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1、RE-HUBUNCOVERING THE HOW OF BRAND VALUE CREATION DURING 11.11 2023 ON TMALLPowered by COMPASSVALUE CREATIONVALUE PROTECTIONVALUE RETENTIONA delicate balance is needed to maintain short-term growth while maximizing brand value in the long-termSHORT-TERMLONG-TERMYour brands ability to create new value
2、 to consumers through your products and activationsProtection of your brand by minimizing the presence in channels with no control over brand experienceYour brands power to maintain its perceived value over timeFocus of this report during 11.11 2023Why it matters11.11 is often used as a barometer fo
3、r consumption in China.While the consensus is that revenue growth for luxury brands during the festival slowed down,some brands still performed strongly.This analysis seeks to uncover the key levers for luxury brands to drive revenue growth during 11.11,and to evaluate the sustainability of this gro
4、wth.Now more than ever before,luxury brands in China must carefully balance short-term growth with the long-term optimization of brand value.The ScopeA representative set of brand flagship stores on TMallBrandsTime PeriodSales 24thOctober 18thNovember(allowing for 1 week of returns)Discount/Pricing/
5、Listing 24thOctober 11thNovember(to avoid new listings after 11th)The facts you knowRevenue performance for brands during 11.11 has been widely reportedTop Performers During 11.11RisersFallersThe facts you might not knowRevenue is important,but HOW the revenue is generated is equally as importantTop
6、 Product ContributionDiscount Width/DepthNew Product PerformancePre-SalesNon-Price PromotionsPrice IncreasesThe contribution to the overall 11.11 revenue from top selling productsThe amount of products on discount-width-and the average level of the discount versus the listing price-depth-(including
7、direct discounts and coupons)The performance of products listed in the run up to the festival.Includes new products and relisted products for clearanceThe revenue contribution from products that were sold through the deposit based pre-sales mechanismThe increase in product listing prices in the run
8、up to the festival a reflection of premiumizationThe use of interest free payments as a consumer value creation lever during the festivalCase Study11.11 represents opportunities to drive top productsSome brands instead spread their sales across a wider,long-tail of their portfolioTop Product Contrib
9、ution0%10%20%30%40%50%60%70%80%90%100%BrandProducts6455516781,0391,7431,2431,3989816852,6861,298Revenue Contribution Top 10 Products86%85%60%41%39%34%32%25%25%15%13%MCM has one of the most concentrated revenuesDriven by one hero product that generates over 50%of its revenue during the festivalTop Pr
10、oduct Contribution75%of MCMs flagship store revenue during 11.11 is generated by 5productsDiscount Width/DepthDiscounting is an integral part of the festivalHowever,there is risk in discounting too wide and too deepProducts are considered on discount if at any time during the analysis period their f
11、inal unit price(on the basis of 1 consumer buying 1 unit)including coupons is lower than the listing priceThe average discount level is calculated by analyzing the percentage difference between listing and final unit price during the times the product is on discountThis analysis does not include cro
12、ss-store or cross-platform promotionsOutlet stores are omitted for the purposes of this analysisBrandWidth(%of products on discount)Depth(Average Discount%)99%15%98%24%97%52%94%29%93%41%92%28%91%35%86%36%85%14%80%19%Even Deeper Discounters(vs.11.11 2022)BrandWidth Change(percentage points)Depth Chan
13、ge(percentage points)+25-3+28+12+19+6+9+13+36-+32+6+21-13Discount Width and Depth(11.11 2023)Discount Width/DepthBalenciaga have increased their discount width/depth versus last yearThis,coupled with financial reports from Kering can indicate significant sales pressureProducts are considered on disc
14、ount if at any time during the analysis period their final unit price(on the basis of 1 consumer buying 1 unit)including coupons is lower than the listing priceThe average discount level is calculated by analyzing the percentage difference between listing and final unit price during the times the pr
15、oduct is on discountThis analysis does not include cross-store or cross-platform promotionsDiscount Width and Depth(11.11 2022)Discount Width and Depth(11.11 2023)WidthDepthNew Product Performance11.11 is an opportunity to launch new products or clear existing productsBrands that can effectively sel
16、l new seasons as well as discounted can help grow brand affinity throughout the festivalTotal ProductsNew ListingsNew ListingsDiscounted/Full PriceRevenue Contribution of Discounted New Products6296456152,68663098.4%16.7%0%71.9%48.8%ExistingNewFull PriceDiscountNew products are defined as a product
17、that was not available during August 1st October 23rdbut available during 24thOctober 11thNovember.It includes a blend of newly listed products and clearance products that may have been listed previously to the above time period.BrandNew Product PerformanceWhile MiuMiu still generates small revenues
18、Its new product offerings are driving uplift at no discountName Checkered Down JacketIvy ToteMatalass BucketMiuMiu HoboMiuMiu 11.11 Product Rank2131719Price25,40021,00014,00015,400Date Listed6thOct 202323rdOct 20232ndSep 202326thOct 2023MiuMiu launched 190 new products during 11.11 with none of them
19、 at a discountPre-SalesPre-sales helps drive interest in key productsRegardless of range of portfolio on pre-sales,it drives disproportionate sales contributionsPre-Sales products(%of total products)12.2%29.5%13.9%27%15.6%of revenue contribution from Pre-Sales products*89.2%84.9%82.6%81.4%79.4%of Pr
20、e-Sales products at discount100%100%71%92.5%88.6%Pre-Sales products(%of total products)4.6%4.5%4.1%2.8%12.8%of revenue contribution from Pre-Sales products*27.3%29.6%30.8%31.5%32.1%of Pre-Sales products at discount90%100%0%22.9%0%Highest revenue contribution from Pre-Sales productsLowest revenue con
21、tribution from Pre-Sales productsRevenue contribution from pre-sales products is for the entire period including the pre-sales period and the rest of the festivalPre-SalesChlos pre-sales offering lead to a significant upfronting of revenueDuring 11.11 proper 1/6 of the revenue was generated comparat
22、ivelyNet sales revenue by day 24thOctober 18thNovemberBrand%of Products with Price IncreaseAverage Price Increase(%)62.7%7%16.2%12.1%11.3%5.7%2.6%21.2%Brand%of Products with Price IncreaseAverage Price Increase(%)26.2%15.7%16.6%5.5%11.6%7.1%8.6%9%Price IncreasesPrice increases in the run up to 11.11
23、 can help increase marginIncreasing prices before an increased amount of consumers see your products can set expectations AugustSeptemberThere were no significant price increases during October in the build-up to the festivalPrice IncreasesSaint Laurent have been steadily increasing prices of core S
24、KUsWith a good lead time to the festival this can help set future expectations of pricing for consumersName11.11 Saint Laurent Product RankPrice Before 23rdAugustPrice After%IncreaseNiki Medium#123,20023,6002%Niki Shopping Medium#316,50017,4005%Le5a7 Hobo Large#521,50022,20013%Nolita Monogramme#119,
25、90010,90010%Non-Price PromotionsInterest free payments are a way for brands to offer extra consumer valueDuring 11.11 there is a significant increase in this lever as well as an increase in the length of the terms of paymentNumber of products on interest free payment(1st 23rdOct)Number of products o
26、n interest free payment(24thOct 11thNov)0(0%)475(82.9%)N/ALength of Payment Terms3m6m12m24m224(22%)609(94.7%)429(49.5%)994(89.4%)306(54.3%)538(87.5%)570(21.1%)1,548(54.2%)Non-Price PromotionsGucci leveraged flash promotions to drive sales of its top selling SKUsFor many this represents the first tim
27、e they were offered with long contract lengths24thOct11thNov10thNov9thNov5thNov3rdNov2ndNov1stNov31stOct30thOct29thOct28thOct27thOct26thOct25thOct4thNov6thNov7thNov8thNov3m6m12m24mLength of Payment TermsNon-Price PromotionsCartier have moved away from offering interest free paymentsThis signifies a
28、shifting strategy for the brand during the festival2021215 Products on interest free payment 62.5%of total products224 Products on interest free payment 72.4%of total products2022202378.3M Revenue67.6M Revenue(-14%)23.5M Revenue(-65%)0 Products on interest free payment 3m6m12mLength of Payment Terms
29、ConclusionsBrands have the opportunity during the festival to further optimize their brand value growth by considering the following strategic shifts:11.11 offers the potential to put your best foot forward in terms of product however an over reliance on a few SKUs on a consistent basis increases lo
30、ng-term risk.Discounting must be off-set by newness of product and an elevated brand experience some brands are tipping the balance toward diluting not only their pricing but also their value.On the other hand,increasing prices and removal of consumer benefits such as interest free payments can also be detrimental to the performance during the festival caution is requiredContact us to arrange a deep-dive session on this report and your own brand performanceSubscribe to our Monthly Newsletter at:www.rehub.techThomas PiachaudHead of Strategythomasrehub.techMax PeiroCEOmaxrehub.tech