Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
A Chinese athletic brand aims to appeal to American athletes through e-commerce.
It’s not just U.S. e-retailers looking to go global. Chinese athletic apparel and shoe brand Li-Ning made its U.S. debut last month at Li-Ning.com.
Marketed here as “the biggest brand you’ve never heard of,” Li-Ning.com launched with about 100 shoe and apparel products styled and sized for American consumers. Digital Li-Ning Inc., the company that runs the U.S. e-commerce site, says it expects to double its product offerings by the end of the year.
Digital Li-Ning is run by an arm of Acquity Group, a digital marketing firm. Ray Grady, an executive vice president of Acquity Group and general manager of Digital Li-Ning, says Acquity Group saw gaps in the sports apparel and gear market in the United States that it believed Li-Ning could fill.
The company met with Li-Ning representatives in Beijing and worked out a deal over two years that made Digital Li-Ning, through Li-Ning.com, the exclusive retailer of Li-Ning-brand goods in the United States for the product categories it sells, namely basketball, running and yoga apparel and shoes. Acquity Group obtained an equity stake in the U.S. operation in return for a payment to Li-Ning Co. Ltd., the Li-Ning parent company, in the seven-figure range, Grady says.
“Li-Ning.com is truly a digital brand being built from the ground up by Acquity Group,” Grady says. “We are vested in helping build the brand, and translating it to an American marketplace.” Li-Ning Co. Ltd. does have some existing arrangements with U.S. distributors for athletic equipment and those did not change with launch of Li-Ning.com. Grady says Li-Ning Co. Ltd. also sees Li-Ning.com as a way to expand internationally. The manufacturer and retailer had made a few attempts to market in the United States previously, primarily through athletic sponsorships, Grady says.
In China, Li-Ning hardly needs an introduction. There are more than 8,000 Li-Ning stores in China, and it is the No. 2-selling athletic brand in the country, according to Acquity, after Nike. The company’s founder and namesake, Li Ning, is a former Olympic gymnast who won six medals in the 1984 Olympic Games. It was Li Ning who lit the Olympic cauldron during the opening games in Beijing in 2008.
Li-Ning ranked No. 37 in a listing last year of the top 50 most valuable Chinese-owned brands, according to research firm Millward Brown’s BrandZ survey. The BrandZ rankings are determined through a formula that takes into account a company’s financials, the earnings that come from a particular brand’s performance and its future earning potential. Nike is the No. 1 apparel brand globally, according to Millward Brown.
But here in the United States, Acquity Group is well aware that it’s a different story. Before settling the deal, the marketing firm tested the brand with U.S. customers. Unaided brand awareness was 0%, meaning no respondents named Li-Ning when asked to name athletic brands they knew of. Aided brand awareness, where researchers supplied respondents with the Li-Ning name, was 4%, with a margin of error of 4%.
Grady says that rather than seeing this as a bad thing, Acquity Group sees it as a launch point to build the brand from the ground up for U.S. consumers. Grady is confident the brand’s products are different enough in style, function and quality to challenge more well-known brands in the States.
Grady says the research also revealed that younger U.S. consumers don’t think of Chinese products as shoddy or second-rate. “The question of will an American consumer embrace a Chinese brand was really the 800-pound gorilla in the room,” Grady says. He says the research showed that older consumers were more likely to associate China-made products as knockoffs or fakes, or to cite concerns about human rights practices in China. But when Acquity Group researched its main demographic for Li-Ning, which Grady describes as younger, slightly higher income and urban, those consumers described China as intriguing and mysterious. “There wasn’t a fear or a negative,” Grady says. “It was more a curiosity.”
Li-Ning.com has all the features consumers are coming to expect in e-commerce sites. It has video, multiple photos of each product, product recommendations, integrations with Facebook and Twitter and free shipping on all orders over $75. Grady says the e-commerce site is built on the Hybris Software e-commerce platform, and Ingram Micro Logistics handles warehousing and fulfillment. Digital Li-Ning has five full-time employees now, which Grady expects to double by years’ end.