Sun Yihui, Bojun Software: The epidemic will impact the footwear industry throughout the year, and digitalization should be put on the strategic agenda

Under the "new coronavirus" epidemic, people across the country have entered a state of home isolation, and offline retail has suffered a great impact in a short period of time. Among them, it is difficult to bypass the offline try on and experience of footwear fashion category, is one of the most affected categories, many footwear brands in the first quarter suffered a crisis of revenue cliff decline. How to correctly judge the impact of the epidemic and actively respond to it is crucial for the future recovery and development of the industry.

Bojun Software is a retail digital service provider focusing on the field of footwear and fashion. Since the release of the first POS product in 1999, Bojun Software has been working in this field for more than 20 years. Today, Bojun Software provides ERP, omni-channel, smart store and other solutions for large and medium-sized shoe fashion brands, with more than 3,000 customers.

Sun Yihui, founder and president of Bojun Software, believes that the blow brought by the "new crown" epidemic to the footwear fashion field may not be limited to the decline in store revenue in recent months, and the entire 2020 May become challenging. The brand's full-year results are likely to suffer a knock-on effect from the grounding in production and sales in the first quarter.

The reason is that the production cycle of footwear fashion enterprises is generally six months to one year, and most footwear and clothing goods need to be produced in the off-season. However, under the epidemic situation, the employees of shoe and apparel enterprises, whether it is product research and development, production and manufacturing, or supply chain logistics, can not return to work on time. Therefore, not only the spring product sales in the first quarter will be stranded, but also the next autumn and winter clothing that should be centrally designed and produced in the spring will also be stalled.

At the same time, from the perspective of C-end demand, Sun Yihui believes that consumer demand for footwear fashion goods will not rebound after the end of the epidemic, because footwear fashion categories have a very strong seasonality. The absence of consumption in the spring will not directly lead to a surge in summer consumption of goods. Therefore, the entire field of footwear fashion will slowly recover to the original state and will experience a long recovery cycle. However, some specific retail categories may see a surge in demand, such as personal protection, disinfection and other supplies. These categories of goods originally belong to the minority consumer goods, but after the epidemic, may become consumers "hoarding" standing goods.

The epidemic has brought challenges to footwear fashion brands, not only in production and sales, but also in the digital process of enterprises. The "house" of the whole people cuts off the opportunity for brand owners to have direct contact with consumers offline, and also cuts off their ability to carry out on-site management of stores. This has awakened many brand owners who have not had enough digital awareness of consumers, goods, store operations, etc.

However, under the epidemic situation, on the one hand, the cliff-like income crunch makes shoe and clothing fashion brands more willing to increase digital investment; On the other hand, because some brands are not suitable for using pure SaaS digital products delivered online, service providers need to deploy and implement them on site. This means that under the epidemic, the deployment and implementation of digital products have to stop.

However, although the epidemic has brought a crisis to the entire footwear fashion field, it is also a "crisis" and "opportunity" coexist. In recent years, with the popularity of the entire retail industry, new brands in the field of footwear fashion have emerged in an endless stream. Sun Yihui said that the level of brands in the industry is uneven, and homogenization is becoming more and more serious. The big test of the epidemic has also brought market integration opportunities to the field of footwear and fashion, the weak will be eliminated, and enterprises that maintain competitiveness will survive the fittest.

After the pandemic, as more brands increase their digital awareness, the demand for digital products and services in retail will also rise. Whether to meet the digital needs of retail enterprises in a short period of time is a long-term proposition for retail digital service providers. During the epidemic, Bojun Software continues to receive new demands from customers. In the future, Bojun Software will also actively develop more digital and online products for retail enterprises to further promote the digital transformation of the retail industry.

Sun Yihui, chairman of Bojun Software

Recently, IAnalya conducted an interview with Sun Yihui, founder and president of Bojun Software, and conducted in-depth exchanges on the impact of the epidemic on the retail industry and the coping strategies of Bojun Software. Part of the content is shared below.

The epidemic has impacted the retail industry, and the recovery cycle may be long

Love analysis: What impact has this epidemic had on the retail industry's shoes, clothing, FMCG and other categories as a whole?

Sun Yihui: On the whole, the impact is negative, and there are not many positive factors. Because of the development of retail, the total proportion of online retail is only 20%. Although the growth has been rapid in the past few years, in fact, the bottleneck or ceiling has been more obvious. Under the impact of the epidemic, the retail growth of online platforms is not particularly obvious, but the offline is basically directly reduced to zero, that is, 80% of the performance is equal to directly gone. Therefore, most of our customers are through private domain traffic, through small programs, wechat, member services in the self rescue. The impact is not just the immediate impact that we are seeing now, but will continue for some time to come.

In the supply chain, inventory links, basically from the shoes and clothing category, the spring directly stranded. Of course, spring is fine, because the clothing of the year is in the winter. It was fortunate that the winter sales were almost over when the outbreak occurred.

But the spring grounding will affect the fall, because this year's spring goods will be sold in the fall, and autumn goods are less likely to be mass-produced. The summer production will also have an impact, so the impact will continue. If the epidemic can pass in March in the short term, the impact will be better eliminated in the winter, and the impact cycle will be longer.

Love Analysis: Why is the supply chain recovery cycle of retail brands longer?

Sun Yihui: Because spring and summer are the key production cycles, but now the factory can not resume work, which is a relatively big problem. Although each business situation is not exactly the same, but under normal circumstances now and summer should be the production of this year's winter clothing products. But now because manufacturing enterprises can not resume work, so the entire industrial chain will be affected. Whether it is manufacturing, supply chain or logistics, it will be affected and passed on layer by layer.

Analysis: What is the production cycle of the clothing industry?

Sun Yihui: The general situation is half a year ahead of production, that is, off-season production. About half of them are produced half a year in advance, and about 20% to 30% are produced one year in advance. Winter clothing is produced in summer and summer clothing is produced in winter. Of course, there are also some brands will quickly reverse, for example, when winter clothing is soon listed, half of the pre-produced winter clothing is produced, and the other half depends on the sales situation. However, the requirements for the supply chain and other aspects will be relatively high.

Love analysis: In addition to the apparel industry, Bojun software also has customers in other industries. What are the differences in the impact of the pandemic on other sectors?

Sun Yihui: There will be some differences, and the impact of the clothing industry will be greater. Because clothing is more need to experience, its goods are not standard products, need to try on. This is why it is difficult to reach more than half of online sales in general, and only about 20% in general.

Therefore, the online sales of shoes and clothing such as strong experience needs more innovation. For example, now through the sharing of a picture, after customers place an order, is it possible to let customers try it on at home first? If you are not satisfied with the fitting, can you directly ask the Courier to take it back? The proportion of reverse logistics will be higher. After reverse logistics goes back, it also needs to carry out more complex processing, whether it is disinfection or sorting, all aspects will be complicated.

Love Analysis: Will the epidemic prompt changes in the competitive landscape of the retail industry? Will there be mergers and acquisitions?

Sun Yihui: I think industry consolidation is very likely to happen. In the first 10 years or so, including retail, IT, Internet related industries, are relatively hot, or to put it poorly is more impetuous, the limelight of national entrepreneurship and innovation is relatively fierce. So in the whole market, I personally feel that the brand is a little too much.

Through the impact of the epidemic, many entrepreneurial companies are actually not enough cash flow to support more than three months, and the current situation is unlikely to get money. In addition, even some large enterprises also need to unite, from the perspective of cost, research and development design and other aspects can be combined, there is a better efficiency improvement.

We also see that many brands have independent research and development, independent design, independent products. However, from the point of view of the product, the degree of homogeneity is very high, and if the trademark is covered, it is impossible to tell which brand it is. Even many brands are produced by the same manufacturer. The current epidemic is also an opportunity for the entire brand retail industry to consolidate. I believe that brands that can survive this round will have stronger vitality in the future.

Product sales and implementation are hampered, but demand is still strong

Love analysis: Bojun Software's customers have changed their needs under the epidemic, what kind of adjustment has Bojun Software made in terms of business strategy?

Sun Yihui: From the current point of view, we have transferred many colleagues who used to do traditional ERP and POS to do online work, because from the current situation of the epidemic, the offline demand will be delayed. For example, if our previous customer wants to go online, if he has 1,000 stores, he needs to go to 1,000 stores for training and POS installation lectures. There needs to be a lot of presence.

The impact on our traditional ERP is actually very big. So far, we've signed a few contracts. At the current stage, online demand is particularly wide. For example, small programs, wechat and wechat business related mobile application demand is particularly wide. Our current colleagues in back-end R&D, testing, and products work from home, but they are already very busy.

The biggest impact on us is sales on the front end. At present, the customer has a demand, we are to help the customer to complete this demand first, because now it is more troublesome to sign the contract, the customer needs to stamp, and the express delivery cycle is too long. There was no time to respond quickly enough, so we were already working, but the impact from a revenue perspective would be huge. In addition, our sales are basically difficult to carry out work, because customers have not returned to work.

Ai Analysis: What is the process of Bojun software team's collaborative work and customer service under the epidemic?

Sun Yihui: We used Ali Dingding more deeply before, and now the usage rate is higher. Because we are doing IT itself, the work is also code-based, so this piece of the impact is not particularly large, efficiency will have a certain impact. The more troublesome process is that the contract needs to be sealed.

In terms of working models and processes, I think there will also be greater investment for retail companies in the future. In the past, it has been inherited in accordance with the conventional way, and we also felt that there was no need to make a lot of processes very complicated, such as being sure to go to the scene to visit the store and see the various situations of the store with our own eyes. But because the retail industry has been doing this for decades, it's hard to change. But this outbreak may help us to optimize and digitize our processes a lot more. I believe that the proportion of online office in retail enterprises will also increase a lot.

The epidemic has hindered the digital process of the retail industry, but at the same time, the education market

Ai analysis: Under the impact of the epidemic, will more retail brands increase digital investment in order to enhance the capacity of all aspects of the industrial chain?

Sun Yihui: It is still difficult to judge, in general, there are two positive and negative factors. On the one hand, we can see that digitalization is becoming more and more important, and the emphasis on digitalization and future construction may increase, but because the performance is affected by the epidemic, most brand customers will have problems in their own operation due to the decrease in income. In the past, there was money but not special attention, and now the overall income has become less, it is actually a dilemma to increase information investment. This is a contradiction.

Even if customers want to build digital, there are many physical problems. For example, from the beginning of the epidemic to the present, the demand of customers is very strong, especially in the mobile end and the member end. But unless it is a product that can be fully SaaS delivered online, it is very difficult to do. Because there is no way to train, there is no way to install or implement on site.

Therefore, I think that after the whole business situation recovers half a year later, the industry will be a better opportunity, because everyone will pay more attention to and invest in digital construction.

Love analysis: What are the characteristics of retail enterprises that maintain strong competitive advantages under the epidemic?

Sun Yihui: From the situation of our customers, the brand with high consumer recognition will have an advantage. Some brands may not even do online, or even only have customer phone numbers, but once they start, they can do a very good job of connecting online consumers, regardless of how well it has been done before.

Some brands have invested a lot in the construction of the member system before, but as a result of the epidemic, the stickiness of consumers is not enough, so the recovery degree of performance is obviously not good.

For example, we have a high-end women's clothing customer, previously people felt that this brand is very old, the volume is not large enough (about 500 million to 1 million a year turnover), and the online development is not very good, so it is expected to be greatly affected. They did suffer a lot in the beginning, and the whole business went to zero. Moreover, their membership construction is mainly based on offline shopping guide services, rather than relying on the system.

However, once they start to do digital transformation, in the current situation, they start to do wechat business, and their performance recovers particularly fast, and they can have a turnover of 1 to 3 million a day, which is relatively excellent under the current circumstances.

From the analysis point of view, whether it can be restored does not lie in the system construction or the number of stores that previously served customers, but in the real stickiness of consumers. As long as there is good stickiness, then with some information tools, you can recover better, of course, it is impossible to recover to the same as the original, but at least you can live longer than others.

Love analysis: During the epidemic, what is the sales performance process of online channels that shoes and clothing products rely more on?

Sun Yihui: This process is similar to the previous wechat wechat business. The shopping guides will share the goods through their moments of friends and wechat groups. The shopping guide has no business now, and will recommend products to consumers point-to-point every day. Some consumers want to be able to deliver goods directly to their homes, mainly using traditional express logistics to deliver goods to their homes, either by direct delivery through the store, or by direct delivery from the company's warehouse.

From the consumer's point of view, everyone's tolerance for delivery arrival time will be much higher than before. I used to buy it today and get it tomorrow. Now the waiting time is longer, which is understandable.

Love analysis: From the perspective of the demand of consumers at the C end, do you judge that consumer demand will usher in a sharp rebound after the epidemic?

Sun Yihui: I don't think there will necessarily be a retaliatory backlash. Shoe and apparel retail, in particular, is characterized by seasonality. Especially women's clothing, the first year to buy clothes, the second year or to buy a new style, the first season has passed. And consumers will not buy more summer or autumn or winter clothes because the epidemic is over. Perhaps some special categories, such as masks and other personal protective equipment will become mainstream consumer goods from the previous niche products, but I don't think there will be a particularly large retaliatory growth in consumer goods. A return to a more or less normal situation is optimistic.

Love Analysis: From the perspective of the whole of 2020, can we see some other industry trends in the retail industry after the epidemic?

Sun Yihui: After the epidemic, many products will return to offline, or offline experiential shopping is still needed, so our current efforts are hoping to help our customers reduce losses at the current stage, in the future can quickly restore the original business scale.