The Announcement of Announcement of Announcement of Good News from the Internet

Challenges: How to convert traditional industrial strengths into online advantages.

Strategy: Build a new online brand using industrial insights and adopt a "profit while investing" approach.

Results: BONO transitioned from offering men's formal wear exclusively to designing full-range men's fashion, moving from online to offline with multiple store openings. Despite these efforts, success remains elusive.

In August 2009, when a reporter from the newspaper contacted Fang Xiaobo, Secretary of the Annunciation Group, for comments on the group's e-commerce endeavors, he replied, "We're not doing well enough yet!" and declined to elaborate further.

Compared to the grand announcements two years prior about Zion Bird's entry into e-commerce, this response was notably subdued.

Opening the Annunciation's e-commerce site reveals a message stating "Zhenniao Online Shopping Mall is under maintenance and temporarily closed," which then redirects users to other pages. Promotions for the Annunciation are nowhere to be found on platforms like Sina, Sohu, NetEase, and Tianya. Additionally, BONO, the e-commerce arm of the Annunciation, has stepped away from its direct-to-consumer approach and now operates two customized stores, Carl Bono and Bono Tailor, focusing on a hybrid "online + offline" business model.

To retreat or persist?

Around 2007, PPG swept through the garment industry like a tornado, bringing e-commerce to the forefront of attention.

At that time, Shanghai Bao Bird Clothing, part of the Baoxi Group, was on the brink of change. On August 16th of that year, Shengxi Bird successfully listed on the SME board of the Shenzhen Stock Exchange, raising 302.4 million RMB, making it the first listed company in Wenzhou's footwear and clothing sector. A week later, Bao Bird Apparel officially launched the BONO brand. On October 8th, the EBONO e-commerce website was launched, marking the beginning of BONO's journey in online direct sales.

As soon as the news broke, opinions were divided.

Supporters believed that BONO would become the disruptor in online sales due to its three core advantages over other "lightweight" companies that solely sell clothes online. First, it had independent product design and development capabilities, along with its own costume design team. Second, it could control industrial resources, leveraging the backing of the Baoxi Group to work closely with top-tier fabric suppliers. Third, it had strong production capacity, with two modern production bases in Shanghai Songjiang and Zhejiang Wenzhou, equipped with ten world-class production lines. These three points ensured that BONO would outperform online direct sellers like PPG and VANCL in terms of product quality.

Compared to "heavyweight" companies like Youngor's e-commerce ventures, BONO was inherently "lighter." Since 2000, Baoji had focused on custom business, primarily tailoring business wear for banks, automakers, schools, and institutions. With no traditional retail channels or specialty stores, there were fewer conflicts between online and offline channels, making it easier to transition into e-commerce.

Opponents also had valid points, arguing that traditional companies lack the "genes" necessary for e-commerce. While the theoretical benefits of transforming a traditional enterprise into an e-commerce operation sound appealing, many practical examples have shown otherwise.

For instance, BONO's supposed three core competencies don't hold up against e-commerce. Having a top-notch design team and premium fabric suppliers doesn't mean lower costs, and higher-priced products lack price competitiveness in online sales. Furthermore, Bao Bird's previous focus on B2B business meant adapting to the B2C market wasn't guaranteed to succeed.

The CEO of VANCL once remarked in a past interview, "In theory, the Annunciation should be the easiest to succeed in online sales; but in practice, it might also be the most likely to fail because traditional clothing companies like the Annunciation cannot commit fully to online marketing like PPG and VANCL, which limits their online sales platforms."

Apprentice disadvantage: From "single" to "full-line"

Regardless of external debates, BONO has been relentless in its pursuit of e-commerce, embarking on its first high-profile layout.

In July 2007, Shanghai Baotuo Textile Technology Co., Ltd., jointly established by Baotuo Group and Shanghai Baotuo Garment Co., Ltd., was founded. Baoji Technology unified traditional channels and online direct sales brands under the English name BONO. On August 25th, the business wear brand of the Annunciation was renamed from BOONIAO to BONO. Around October, relevant personnel from the BONO management team were recruited. At that time, Bao Bird hired Tian Jian, a former general manager of Yahoo China, as the general manager of the BONO direct marketing brand. By the end of the year, Baoxi announced an 80 million RMB investment in BONO. All signs indicated that Shengao Bird hoped BONO would make a significant impact in the field of e-commerce.

However, within six months, the situation took a dramatic turn.

First, Tian Jian, the general manager, resigned. When outsiders speculated whether this signaled the failure of Zingbird's e-commerce efforts, Zhou Xinzhong, chairman of Zhejiang Xinxiu Clothing Co., Ltd., explained: "When Tian Jian was hired, both parties agreed that he would help straighten out the direct marketing structure, and then the original management team would take over BONO. He initially joined as a consultant under the company's name." Tian Jian's appointment as general manager of BONO was purely for management convenience.

Regardless of internal operations, BONO struggled with internet direct sales, and new attempts began in the second phase. On March 12th, at the press conference for BONO, the company formally announced its shift from selling single online shirts to a full range of menswear, replacing standardized products with fashionable designs.

At the time, the deputy general manager of BONO openly stated at the summit: "Currently, our business, fashion, and casual wear ratios are 3:5:2. In the future, we hope to achieve a 2:5:3 ratio." This effectively marked a complete reversal of BONO's direction. Initially, business attire dominated BONO's product lineup, but in the future, this proportion would not exceed 20%.

It is said that five months earlier, BONO executives had held a conference dubbed the "Zunyi Conference" by insiders. At this meeting, BONO management decided to replace "single business attire" with "fashion design." However, the issue was that BONO had previously invested millions of dollars and promoted the brand based on "business attire." In this transition, the previous millions of dollars were essentially wasted.

During this period, another piece of news shook the industry.

On March 19, 2008, the Annunciation issued an announcement regarding the use of funds changed, stating that it would use a total of 96.04 million RMB originally intended for suits and shirts to acquire an 80% stake in Shanghai Bao Bird Garments Co., Ltd. Analysts commented that this acquisition was an indication of the Shengtuo Group's intention to expand its online channels and seek new revenue streams through e-commerce.

Regarding this move, Bao Xiaobo, secretary of the board of directors of the company, said that Baoxiu believed e-commerce was a trend in the industry's development but adopted a cautious strategy toward this business. He also noted that e-commerce was not the core of the company's future business development and that the adopted strategy was also "profit while investing and producing."

Due to different origins, BONO lacked the marketing promotion advantages of VANCL in competing with it. VANCL was the product of venture capital investment, raising tens of millions of dollars within a year, with overwhelming advertising campaigns that BONO couldn't match in the short term. Although the Annunciation had announced an 80 million RMB investment in e-commerce, questions remained about the effectiveness given the various inputs during the period. After all, the mindset of using venture capital versus personal funds is inherently different. Although VANCL invested heavily in marketing, its product prices were very low, with shirts starting at as little as 68 RMB; whereas BONO's prices were around 300 RMB.

Therefore, BONO's strategy of "profit while investing while investing" and mid-to-high price products were bound to face challenges. Not only did BONO, which once had a high-profile campaign, fail to catch up with PPG, it was even surpassed by later entrants like VANCL.

Changing tracks sideways: "Online" goes "Offline"

In the second half of 2008, PPG, the "big brother leader," was beset by negative news, leading to a slow-down in its development. During the same period, the second phase of BONO's efforts hit a snag, failing to meet the initial expectations of "strengthening the backend and offering high-quality products" to rival competitors' thresholds in online sales. Forced to pivot, BONO turned to launching offline operations.

BONO's offline stores are divided into two brands: Carl Bono and Bono Tailor. The former focuses on high-end customization and targets the gold-collar market, while the Bono Tailor community custom shop not only offers fashion customization at relatively affordable prices but also serves as an EBONO network direct sales experience center where online-sold garments are displayed and sold. Consumers can feel the fabrics, craftsmanship, and try on the garments either in-store or via the Internet.

In interviews with the media, Gao Feng repeatedly emphasized that combining e-commerce with community-customized stores aimed to reduce costs and minimize financial risks. Hence, there was no large-scale advertising for the EBONO e-commerce platform. Instead, some resources were allocated to building community custom stores, opening them in relatively inexpensive commercial buildings.

The strategy was clear: BONO wanted to expand its direct sales product line and service offerings using the Bono Tailor community customization store as a vehicle, while simultaneously forming a link with the online direct sales brand EBONO. This would create a "community-based, unified customization center, experience center, and service center."

Here, we need to redefine "e-commerce."

If e-commerce involves selling goods online through a web-based platform, then BONO clearly deviated from the traditional e-commerce trajectory. However, if the future of e-commerce is to embrace the "online + offline" model, then BONO seemed to be forced to return to the right path.

The question is, if all customer sourcing and sales activities are conducted in the Bono Tailor store, is this still considered e-commerce?

This brings to mind a conversation with Wu Zhize, Chairman of the Annunciation Group. "BONO does not aim to place orders simply through the Internet but to build a brand. In three to five years, when the price advantage of men's apparel sales online diminishes, BONO's backend will gradually showcase its strengths. Whether through traditional channels or the e-commerce model, the ultimate market competition for men's wear will still boil down to branding."

Back to the beginning

Thus, the focus has shifted from how the Baoxi Bird executed e-commerce to how the Annunciation used the e-commerce boom to shape its brand proposition.

In this proposition, the Annunciation didn't succeed in e-commerce but excelled in advertising.

Firstly, around 2007, when e-commerce was akin to a "10,000 kilograms per mu" phenomenon during the Great Leap Forward, the Annunciation's advertising strategy was as follows: On August 16, 2007, the Siaoniao Group listed on the SME Board of the Shenzhen Stock Exchange. On August 25th, Baotou Fashion officially released the BONO brand. On October 8, BONO Electronics was formally launched, marking the beginning of its business website. In March 2008, the group acquired another 80% of the shares of Bao Bird, returning Bao Tiao to the Shengtuo Group. Consequently, the 2008 annual report showed that in 2008, the company reported an operating income of 960 million RMB, a 105.55% increase over 2007. The primary reasons were the inclusion of Shanghai Bao Bird Garments Co., Ltd. in the consolidation scope; continued brand building that expanded brand awareness and reputation; a steady expansion of the sales network and increased sales scale; and the price increase of products, which boosted gross margins due to increased brand value.

In terms of channel business, Baotiao itself had previously engaged in customized business. Combining this with the expansion of the BONO business, along with early exposure to e-commerce, significantly increased the brand awareness of the renamed brand. Simultaneously, riding the wave of economic recovery, they launched offline stores to conduct substantial business expansion.

From today's perspective, the Annunciation used BONO to enter new channels. BONO ultimately took the "online + offline" route, which is actually a microcosm of the tortuous exploration of traditional clothing companies venturing into e-commerce.

There are two main issues in the development of e-commerce for traditional branded clothing: first, the conflict with traditional channels, such as implementing a regional agency system and then adopting a network channel, creating contradictions in benefit distribution between manufacturers and original agents; second, the inherent nature of high-end garments, particularly suits, which demand precise fitting and cannot be adequately met by online sales.

Newsboys for brand testing can avoid the first problem; and BONO's shift from online to offline seemingly solves the second problem. But if sales activities are primarily completed in the store, it may not be classified as e-commerce. Of course, perhaps the company itself doesn't care about the medium of sales activities, as long as the goal of selling is achieved.