First-hand national tide, first-hand NFT, atypical involution case of Web3.0.
The world’s major sports brands are still pouring into the Metaverse, using digital collections to expand their boundaries.
On March 21, Xtep held a new product launch conference and launched a digital collection of running shoes called “160X-Metaverse”. So far, the top three domestic sports brands have taken a similar first step towards the Metaverse.
According to incomplete statistics, Nike, Adi, Puma, Under Armour, ASICS, New Balance… including domestic brands Anta, Li Ning and the latest addition to Xtep, have been in the Metaverse through a series of actions such as co-branding, cooperation and acquisition. Great show.”
Nike spent $200 million to acquire RTFKT, a company specializing in NFT sneakers, and its most successful sub-brand Air Jordan partnered with Fortnite to launch virtual sneakers.
Adidas has launched 30,000 “into the Metaverse” series of NFT works, and has reached a partnership with the Bored Ape Yacht Club (bored ape club), Gmoney and the team behind Punks Comic.
Puma has collected multiple feline NFTs, and on Twitter, changed the previous PUMA to “PUMA.eth”, and the “new name” itself quickly became an NFT.
It is not difficult to understand the intention of sports brands to deploy NFT business. The ultimate goal of all business activities is to make profits. At a time when the Metaverse is just a noun concept, launching digital collections has become a marketing act.
This characteristic is more obvious in domestic brands. Although both belong to the encrypted art system, foreign NFTs have stronger financial attributes, while domestic NFTs are not allowed to trade twice, and the meaning of NFTs is mostly defined by digital collectibles. Not long ago, WeChat publicly stated that it has taken measures such as cracking down on the transaction of digital collections and banning the official account of the digital collection platform for public accounts and small programs that hype and sell digital collections for the second time.
This means that the launch of “digital running shoes” at this time is, for Xtep, a plan to deploy the Metaverse, and it is also a marketing test for the young user group. Is interaction really reliable for Xtep?
01 Xtep can’t keep up with the pace of young people
As a member of the “Jinjiang Department”, Xtep is in the same line with the development of domestic sports shoes and apparel brands. From the foundry to the creation of its own brand, it has also cooperated with Li Ning, Anta, Hongxing Erke, Peak, 361°, etc. to contract CCTV prime advertising time.
But now, Xtep, which has been chasing Anta Li Ning’s step-by-step, has been left farther and farther by the two in various data.
In terms of revenue, Anta Sports achieved revenue of 49.328 billion yuan in 2021, and Li Ning 22.572 billion yuan. The latest financial report released by Xtep shows that revenue has just crossed the 10 billion mark, reaching 10.013 billion yuan.
In terms of net profit, Anta’s net profit attributable to its parent was 7.72 billion yuan, Li Ning was 4.011 billion yuan, and Xtep was 908 million yuan; in terms of market value, as of March 31, Anta’s market value was 262.628 billion Hong Kong dollars, Li Ning’s market value was 173.759 billion Hong Kong dollars (Hong Kong stock), and Xtep 307.22 ( Hong Kong stocks) billion Hong Kong dollars.
In terms of macro data, although Xtep has always ranked third, it is no longer in the same echelon with Li Ning Anta.Several other data can also see the embarrassment of Xtep being confined to second-tier brands.
First of all, in terms of the number of stores, the number of Xtep stores in the past three years has not increased significantly compared with previous years. It mainly adopts the strategy of large-scale stores and accelerated store opening in second- and third-tier cities to consolidate core users and avoid being rigid with first-tier brands. Penetration is also getting harder.
The dissemination of new things in the digital field generally follows the top-down rule. The virtual value and social attributes of NFTs are difficult to attract young users in the second and third tiers. For leading brands, whether in the name of digital collections or NFT gimmicks are the icing on the cake. Brand awareness can be seamlessly connected with digital assets, but non-first-line companies do not have this privilege.
Slow-growing gross margins are another chronic problem for Xtep. The financial report for the past five years shows that the gross profit margin of Xtep has been maintained at 40% to 45%, which is the same as that of 361°. In contrast, Li Ning has risen to more than 60%, and Anta is about to break through 70%; in terms of net profit margin, Xtep is the lowest among the four major brands, only 10%.
Low interest rates are inseparable from Xtep’s brand positioning, which has always been a cost-effective marketing strategy, which has delayed brand upgrades. Even with the blessing of the national tide, the vast majority of the glory is divided up by the head. With Li Ning and Anta striding ahead, Xtep can only retreat and focus on the running field. Sponsoring marathon events can make Xtep more professional, but it can’t be more fashionable.
In 2019, when it was painful to think about, Xtep began to acquire high-end brands internationally. Gasway and Paladin both completed acquisitions during this period. However, just like the growth and embarrassment brought to Anta by FILA, the main brand is not very helpful to the main brand by making up for the high-end shortcomings. The crowd who buys Xtep running shoes has not changed significantly. The young people in small towns are still the core users of Xtep. The area that NFT has not yet covered.
Consumers who divide their tastes by brand have begun to have a greater sense of trust in domestic products, which is one of the internal reasons for the rise of the national tide. Li Ning’s 1,499 yuan shoes were fired at a sky-high price of 48,889 yuan. Young people can’t understand it, but they will realize that Li Ning can be fired in domestic brands. Anta doesn’t even have the quality of “letting young people chase”, and Xtep doesn’t even have it.
With the development of NFT, the imperfect market is swept by the super-large bubble, and the unfinished courses are difficult to be completed by the concept-first virtual world. Xtep’s digital running shoes try to establish a sense of trust with young users, but also consume Only belongs to the brand value of domestic products.
02How to take shortcuts with NFT?
The more complicated reality of Xtep is that it is facing a brand battle with channel transformation.
The transformation of the traditional distribution system is a big test for every sports brand that started as a foundry.
The huge inventory crisis that broke out in the sports market ten years ago became the last straw that overwhelmed many shoe companies. Li Ning Anta adjusted its thinking and gradually changed the brand wholesale model to the brand retail model, and it was difficult to complete the transformation.
But today, the wholesale model is still one of the pillars of Jinjiang shoe enterprises. Muddy Waters issued an article shorting Anta five times, repeatedly questioning Anta’s conspiracy with distributors to create false prosperity in financial reports; Li Ning immediately fell into an inventory crisis after tying up with Nike in the Chinese market in 2011, and also relied heavily on repurchasing old goods to scrape bones for healing. Chronic illness.
Xtep reacted more slowly than Anta Li Ning. It only put the three-year transformation plan into the company’s strategy in 2015. It was not until 2019 that it dared to say that the strategic transformation from the brand wholesale business model to the brand + retail management model was completed. At this time, Li Ning has occupied the cognitive heights of the national tide with the New York fashion show, and has come to the latest stage of competition for domestic products.
That is to say, when other companies began to fight for design and brand influence, the focus of Xtep was still going around in the manufacturing and sales links. This has also caused the gap between Xtep and the head to be widened again, and it is still the role of a follower.
Li Ning took the lead in labeling “China”, Xtep chose “Chinese Kung Fu”, and cooperated with Shaolin Temple to try to create a new national trend IP; FILA turned losses into profits and helped Anta complete the high-end brand layout, Xtep acquired Ge Shi Wei, Paladin, to create a multi-brand strategy matrix.
It is obvious that Li Ning’s national tide strategy not only seized the opportunity, but also a series of supporting actions to incubate the sub-brand “China Lining”; it took Anta nearly ten years to reverse FILA’s losses and make it the backbone of the group; However, Xtep, which has taken advantage of the trend of the country and acquired foreign brands in a big way, is difficult to make a “quality” leap in the short term.
At this point, the problem is clearer and more intractable. On the one hand, it is the channel transformation that is halfway through, and how to directly reach consumers through or bypass the layers of distribution systems.
On the other hand, the imminent brand upgrade, how to get into the consumption cognition of front-line young people.Thus, the digital running shoe “160X-Metaverse” was born.
Compared with the uncertainty of whether the digital collection is a Metaverse Pass, Xtep firmly believes that this action will generate high-level interaction with the user group, and the resulting more direct contact and brand image reshaping.
Xtep’s intention can also be seen from the selection of the first NFT. The 160X series is the main style of Xtep’s functional products, with technology-assisted racing as its selling point. It is one of the few high-end products of Xtep.
As long as it is a place where young people gather, sports brands will not let it go. At present, digital collections are a virgin land that can be reclaimed. The difficulty of Xtep lies in the lack of digital genes.
Xtep’s main line products are concentrated in the field of running, and the high-end product line is mainly functional running shoes. Sponsoring a number of marathon events has always been a measure that Xtep is proud of. This is also the crux of the crux of releasing digital collections for Xtep. There is a lack of collectible targets on the Internet. In the field of NFTs for the purpose of scarcity and personalized collection, Xtep does not have a “traffic password” that can be obtained.
03NFTs should be self-improvement, or should they follow the gourds?
NFT platforms seem to be becoming the new social venue.
This is why Nike, Adidas and Puma are reluctant to let go of this new opportunity. How to develop a unique NFT development path is also a problem that brands must consider.
Nike, which has a keen sense of smell and is good at building momentum, first acquired a virtual sneaker brand, and then airdropped it to the holders of “Clone X” NFT in February this year, a virtual space PodX that can display NFT collections, and a mysterious “MNLTH”. Box.
Mystery box airdropped by Nike
Unknown is accompanied by speculation and pursuit, and the price of Nike’s mystery box keeps rising. The current price of “MNLTH” on OpenSea reaches 4.5 ETH ($12,325).
The old rival Adi is also not to be outdone. The 30,000 original NFTs released can be exchanged for physical goods in stores, and throughout 2022, these NFT holders have the opportunity to obtain 4 exclusive physical products for free. When they choose to exchange physical goods, NFT will It is destroyed, and then a new NFT with a higher number is obtained (such NFTs generally have a lower number and a higher value). The interaction generated by this launch has been continuously spread with the update of the gameplay, and it has also increased Adi’s user stickiness again and again.
Due to the limited understanding of emerging things and the niche of the NFT market, domestic brands are difficult to make breakthroughs in gameplay, which also makes the marketing activities in the name of NFT more like self-healing that do not want to be absent.
Puma, the third largest sports brand in the world, which is in a similar situation to Xtep, can also be used for reference.
By collecting feline NFTs that echo the cheetah image on the brand logo, it continues to attract NFT and Web3 fans with similar tastes on social platforms, and through the process of selectively collecting feline NFTs, users are more interested in the brand. awareness is further deepened.
The reason why Xtep chose 160X running shoes is also that this running shoe carries the image of “professional running shoes” that Xtep wants to create, but the difference from Puma’s NFT path is that the interaction of this single product does not have the ability of non-figurative collectibles. It brings breakthroughs and brand imagination.
Puma chose three different circles of cat lovers, Puma users and NFT enthusiasts, and the chain reaction brought about by it. Xtep only has a connection between the two points of “running shoes-user”, which seems to greatly reduce the communication effect.
Exploring the rhythm that suits you on the gameplay demonstrations of many leading brands may be the only choice for Xtep for a long time.
It is reasonable to speculate that domestic players will sooner or later introduce the game of exchanging NFTs for physical products, and there are too many ways of one collection, one joint name, and one exchange, and emerging users also need to constantly stimulate and maintain FOMO sentiment (Fear of missing out refers to the total Anxiety about losing or missing something).
How do NFTs that are not allowed for secondary transactions bring value to users? Domestic brands are facing the same problem, and Xtep has to solve it is particularly complicated. The strength of the non-first-line is both the cause and the effect. There are too many leaders, and the strategy of following can only continue to be implemented.
Anta and Li Ning are no longer “poor boys”, and it is still difficult to create an IP that has enough influence and can resonate widely. NFT sweeps the business world, rules, crowds, gameplay… brands face more than one mountain.
“Puma “renamed”, the three major sports giants “turned to NFT” – yqqlm
“Leaders in the Running Segment, Multi-Brands Entering a New Stage of Development – The First Coverage Report of Hong Kong Stock Companies” – Kaiyuan Securities
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