Led by Liang Chao, streetwear fashion label Yoho! rides China's consumption upgrade to success
In mid-December, Yoho!, China's largest streetwear fashion group, launched UFO, a sneakers resale channel, on its e-commerce platform with all guns blazing, notching up over 1 million yuan ($145,574) in sales revenue on the very first day.
After the sensational debut, perday deals have settled to a decent number. Liang Chao, founder and CEO of Yoho!, said: "We've stepped into fashion retail because there's plenty of demand in the market. Among the products searched by consumers, sneakers are prominent," he said.
His point is confirmed by consultancy Grand View Research whose data showed that the market value of the world's sneakers market will exceed $95 billion in 2025.
A resale channel retails secondhand but unused goods. When a consumer returns goods bought without using them and gets refunded, the retailer puts such goods on sale on its resale channel. Sometimes, prices on such a channel could be higher than normal tag prices, if the product is a limited-edition item.
In the US, a resale platform similar to UFO, called StockX, recorded average daily transaction volume in sneakers in excess of $2 million in 2018. Chinese consumers contributed some 15 percent of it.
"At present, sales of sneakers take up more than 20 percent of the total revenue of our online retailing. We find it necessary to launch a specific sector to meet that rising demand," said Liang.
The resale platform for sneakers is just one of the many attempts that Yoho! has made to boost sales since it tapped into online retailing in 2007. At present, e-commerce contributes up to 90 percent of the group's annual income.
Founded in Nanjing of East China's Jiangsu province in 2005 as a fashion magazine, Yoho! has since grown into a fashion icon. Its presence now spans media, e-commerce, physical stores, annual fashion carnivals and travel information.
The group opened its first 5,000-square-meter flagship store in Nanjing in October 2017. In September last year, Yoho! opened a smaller-scale physical store named Yoho! Blu in Shanghai.
This chain, with stores of 150 to 500 sq m, aims to sell more affordable streetwear.
In 14 years, the group has received investments from big-name firms such as SAIF Partners, CMC Capital Partners and C Ventures. Its latest E series funding round was completed in October, and netted $25 million.
The group will use the funds to open more brick-and-mortar stores at large-scale plazas in Shanghai, Hangzhou and Nanjing.
"Some people assumed that we have moved offline because the online market has somehow saturated. This is sheer misunderstanding. We have made the (offline) move because there is a growing demand among consumers. The maturity of technology has made the combination of online and offline experiences possible," he said.
Yoho! is drawing up plans to list on an overseas bourse in the next few years. The maturing of the Chinese fashion market over the past few years has fueled the growth of Yoho!, according to Liang.
According to the annual fashion report released by Beijing-based market research firm Trends Bigger, streetwear fashion products have gained in popularity among Chinese consumers, especially those aged between 18 and 28.
About one-third of the Chinese consumers will opt for Chinese domestic brands, which is an important indicator of a maturing market.
"The rise of the middle-income group in China shows their tastes in life are now defined by quality - more exquisite and sophisticated. Consumers born in the 1990s have a more diversified understanding of the fashion industry, which has helped boost the ongoing consumption upgrade," said Xiao Mingchao, CEO of Trends Bigger.
Agreed Liang, adding improved tastes have become more pronounced over the past few decades. While people might buy a pair of fake premium-brand sneakers to keep in touch with the fashion trend 20 years ago, the younger generation would rather wear something more affordable. This means, consumers' understanding of fashion has matured over time, he said.
But still, Liang said he believed there is much room for growth in the Chinese fashion industry compared to other markets like Japan and Europe.
"We've seen the rise of many Chinese domestic brands in recent years, most of which are managed by designers. But the management of a brand is much more than that, as it will include sales, marketing and the whole supply chain. Such infrastructure and professionals are crucial," said Liang.
