BOSIDENG, trapped in the "impact on the high-end" scenario

Author: Dake

Editor: Yang Yong

ID: HQingXiaoFei

In June, BOSIDENG released its annual report for the 2023/24 fiscal year, with a total revenue of 23.214 billion RMB, an increase of 38.39% from the previous fiscal year. However, despite the significant growth in performance, the company's founder, Gao Dekang, announced on July 3rd a plan to sell 400 million shares at a price of 4.31 HKD per share.

Despite BOSIDENG's strong financial performance and positive recommendations from over a dozen securities firms such as Guotai Junan Securities and TF Securities, the selling behavior of key shareholders undoubtedly impacted the market. This series of actions caused BOSIDENG's stock price to decline for four consecutive trading days, with a cumulative decrease of 19.81%.

Image Source: BOSIDENG stock price

It is worth noting that this is not the first time BOSIDENG shareholders have reduced their holdings this year. According to Wind data, since the beginning of 2024, Executive Director and Vice President Rui Jinsong has reduced his holdings three times, totaling 6 million shares. In addition, after Nomura Holdings increased its holdings by 91.236 million shares on March 22nd, they reduced their holdings by 65.636 million shares just two days later.

What signals do the "changes" in BOSIDENG's management reflect about the development of the brand and the industry? Can BOSIDENG continue to thrive?

Sun-protective clothing failed to revive BOSIDENG

In recent years, sun-protective clothing has undoubtedly been a hot "explosive product" in the clothing industry. The sun-protective clothing market has shown rapid growth in recent years. According to a research report by Zhongtai Securities, the GMV (Gross Merchandise Volume) of sun-protective clothing on the Douyin platform reached 3.7 billion RMB in 2023, a year-on-year increase of 217%. A report by iResearch also pointed out that the primary consideration for users during outdoor sports is outdoor protection, accounting for 65.3%, indicating that the increasing awareness of sun protection is driving the heat of the sun protection product market.

E-commerce platform data also confirms the popularity of the sun-protective clothing market. On the day of Tmall's "618 Mid-Year Shopping Festival," almost the entire top ten list of women's best-selling items was dominated by sun-protective clothing, with the "fashionable sun-protective clothing" category accounting for as high as 70%; during JD.com's "618" event, the sales of sun-protective clothing grew rapidly, with a year-on-year increase in transaction volume of 120% Although there is no undisputed leader in the sunscreen clothing track at present, its market heat has quickly been seized by major apparel brands. In the domestic sunscreen clothing market, outdoor lifestyle brand Jiao Xia has a first-mover advantage, currently holding a market share of about 26.5% in the sunscreen clothing market on Taobao platforms. In addition to Jiao Xia, emerging sunscreen clothing brands such as MoXun, SINSIN, and VVC have also risen rapidly in recent years. For example, during the "618" period on JD.com, SINSIN's transaction volume increased by more than 37 times year-on-year, MiJu increased by over 4 times, Xiao Ye He Zi and MoXun increased by 3 times. At the same time, outdoor apparel brands such as Camel, Pathfinder, fast fashion brands like Uniqlo, and sports brands like Anta, Li-Ning, have also entered the sunscreen clothing market.

Swearing to develop "spring and summer down jackets," Bosideng has been laying out the sunscreen clothing market since 2020, taking a mid-to-high-end route, attempting to achieve seasonal diversification of performance by pricing sunscreen clothing over a thousand yuan, reducing dependence on winter sales peaks. In order to strengthen consumer awareness of sunscreen clothing, Bosideng has spared no effort in carrying out extensive promotional activities. According to the "Insights into the Sunscreen Market in the Summer Economy of 2023" report released by QuestMobile, in April 2023, Bosideng's advertising spending on Xiaohongshu reached as high as 1.71 million yuan, surpassing its competitor Jiao Xia, ranking first. During the same period, Bosideng's investment in sunscreen product influencer marketing on Douyin platform was 2.193 million yuan.

Image Source: Bosideng Official Website

In addition, Bosideng has also strengthened the brand's high-end image through collaborations with French high-fashion designer Christelle Kocher to launch new products, partnering with "Fashion Bazaar" to release the "New Sunscreen Fashion Manual," and hosting the world's first sunscreen clothing show at the Beijing International Film Festival.

These efforts have achieved certain results. In the 2023/24 fiscal year, Bosideng's sunscreen clothing product sales reached 500 million yuan, a 300% increase from the previous fiscal year. It is expected that the sales of sunscreen clothing products in 2024 will reach 1 billion yuan, achieving a doubling growth. However, due to the lower gross profit margin of sunscreen products compared to down jackets, Bosideng did not significantly increase overall profitability as a result.

Financial report data shows that in terms of profitability, in the 2024 fiscal year, Bosideng's overall gross profit margin increased slightly by 0.1 percentage points year-on-year to 59.6%. Among them, the Snow Flying brand's gross profit margin remained at 46%, but the Bosideng brand's gross profit margin decreased by 1.2 percentage points year-on-year to 69.6%.

Regarding the decrease in Bosideng brand's gross profit margin, Rui Jinsong, Senior Vice President and General Manager of Bosideng Business Unit, stated that it was mainly due to the impact of the gross profit margin of new product categories such as sunscreen clothing launched during the reporting period, with the gross profit margin of sunscreen clothing being about 10% lower than that of down jackets. According to Caixin data, in the first quarter of this year, Bosideng, with the highest average transaction price, sold only between 500-1000 pieces, with a total sales amount of only 250,000-500,000 yuan, ranking at the bottom among competing brands With the continued heat of the sunscreen clothing track, the industry's "internal competition" is intensifying. On the brand side, more and more brands are impatiently selling marketing concepts and digitally chaotic product markets through dazzling marketing concepts. On the consumer side, facing the huge price difference of products and the increasingly complex protective functions, the seemingly simple consumer purchasing decisions are becoming more complicated, and consumers can only rely on evaluations from Xiaohongshu and Douyin to make judgments.

This trend further exacerbates the "internal competition" in brand marketing. Given the low entry threshold for sunscreen clothing, as more and more brands come here to find the "second curve", it is still doubtful whether sunscreen clothing, a popular track, can become a new growth curve for Bosideng.

Bosideng's High-end Strategy: Can't Go Up, Can't Go Down

Looking back at Bosideng's "rejuvenation" in 2018, it can be said that it was achieved through "high-end strategy", launching a strong brand effect through loud marketing campaigns. However, by 2024, this "high-end strategy" has backfired on Bosideng.

Since the winter of 2023, Bosideng has been embroiled in controversy due to price increases. Relevant data shows that since the high-end strategy began in 2018, the average price of Bosideng down jackets has increased from around 1000 yuan to about 1800 yuan, an increase of nearly 80%. Although the prices of high-end products have decreased somewhat, they still remain at a high level. The "Mountaineering Expedition" series, with a historical highest selling price of over 14,000 yuan, even after the price reduction, the 2023 models are still priced at over 7,000 yuan, far exceeding the acceptable bottom line for "working-class" consumers. Firm in its high-end strategy, in November 2023, Bosideng executives stated at the mid-term performance briefing for the 2023/24 fiscal year that Bosideng even plans to further increase prices, with the average price of products expected to reach 2,000 yuan in 2024, and an additional mid-to-high-end product line priced above 3,000 yuan.

The consecutive price increases undoubtedly made Bosideng's financial reports look good. Bosideng's revenue broke the 10 billion mark directly in 2019, achieving consecutive annual growth in revenue and net profit since 2019, with the gross profit margin increasing from 46.38% in 2018 to 59.59% in 2024.

However, doubts have also increased. For a while, criticisms such as "The price of Bosideng down jackets has risen to the point where they are unaffordable!" and "I couldn't afford to wear Bosideng before, and now I still can't afford it" have been heard constantly, with the Weibo hashtag #Bosideng average price has risen to 1600 yuan# trending and receiving over 200 million reads.

Image Source: Xiaohongshu

In fact, it is understandable to move towards high-end products, but Bosideng has fallen into such a controversy, as netizens put it, "it's like suddenly buying a lemonade for 30 yuan at Mikel's Ice City", which consumers cannot bear the huge gap between the sudden price increase of the product, and it also raises doubts about the product's technological capabilities.

The not-so-high-end "core technology" has sparked market controversies. Market observations report that Bosideng's main selling point, the "black technology", uses aerospace intelligent temperature-regulating materials (PCM intelligent temperature-regulating), which are not unique to them, have low costs, and low manufacturing difficulty. "Bosideng is treating a technology that has long been popular as the core selling point of their product, selling it at a high price of over ten thousand yuan, which is quite unreasonable."

At the same time, issues such as "buying broken goose down for a thousand yuan" regarding quality and quality control have also led Bosideng to face consumer doubts about the mismatch between the price and the product. On consumer complaint platforms like "Black Cat Complaints" and social platforms like Xiaohongshu, many consumers have reported that the fabric and fillings do not match the descriptions. Issues such as color fading and pilling of the down jacket, wear and tear or damage after wearing it a few times, and buttons easily falling off undoubtedly do not match the "high price".

Furthermore, Bosideng also needs to address the profound issue of having a stable high-end customer base as a prerequisite for brand high-end positioning. The ability of major luxury brands to stand firm in the "high-end" segment lies in having a strong enough brand effect to win the recognition and loyalty of high-end customers. The success of sports brands like LULU also lies in successfully penetrating the high-quality middle-class consumers.

However, looking at Bosideng, high-net-worth users have a wider range of choices when it comes to clothing, and the natural defense against the cold brought by money, how much do they really need down jackets? Perhaps, the data can provide some evidence.

According to the 2021 iResearch data, by analyzing the transaction data of down jackets on a mainstream domestic e-commerce platform, it was found that the majority of consumers purchase down jackets in the price range of 200-500 yuan, with sales of down jackets priced over 1000 yuan accounting for less than 5%. In addition, iMedia data shows that in 2023, most Chinese consumers prefer to purchase down jackets priced at 1000 yuan or less, with the most concentrated price range being 400-600 yuan, and only 3.3% of consumers choosing a price above 1500 yuan.

Meanwhile, in the mid-range market abandoned by Bosideng, old brands like Duck Duck and outdoor brands like Camel are making significant progress. Duck Duck's GMV exceeded 10 billion yuan in 2022, rapidly occupying the market gap. Duck Duck's product pricing is mostly below 1000 yuan, with lower prices for hot-selling products, and actively imitating Bosideng's marketing strategy, officially announcing Wang Yibo as the brand spokesperson to further strengthen brand building. With a market strategy that is young, fashionable, and cost-effective, Duck Duck has successfully attracted young consumers and those seeking cost-effective products.

Outdoor brand Camel is also entering the down jacket market, fighting for a "bloody path". Last year on Double 11, Camel topped the Tmall outdoor brand sales rankings, Douyin outdoor rankings, and other platform rankings. Behind this success is Camel's mid-range strategy, where a Camel three-in-one assault jacket down jacket costs only over 600 yuan, while a single product Ding Zhen's same model Phantom Black three-in-one assault jacket (fleece lining) has a price tag of 2198 yuan, but through self-media KOL channels, it can be as low as 389 yuan Playing with "outdoor + warmth" and "sports + warmth", sports/outdoor/light outdoor brands represented by Camel are firmly occupying consumers' minds, while Bosideng is far behind.

Image Source: Xiaohongshu (Little Red Book)

Nowadays, Bosideng, which focuses on "high-end", may be facing the dilemma of "can't go up, can't go down". High-end does not equal high price. If Bosideng wants to truly establish its high-end positioning, it may still have a long way to go.

No brand

Can always sit on the "credit list"

Reviewing Bosideng's "Zhongxing" and controversies, it is inevitable to find that Bosideng has somewhat "inverted priorities". Products are always born out of consumer demand, and the key to the success of high-end lies in providing products and services that match high-end customers. Without this underlying logic, whether it is raising prices or inviting big-name celebrities to "promote", it is impossible to truly reach consumers.

Image Source: Bosideng Official Website

Bosideng returned to the public eye and received praise by launching a "windbreaker down jacket" that marked the beginning of high-end. At that time, the impression of down jackets was bulky, but Bosideng precisely integrated the two to create the innovative "windbreaker down jacket". Within an hour of its release, the sales of this windbreaker down jacket exceeded 10 million.

The reason why Bosideng's sun protection clothing received praise in 2023 was because in a market where white-label products were rampant and disorderly, Bosideng brought relatively standardized standards based on its experience in making down jackets, and gained consumer recognition with brand endorsement.

However, as the market changes and competitors progress, no brand can sit on the "credit list". In recent years, Bosideng has not launched a down jacket "blockbuster" capable of sweeping the market, and its technical capabilities and product design of sun protection clothing are gradually becoming "ordinary" among many new brands focusing on research and development and design. Without the support of products, high-end positioning naturally becomes unattainable.

Truly reaching the peak of "high-end" is not about raising prices, not about slogans, perhaps it lies in the accumulation written in the long slope of thick snow