“September is the traditional peak season in the European and American markets, and the purchase of Thanksgiving and Christmas supplies brings a large number of orders, especially the surge in online demand.”
Picture source: cfp
Deng Richao runs a foreign trade clothing factory in Panyu, Guangzhou. In July, he finally breathed a sigh of relief.
“Orders have begun to come back, and the turnover for two consecutive months has doubled that of the same period last year. The production capacity in August was close to 300,000 pieces, reaching 15% of the full-year production capacity last year. .” As the domestic epidemic gradually stabilized, Deng Richao’s factory not only resumed its previous operations, but the “retaliatory” increase in orders even made the workers a little busy.
China is not only the world’s largest producer and consumer of textiles and clothing, but also the largest clothing exporter. The first half of this year was affected by the epidemic at home and abroad. The epidemic hit the garment industry and became the hardest hit area. In particular, the demand for garment exports dropped to freezing point. In the second half of the year, although the new crown epidemic is still spreading around the world, my country’s textile exports have improved greatly.
According to data released by the Ministry of Industry and Information Technology on September 10, from January to August 2020, my country’s textile and apparel exports were US$187.41 billion, a year-on-year increase of 5.62%, and the growth rate was higher than that from January to July. Increased by 0.05%. According to August data, textile exports were US$14.72 billion, a year-on-year increase of 46.96%; of which clothing exports were US$16.21 billion, a year-on-year increase of 3.23%. It was the first time that positive monthly growth returned after seven consecutive months of negative growth during the year.
The reason why foreign trade clothing orders are “hot”, Deng Richao analyzed, is that on the one hand, it is due to the gradual stabilization of the epidemic in China, and many factory supply chains have resumed operation after June. This means that orders can be received again; on the other hand, there is demand from overseas markets. Despite the seriousness of the epidemic, overseas consumer markets are still operating. As September is the traditional peak season in European and American markets, the purchase of Thanksgiving and Christmas supplies brings a large number of Orders, especially online demand, have surged.
As a supplier of foreign fast fashion and e-commerce brands, Deng Richao’s customers include ASOS, QUIZ, Showpo, Missguided, etc., mainly for the European, American and Australian markets, and its products include dresses , evening gowns, etc., sales last year reached 14 million US dollars.
Display of some foreign order products (Picture source: Deng Richao)
Like most garment factories, Deng Richao also stocked up at the beginning of the year, but the sudden epidemic disrupted all rhythms, leaving the factory almost at a standstill from February to May. “Last year’s orders were cancelled, and we made them.” The goods were not allowed to leave. During that period, the turnover dropped by 95%, and we don’t know the future direction.” Deng Richao said.
For this reason, during the epidemic, clearing out as much backlog of inventory as possible became their first step to save themselves.
In order to clear inventory, most export merchants will switch to domestic sales and sell goods at low prices. The cost of a lifestyle dress is about 60-100 yuan, and the factory reduces the price by half and sells it at a loss. . Deng Richao said that this was a helpless move. For the sake of capital chain and surviving the epidemic, “cash is king”. However, this approach once led to a price war within the industry, and the digestion capacity of the domestic market is relatively limited, so it is not easy to clear positions in a short period of time.
While working hard to clear inventory, they will also rely more on online channels. Deng Richao observed that some peers who still use traditional models such as offline delivery have been eliminated during this epidemic. However, judging from the response from online channels including Alibaba and other e-commerce platforms during the epidemic, the demand for foreign trade procurement still exists.
Deng Richao’s factory began to adjust the proportion of offline and offline sales from the year before last. By the end of last year, online channels had contributed 90% of its revenue. The earlier transformation of online channels gave Deng Richao added confidence. In the past few months, the company has increased its efforts to find customers online and increased investment in online channels, including increasing promotion on the Alibaba platform. At no cost, we also hired some professional teams to help optimize the company’s website to facilitate placing orders on Google search engines.
With the help of online live broadcast shows, it is considered to be able to effectively acquire new customers. (Picture source: Alibaba)
In early September, Deng Richao’s factory participated in the Alibaba International Station Procurement Festival, trying to showcase original design products to overseas markets through live broadcast catwalks and other methods. We also hope to acquire new customers. Live broadcast catwalks have attracted a lot of attention. Data from Alibaba International Station shows that the number of live broadcast viewers during the peak period was as high as 20,000, and the number of inquiries and click-through rates increased by 300%, with an increase of about 70% in September.
Deng Richao told Jiemian News that the company’s inquiries were relativelyThe current increase has been at least 50% to 200%. Although no orders have been completed, he believes that it will provide some help for subsequent development. “Because the epidemic will permanently change the purchasing model, it may take a long time for the offline market to recover, and after the epidemic, the share of online purchasing and sales will continue to increase.” Deng Richao said.
Faced with order fragmentation, factories are constantly optimizing their supply chains. (Picture source: Deng Richao)
However, more “connection to the Internet” also means higher requirements for the supply chain.
In recent years, consumption upgrades have brought about fragmented and personalized market demand, gradually changing the “bulk supply” model of the clothing supply chain. Deng Richao revealed that in the post-epidemic era, this model will gradually become history, and orders will become more and more fragmented, which will have a huge impact on the supply chain, specifically in the form of smaller order sizes and lower purchase unit prices. It will be lower and the delivery speed will be faster, but the manufacturer will have to control costs. This means that if the factory does not optimize its supply chain, it will not be able to find a balance in such contradictions.
Picture source: Printing and dyeing people
For ultra-fast fashion brands, they generally have a strong understanding of the supply chain. Due to the stricter fast response requirements, the process from proofing to production is usually shortened to 7 days at the fastest, which is 7 days less than Zara’s fastest time. The products of e-commerce brands also perform faster and cost less. As a brand OEM and wholesale enterprise, Deng Richao admitted that the pressure they face is not small. In addition, orders will become more fragmented, so they can only continue to find ways to improve their “small orders and quick response” capabilities.
On the one hand, factories need to infer and predict market demand trends based on real-time sales data to help quickly adjust production strategies; on the other hand, they also need to feedback on real-time product sell-out rates , accurately calculate the “smooth and stagnant” models, and quickly cut off the slow-selling models, and quickly pursue orders for best-selling models to ensure supply. For categories that are popular in the market during the season, the next wave of development can be added to increase the hit rate of popular models. .
In addition, Deng Richao also mentioned that currently, in order to shorten the path of goods from the supply chain to consumers, they have strengthened the connection between fabric manufacturers, designers and logistics , in order to quickly organize flexible production. </p
