Author | Wang Xiaojuan

Editor | Huang Yu More than half a year ago, e-commerce giants began to follow in the footsteps of PDD to launch "refund only". However, the drawbacks of "refund only" gradually emerged, and now Taobao is correcting its course. On July 26th, Taobao announced that it would optimize the "refund only" strategy, improve the seller's after-sales autonomy based on the new version of the experience score (store experience score), the higher the experience score, the greater the seller's disposal rights, and stores with a score of 4.8 or higher will receive more autonomy. The relevant policies will be officially implemented on August 9th. It's easy to see that Taobao is trying to strike a new balance between user experience and seller rights. Over the past few years, the biggest change in the e-commerce industry has been the rise of PDD. In addition to low prices, "refund only" is also a core factor in PDD's success. Therefore, e-commerce platforms have gone from questioning and understanding PDD to learning from PDD. At the end of last year, in order to strengthen consumer rights, Taobao began to support buyers for refund only, and JD.com also revised its guidelines to add standards for user refund only. However, while "refund only" protects consumers, it is also vulnerable to abuse by "wool party" and causes harm to seller rights. For example, during this year's June 18th promotion, many clothing merchants stated that the return rate can reach 80% or even 90%. Since consumers can apply for a refund without returning the goods for quality issues, a large number of merchants are experiencing significant losses. Insiders at Taobao told Wall Street News that Taobao is taking a beneficial exploration between users and sellers by optimizing the "refund only" based on the store experience score. "By guaranteeing consumer rights, it also significantly optimizes the business environment and forms a more benign and healthy e-commerce ecology." This also conforms to the current tone of Taobao's adjustment of the business environment. Recently, Taobao launched a round of scale modification for merchants, such as clarifying that "experience score" is the core basis for traffic distribution. In addition, from September 1st, Tmall will cancel the annual software service fee for the platform. However, Taobao's relaxation of the "refund only" rights of sellers is only to a certain extent. The premise for sellers to obtain autonomy is to continue to improve their service capabilities. At the beginning of the year, Taotian announced the upgrade of the new store comprehensive experience rating standard. After the upgrade, the rating focuses more on consumer-related indicators such as "refusal rate for refund" and "platform help rate." In addition, services that affect consumer shopping decisions, such as "return insurance", will also be a bonus for merchants. In other words, if sellers want to get high scores, they really need to serve consumers well. Of course, Taobao also provides practical rewards such as traffic to high-quality merchants, and this time it has also ceded some after-sales rights. Wall Street News learned that after the optimization strategy of "refund only" is launched, Taobao will not actively intervene through Wangwang or support refund only after receiving goods for sellers whose store experience score is greater than or equal to 4.8. Instead, Taobao encourages merchants to negotiate with consumers first. In short, Taobao will reduce or cancel after-sales intervention for high-quality stores, and the platform will give different degrees of autonomy to merchants according to the experience score and industry nature. In addition to giving merchants more autonomy, Taobao will also provide multiple after-sales service solutions for merchants to choose from, guiding merchants to continuously optimize after-sales services and reduce disputes and losses caused by "refund only". It is worth mentioning that Taobao has also optimized the appeal process for "refund only". After the user initiates an appeal, the platform will invite a third-party testing agency to sample the product. If the test passes, the platform will compensate the loss to the seller. As Taobao adjusts the "refund only" policy, it is time for the industry's grand "learning from PDD" campaign to reflect. In the increasingly fierce e-commerce competition, true innovation and differentiation can bring greater competitiveness than copying and learning from others.

2024 is a big sports year, from the Asian Cup to the European Cup, from the Olympics to the five major leagues, global attention-grabbing events that allow each sports brand to gain more exposure, especially Li Ning, who sponsors several Chinese national teams in the Olympics.

Li Ning wants to seize the flow of the Olympics to help its performance overcome the bottleneck as soon as possible.

Recently, Li Ning submitted a mediocre semi-annual report.

The revenue increased slightly by 2.3% to 14.345 billion yuan, and the gross profit was 7.236 billion yuan, up 5.8% from 6.839 billion yuan in the same period in 2023. The overall gross margin was 50.4%, up 1.6 percentage points year-on-year.

At the same time, Li Ning's net profit fell 8% year-on-year to 1.95 billion yuan, reducing the decline compared to a 20% drop for the full year 2023, which was mainly due to the reduction of investment in channels and other aspects.

However, due to the poor performance of the annual report in 2023, the market had previously expected Li Ning's revenue to be 14.23 billion yuan and net profit to be 1.67 billion yuan, with a market expectation of 48.7%. Now, all three key indicators have exceeded market expectations.

The footwear business is still the key to Li Ning's revenue stability. In the first half of the year, footwear sales revenue was 7.844 billion yuan, an increase of 4.4% year-on-year, accounting for 54.7% of total revenue.

Footwear growth is mainly due to Li Ning's introduction of corresponding products for the masses.

If classified by each sport, the flow water ratio of the three core professional categories of running, basketball, and fitness has reached 66% this year, setting a new high of the same period in five years. These three types of sports also have the largest number of participants. With these three major professional sports as the engine, Li Ning's three major series of running shoes, Ultralight, Chitu, and Flywire, sold more than 5 million pairs in the first half of this year.

Revenue from clothing has declined year-on-year and is the only category that has declined among various business classifications. The revenue for the first half of the year was 5.375 billion yuan, a year-on-year decrease of 4.7%, accounting for 37.5% of total revenue.

How to improve the product competitiveness of the clothing category is still a major challenge that Li Ning needs to solve.

In July, Li Ning released a table tennis series product, "2024 China Table Tennis Team Long Clothes," and even invited all the Chinese table tennis team athletes and coaches who were training in Chengdu at that time.

However, on the Olympic arena, Fan Zhendong, wearing long clothes, was sweaty and soaked all over, and the long clothes were caught in a breathable controversy. In addition, in the mixed doubles table tennis match, Wang Chuqin and Sun Yingsha kept pulling their trousers on the court, which sent Li Ning to the hot search again. Currently, it is difficult to find either the long clothes or the champion shorts on its Tmall flagship store.

Faced with an uncertain market environment, Li Ning has also slowed down its expansion pace.

From the channel perspective, Li Ning's brands have a total of 7677 stores, with a net increase of only 9 stores at the end of 2023, and the brand emphasizes "consolidating the quality of high-level channels, strengthening new emerging market channels, and accelerating store image upgrades."

Therefore, in the first half of this year, Li Ning closed 30 stores, close to the total number of stores closed last year, and began to pay more attention to the quality and efficiency of stores relative to the growth in scale.

Adjusting channels is also a key to growth as online platforms have become increasingly important. According to the financial report, the revenue from e-commerce channels increased by 11.4% year-on-year, and the online consumption environment is gradually recovering, so Li Ning has invested more in the online channel. In the first half of the year, Li Ning's sales and distribution expenses were 4.327 billion yuan, an increase of 9.6% year-on-year, accounting for 30.2% of total revenue. Li Ning said that it mainly increased investment in market promotion and product promotion, especially in live broadcasting channels favored by consumers, to tap potential customers.

In the first half of the year, Li Ning's sales and distribution expenses were 4.327 billion yuan, a year-on-year increase of 9.6% and accounted for 30.2% of total revenue. Li Ning said that this was mainly due to increased investment in market promotion and product advertising, especially in the popular live streaming channel where Li Ning increased content promotion to tap into potential consumers.

However, Li Ning is currently facing a more intense competitive environment, and the changes in sports driving and consumer habits have enabled brands to see the potential of combining sports and fashion. All brands are making efforts in this direction.

Li Ning has also been wanting to push the brand to a higher level, selling at a higher price, but has frequently found itself in an awkward situation of being criticized for being too expensive.

Against this backdrop, Li Ning's stock price has fallen by over 80% from its January 2023 peak. In the future, Li Ning will need to tell a more inspiring business story to boost market confidence.