for fabrics. Consumer dissatisfaction with clothing is gradually accumulating and can be ignited at any time. Faced with the high return rate, those who really want to work in the clothing industry can't help but raise a question from the bottom of their hearts: what kind of clothing are consumers looking for this generation?

2. We are willing to spend money, but we don’t want to waste it

A highly praised comment on social media may give the best answer: "We consumers want to buy clothes with good quality, high cost performance and suitable for going out." "Consumers are willing to spend money, but not to waste it. They care more about the quality-price ratio," said Guo Hongkai, founder of the post-90s clothing brand "Xiong Jiashe".

In recent years, Guo Hongkai has deeply felt that "the clothing industry has changed." In 2019, when Guo Hongkai first entered the clothing industry, the entire market emphasized "cost-effectiveness". As long as the price was cheap enough, there would be no worries about sales. Guo Hongkai himself earned his first pot of gold in the clothing industry by selling nearly 10,000 belly bands, a white-label product priced at 19.9 yuan.

"But now price is not the only factor, consumers are also concerned about quality," Guo Hongkai explained. In the fierce market competition, in order to ensure profits, many businesses sacrifice quality, which has led to changes in the consumption concepts of many users. Providing products with high quality-price ratio has become a way out for businesses. After understanding the changes in user needs, Guo Hongkai gave up the white-label route and started operating the "Xiongjiashe" children's clothing brand in 2022. After upgrading the supplier sampling link to a self-built full inspection team, he began to impress consumers with quality.

Facts have proved that Guo Hongkai's decision was correct. In 2023, Guo Hongkai's annual transaction volume was 4.65 million orders, of which the annual transaction volume of the "Xiongjiashe" brand was 3.27 million orders, and the return rate was also far lower than the industry average. What makes Guo Hongkai most proud is that the most common comment in his four stores on Pinduoduo is "very good quality, I like it very much."

Figure | Comment area for Xiongjiashe single product sales

"For consumers, the 'value for money' of clothing is equally important ," said Zhu Linqiang, brand operations director of Kocotree. As a children's brand established in 2009, Kocotree has seen a growth of more than 100% on Pinduoduo in recent years. It currently has 6 stores on Pinduoduo, with an average daily sales of about 30,000 orders and monthly sales of more than one million items, making it a well-deserved top merchant on the platform. One of the brand's hats, priced at 49 yuan, was so popular among consumers that it sold one million hats.

This has also raised questions from many users, "Why would parents spend 49 yuan to buy a summer hat for their children at Kocotree?" After all, children grow up quickly, and there are so many products to choose from on the market. Spending 49 yuan on a small hat is not really a good deal. "This is something that many people have not discovered yet. The consumer mentality has changed," said Zhu Linqiang. The team once conducted a special survey and found that it was not that parents could not afford a 49 yuan hat, but that children's things are often "practical" and most of them are simple in style and look similar at first glance. Therefore, price has become a decisive factor, and everyone can only "compete" on price.

The post-90s and post-95s generations have gradually become the backbone of parenting, and they also have their own unique insights and pursuits in parenting. They like to record their children's growth process more than previous generations, and are more eager to share their children's growth on social media. They are also keen to dress their children up to be both fashionable and cute, even if it costs a lot of money. After noticing this change, the Kocotree team changed its design strategy. In order to cover a wider range of people, it began to pay attention to consumer needs and added multiple product categories such as "outdoor" and "sun protection" to provide consumers with more choices.

In terms of clothing design, in addition to replacing the previous colorful cartoon patterns with softer, abstract patterns, they formed a special clothing team to design children's clothes.

"We are building a moat with design and service," said Zhu Linqiang. That is why, in the ever-changing clothing industry, the Kocotree brand is still growing rapidly, and the price range is wider. "There is no shortage of powerful buyers on Pinduoduo," this is the consensus of merchants such as Guo Hongkai and Zhu Linqiang, and it is also a true portrayal of Pinduoduo's e-commerce.

3. The platform helps merchants find business growth

Although many businesses have realized that "quality-price ratio" and "appearance-price ratio" are the keys to success in the clothing industry, this does not mean that businesses are facing an "open-book" exam. As a typical non-standard industry, the clothing industry faces the dual challenges of severe homogeneity and huge inventory pressure. Only by achieving a high turnover rate and quickly recovering funds can a brand enter a virtuous cycle. This means that only when the goods are selling well and the survival pressure is solved can businesses invest more energy in product quality and design aesthetics.

Many businesses are exploring the "explosive order" strategy, but this is the most challenging - especially for small and medium-sized brands and emerging brands, they lack sufficient resources, funds and time to gradually build brand influence and trust. In the absence of "trust endorsement", consumers and businesses are in a "double-blind" state and can only be randomly matched on the dimension of price.

E-commerce platforms represented by Pinduoduo have provided a new solution: through strict multi-dimensional assessment, they screen out high-quality brands and grant them "black label" certification; at the same time, through activities such as the 10 billion yuan subsidy, they help merchants solve traffic problems. The results of this model are obvious. "80% of our sales in the past three months have benefited from the 10 billion yuan subsidy plan,"

Zhu Linqiang explained that the sales volume of the clothing industry is directly linked to the exposure of the products. After the exposure of the 10 billion subsidies, the sales volume and store weight of the brand also increased, while driving the sales of other products in the store, thus forming a positive cycle. Guo Hongkai also frankly stated that as an emerging brand, after obtaining the "black label" certification of the platform, with the official trust endorsement, the brand's traffic has increased significantly. Considering that many merchants are still in the exploratory stage when they enter Pinduoduo, and the team and human resources are relatively limited, Pinduoduo also provides operational guidance and support for these brands. For example, after Guo Hongkai's brand "Xiong Jiashe" experienced its first explosion of orders, the Pinduoduo team immediately provided operational support to help them through the most tense period of manpower.

On the other hand, due to the diversification of fashion trends, the "hot items" in the clothing industry are becoming increasingly difficult to predict. Usually, merchants need to launch a large number of new models to increase the chances of "hot items", which leads to extremely high product launch costs and merchants have to cut costs in other links. In order to reduce development costs and cycles, so that merchants can improve in design, fabrics, technology, consumer experience, etc., the forward-looking help provided by the platform is crucial.

NetEase Yanxuan said that it will implement a "focus" strategy starting from 2021, allocating resources to products that are more popular with users and have higher praise rates, and boldly abandoning products with poor reputation and low efficiency. In the clothing category, in order to ensure that every product is carefully polished, the NetEase Yanxuan team will conduct in-depth cooperation with Pinduoduo's operation team before the new products are launched twice a year in spring and summer and autumn and winter, and use the data provided by the platform for product design and marketing layout.

The NetEase Yanxuan "silk T-shirt" that was a hit on the Pinduoduo platform this year is the result of the cooperation between the two parties: when the NetEase Yanxuan team discovered that "silk" was a popular trend this year, they took samples to co-create with the Pinduoduo operator. After analyzing consumer preferences, the two parties designed the clothes into a V-neck style and optimized the color.

In the end, this "silk T-shirt" created a sales volume of one million orders and became the first choice for many consumers who wanted to buy silk T-shirts. This top is just one of the microcosms of the co-creation of the two parties. "Co-creation with Pinduoduo has saved our R&D costs and cycles." NetEase Yanxuan will also reinvest the saved resources into product innovation, which is why consumers say that "NetEase Yanxuan is getting better and better."

In other words, the current undercurrent in the clothing industry not only places higher demands on brands, but also requires platforms to show sufficient innovation and sincerity if they want to do a good job in this business.

4. Only when all parties win together can there be sustainable business

When consumers complain about clothing brands, a common complaint is "instability". Many consumers believe that after achieving success, some brands seem to become "floating", and product quality cannot be consistently guaranteed. For the clothing industry, "instability" is also a nightmare.

After the explosion of orders, manufacturers were worried that production capacity could not keep up with demand, and that overcapacity would lead to waste of resources. Therefore, many businesses chose to adjust production capacity through the OEM model. "In this process, we suffered a lot," Guo Hongkai recalled. In the early days of entering the clothing industry, he achieved an explosion of orders. In order to ensure smooth delivery, he chose several small family factories for OEM. Due to the unstable order volume, these factories are often in a state of rush to complete orders, and quickly find the next order after completing the previous order. In addition, the production capacity of each factory is limited, and the quality standards of each factory are different. In order to meet the deadline, they cut corners.

For example, after learning that Guo Hongkai's team only conducted random inspections, some factories adjusted the order of goods to increase the inspection rate; or provided qualified products during inspections and mixed defective products with large quantities of goods. These "slippery" behaviors ultimately led to an increase in brand return rates, disappointed consumers, and the merchants failed to make a profit.

This is just a microcosm of the clothing industry. For a long time in the past, consumers and merchants seemed to be caught in a vicious cycle, with both sides feeling helpless and losing dignity. Fortunately, this situation is gradually changing. Thanks to the huge user base of platforms such as Pinduoduo, any consumer demand can find corresponding goods. Merchants only need to focus on providing products with high quality and price ratio to stand out in the market, and more positive changes will follow.

"We clearly feel that consumer demand is changing," said the head of Kocotree. As a mid-to-high-end children's brand, Kocotree has invested more energy in exploring consumer demand and product research and development after getting rid of the price war. Last year, Kocotree independently developed a raw yarn system and applied it to the production of children's sun-proof clothing, making these sun-proof clothing not only fashionable in appearance, but also with a sun protection effect that exceeds the market average. Kocotree, which has received market acclaim, plans to expand to more clothing scenarios to realize the brand's vision of "aesthetic travel." As a consumer, every penny spent has become more valuable.

On the Pinduoduo platform, various clothing merchants have continuously innovated in fabrics, design, wearing experience, etc., and launched many high-quality and cost-effective products, allowing consumers to buy better quality goods at the same price. "Consumers spend the same money, and can buy better things." Their feedback is becoming more and more positive, which also means that the iceberg called "distrust" between consumers and merchants is melting.

In addition, the textile and garment industry is an important pillar industry in my country, which is related to the livelihoods of tens of millions of practitioners. While e-commerce platforms solve sales problems, positive changes have also taken place in the upstream industrial chain. "Take the down jackets we sell as an example. The goose down and duck down raw materials come from different production areas such as Dabie Mountain in Anhui, Changbai Mountain in Northeast China, and Shandong," said a relevant person from NetEase Yanxuan. Down jackets have achieved excellent sales results on e-commerce platforms, which not only allows consumers to wear high-quality products, but also brings more income to practitioners in the raw material production areas.

Such mutually beneficial stories are frequently played out in places that Pinduoduo touches, from south to north, from first-tier cities to rural towns. In the final analysis, the essence of business lies in win-win. Only with the joint efforts of e-commerce platforms, merchants and consumers can we enjoy a better life together.

Author: Yang Jia; Editor: Cai Yu; Source public account: Microscope Story (ID: 1092858)