Counterattack and rise to the top! OEM factory sprints for IPO

Instead of being controlled by others in the OEM industry, it is better to build your own brand and penetrate into the C-end. More and more OEM companies have begun to transform into brands, and many have achieved rapid growth in performance.

The following Wall Technology not only has its own brand doing well on Amazon, but is also in the process of going public.

OEMs are making a comeback, and big-selling suppliers are also going public

On November 7, 2024, Waler Technology Group Co., Ltd. (hereinafter referred to as "Waler Technology") completed the registration for tutoring with the Zhejiang Securities Regulatory Bureau, rushing for an IPO on the Beijing Stock Exchange, and the tutoring institution is Century Securities.

However, this is not the first time that Walter Technology has prepared for listing guidance. As early as 2019, Walter Technology conducted its first listing guidance filing, but after eight rounds of guidance, the IPO seemed to have "died".

You may not be familiar with Wall Technology, but I believe everyone will be familiar with Bombas, the Amazon best-seller backed by it .

Bombas, a business legend with an annual revenue of more than $250 million, was created through a pair of small socks . In addition, the company's valuation has reached $100 million in 2024, with cumulative sales exceeding $1 billion.

As an important supplier of Bombas, Wal Technology was established in 2020. It was originally a textile and clothing OEM factory, mainly engaged in high-end cotton socks (flat socks and terry socks) and sports and leisure apparel (one-piece molding, seamless knitting and traditional tailoring) and other products.

In fact, Wall Technology not only manufactures socks for Bombas, but is also a partner of well-known international brands such as NIKE, VF, ASICS, and these leading brands also contribute considerable revenue to Wall Technology every year.

Financial report data shows that in the first half of 2023 alone, the revenue contributed by the company's top five customers accounted for more than 80% of the total revenue. It can be said that Wall Technology is highly dependent on OEM.

However, one thing worth noting is that in recent years, Wall Technology's performance and profits have been growing.

In 2021, the company's revenue was 802 million yuan, and its non-net profit was 34.58 million yuan; in 2022, its revenue was 815 million yuan, and its non-net profit was 58.79 million yuan; in 2023, its revenue was 893 million yuan, and its non-net profit was 76.69 million yuan. In just three years, the company's net profit has nearly doubled.

In the first half of 2024, the company's revenue was 523 million yuan and its net profit was 5,662 yuan, both of which increased significantly. This may be inseparable from the modernization transformation of Wall Technology.

It is understood that Wall Technology has built an intelligent manufacturing unmanned factory and started mass production of intelligent unmanned factories in 2022. While its labor costs have been drastically reduced, its sales gross profit margin is far higher than that of its peers by 100%.

At the same time, the company also used intelligence to eliminate inventory problems, reducing its stocking cycle from 180 days to 7 days. With reduced manpower and improved work efficiency, many customers did not object even when product prices rose.

At present, in addition to the original OEM/ODM business, Waltech has also started to develop its own brands, mainly including "+MD", "LIN", and authorized brands "NBA", "MN" , etc., and many products of these brands have performed well on Amazon, such as the two socks in the picture below ↓

In the future, with the continuous development of the socks industry, I believe that Huaer Technology will also reach more markets. According to Statista data, the global socks market revenue is expected to reach US$23.39 billion in 2024, and is expected to maintain a compound annual growth rate of 2.79% by 2028. Among them, the United States is the second largest socks consumer market, followed by Germany and the United Kingdom.

It is not difficult to see that Walter Technology's transformation has achieved some success. In fact, in recent years, with the increasing competition in the e-commerce market, more and more sellers are choosing to transform. There are many companies like Walter Technology that have turned to branding to build competitive advantages, and most of them have achieved good results.

OEM transformation to branding, multiple successful cases for reference

HiBrew, which specializes in coffee machines , previously provided OEM services for an Italian company. It later established its own brand and leveraged AliExpress to enter the Middle East market, and finally successfully made it to the top of the local coffee machine category rankings.

Xiamen Ruierte initially provided OEM services for well-known bathroom brands in the ODM model. It was not until 2021 that it built its own brand and entered Amazon. Currently, Ruierte sells nearly 20+ ASINs on Amazon, and its store star rating has reached 4.6.

Hals was once a contract manufacturer for famous water cup brands such as Yeti and Stanley . Later, it realized the risks of sole OEM and began to incubate its own brands in 2016. It currently owns four major brands. Its overseas revenue in the first half of 2024 was as high as 1.196 billion yuan and is in a growing state.

Delan Minghai was also a contract manufacturer. It was not until 2019 that it began to print its logo on its products and sell them on Amazon. In 2020, it opened up the overseas energy storage power supply market with the brand BLUETTI. After completing the transformation to its own brand, it ushered in a period of rapid development. Only one year after going online on Amazon, its sales exceeded 100 million yuan, and two years later it ranked third in the world.

From the above cases, it is not difficult to see that there are many companies that have transformed from OEM to brand. In the eyes of many OEM factories, the road of OEM is not easy to take. On the one hand, they are constrained by big sales, and on the other hand, they have to be careful not to be replaced by competitors, not to mention having any say.

But branding is different. You can directly reach C-end users and have considerable autonomy. And the profit is much higher than the OEM model. In contrast, branded products obviously have a higher premium ability, and sellers can obtain higher profit margins while maintaining product quality.

On the other hand, with the continuous growth in the number of cross-border sellers in recent years, building a brand is also an important way for them to escape from homogeneous competition and low-price involution.

Previous survey data showed that more than 40% of sellers found that brand building can directly increase sales, and many sellers even plan to increase investment in brand building in the coming year. There is no doubt that branding has become a general trend.

But the difference is that OEM factories are faced with the yield rate requirements of customers, while branding companies are faced with picky consumers. Sometimes a bad review can ruin the sales of a product. There are still many factors that need to be considered behind entering the market of own brands.

Therefore, when transforming into a brand, sellers also need to work hard and achieve success on the platform through new thinking and skills.

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