Su Ning buys the Red Child to herald the electricity merchant merger tide beginning

Mo Dai Green Zhou

On the eve of the National Day, Suning Group Vice Chairman Weimin announced Su Ning will wholly-owned mergers and acquisitions of red children, costing 66 million of dollars. The red child is the domestic mother and infant vertical profession the well-known electricity merchant, occupies the important position in China's huge mother and infant market. This shows that suning easy to buy the mood of the electrical appliances are extremely urgent, and suning easy to buy from a single electrical appliances to the general merchandise category of the trend of the expansion of integrated electrical business.

At present, the domestic business leader Enterprise product line expansion of the same strategy is diversified, a large number of vertical category of consumer electric enterprises to the General department store transformation. For example, Jingdong Mall 2009 from the field of large household appliances and white household appliances to daily necessities, jewelry, clothing caps, nutrition and health supplies, Suning easy to buy from 3C home appliances to clothing, beauty makeup, mother and child expansion, Amazon China 2009 years product line expansion LCD TV and automotive supplies and other products.

Therefore, vertical consumer to the general Department of Electrical Business Development has become a trend, there are three main motives: one is to enlarge the internal demand of sales and enlarge the scale, the other is to realize the intrinsic need of "gambling agreement" and IPO; third, to provide more products and services, and strengthen the external needs of users "stickiness".

According to the monitoring data of China Electronic Commerce Research Center, as of June 2012, China's consumers online shopping market ranked number one is still the day Cat Mall, accounting for 47.6%, Jingdong Mall ranked second, accounting for 20.5%; in the third place Tencent has reached 3.8%; follow-up 4~ 10-digit ranking is: suning easy to buy, Amazon China, where customer prudential products, Bowser nets, Dangdang, xun nets, new eggs in China. It is not difficult to see that the general Department of Electric dealers occupy a majority of seats.

According to the executive vice president of Suning Li Bin said, Suning easy to buy in department stores, daily necessities, maternal and infant products category has reached 1 million, is expected to reach 1.5 million this year scale. And take acquisition means, no doubt is suning easy to purchase the shortcut to expand Business, but the acquisition of enterprises usually easy to merge, difficult to integrate. From the perspective of China's Internet mergers and acquisitions, mergers and acquisitions enterprises often appear to compete for the actual control rights, the core competitiveness of the business decline. Supply chain integration, management team integration is still to be Su Ning and red children together to solve the problem. Suning easy to purchase the acquisition of Red children, is no doubt suning easy to buy a major change and transformation, but the result is "hit" or "innovation", through a period of development can be seen.

Data show that red children was founded in March 2004, through the directory and the Internet to provide users with shopping methods and cheap products. The company started to create redbaby.com.cn "Red Kids" website in 2006. Red Children company also use DM directory, call service center, special alliances and other channels, through 12 branches covering the country's 16 provinces and cities.

China E-commerce Research Center monitoring data show that 2009, the red Child sales of 2 billion yuan, 2010, sales of 1.5 billion yuan, to 2011 red Child sales of 1.5 billion yuan, but at a loss. Data show that from November 2005 to July 2012, red children in four rounds of financing, respectively, to obtain venture capital of 2.5 million U.S. dollars, 3 million U.S. dollars, 50 million to 100 million U.S. dollars, 20 million U.S. dollars.

After being bought by Suning, the red children lost heavily, the former three investors were trapped in the Arctic light, NEA, Triumph venture. Suning easy to buy 66 million dollars to buy red children, for investment in red children's venture capital institutions, is just "solution" of the extent, from which no profit much.

Red Children since its inception, the company has been unable to get out of the scale of the profit dilemma, in attracting large investment in VC and even after gambling, not only the IPO is hopeless, and it is difficult to attract capital injections, coupled with the company's founding team was squeezed by the investment side for many years, the company has long In this context, red children this "prostitution" to Suning is helpless.

In fact, the red children by Suning purchase, but also from the side reflects the capital hope to follow the previous experience of the Internet IPO has become increasingly difficult. More importantly, the current scale and visibility of vertical dealers is not enough to reach the scale of profitability, the difficulties of the IPO will inevitably lead to an increase in the number of acquisitions in the industry, the electric business "fish" trend has just begun.

(Author unit: China Electronic Commerce Research Center)