On July 23, 2021, the domestic sports brand Hongxing Erke made a “bankruptcy donation” to Henan’s heavy rainstorm disaster area and detonated its network. Its sales performance once soared 52 times and many products were out of stock. Now after 100 days, the heat at that time has gradually dissipated, what kind of situation is Hongxing Erke facing? Recently, the Red Star Capital Bureau visited a number of Hongxing Erke stores and found that the “wild consumers” that had been swarming at the beginning have gradually left the market, and the store traffic has been greatly reduced;
In the past month, its Douyin followers have also plummeted, with an average of nearly 10,000 followers per day. In addition, its live broadcast sales are not optimistic, and the purchase rate of fans is also lower than that of similar domestic sports brands.
As consumers become more rational, fan stickiness and purchase rate have become the biggest problems that Hongxing Erke needs to face.
Attention has dropped sharply, with an average of nearly 10,000 followers per day
On July 23, 2021, Hongxing Erke also donated 50 million yuan to Henan’s devastated area due to its own losses for years, which aroused the public’s attention. Suddenly, on the topic of Hongxing Erke’s “bankruptcy donation”, netizens went to the live broadcast room to place orders to show their support.
On that day, Hongxing Erke directly broke a number of records: the sales volume soared 52 times, the total sales exceeded 22 million yuan, and many products were once out of stock.
The next day, many consumers rushed to Hongxing Erke’s physical store to check in to support them, and even appeared wild consumption behaviors such as “men buy 500 for 1,000 and run on their legs” and “even the clothes on the models are stripped”. Even the chairman of Hongxing Erke Wu Rongzhao had to personally end, calling on netizens to “consume rationally.”
Nowadays, it has been 100 days since Hongxing Erke bankruptcy donation. The Red Star Capital Bureau recently visited a number of Hongxing Erke stores and found that the offline traffic of the stores has been greatly reduced. Many shop assistants told the Red Star Capital Bureau that the current customer flow in the store has returned to normal compared to the peak period in July and August. Except for a few shoes with broken codes, the goods are complete.
In addition, after the heat is over, the number of fans on the online platform of Hongxing Erke also plummeted. Feigua data shows that as of press time, the number of fans on the Hongxing Erke Douyin platform is 14.556 million, an increase of 269,000 in the past month, and nearly 10,000 followers are dropped every day. Taking October 31 and November 1 as an example, the “Hongxing Erke Brand Official Flagship” Douyin account dropped 8,568 and 6,167 followers respectively. Only on the day of the Shanxi rainstorm donation on October 11, 1,192 new ones were added. fan.
In addition to the above accounts, the Douyin account of “Hongxing Erke Wu Rongzhao”, which was certified as the president of Hongxing Erke, has also had a negative increment in the past 30 days, and dropped 209,000 followers.
In addition, the number of fans on the Hongxing Erke Kuaishou platform was 3.748 million, with an increase of -53,000 in the past month, almost 2,000 followers per day. Take October 31 and November 1 as an example, 1900 and 1600 followers were dropped respectively.
Fan purchase rate is low
The Red Star Capital Bureau noted that although there have been moments of “wild consumption” by fans, the realization rate of Hongxing Erke fans is generally not high. Especially in the past month, Hongxing Erke Douyin live broadcast sales have only been 1/6 of Li Ning’s.
According to data from Feigua, the official flagship store of the Hongxing Erke brand, which has 14.556 million Douyin fans, has 55 live broadcasts in the past month with sales of 12.941 million yuan, with an average contribution of 0.88 yuan per capita. In the past 7 days, due to the “Double Eleven” blessing, the sales of 10 live broadcasts in Hongxing Erke’s Douyin live broadcast room exceeded 5 million yuan.
However, compared with Li Ning, which is also a domestic brand, the number of fans of Li Ning Sports Douyin is only 4.153 million, which is less than a small number of Hongxing Erke, but its 63 live broadcast sales in the past month are 81.585 million yuan, which is the sales of Hongxing Erke. More than 6 times, the per capita contribution is 19.6 yuan.
Hongxing Erke and Li Ning Sports Douyin live broadcast sales comparison
In addition, Anta Sports, which has 3.841 million fans, has 40 live Douyin live broadcasts in the past month, with sales of 23.213 million yuan and an average contribution of 6 yuan per capita; Xtep China, which has 751,000 fans, has 60 Douyin games in the past month. Live broadcast sales were 995,000 yuan, with an average contribution of 1.65 yuan per capita.
In the domestic sports brand market, Hongxing Erke will inevitably face competition from Li Ning, Anta and other rivals, so its current situation is not optimistic.
Judging from the data disclosed by Li Ning, Anta, Xtep, 361 Degrees, etc. in the first half of 2021, domestic sports brands continue to exert their strength, and both sales and operations are on the rise:
Li Ning (02331.HK) realized revenue of 10.197 billion yuan in the first half of the year, a year-on-year increase of 65%;
Xtep (1368.HK) achieved revenue of 4.135 billion yuan in the first half of the year, an increase of 12.4% year-on-year, and the group’s gross profit margin increased by 1.3 percentage points to 41.8%;
361 Degrees (01361.HK) achieved revenue of 3.107 billion yuan and net profit of 401 million yuan in the first half of the year, a year-on-year increase of 32.9%;
Anta (02020.HK) online business in the third quarter of this year increased by 25%-30% year-on-year.
Since Hongxing Erke delisted in 2020, financial data has not been publicly disclosed. From the previous financial data disclosed by Hongxing Erke on the Singapore Stock Exchange, from 2018 to the first half of 2020, it lost 298 million yuan, 2.958 million yuan, and 600,000 yuan respectively. Among them, the revenue in the first half of 2020 was only 2.84 billion yuan, compared with the same period. The performance of major domestic products sports is less than 1/5 of Li Ning and less than 1% of Anta.
Hongxing Erke’s financial situation this year can be seen from the Tao Department data. The Red Star Capital Bureau noted that as of November 2, the sales of Hongxing Erke’s Tao series in the past 30 days were only about 1/4 of Li Ning’s. Tmall platform data provided by Taodata shows that in the past 30 days, Hongxing Erke brand sales totaled about 620,000, with sales of 116 million yuan; Li-Ning brand sales totaled about 3.12 million, with sales of 400 million yuan.
Consumers tend to be rational, how can Hongxing Erke retain them?
At the beginning, consumers’ “distressed” towards Hongxing Erke’s bankruptcy donation triggered phased irrational consumption. From the data point of view, the current consumer enthusiasm for Hongxing Erke has become more rational. Baidu index monitoring data shows that Hongxing Erke’s search index began to climb on July 22 and reached a peak of 1,214,600 on July 24. It has been declining since then and remained stable at 4000-5000 in September.
Do the millions of fans who support Hongxing Erke in wild consumption really recognize the products of Hongxing Erke? What are the reasons for the fans who left the scene in the hustle and bustle?
A Douyin fan told the Red Star Capital Bureau that in the comment area of the works, there are usually old styles and poor quality of Hongxing Erke, and some fans feel that the creative is not innovative enough.
A Douyin user who recently took Guan Hongxing Erke told the Red Star Capital Bureau that he had been following Hongxing Erke during the donation period and used a curious mind to review interesting comments in the live broadcast room. With limited premium space for big-name brands, there is no consumption.”
Some consumers also expressed that they will continue to support Hongxing Erke, “Shoes do not require frequent purchases like food. After buying shoes before, you do not need to buy them again for a short time, but Hongxing Erke will be given priority in the future.”
Wu Rongzhao, chairman of Hongxing Erke, also realized the quality defects of Hongxing Erke, and tried to establish a reputation for the quality of the brand. Some netizens reported under his account that “Some people say that the odd bullet series have pierced feet.” Wu Rongzhao replied “I can’t bear the pierced feet” and said, “I want to apologize to him and solve the after-sales problem for him.”
So, when consumers become more rational, what should Hongxing Erke do to retain consumers?
The latest increase in Hongxing Erke’s attention was on October 11, when it donated 20 million materials for the heavy rain in Shanxi. Baidu index monitoring data shows that on the day of donation, Hongxing Erke’s search index ushered in the monthly highest, and the short video account that had been dropping fans for a long time also added 1192 fans on that day. In the face of major social disasters, Hongxing Erke who “quietly donates” is often seen.
After the donation craze, Hongxing Erke also launched a series of brand activities, trying to build brand power and enhance brand tone. On November 1st, Hongxing Erke co-star Chen Xiaochun filmed the national style blockbuster “Under One”; October launched the Qingming Shanghe Garden, “Three Kingdoms” five tiger heroes joint model, and Chery Automobile launched the retro national tide series of sweaters; August launched Henan The joint fund of the Museum, andMilletcell phoneLinkage marketing; In July, we joined hands with “Gintama” to break through the dimension wall.
In addition, Chairman Wu Rongzhao has also become a major portal for Hongxing Erke to attract consumers. Wu Rongzhao’s image of a Fujian businessman who was washed away by floods in the early days of his business, “has been exposed to rain, so I also want to give others an umbrella” moved countless netizens. At present, Wu Rongzhao’s Douyin account has 11.344 million followers, only about 3 million less than the brand’s flagship store.
Donations, brand endorsements and Wu Rongzhao have gradually become the three new labels for consumers to pursue Hongxing Erke. The Red Star Capital Bureau noticed that the top three videos of Hongxing Erke’s Tik Tok praise in the past month were the Shanxi Rainstorm Donation, Chen Xiaochun’s joint endorsement and Wu Rongzhao’s factory inspection.
Economist Song Qinghui once said that with the epidemic under control, many domestic consumers have returned to the fitness field. Domestic sports brands are facing a new round of development opportunities, and the market scale is expected to further expand. However, quality and innovation are always the key issues that Hongxing Erke will not be able to get around after the heat dissipates.
Reporter/Yu Yao Trainee Reporter/Cai Xiaoyi
Editor-in-Chief/Ren Zhijiang Editor/Yu Dongmei