The 800-Person "Factory" That Manufactures a Taobao Product Called the Influencer | Behind Influencer E-Commerce, Part 2

In three stories, we show you the people standing behind an influencer whose products sell out, and the industry changes they have lived through. This is the second.

Wang Yang spends her working days looking for influencers.

Specifically, it works like this. Every day she opens Weibo and searches for personalities who have shot up recently. When she finds one whose posts have pull and whose face photographs well, she quickly boils her down to a few adjectives — "artsy," say, or "campus style." If she likes what she sees, she sends a direct message saying her company, Ruhnn, is interested and would like to talk.

Ruhnn sells women's wear online, and it is the first employer Wang Yang has had since finishing college. For more than a year now, her days have gone to scrolling social media and negotiating deals. Recently, though, she also took over running an influencer store. It is a young shop still growing, "with the potential to blow up into a big one," and it has become the center of her work.

She gets to the office at 10 a.m. and starts by going through the store's traffic from the day before.

She says the job makes her "like an accountant" — calculator in hand, working out each day's traffic growth rate, then checking which Taobao promotions are coming up so she can sign the store up for them.

The day before her interview with QDaily, the store had just listed new items. Once she was done with the traffic math, she checked the refund numbers and adjusted the order quantities.

Plenty of Taobao stores face this problem, and it hits influencer stores hardest — their pre-sale periods run longer, and most of them have to honor no-questions-asked returns within seven days. To hold down inventory, an influencer store will usually leave a pre-sale window of 10 to 20 days after the factory turns out the first batch of garments, and during that stretch a wave of refunds is unavoidable.

Wang Yang's other front is the influencer's Weibo account. Fans do not always go to Taobao's Wangwang chat; often they leave comments under a Weibo post instead — "couldn't grab one," or "shipping takes forever." Some ask the influencer to put a new piece on and show it in a video rather than a photo. Wang Yang needs that feedback, and then takes it to the store owner and to the various departments.

She is the link between the influencer and everyone else in the building. Once an influencer signs, everything from the positioning of her style and the profile of her fans to the store's data comes back to Wang Yang to coordinate.

That has made her fluent in how each step connects to the next — and introduced her to all 800-odd people who work here.

What does the "New Talent Development Department" do?

More than 30 people at Ruhnn do Wang Yang's job in the marketing department, except that the department is now called the New Talent Development Department. The new name tells you that Ruhnn has gone from making clothes to incubating influencers. Put simply, the department decides who gets into Ruhnn.

Its staff work like old-fashioned talent scouts: they dig up new faces, set the tests they have to pass, and line up deals for the influencers they sign.

Ruhnn judges a candidate on three things: taste and an eye for picking styles, the ability to make content, and a sense of fashion. It does not care whether she is unmarried, and it does not put much weight on how many followers she already has.

Putting too much faith in follower counts has cost Wang Yang before. An influencer may start with a large base, but if her positioning is fuzzy her following grows too slowly afterward, and the cost of building her up runs too high.

Before signing anyone, Wang Yang runs a few tests to estimate that cost. The estimate rests on an influencer's core strength: her ability to produce content. She has to keep talking to her fans, posting photos, text, short videos and livestreams to hold their attention.

And all of that is only a small part of Ruhnn's business.

What the New Talent Development Department does is bring in people who already have some pull and "grow them into 'big V's,'" Weibo's heavily followed verified accounts. Turning an unknown into an influencer is someone else's job — the New Talent Training Department, which works with an agency called Xingyou Entertainment. Xingyou also incubates for Chenfan, the e-commerce company run by Xueli. It recently took an 80-million-yuan pre-A round from Chenfan.

In the summer of 2016, Ruhnn and Xingyou set up influencer academies in Daxing, Beijing, and Yuhang, Hangzhou. Ruhnn has since signed more than 40 of the students. Going from trainee to opening a store takes at least two or three months, "depending on how quickly they catch on."

The academies' two biggest successes so far are Da Mianjing and Song Dai. Da Mianjing makes no secret on Weibo of her weight — 135 jin, about 67 kilograms — and urges slightly heavy girls to try styles they would otherwise avoid, with the occasional "slimming" outfit tip. She has only 120,000 followers, but a few months ago she had 2,600, so the trend is good. And she points squarely at one group, plus-size women. "The conversion rate is very high," Wang Yang says.

Song Dai came up as a Taobao model. She has a sweet face, and her Weibo photos are usually shot against expanses of pink. She has 230,000 followers, and Wang Yang says her Taobao store takes in 80,000 to 90,000 yuan a day.

Their files sit on Xingyou Entertainment's website, each with its own set of labels: Da Mianjing is a "plus-size woman" and a "makeover pro," Song Dai a "soft anime girl."

Labeling is how you fix an influencer's target audience, and it comes straight from the way Korean agencies manufacture stars. Dropped into the clothing business, these unlike personas stand for unlike styles, each paid for by a different crowd.

Ruhnn's roster breaks down accordingly: Zhang Dayi and her loose street look, Song Dai and her sweetness, Da Mianjing for women who are a little heavy.

The assembly line looks a lot like the old star-making machine — and it does borrow the same methods. But every role on the line has swapped places.

Talent agencies and brands used to be supplier and client, with the star signed to the agency. In the influencer economy, the e-commerce companies sign the influencers themselves, then either train them in-house or take them to a specialist agency to build their following.

What kind of company is Ruhnn?

Jiubao, in Hangzhou, is a famous production hub for Taobao women's wear, and Ruhnn is the loudest name in it. It is also remarkably hard to find. The company fills an entire eight-story building without so much as a plaque carrying its name and logo.

Thousands of small and midsize garment makers and one-room workshops are tucked into this gray-yellow industrial zone. Most of the roller shutters on the ground floors stand open; trucks come and go, and loaders haul down bales of fabric.

In Hangzhou, the great majority of Taobao merchants still work the old way. But over the past few years three companies — Ruhnn, Tisu and Chenfan — have changed roles. The first two came out of garment manufacturing. Only Chenfan, founded by Xueli, better known as "Wang Sicong's ex-girlfriend," has no such background.

Ruhnn's CEO, Feng Min, trained in science and engineering. In 2007 he started a mail-order platform along the lines of Mecox Lane; it failed. At the end of 2011 he launched a women's wear brand, Libeilin, and within two years took the store to Taobao's double gold crown rating.

As recently as two years ago Ruhnn was still among Taobao's top ten sellers under the Libeilin name. Now it is an influencer incubator listed on the New Third Board, China's over-the-counter market. Zhang Dayi, Da Jin and Zuo Jiaojiao — influencers with millions of Weibo followers apiece — are all on its books.

Nearly 20 departments, large and small, are spread across Ruhnn's eight floors. Employees ride the company's enormous freight elevator up and down between them.

The New Talent Development Department guards the door. On the 8th floor, more than 80 designers pick and draw the styles, and the drawings go down to the technical department on the 6th, which cuts patterns and makes the samples. Turning fabric into a finished sample runs through sourcing, testing, sewing and placing the factory order — more than 100 people work on that alone. And clothes are only part of what an influencer store sells; cosmetics are ordinary business too.

Ruhnn's 40-odd influencer stores each come with a content team that writes their Weitao feeds, product pages and WeChat official accounts. Customer service alone fills nearly a whole floor. Among the neat rows of desks on the second floor stand clothing racks hung with the newest items from the stores; the reps need to see and touch the fabric before they can answer the shopper at the other end of Wangwang. Then there are the hundred-odd people in branding, production planning, administration, HR and legal…

More than 800 employees, spread along a very long chain, all turning around the same center: the influencer.

In 2015, Ruhnn still ran everything from the factory floor to store operations and employed 1,700 people. In early 2016 the factories were spun off, and most of those jobs went with them.

In Jiubao's traditional trade, the workers matter enormously. That dense supply of labor sits at the top of the clothing business, sewing the garments that ship out across the country. What it aims at is selling a hit.

Ruhnn is now much lighter, and much more appealing to investors. After a B round of several tens of millions of yuan from Legend Capital, Alibaba put in 300 million yuan in November 2016, becoming the fourth-largest shareholder with nearly 10% of the company.

The company now describes itself as "influencers plus incubator plus supply chain." Both the people doing the producing and the thing being produced have changed.

Zhang Dayi, the influencer, is Ruhnn's most successful "product"

By 2013 Zhang Dayi, a regular in Rayli and Mina, was already a star on Weibo, and after being asked over and over which brands she was wearing, she decided she wanted a label of her own.

She was then modeling for the online store of Ruhnn's predecessor, Libeilin, so she went to Libeilin about becoming her supplier. The arrangement showed both sides what was possible. In 2014 she became the first influencer Ruhnn signed.

Within a year her store had beaten out shops that had been trading for years to become the top influencer store on Taobao.

Everything Zhang Dayi gets at Ruhnn is top of the line. She is not only a signed influencer but also runs a subsidiary, Hangzhou Dayi E-Commerce. On top of everyday clothing she sells lingerie and cosmetics, which takes more hands. Seven or eight designers work on her store; the other stores get one or two.

The copywriters, operations staff and service reps assigned to her form their own group, separate from the rest. Customer service alone runs to more than 50 people, "sitting together like a school class," Wang Yang says. That is roughly as many as all the other influencer stores combined, "but there are just too many customers, and they're always complaining that the reps are slow."

In 2016 Zhang Dayi's subsidiary booked 228 million yuan in revenue, more than half of Ruhnn's total. Which is to say that the dozens of other influencers on the roster, put together, still cannot earn what she earns alone.

Ruhnn is something like a nanny, an agent and a supply chain rolled into one. Zhang Dayi only has to decide on the styles and "look lovely on camera"; everything before and after is handled behind her. She spends most of her time in Shanghai and comes to Ruhnn once a month, when her assistant carries away all the samples for the coming quarter's releases.

How did influencers and Taobao end up together?

A large share of Ruhnn's 100 signed influencers used to be magazine models or Taobao models. Modeling had run into a ceiling, and running an influencer store was the way out.

The decline of fashion magazines closed off the path for young women who wanted to model. And modeling is hard to sustain as a career, especially at girlish titles like ViVi and Rayli, where brands drop a model once she reaches a certain age. The influencer's other ancestor, the Taobao model, mainly shoots flat product photos for Taobao stores and is paid by the hour or by the garment — essentially manual labor, with time as the only cost and more work meaning more money.

So magazine models and Taobao models have to change careers before their careers end. Since they already know e-commerce and look good on camera, the obvious move is to open an online store selling clothes or cosmetics.

The traffic they carry with them on social media was exactly what Taobao stores were hunting for at that moment. Weibo made the ideal petri dish — Alibaba holds 31.5% of it. In 2015, Weibo launched a shop window feature that cut the jump between the two platforms to a single step, so fewer would-be buyers fell away en route.

Running an online store is a traffic game. The Taobao-native brands investors once chased — Handu Yishe, Qigeqe, Liebo — were creatures of Taobao's boom years. When the price of traffic shot up, small merchants and newcomers had to find other ways to bring people in.

So stores looking for traffic paired off with models looking for a supply chain, and it worked. Because the model could be copied, girls with similar résumés or simply good faces began looking for their chance, and investors had been circling them for a while already. Companies like Ruhnn appeared to meet the need.

Weibo became the influencers' main battlefield; more than 15,000 e-commerce influencers are on it.

In 2016, independent accounts on Weibo earned 11.7 billion yuan over the year, most of it going to e-commerce influencers.

Douban was once a training ground too. But it was weak as a social network, and influencers who wanted to sell things ended up on Weibo. The better-looking Douban names, like Zhang Xinyuan and Jessie Li, went into acting instead — a completely different road.

Weibo does more than provide the platform; it advises the incubators, supplying back-end data and audience profiles. Ruhnn, Chenfan and Tisu are all Weibo "strategic partners," a title that requires an agency to hold more than 20 influencer accounts, more than 10 million followers, and annual store revenue above 250 million yuan.

Risk

Managing influencers is not a small business.

Lao Qi, who runs a Tmall store, recently signed an influencer called Tingting, whose own shop had all but seized up because she "had no idea how to run it." She drummed up business through Taobao livestreams, shot her product photos on a phone and had no steady suppliers.

Lao Qi spent 20 years in wholesale clothing and moved into e-commerce seven years ago. Like Ruhnn in its early days, he has a supply chain and plenty of experience running a Taobao store.

But he signed Tingting to only three months. He knows perfectly well that while the method of building an influencer can be copied, competition is pushing the cost of it up: "The main thing is her own ability — whether she can make it work." What Lao Qi can do is shoot a more professional set of photos and spend 70,000 yuan on Taobao's Zhitongche keyword ads.

From the outside, there seems to be no rule to who becomes an influencer. He Ningning, a Taobao model, was one of the eight people who rang the bell at Alibaba's New York Stock Exchange listing. She took the healthy, sunny, athletic route, talks about fitness on Weibo and has been on the quiz show Who's Still Standing? 《一站到底》. And still she "just never caught fire" — 200,000 Weibo followers.

A Ruhnn influencer named Yang Xia, by contrast, picked up more than two million followers in half a year. She came from nowhere, already has a son and a daughter, and often posts family pictures with her husband and children. But she is positioned as a "hot mom" and works in cosmetics, and the followers piled up fast.

Cosmetics beats clothing for showing results. Before-and-after makeup videos and photos are the most immediate and the most compelling. Set against Michelle Phan, whose makeup skills amount to swapping faces, Yang Xia's looks are all much the same — everyday, light. Her fans mostly leave comments marveling at how happy her life looks, or asking how she got through two children without stretch marks.

Ruhnn likes a case like this: cheap and quick to make famous, with a clearly defined audience and a strong ability to convert it into sales.

So far several influencers have left Ruhnn after making their names, and that risk is always on an incubator's mind. Wang Yang says she understands. Ruhnn's goal, she stresses, is no longer only the influencer business. The next step is "to have brands of our own."

(Wang Yang is a pseudonym, at the interviewee's request.)

Cover image from: fotocodex