The name PPG may remind many of the American coating company with more than a century's history, but the PPG I am going to talk about is a Shanghai-based Internet directory sales company of clothes based on a "light-channel" business model.
Statistics from CTR Media Intelligence show the advertising spending of PPG shirts ranked the seventh among all clothes brands and the growth was the highest in the category.
Every day, the company sells over 10,000 shirts, almost touching the 13,000-piece sales volume of Youngor, the No 1 player. This means without a shop, a factory or a production line, PPG has made a shirt empire out of just three warehouses.
'Light' business
PPG was founded in 2005 by Li Liang, a Chinese who returned from overseas. The name of the company stands for perfect product group. Li used to work at a large US direct shopping company, so when he returned to China, he decided to start a "light" company in the men's apparel market, following the model of Dell.
PPG controls design, outsources production to manufacturers in Zhejiang Province, and sells the products through directory, online, and telephone shopping, saving costs in wholesale and retail.
PPG has just one shop. All operations are conducted from a three-story building with 500 people, including over 200 call center staff. It has also developed an IT system that connects the links of sourcing, production, warehousing, logistics and distribution on a single platform.
In classic marketing theory, this business model, which adjusts production according to marketing, is called "just-in-time production". PPG's production cycle is 7 to 10 days less than a traditional shirt company, so it saves a lot of money in operating and warehousing.
Like Dell, PPG products are priced at the low and mid-range. A 100 percent cotton shirt sells at 129 yuan and a wrinkle-free shirt is priced at 199 yuan, and a pure-color cotton T-shirt sells at 99 yuan. Some combinations are even cheaper. The prices are 20 percent lower than mainstream ones.
With lower prices, PPG has to win in volumes, so bundled sales are an inevitable choice.
It mainly has three strategies: one is combination, such as, if you buy a shirt and a pair of trousers together, you get 50 yuan off; another trick is packaging, in which several shirts of the same style but different colors are sold together at discounts; the third one is deduction, such as if you buy goods worth 250 yuan, you get free delivery.
At the same time, PPG has also learned from Dell's special offer with a deadline, which prompts consumers to transform their purchasing desire into action.
Logistics and payment are the two bottlenecks in online, telephone and direct shopping. With the development of third-party logistics, the bottleneck in logistics does not act as an obstacle, so PPG provides on-door delivery and payment in more than 50 cities, which reduces shopping time and intermediary links, as well as eliminates worries from consumers on their payment.
PPG guarantees refund in 90 days, a rarity in the clothing business. PPG has more pressures on service and warehousing costs. However, this guarantee adds confidence in consumers and helps to get more orders.
PPG gift card is an innovation, which does not only bring more sales, but also spreads the reputation of the company when a customer gives the card to his or her friends or relatives as a gift.
Personalized embroidery is another customized service; it adds to emotional ties when customers have their initials added to a garment, and creates more value.
Experts believe that in traditional marketing, a lot of value is underdeveloped. If entrepreneurs do not discover the needs of consumers and communicate with them, consumers' purchasing desire remains suppressed, so they do not have a special preference to any particular brand.
In the Chinese shirt market, there is no leading brand. The timing of PPG's entry was right, so it had the opportunity to win a large number of young consumers.
The author is a senior editor of Executive Magazine, a Beijing-based publication focusing on management and marketing
