A direct seller that only sells socks—this is not something that anyone in the industry would have predicted would be successful. Beauty and personal care and consumer health products dominate the space. Apparel as a percentage of products sold through direct selling is only 4% globally and it’s negligible in China. There are still many hurdles and AUN is but a blip on the radar with only US$45,000 in monthly sales at the end of Spring 2015. However, with a compound monthly growth rate of over 73% in the two months since it began selling on WeChat in March of that year, the potential for this innovative business model that relies on simplicity and social media is apparent.
Methodical merchandising keeps things simple for shoppers and sellers alike
No matter how small, the company must be credited for making a name for itself in a negligible market in China—apparel direct selling. It’s clear that its merchandising decisions played a big role in this. Socks themselves are not particularly interesting, but they are widely used and without much in terms of recent innovation. Specializing in this category (AUN started with only one SKU) allowed them to focus all their efforts on improving that one product. The result was a sock that makes use of silver ions to combat bacterial growth and deodorize the sock at the same time.
Focusing on a single, widely used item not only made it easier to develop an innovative version, but it also makes it easier to sell considering that there is no face-to-face interaction and the direct selling is done completely via social networking. Minimal SKUs limits the need for sellers to become experts in a variety of products and it makes it simple for the buyers to understand what they’re buying over the app. It’s also easier for said shoppers to take a gamble on a single pair of socks, which gets the salespeople’s feet in the door for future relationship and brand building, a tough task for direct sellers of all varieties.
A direct seller built from scratch on social media
AUN wasn’t even a direct seller to begin with. The company opened for business in 2013 on China’s largest e-commerce platforms, Alibaba’s Tmall and JD.com. In 2014 they opened a physical store. In 2015 they truly differentiated themselves when decided to open a store on WeChat. Instead of just being another place to buy its socks online however it opted to use the Renrenws system which enabled its followers on WeChat to promote and sell the product to their friends. It was this move that finally propelled the company towards success thanks to the ease of which word-of-mouth translated directly into sales. It’s important to note that AUN still sells online and in store; the direct selling component is just a part of their omnichannel strategy. It just so happens to be the most successful part.
Source: AUN's WeChat Store
It makes a lot of sense to leverage the power of these social networks for direct sellers so it is ironic that one of the first companies to do so wasn’t even a direct seller to begin with. Direct sellers have been slow to transition online and their sales have not been too drastically impacted because of it, but that doesn’t change the fact that the shoppers of the future will increasingly find themselves online thanks to the access it provides. Integrating social media and commerce has been a tough but intriguing proposition for years and AUN’s preliminary success shows there is traction to be gained in the realm of social commerce and messaging apps for direct sellers with a devout fanbase.
Even if AUN doesn’t make a big mark in the end, there are lessons to be learned
AUN’s presence on WeChat is relatively new, and strategies for online stores on messaging apps have yet to be really refined. If AUN fails to take off, it still shows that preliminary traction can be gained from instituting a direct selling distribution system via mobile apps which could likely be translated to brands with larger, more established customer-bases. Half of all internet retailing in China was done via mobile in 2015 and the rest of the world is predicted to catch up to that by 2020. China itself will find that 67% of its online sales stemming from mobile at that time, indicating the importance of being present in the channel by then. AUN reflects the importance of leveraging this channel as they found the most success after migrating here with their minimal product catalog being a perfect fit for how people prefer to browse and shop on mobile.