Electricity companies burn money madly, capital bubbles may be broken

The most jaw-dropping is the electric business enterprise crazy burning money, in fact, they know that the money is wrong, but they still burn money, like children, Ming know wetted to be beaten, but also wetted. They do not consider profit at all, regardless of cost. Some of the operators are impetuous, in the traditional enterprise vicious marketing of the old road. carelessly, will become Qin Qi second.

"It Business News Network"

(Reporter Mu-xi) recently as one of the largest electric business platform Dangdang and the first in the United States listed in the U.S., the Chinese electric business Mai Lin both issued an astonishing annual loss of earnings. of which, Dangdang lost 36.3 million dollars a year, and Macaulay also net loss of 33.3 million U.S. dollars. These figures are shocking and why are such huge losses?

"The loss of electricity dealers is largely due to cannibalism." "Senior Internet personage Zeng in the interview with media reporters that the vicious competition between the electricity dealers, is to lead to the end of the electricity dealers can only" make a yell does not make money "reason.

Macaulay reported a gross profit of 20.3 million dollars in the fourth quarter of last year, down 19.4% from $25.2 million a year earlier, with a gross margin of 35.1% per cent, down from 39.3% in the same period of the previous year. The year-on-year decline in this gross margin was mainly due to the increase in net revenue of the Internet business in the quarter and the interest rate of the business as a result of discounts offered to customers and stores.

Electricity trader price war high fever not return big loss more than capital bubble will break

When the earnings show, Dangdang's anniversary in November, when the fourth quarter issued a lot of coupons, as a promotional tool, has a certain impact on profitability. The price competition in the quarter was also fierce.

Obviously, the price war between the electric dealers seriously affects the profit. While commenting on the loss, Dangdang CEO Guoqing said, "When the loss in service and price war, value!" ”

So bad earnings, such a huge loss, is not the big guys are ashamed? Not afraid of price wars? Value, where is the value?

Aramus, deputy director of the China Electronic Commerce Association Policy and Law Committee, believes that Guoqing's own comparative personality, his views and ideas are difficult to identify many people.

Do not want to be named electrical business practitioners in the IT Business News network reporter interviewed, said in the electric business bosses that this is the upfront investment, is the investment of their own construction, value! But, in fact, still afraid of playing price war, price war is just helpless.

China E-commerce Research Center analyst Mo Dai Green in the IT business News network reporters said: "This report can make Dangdang clearly see their weaknesses, can precipitate down, in these aspects to improve, further identify the future direction of development, to develop a suitable path for their development." ”

In theory, the short-term price war may be favorable, but so far, China's e-commerce has not been out of the chaos of price war.

There are insiders believe that the price war more harm than good, price war is difficult to accumulate popularity, because this brings the user may be unstable, viscous is not high. For increasingly picky consumers, they have seen too much noisy marketing. But in fact, whether it is a bloody price war or a sky of advertising campaigns, all just stimulate the consumer short-term shopping mood, and no real and consumers have established emotional contact.

The most jaw-dropping is the electric business enterprise crazy burning money, in fact, they know that the money is wrong, but they still burn money, like children, Ming know wetted to be beaten, but also wetted. They do not consider profit at all, regardless of cost. Some of the operators are impetuous, in the traditional enterprise vicious marketing of the old road. carelessly, will become Qin Qi second.

Mo Dai Green that the price war for the company can fight for market share, as the industry leader. From the current point of view, the development of electric business enterprises for many years has accumulated a certain amount of funds and their relatively stable customer groups, which let them have a certain basis. Second, the electric business enterprises have their investors can rely on, they play a price war to a certain extent to attract investment in the wind.

In the early stages of development, the price war is understandable, but addicted to it, can not extricate themselves, the impact of profit is wrong. Aramus that the price war itself on the development of E-commerce industry, may not be a good thing, if not to say that the price war has the benefit, then is profitable, unprofitable price war is still not convincing.

In particular, the city's electric business enterprises, price war caused huge losses, shareholders will not be willing to, in the future may encounter the fate of the city. Mo Dai Green believes that the danger of picking cards exists, do anything is risky.

Other people do not want to give the name of the industry in the IT Business news network reporters bluntly very disgusted with the price war, and very disgusted with some of the electricity business. He said that some electric business owners do not understand the electric business, but also do not understand business management. Now the electricity quotient has a strange phenomenon, the big guys thought unceasingly occupies the market, the unceasing enclosure is can completes the electricity merchant. That's not going to work.

The industry mentioned above, the most impressive is the electric business enterprise crazy burning money, in fact, they know that burning money is wrong, but they still burn money, like children, know wetted to be beaten, but also wetted. They do not consider profit at all, regardless of cost. Some of the operators are impetuous, in the traditional enterprise vicious marketing of the old road. carelessly, will become Qin Qi second.

However, there are indications that investment in VC/PE (VC/PE) funds is slowing down in the area of E-commerce.

China Venture Group analyst Feng Po points out that the most active Internet industry investment in January is only 67.6 million U.S. dollars, the industry accounted for 6.5%, compared to the annual share of a significant decline in last year. From the subdivision industry, E-commerce Investment 5, still is the mainstream of internet investment, but from the scale of investment, its overall valuation has been significantly declined.

If the electric dealer does not have the money to burn, then only then is dead. This requires the electric business enterprise must abandon the price war, rational management.

Industry insiders told it Commercial news network reporter, the electric business to go out of the price war, only from products and services to enhance, can improve conversion rate and repeat purchase rate. Mo Dai Green said: "The future of the core competitiveness of the electrical business embodied in the quality of products and services." Depending on the advantages of the price, the user loyalty is not stable, if there is a lower price, then go to other places to buy. Only users really feel that the quality of products and services to protect, in order to improve the customer's trust in the electricity quotient and the possibility of buying again. ”

It's time for the electric trader to calm down and rethink. Aramus that the development of E-commerce has come to the need to find a new profit model of the key point, the advantages of E-commerce has been exhausted, the disadvantage is exposed, the future to have new development, must innovate, otherwise it is difficult to survive.