The Zhitong Finance App learned that under the trend of consumption downgrading, Huachuang Securities published a research report saying that under the trend of consumption downgrading, the Taotao factory uses an M2C model, linking more than 100,000 industrial belt source factories and the other linking more than 300 million consumers. With its high quality and price ratio, it has given birth to multiple “national babies” with single-link sales exceeding 100W+, and has become a veritable “national factory”. Take the luggage industry as an example to promote the transformation and upgrading of the luggage industry belt in Shinkan County through the “Star Brand”. By developing online channels and establishing more direct communication with consumers, semi-managed services reduce operating frictions, focus on core business, and quickly explode products, thereby reducing costs, improving gross profit and supply chain capabilities, realizing the transformation of manufacturers to product autonomy and brand value, and exploring a relatively healthy and sustainable growth path.
Taoyuan Factory is a platform under the Taotian Group that focuses on direct supply from the source factory. It uses the M2C model to link more than 100,000 industrial belt source factories and the other to more than 300 million consumers to provide them with cost-effective source products. Under the trend of consumption downgrading, with its ultra-high quality and price ratio, Taobao Factory has spawned several “national babies” with single-link sales exceeding 100W+, and has become a veritable “national factory”.
On the operation side, Taoist Factory uses the M2C semi-hosting model, which covers six major solutions: digital product selection, intelligent pricing, marketing hosting, supply chain optimization, logistics and localization services. Factories can select suitable and required modules according to their own development needs and are supported by Ao Factory. On the fulfillment side, we pioneered the NN warehouse (N yuan N item single warehouse) model and cooperated with Cainiao to achieve cross-commercial contracts. Products from different merchants can be combined into a single package for delivery, greatly reducing logistics costs.
Since this year, Taotian Group has continued to expand the supply of merchants and categories, and has made adjustments in terms of entry standards, entry procedures, product commission discounts, etc.: 1) New product commission: Since January 17, '24, you can enjoy a fixed commission of only 0.6% for new links during the cold launch phase from January 25 to June 30, with a maximum commission discount of up to 95%; 2) In terms of entry qualifications: cancellation of registration indicators such as annual turnover of 4 million yuan or more and general taxpayer qualifications In order to have an individual business license and be eligible for invoicing, you can move in; 3) In terms of entry process: abolish processes such as uploading turnover certificates and manual review to achieve the fastest same-day review of explosives on the entire network and one-click check-in for Taobao and Tmall merchants; 4) Brand certification: In July '24, we launched an upgraded semi-hosting service for high-quality industrial belt manufacturers to provide excellent suppliers with customized “Star Brand” privileges and exclusive services such as traffic support to support the development of industrial belt factories.
Take the luggage industry as an example. In 2024, luggage in Xingan County, Jiangxi Province will become an industrial belt that Taoist Factory focuses on. Currently, consumers' pursuit of cost performance, practicality, and personalization far exceeds that of luggage brands themselves. Huachuang Securities believes that in the future, luggage will focus on the mass and mid-range price segment markets, and merchants with product design, innovation capabilities, and cost advantages may gain competitive advantages in price and stand out in a highly fragmented market.
Taoist Factory has seized this industrial opportunity and promoted the transformation and upgrading of the luggage industry belt in Xingan County through the “Star Brand”. Xingan County is one of the four largest luggage and leather goods industry bases in China. The output value of the luggage industry in '23 was 6.651 billion yuan, yoy +34%. Although it is characterized by a zipper structure as the main body, with the intensification of market competition, simple manufacturing and price wars are no longer a sustainable development model. The industry needs to transform in the direction of innovation, digitalization, mid-range, and branding, placing higher demands on technology, capital, and talent. This is the focus that Ao Factory can empower.
Specifically: 1) Talent level: Most local luggage workers in Xingan County have returned to their hometown from Guangdong, Zhejiang and other places to start businesses, bringing back advanced technology, resources and capital, but the local experienced e-commerce talents are relatively scarce. The Taofactory semi-hosting model has solved the problem that enterprises don't understand online operations, and the production side and consumer side have been opened up through platform hosting; 2) Brand building level: Previously, Xingan County luggage focused more on B-side OEM customers, and the popularity and influence of C-side consumers was relatively limited. The launch of the Taotao factory has given merchants a traffic entrance to a larger customer base across the country. At the same time, it also helped build a “star brand”, and also gave the industry a strong endorsement of cost-effective products, which promoted consumers' awareness and trust in the industrial belt; 3) Supply chain level: Xingan County has excellent geographical advantages, and is well balanced from commercial and trade centers such as Hangzhou and Guangzhou, as well as distribution centers such as Ningbo Port and Fuzhou Port. On this basis, the NN warehouse model of the Taotao factory further reduces supply chain costs and enables efficient and convenient contract fulfillment. At present, Taobao Factory has become the preferred business explosion platform for merchants in the industrial belt.
Huachuang Securities believes that the “Star Brand” of the Taobao factory uses platform advantages to help industrial manufacturers get rid of the vicious business model of not cutting prices and establishing more direct communication with consumers by opening up online channels, while semi-managed services reduce their operating friction, focus on core business and quickly explode products, thereby reducing costs, improving gross profit and supply chain capabilities, and has realized the transformation of manufacturers to product autonomy and brand value. It has also explored a relatively healthy and sustainable growth path for Xingan County. It has brought a new engine of growth and development vitality.
Risk warning: risk of macroeconomic fluctuations, consumer demand recovery falling short of expectations, increased platform competition, rising upstream raw material prices