China retail e-commerce road--one step and three sigh sigh

Intermediary transaction SEO diagnosis Taobao guest Cloud host technology Hall

"Every issue": many times, fast is slow, slow is fast. --Zhang Ju, founder of the International Union of Analysys

"Preface": I can't remember the number of days when I was writing with headphones, but it was completely disrupted when I entered the electrical business. Blogs are rarely updated, microblogging is rarely written, and almost all of the QQ groups have disappeared. So, when a lot of changes and even sacrifice for a year of E-commerce experience, it is not only worth writing something, but also have to write something.

Body:

There is no doubt that China's e-commerce is in a very difficult period. Especially when the only goods will be listed so in the past very good news, today has become a verification of "bloodshed", "loss", "capital chain" the tension of the conclusion. This has to make people born sigh, China's e-commerce, what happened?

China will not have Amazon

　　

This title is afraid to offend a lot of people, also will incur to shoot bricks and despise. But I must stick to my idea, if it is wrong, please haihan.

China is difficult to have Amazon, not one (or several) aspire to become the Chinese Amazon's own problem, but China does not have such a big environment. Just as we don't have jobs here, we don't have Facebook or Pinterest. It is not a question of imagination or executive power, but of the obsession with the myth of rapid success and the brutal competition of capital-pushing forces.

Compared with the American E-commerce, China's e-commerce is more obsessed with the Amazon development route, whether it is a large platform or vertical category of electrical dealers-almost regardless of the cost of rapid expansion, Gongchenglvede, as soon as possible to crush their opponents, and then a single big.

This is a good idea, but when everyone's strategic intentions are so similar and obvious, just like everyone in the Mahjong game playing "seven pairs", the final most likely outcome is "Huang Zhuang", who can not Hu.

Without him, we cannot ignore the fact that China's consumer environment is a lot different from that of the U.S.

One, consumer mentality and loyalty is very different.

Chinese consumers lack of loyalty, and the brand cognitive ability is relatively weak, which makes it difficult to accumulate electricity commodity cards. This can not blame the Chinese consumer, it is a brand accumulation of e-commerce sites are not several, and there are brand accumulation, sales must be the price to maintain the integrity of the homogeneity of the standardized goods. Plus the internet on the comparison can not be as difficult as the online store, so where there are bargains, consumers to where to buy, so the Battle of E-commerce, in today's view, the main battlefield is still the price battlefield.

Yes, other user experiences outside the price are also important. But I found in practice that there is no user experience comparable to price. Some of the user experiences that foreign countries attach great importance to China's electric business may not be the most important. Chinese consumers, unlike North American consumers, are probably the most patient customers in the world who are willing to endure more for lower prices. A basic habit can see the difference--from Sina onwards, Chinese people don't mind looking at very long pages, and Americans have long been impatient. So, to gossip, those who want to imitate America's minimalist type of page will win the attention of Chinese consumers, but it is hard to win their purchases, Yoox has done these attempts, but today most Chinese do not know their existence.

China's e-commerce shoppers are not rich, the sale of luxury website shopping crowd is not a monthly salary over million of the middle and High income group, but is a monthly salary of four thousand or five thousand of the ordinary wage layer, they are sensitive to the price must be more than you and me. Therefore, I am also sure that the problem that haunts Jingdong is this kind of loyalty. A better user experience helps, but price changes can lead to more sensitive nerves. Every 10% increase in prices, consumers will lose 10% or more, and your shopping experience good to a certain extent, there is always a limit.

On the contrary, American e-commerce consumers have some "passive loyalty" meaning, on the one hand, the price itself, the United States, the electricity business can not continue to maintain their own low price (I will elaborate later), even if the successful Amazon, but still fall into the low price and low profit dilemma, so the mainstream electricity dealers will not fall into a lasting price war, Low-price dumping is not their core competitiveness (but it is basically the core competitiveness of China's electricity dealers). And when prices are not the only determinant, the user experience and shopping habits become important locking factors. On the other hand, it is worth our attention, the United States has a lot of "hundred years old shop" of the electric business site, such as Sears, Kohl ' s, Advance Auto Parts (www.advanceautoparts.com), or online has been very successful and then turned to the line brand, For example, Footlocker, Gravity defyer, they themselves mean a very strong shopping crowd. China does not have such a successful vertical electric goods card. The last possible cause is logistics. Interestingly, America has a more advanced logistics system, but American consumers are less willing to pay for logistics. This is related to national conditions, the United States of developed urbanization, shopping groups are very dispersed, and labor costs are expensive, logistics costs higher than China. This situation increases the user's transfer costs, to a certain extent, reduce the price sensitivity of the commodity itself, and objectively increase their loyalty. It also has another side-effect-the US local electricity business is better and healthier than China.

Second, it's hard to be "lighter".

Amazon's commodity structure is very different from its domestic imitators, and the goods with the highest profit margins are related to intellectual property. The 2011 Q4 earnings show that Amazon's multimedia sales accounted for more than 30% of all sales, but in China it was hard to achieve large profits or even mass sales. So, in a sense, the Big Mac Amazon is actually a lot lighter than its peers in China, but even so, with a gross margin of 21%, the Big Mac's net profit margin for 2011 years Q4 is only 1%. In the future, it is also certain that Amazon will "change Light" (and let us look forward to some of its future acquisitions), and that its main profit will not come from "heavier" physical goods.

A number seems to confirm the view that digital content subscriptions are the largest online retail product category in 2011, with an increase of as much as 26%, and digital content subscriptions are a category that consists mainly of digital content downloads, including music, movies, TV dramas and E-books. Thanks to the popularity of tablets and e-readers, the acceleration of E-book downloads has led to a strong growth momentum for digital content subscriptions.

　　

Photo Source: Techfrom Technology Source

Another "lighter" area of Amazon is logistics. We know that Amazon is a self-built logistics center, but Amazon is not proprietary distribution, but by third-party distribution such as UPS, Hua logistics, such as large-scale logistics enterprises completed. For the U.S. electric business, this is a completely reliable way, the key link in logistics-warehousing and picking, by their own control, and supply chain of the lower end by specialized companies, efficient and lower costs. But copying to China is impossible. The difference of transportation and transportation and the specialization of the distribution industry, the third party distribution is difficult to realize the unification of the scale and efficiency of the American peers. So we learned about Amazon's own logistics center, and we had to go further than Amazon and build our own distribution power. This makes us have to pay a higher price for achieving the same efficiency as Amazon.

Therefore, it is a pity that after the noise of group buying, our E-commerce is not "lightweight", all of Beijing's expansion has not been towards the "lighter" direction, but become heavier, this is the pursuit of large-scale inevitable. Similarly, when it is not without effort, the market response is weak and when the strategic route is completely ambiguous. This is not a technical issue, it is not a primary stage of business development, it is a national condition--Our soft knowledge products have never been able to get the benefits that really correspond to their value, people hate to pay for it, and our infrastructure, as an objective environment, increases costs and reduces efficiency.

　　

There is a significant gap between the three and the scalability.

If we are to build a true Amazon in China, we must attach great importance to scalability. Amazon's profit growth has not been the traditional book retailing, but the scalable business based on the high scale. Obviously, sparing no effort or even losing money to sell the Kindle series is a confident gamble that will win the supremacy of online retailing for the next five years. Similarly, online shop platform services, logistics centers, cloud computing, and so on a series of inputs to enhance their own scalability exists, and these strategic actions behind us can see the very obvious intention-to provide consumers with lighter future goods to further expand the scale of sales and reduce costs; To provide business partners with more forward-looking and basic quality services to win the opportunity to lock business customers and create more profit breakthroughs.

Despite its retail start, retail is no longer Amazon's wards, and Amazon is expanding its chances of profitability while increasing its scalability.

In contrast to China, we are copying Amazon? We copied Amazon's retail segment and might replicate Amazon's sales, but beyond that, we have little in common with Amazon, especially as Amazon's profit breakthrough is hard to replicate in China. This is the difference between national conditions-intellectual property and third party services are always in the middle of the country, they are never very hard to keep the waist very straight. That means Amazon has been making a positive profit for many years, and we're not going to expect us to follow Amazon's trajectory.

You can say that, although not the same as Amazon, but one thing in common is that I have at least the user. Yes, yes, unfortunately these users are not loyal users, in China, we are faced with a group of clearly more "snobbish" consumers. You can also say that we can tap into these user's other value! Well, it's possible, but it's not clear yet, and the Chinese seem to have no good idea in that regard (this is in stark contrast to the US situation).

From the current competitive environment, China is not difficult to appear super large-scale e-commerce enterprises (in fact, we already have), but dare not say that we can have a successful Amazon like E-commerce business.

Scale, profitability and the pain that began to spread

　　

The magic of Amazon and the huge purchasing power of China's 140 million shoppers have spawned the urge to create E-commerce miracles in China. The capital market cannot restrain, various institutions and funds are on the cloud, for a moment, magnificent.

From this point on, our E-commerce path began to deviate from the track. Scale and profitability became a paradox, and economies of scale quickly became "economies of scale".

In the face of some eager to find the opportunity of VC put forward on the issue of the electricity quotient, I can only smile, when you know the name of a power provider, it does not small, and when it does not small, it will not be profitable. That is to say, you know the name of the electric dealer is certainly not profitable electricity quotient. Oh, of course, when the exception is, when it is a very positive model.

Face above 30% gross margin, still can lose money? The electric business enterprise does not necessarily have the very low gross profit margin, but loses or not, has nothing to do with the margin. The essence of consumer E-commerce is retail commerce, in theory the only way they can make money is by selling goods that are priced higher than the cost price. In this way, the more you sell, the more you should earn, and the business of E-commerce should have economies of scale.

But we are beginning to face the exact opposite.

There are so many differences between business and traditional offline retailing that there are completely different rules of the game. The reason for the economies of scale is the three biggest problems.

Question one: small horse carts.

Although the business of the consumer E-commerce is not moving to finance tens of millions of dollars, in the Internet circle enviable, but in the traditional retail industry, tens of millions of dollars is really not a big money. E-commerce is ultimately the same as the traditional retail nature, is to do retail rather than internet, so the need for investment is not tens of millions of dollars so simple.

We calculate an account, if there is a 500-person e-commerce enterprise, sales of low-end fashion apparel, gross profit margin of 30%, customer unit price of 200 yuan, flow conversion rate of 2%. It finances 10 million dollars, how long can this 10 million dollars be in charge?

First, we assume that they need to buy traffic (this is nonsense, do not buy the flow of electricity business how to live, not all are like jingdong when so famous, according to 0.5 yuan a true UV price (this price is difficult to do today), one months if they buy 2 million UV, is 1 million yuan cost.

Then, what about labor costs? 500 people, assuming that the average company to pay the cost is one months 10000 yuan (the company paid 15000, employees may also be more than 6,000), then one months of labor cost is 5 million yuan.

In addition, we believe that the company's operating and logistics level is medium, with various costs added (warehousing, logistics, IT infrastructure, etc.), one months about 2 million.

This one-month cost of nearly 8 million yuan. Please note that we do not calculate the cost of buying goods, we even assume that all the goods are sold instead of buying and selling.

So how much does it make in one months? If the purchase flow is 2 million, plus natural flow 1 million, one month flow is 3 million, conversion rate 2%, customer unit price 200 yuan, then one months sales is 12 million, gross margin is 3.6 million.

Now, it looks like the monthly loss will reach 4.4 million, 10 million dollars for them to lose 55 months. Not bad.

But since the financing came, I can not be as conservative as before, should expand the scale. Once scaled up, the situation changed immediately.

Usually, the 500-person business is likely to expand to 1000 people, category expansion, gross profit down to 20%, customer unit price unchanged. If the conversion rate is still 2% (in fact, the conversion rate of flow increase will be reduced), how long will this 10 million dollars be?

They still buy traffic, but the traffic doubled, from 2 million UV buy 4 million UV, price or 0.5 yuan. Cost 2 million/month.

Labor costs now turn into 10 million dollars.

Increase in the number of people, category increase, various management, operating costs must increase, we assume 4 million per month.

One months cost nearly 16 million yuan.

Look at the gross margin. Flow increased to 5 million at this time, conversion rate of 2%, one months sales 100,000 orders, sales 20 million yuan, gross margin of 4 million yuan. We can see that, despite the increase in human labor, gross margin does not increase by one-fold-a situation that is common. The increase in personnel does not mean that it can bring about a qualitative change, many times it brings negative effects.

One-month losses turn into 11 million, and six-month funding will be depleted.

If the company does well, the gross profit margin does not fall, then the loss is 9 million. If the conversion rate increases to 3%, the loss will still be 7 million, 10 months or so will consume light financing.

Six months or 10 months, is not too long, if coupled with question two will discuss the amazing waste, despite the financing, e-commerce companies still walk on the cliff edge. #p # subtitle #e#

Question two: amazing waste.

　　

The model above is idealized because we do not consider waste at all.

But E-commerce companies are always a staggering waste. The waste of redundant personnel is only on the one hand, because of sales forecasts or decision making mistakes, the waste of category or commodity is equally terrible.

We've all heard rumors that every hundred million inventory is difficult to digest. Do not talk about true and false, this is not a case, many e-commerce companies are not completely sold or sold on credit, and once the purchase and sale, there will always be digested inventory. Taobao Double 11 has made a lot of electricity dealers, but also let a lot of sales forecast improper electric dealers pressed countless goods in the warehouse, these goods may take six months or even a year to gradually clear out, which means that the profit margin of the reduction, management costs increase. In addition, the complexity of logistics management also increases the waste, wrong delivery, return goods caused by losses, can cause monthly millions losses.

Due to the lack of professionalism, e-commerce companies in the cost management and traditional retail enterprises have too much difference, waste is a lot of management is not in place embodiment.

The bigger the scale, the bigger the waste. Wasteful losses can be as high as 50% or more of gross margin. Terrible。

Question three: Sacrifice profits for scale.

We see on top that the scale is not economic, but E-commerce is still chasing the scale.

We can't chase the scale. If there is no scale, no financing, and those who get the financing, will use a lower price and a more severe market operation will drive us out of this not fast run is mercilessly abandoned competition.

But if we chase the scale, we will start to go to a one-way street. The scale of the increase, the loss of rapid amplification, so have to look for more money, and once the money is not in place, will quickly crack in the fast run.

It's a chess game that doesn't seem to win at all, and I have to get bigger, but I have to shed more blood while getting bigger. I'm going to get a blood transfusion before the bleeding dries out, or once and for all, I can reach the blood station (listed). This is really a bloody war, on the one hand we are fighting against each other, and on the other hand we are bleeding. It was brutal enough.

Therefore, the only products will be bleeding to the other side of the blood station, almost to the point of unsuccessful, we can fully understand. Otherwise it is likely to die of ischemia.

But I am worried that for business, rationally speaking, listing only means a new beginning, it is not an end at all. After the listing, we will face a bigger problem, how will we profit? If not, how will we continue to maintain the share price and persuade the two-tier market to pay? However, perhaps the opportunity itself is sufficient, but this is the original intention of the business? If your career is purely for financial freedom, you often fail to achieve your goal. Financial freedom or the by-product of a successful career, but not the purpose of the cause itself.

　　

However, only on the listing, for the current number of players are already elusive dream. An investment agency cannot hold on to a plate that cannot be turned into cash forever. Once more and more people find that the game deviates from the fundamentals and cannot be dragged back to normal orbit, a similar effect of a Ponzi scheme is revealed. People start to look bad, start panicking, some of the past gorgeous appearance will quickly disintegrate, and exposed the cruel reality of the wound.

The pain began to spread.

Electricity business is not winter, but change will happen

I have seen the electricity business review experts said that China's electricity business is not a cold winter, because our online purchasing power growth continues to advance by leaps and bounds, our electricity business still more opportunities than challenges.

I can't agree more, the electricity business is still only the initial stage, the opportunity of this industry is far more than the challenge.

But it is not normal to be profitable and not to find a profit breach.

Time is the best touchstone, when the tide receded, to know who was swimming naked. Unfortunately, when e-commerce this tide receded, we suddenly found that almost no one dressed in decent clothes.

To be poor is to change, to change, to rule long. There is no doubt that China's E-commerce in the 2012 into a "poor year", will be to "change year" forward. The first is that China's E-commerce will return to the fundamentals of business-creating profits or at least proving the potential for future certainty.

Let's look at what we're learning, America, and their e-commerce patterns are significantly different from China's. Because the Amazon is a big one, other electric dealers want to rely on the scale of horse-racing to prove themselves very difficult, and the U.S. retail market itself mature and predictable, so the imagination is not big. So the American electric dealer, I contacted these, such as AAP, bodybuilding.com, LightInTheBox (please allow me to use it as the American Electric dealer), the Ebags, the 1-800-flowers and so on, they are all to profit as the direct goal. The impetuous atmosphere of the entire American Internet is very humble. There are a lot of U.S.-listed electricity companies, but few are worth more than $2 billion trillion.

Internet marketing analysis Business in the United States, the characteristics of the side illustrates this phenomenon. In the United States, e-commerce companies are willing to pay for the analysis and optimization of the site, I have said that the conversion rate of the top ten E-commerce companies have used high-end web site analysis or optimization tools. The US electric trader attaches much more importance to the conversion rate than the Chinese counterparts. We can easily see a large number of ongoing AB tests in the US on our electric or shopping websites, and I have never found them in China.

Because Americans too need to earn money to feed themselves, rather than circle money from the fat.

So, you rarely see America's electric dealers die to fight a price war, even Black Friday and Cyber Monday these popular holiday, the use of total station discount is also very cautious, more rely on a single product deals promotional to attract consumers.

Anti-China, our electric business is not opportunistic is criticized, is the strong man broken wrist, but lack of real business to do the calm, the courage to rely on self-reliance.

Yes, on that cusp, we can't stand on our own feet, we need to sing and punch with outside force, but now everything will be completely different.

Who has a better chance?

The goal of business is to make money, and it is hard to maintain a business that doesn't make money. In the past, people joked that China's e-commerce companies are not e-commerce, but stock companies. It was hard for me to remember. Today, such a company is facing the top priority is necessarily how to profit, the stock company's vision with the only products will be listed testing become confusing.

Who has a better chance of surviving and winning when the fear of uncertainty fills the industry? I believe that three kinds of practitioners will win and restructure China's electric business.

First, the rapid transformation of strategic thinking, from the horse race to the faster and more intensive;

Second, the traditional brand maker (manufacturer or retailer) successfully e-commerce;

Third, to create a new profit model.

Finally, I cannot comment that it is quite difficult to create a new profit model for the Business-to-consumer e-business. E-commerce is "real economy" rather than "virtual economy", so beautiful said Mushroom street can be surprised four from their "virtual", but jingdong or when the brick is the height of the base, derived from their "real". But perhaps our country will be born a man of jobs, who can say that there is no such possibility? It's just too small a chance.

For the second, traditional brand makers have too many advantages over the current wave of internet makers. The essence of e-commerce is business rather than electronics, and for all aspects of the fundamentals of business, the popularity and credibility of the brand itself has reduced market and marketing costs; supply itself has a greater advantage; Other areas of the supply chain may also have advantages; and the online business accumulation of management experience with the young impetuous Internet power is no comparison. It is clear that the United States has already taken the lead for us to see how many of the most heavily sold dealers in the table below are traditional offline brands (data from 2010 statistics).

　　

In other words, e-commerce is the combination of Internet and retailing. One way is for Internet practitioners to infiltrate the retail industry, and the other is the expansion of retailing to the Internet. Who has more resources, more opportunities for success, the balance will be tilted toward who is self-evident.

In this way, in front of the current electric business practitioners, only the first opportunity.

In fact, for the first, we have too many vivid examples in front of, do not say far, in fact, Amazon is a textbook case of intensive farming.

Amazon does not have much to say about it-by digitizing the supply chain, to make it more refined and efficient, to enhance customer care--based on intensive customer relationship management, solid and robust category and business expansion (with shared cost centers as the main areas, including S3 and EC2). In short, Amazon is like a piece of land with different crops, the top of which is full of odd flowers and the orderly, not the flow of the field, but the numbers, there is no business in the world more delicate than Amazon, fine is the company's irreplaceable genes and survival of the baseline, Apple's survival is determined by the same genetic innovation.

It's hard to imagine how Amazon can create new business models and then suddenly make a lot of money, all of which is just a portrayal of classic microeconomics-more sales and lower costs, quickly finding Pareto's best, and replicating it. It is as precise as a flywheel, and if it is not, profits are like water droplets in the desert, and you will watch them disappear.

China's e-commerce companies, at this moment, it is from the extensive to fine time. The good news, though, is that when the tide goes out and everyone is busy getting their clothes back, the rules of the game suddenly change, all swimmers are hard to have the energy to circle the larger sphere of influence, you can not see more whistling overtaking or even suddenly run over your competitors, you also have the time and energy to restructure the mountains and start a more nuanced journey. You should do that.

The side effects of happiness

　　

If that's what I want, when Chinese electric dealers start looking for gold from their fingers, all the data analysts will have a real chance. This is the best side effect we can see.

At the annual meeting, Liu Yan's speech impressed me, and he believes that there are three reasons why the current e-commerce is not so important to the data, the data may not be able to play a real value.

First, the stage problem of China's electric business development. At present, the electric business horse enclosure, extensive, and no intensive electric power, it is difficult to the data have a higher pursuit and requirements.

Secondly, the role problem. CEOs or COO only focus on the big numbers, and the operations department should be more concerned about the data, but they lack data awareness and demand.

Third, capacity issues. Even if there is a pursuit of data, it may not be able to achieve. Extensive's electricity quotient, has not established a suit of data to survive the infrastructure, also unmanned power is usable. Even more frightening is the lack of professionalism that, despite knowing that they need data, does not know what data they need, and lacks the ability to ask the right questions.

This is a lot of consensus with my article data-driven E-commerce organization architecture puzzle and reflection.

Therefore, in the extensive enclosure process, a lot of problems occur in need of people's executive power to solve, but also up to the need for data to analyze the level. For example, because of the expansion of the category, 1000 SKUs are added within one months, these SKUs require at least complete product detail page display, but because the execution is not in place, these pages have only one picture introduction, even the product description text is extremely scarce, this is not the data can solve, this time only four words solve the problem- -Do it quickly.

Either lack of retail genes, or lack of internet genes, China's e-commerce is still in the "lame race" stage, we are busy to make up for their shortcomings, more powerful execution than anything else.

Until one day, when extensive expansion of the tension weakened, the bubble need more strong support to ensure that the bubble does not rupture, the data will become a strong glue to make the bubble more resilient, or even make these bubbles change to become more solid plastic or even brick walls.

This is actually the course that Amazon has gone through. But now the process, China's e-commerce will have to start to walk, and have to start to go.

For data practitioners, this is a happy side effect, but how much, but also some sad. Once upon a time, we believe that the "optimization" of the word scenery infinite, to today understand that we have to wait for the incomplete part to be made up before it is possible to optimize the body's function. The process of making up for the broken body was supposed to begin on the first day, but it didn't come late until the ebb. All kinds of flowers, familiar with the return of Yan ...

Conclusion

China's E-commerce Road, this is not smooth sailing. The noise of ups and downs was originally the normal business return to economic Basic Law. But for decades, the noise has been endless, but never really stopped.

If you ask the future of China's E-commerce Road where? I really understand the "road at the foot of the" meaning. Tide again tide, retreat of this tide is brewing the more grand that tide, the sound of Bang is not yet in the ear, but the breeze that pushes up has already lifted people's sleeve. The tide is coming, with greater strength, the determination to restructure the mountains, and the direction of the last.

Thanks to all the help and support of my friends, thank all the patient waiting for my friend, thank all and I have been struggling with the same peer, tearful salute!

Another, the article extreme or poorly understood, please friends to correct me.

Original: Http://www.chinawebanalytics.cn/china-b2c-nowfuture/