Beijing
Lola Password, the leading brand of Douyin Hanfu, has been closed down and has continued to suffer losses for more than a year due to increased costs and intensified market competition. The founder said that it would be difficult to cover costs without raising prices, and low-priced plagiarized products would impact the market. The brand was once brilliant, but challenges such as return rates and rising traffic costs have led to difficulties. The founders plan for transformation, emphasizing the importance of innovation and adapting to market changes.
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Produced by "Eye of the Storm" ifeng.com
Author丨Li Guangkun
Email for breaking the news and complaints: all_cj@ifeng.com
A Douyin-leading Hanfu brand with an annual turnover of several billion has been closed.
It has an outstanding record. It was once the No. 1 Douyin clothing anchor list, Douyin Double 11 overall list, the Peak overall list, and the 618 clothing sales total list. It also took 11 hours to sell a total of 140 million yuan in live broadcast sales.
However, the past achievements have not changed the fate of Rolla Code being suddenly closed.
What happened behind the sudden turn of fate?
Laola Cipher, the founder of Laura, and her husband Caesar answered all their questions on Phoenix.com's "Eye of the Storm". As the outside world suspected, they attributed the reason to changes in costs. Before closing, they had been losing money for more than a year, with losses amounting to tens of millions a year.
This brand, founded in 2016, started Douyin live streaming in May 2020, and the average price of clothing was controlled at around 200 yuan. In 4 years, it rose to prominence, became the leader, and then closed the store. The whole process. It was also during this period that both the platform and the industry underwent earth-shaking changes.
For example, the return rate, "When we started in 2021, the return rate was still 30%-40%, but now the return rate is 70%-80%, which has doubled." For example, the traffic cost, "has doubled. "10 times more"; for example, the consumer trend of "low price is everything", lower-priced plagiarized products appear faster and faster, "copied in a week", plagiarism merchants use inferior fabrics to pass off the same style. Lower prices also make their products more difficult to sell.
The source of the last farewell live broadcast/video screenshot
"The cost of our silk fabrics is only two to three hundred yuan. Their so-called 'real silk' sells for more than 100 yuan. How is this possible?" said At this point, Caesar felt helpless.
Although they cried many times before and after the closure, they have now sorted out their mood and status and devoted themselves to the next stage of brand entrepreneurship. "Companies need to continue to innovate and adapt to market changes. , in order to remain competitive”,Laura said.
At present, "Hanfu market involution" has become the consensus of the industry. What exactly is it that makes a brand that is positioned as original, mid-to-high-end, and sells billions a year, unable to retreat in the current market? ?
The following is a conversation between Lola and Caesar from "Eye of the Storm" on Phoenix.com, with the content abridged.
Ifeng.com's "Eye of the Storm": Why did you choose to turn off the Rolla password before 618?
Lola: In fact, this brand can continue to operate, and there are plans, such as raising prices and reforming the brand style and characteristics, but we still made this decision. I closed it before 618 because I didn’t want the brand to leave a negative impression on consumers. The sales volume of 618 is very large. If the after-sales experience is not good, it will affect their impression of Rolla Password. I don’t want that to happen. I hope that if I don’t do it, the impression left behind will be bright and bright, and consumers will still miss it.
Caesar: At that time, my heart was already tired. It didn’t matter when it ended, or whether it ended immediately.
Ifeng.com's "Eye of the Storm": What is the real reason for closing the Rolla password?
Lola: I have always hoped to provide users with high-quality products and buy better products at lower prices, but things have gone counterproductive. Our costs and labor costs are very high. To make products based on the quality of the brand, the company needs to operate normally. The existing price cannot cover the cost, so it can only raise the price, but consumers will not adapt to the price increase. In order to leave a perfect impression on consumers, I would rather abandon this brand. Closing it is the best result.
Caesar: Laura is an emotional person and wants to have an explanation with her fans. We persisted for a period of time, during which the company was losing money every month. Starting from 2023, it has been losing money for nearly more than a year. There is really no way to close down. We have to support such a large warehouse, so many employees, designers, and so many factories, but these profits can no longer support ourselves. If we don't lose money, we can persevere, but that's a loss of tens of millions a year, which no one can bear.
Ifeng.com's "Eye of the Storm": From offline to online, Rolla Password has experienced a period of rapid development. From 2020 to 2024, how has the existing market environment changed costs? Why does it lead to losses?
Caesar: Return rate, traffic cost, and industry involution are all reasons.
In the year 2020, we officially started Douyin live broadcast. At that time, I found that my mother and mother-in-law bought everything online. We realized that we needed to make a layout and completely switch online. The process was also very smooth. In two or three years, the warehouse expanded two or three times. It rented a few thousand square meters at the beginning, and later expanded to tens of thousands of square meters, and the sales volume doubled.
But the industry is changing too fast.
When we started in 2021, the return rate was still 30%-40%, but now the return rate is 70%-80%, which has doubled. We also have to bear the cost of returning goods. From delivery, warehousing to freight and packaging materials, our cost per order is also 10 yuan. We have not included shipping insurance, and we do not want this increased cost to be passed on to other consumers who do not return goods, but this difference will not make the return rate lower.
Traffic costs are also getting higher, increasing by 10 times. There were few people doing it in the past, but now there are more people doing it. They are bidding for traffic. These are all costs. This has a huge impact. If you catch our live broadcast this time, you may not be able to catch it next time. It’s like opening a physical store on the main street. When you build a road on the main street, your customers will Affected.
As traffic costs become higher, many merchants bid by lowering quality and lowering profits. Ours is not good enough and quality cannot be lowered. I don’t have such big profits to compete with them.
There is a lot of discussion about the "price comparison system" in the outside world. In fact, this has not had much impact on us, because before Douyin launched the price comparison system, we had already decided not to do it. Nowadays, many platforms are promoting price comparison systems. I think it is reasonable to compare the prices of cups of the same brand produced by the same factory, but for clothing, the price comparison is actually unreasonable. Many clothing plagiarizes our brand, and we are all numb, but in fact The fabrics and workmanship skills of the clothes are different, but consumers can’t tell the difference from the pictures. There are even pictures of copies of our clothes that are better looking than the ones we took. Such price comparison does not necessarily allow consumers to buy at lower prices. Buy a good product.
Ifeng.com's "Eye of the Storm": Nowadays, everyone wants low prices. How are these changes in market factors and costs causing the industry to change?
Caesar: Now the competition in the Hanfu market has turned into vicious competition. When we make original products, it costs three to four thousand to make a pattern (referring to taking the clothing artwork to the factory to make patterns). Some patterns cannot be made, and we need to make three or four times. Then we can produce large quantities and adjust the fabrics. is the cost. Moreover, we are a formal enterprise. Every fabric or garment will be sent to a formal national institution for testing. There will be insect-proof, anti-mite, and anti-bacterial test reports. The test for one piece of clothing costs more than 1,000 yuan. These are the requirements of standardized brand companies.
But many small workshops in the market do not do any of these. Some of our dyes are plant dyes, and some coated fabrics on the market are chemical dyes, and some are chemical dyes.For cancer, the two costs are different. Some merchants make a fabric if they see it is cheap, and then put it into the warehouse for sale directly. What they strive for is a probability. After all the previous costs are saved, if they sell 10,000 pieces and sell three or four thousand pieces, they have already earned back the cost. The remaining six or seven thousand pieces, no matter how they are sold or how good the quality is, He all makes money.
And they will copy your style directly. Although the quality is different from our original version, how many people can tell the difference in quality by looking at the pictures?
Some people sell imitation silk as real silk. I was very angry when I saw it. The cost of our real silk fabrics alone is only two to three hundred pieces. They sell a piece of real silk for more than 100 yuan. How is this possible? When making a wool coat, our wool content data is very accurate. If it is said to be 100% wool, it means 100% wool. However, some stores only have 20% wool content, and they will dare to say that they are 100%.
My cost is four to five hundred yuan per piece, but their cost is only 100 yuan, and the selling price is two to three hundred yuan. The magnification can reach 3 times. It looks like the style is the same as ours, and even the pictures are stolen from mine. Yes, the price is much cheaper than ours. If an unfamiliar consumer is not familiar with your brand, others will buy his product but not mine. In such a competitive environment, we really can’t do it.
I insist on being original, but I also want to be mid- to high-end, but the road is blocked. We would rather not do it and do it well if we do it, or I won’t do it.
Ifeng.com's "Eye of the Storm": Have you tried transformation to win back consumers?
Caesar: From last year to this year, we have worked hard to let consumers experience good products at low prices and differentiate them from other stores. The price is 3 yuan to 5 yuan more expensive, and we use quality Keeping everyone is really selling at a loss, but this still cannot change the status quo.
For example, we used to sell T-shirts for 150-200 yuan each, but now they sell for 70-100 yuan, a decrease of 100 yuan. Of course, after the price reduction, the price is still higher than some T-shirts on the market, but it is already an extreme cost reduction. It sells for 70-100 yuan, and the cost starts at 50 yuan. T-shirts on the market sell for more than 30 yuan, and the total cost is only 10 yuan. how much.
We have been in the supply chain for so many years and have a very strong fabric supply. For cotton T, there is a big difference between 20, 30, 50 and 70 (the number of lengths of cotton yarn weighing one pound, the higher the count, the softer). This kind of ready-made garments will be randomly checked and washed 100 times to ensure that they do not deform or lose their shape. Only by carefully touching the fabrics can you feel the differences in density, gloss and other fabrics.
Our cost reduction does not reduce the quality of clothes, but reduces costs in terms of manual warehousing. For example, what used to be done by 4 people is now done by 2 people, and the office space has also been reduced. In the past, There were 7 floors, now it is only one floor, but the clothes should have no missing parts.
After the price reduction, the sales volume increased a bit, but the profit decreased, and in the end it was still a loss. How much does our company’s warehouse rent, equipment and labor cost every year?Ten million, these costs have to be deducted from the gross profit. After the deduction, there is basically no net profit left, and it is all in vain.
Laura: Originally, we wanted more customers to feel and experience the difference in quality, so we lowered the price. But once the price drops, it will be difficult to increase it. Consumers will not raise the price. Adaptable. This is why I say that in order to leave a perfect impression, I would rather abandon this brand. Closing it is the best result.
Ifeng.com "Eye of the Storm": Was it difficult to make the decision to close? How long have you hesitated?
Laura: Many friends called me before and asked me why I didn’t do it? I always hung up the phone without answering, because every question pierced my heart. I cried many times and my tears were uncontrollable. I always wore sunglasses when I went to the airport. Laura Code is really like my child. I raised it and then I wanted to give it up, but there was no way. Giving up was the best choice. I gritted my teeth and shed tears. I also stopped it because I felt There is still a long way to go.
Caesar: Really, we treat it like a child, very emotional, just like my child is seriously ill, and we can’t save it after trying every means, and it’s very sad. Many old employees of the company cried. They also put in a lot of effort for this brand.
At the end of last year, when we were making plans for this year, we agreed to review the situation before May Day and give ourselves half a year to work hard to see if we could save the Lola Password brand and change consumers’ perceptions. I know, but not much has changed. As long as you keep doing it, once you go through these processes, you will still lose money, and the more you do, the more you lose. It is useless for us to fight against platform growth and "natural" growth. When you are about to leave, everyone will think about you.
Ifeng.com "Eye of the Storm": What are your future plans for brand entrepreneurship?
Lola: Now we are already planning a new brand. When it comes out again later, I hope to more accurately meet consumer needs and know what consumers want next.
In fact, in the past when we were working as entities, we would also involute. Now involution has become a daily routine. In this process, you have to adjust, how can you not involute, and how can you do well in the future. What I think now is that I must create my own style and design. Women do not lack clothes. What they lack is a high-quality life. Your design must convey this concept and bring such an experience.
I previously believed that the current simple design and sales can no longer meet the development needs of clothing brands. Only reducing costs through digital layout and improving the efficiency and experience of clothing retail is the future development direction. . In fact, this is what Rolla Code does. Over the past few years, this view has not changed substantially. Digital layout can indeed bring some positive effects. However, I also realize that we cannot rely solely on digitization. This is not enough. It also needs to be combined with The unique positioning of the brand and the coordination of multiple aspects to promote the development and progress of the brand are what we will do next.
Caesar: I believe that the Laura Code may appear offline in the future, because the real thing can be seen offline.You can feel the difference in quality just by touching it. In fact, we have been able to stop being so tired a long time ago. We really want to be a good brand.
