In the past eight years, the Chinese apparel market has undergone a significant transformation. Back then, the industry was dominated by wholesale fashion practices—bulk sales, limited returns, and cash-based transactions. The distribution system relied on large quantities being sent to channel operators and sellers first. At that time, only a few brand companies began transitioning from this model, implementing order systems to better manage inventory and sales. Today, the majority of brand companies have adopted an order-based system, with some even purchasing it from third-party providers.
During this early phase of transition, many franchisees struggled to understand the new order system, leading to confusion or resistance. However, as time passed, most franchisees came to recognize the benefits of ordering, such as better inventory control, reduced waste, and more accurate demand forecasting. Despite this, a few still prefer the old distribution model, believing that the order system shifts the risk onto them. In reality, both models require careful planning and execution. Some franchisees, however, adopt a "look at the goods" approach, ordering just enough to cover immediate needs, often claiming, “If I sell it, I’ll make up for it.†Unfortunately, this mindset often leads to missed opportunities and long-term losses.
The core issue is that many franchisees fear inventory, seeing it as a major threat to profitability. But in reality, out-of-stock situations can be even more damaging. If we compare inventory to a wolf and out-of-stock to a tiger, both are dangerous—but the tiger is harder to spot. Ordering is one of the most critical tasks in retail operations. As one saying goes, “Ordering determines half of your quarterly sales performance,†and this is true. A well-managed product lineup, combined with effective store presentation and promotions, can significantly boost sales. Conversely, poor inventory management can undermine all other efforts.
To illustrate, let’s take a hypothetical example: if a product is overstocked and sold at a 35% discount, the loss per unit could be around 20 yuan. On the other hand, if the same item is out of stock, the potential profit lost per unit is 110 yuan—making the impact of stockouts far greater than that of excess inventory. Yet, many franchisees fail to see this because the cost of stockouts is hidden and less immediately visible.
Some franchisees argue that promotions require additional costs like labor, advertising, and rent. But these investments can also attract new customers, increase market share, and strengthen brand loyalty. Moreover, while replenishment may seem like a solution to stockouts, it’s not always feasible. Brands typically reserve only a small portion for replenishment, and when a popular item runs out, it's often too late to catch up. This can lead to rushed production, lower quality, and delays that further hurt sales.
Today, China’s garment industry has shifted from a production-driven model to one focused on customer needs and competition. Marketing, product development, and efficient operations are now key. If brands focus too much on production, it can harm the entire business chain, negatively affecting franchisees and the broader market. Therefore, the order system is not just a trend—it’s a necessary evolution in the industry.
The order system promotes mutual benefit between brands and franchisees. It allows for better coordination, reduces risks, and creates a more sustainable business model. Franchisees can leverage their local market knowledge, while brands can ensure consistent product availability and quality. This collaboration fosters growth and long-term success.
In summary, the order system is more than just a change in process—it’s a shift in mindset. It requires trust, understanding, and shared goals. While challenges exist, the long-term advantages of an order-based model are clear. Those who adapt and embrace this system will thrive in the evolving apparel market.
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Liya Garment Limited Company , https://www.liyaunderwear.com