The educational scale of e-commerce in China has been increasing

In the rapid development of store 1th, there is a big environment that can not be neglected is the rapid development of China's E-commerce market.

An e-commerce industry personage has exaggerated to describe China's E-commerce Tide said: "Tornadoes come, pigs can go up trees." "If a decade ago, shop number 1th might not have been able to do it, or even die."

In other words, shop number 1th found its own direction, and did meet a good year.

Bundled operation "alongside the wealthy"

Shop 1th's initial business model is not new, it's just moving goods from traditional supermarkets to the Internet. But since there is no precedent, there is no object to imitate, so it seems more difficult.

Initially, see red children do the catalogue is very successful, shop 1th began to do catalogs to promote, and then began to try to learn the traditional supermarket practice in the subway station, bus station, the community inside the poster, but the effect of these two promotional means is unsatisfactory. At this time, No. 1th shop seems to be in trouble, successive promotion failures so that they even doubt their entrepreneurial direction is correct. This time, however, things seem to have changed.

On one occasion, Liu Junling met the old colleagues who are currently working for SINA le Habitat. Liu Junling said to him, Sina so big traffic, have no use, can put the above that position chain to shop 1th, we give you commission. They have not done, decided to try, the results of a try to 1th stores with a lot of traffic, but the purchase rate is still not high.

According to this idea, Gege and Liu Junling also found the Tianya site, and in its online open Tianya 1th shop. "They also thought it was a good idea for their members to serve, so we opened the Tianya 1th shop." At that time member thought is Tianya, so many people go to see, the effect is very good. "Just said.

After that, number 1th stores the thread of online marketing, gradually increasing cooperation with the community website, and even cooperation with competitors. In addition, online activities, such as the holding of cute baby and other online activities, and continuously for the number 1th stores to increase traffic and orders. Gege and Liu Junling this way to promote the image known as "alongside the rich", the use of huge traffic Sina and Tianya Web sites such as bundled operation, and then through the brand publicity and promotional activities will users into the 1th store site, and then into orders, and then through the customer's Word-of-mouth propaganda, two times spread out.

The trouble of Growing up

The rapid increase in orders to 1th stores experience the trouble of growing up, subject to logistics and warehouse storage capacity of the troubled, burst warehouse began to appear frequently.

There was a time when shop 1th stopped accepting customer orders at one or two o ' afternoon. 1th stores in Shanghai before the stronghold of the explosion at least 5 times, so that constantly increase the warehouse, the first 6,000 square meters, and then add 10,000 square meters, now Shanghai is more than 70,000 square meters.

No. 1th Store Operations Vice President Wang Haihui clearly remember his 2010 summer just joined the No. 1th shop when the first job is to find warehouses. "I and the team under the scorching sun in the North canton and Jiangsu and Shanghai to find warehouses, sun Heibuliuqiu, but also heatstroke." At that time we found a 30,000 square meters warehouse, but came back to find, far from enough, but also to find, very energy-intensive. Wang Haihui the investor newspaper.

Now 1th stores have 15 warehouses, Beijing, Shanghai, Guangzhou, Chengdu and Wuhan, an area of more than 260,000 square meters. A warehouse can cover the surrounding 250 kilometers, can reach the second day distribution, 24-hour distribution. "But the increase in the warehouse does not solve all the problems, and at the end there are many physical limitations." For example, just talk about the explosion, warehouse too large cost is very high, the warehouse is too small a lot of things can not be achieved. "Just said.

Sometimes in the event of holidays and promotions, the order volume of a week rose 50%, sometimes after a night to wake up the next day, burst the warehouse. Just last month, shop 1th just past the 4 anniversary of the store, some of the merchandise also appeared in the explosion.

How to solve the problem of open warehouse is the top priority of Shop No. 1th. To improve the situation, store 1th is upgraded and optimized for the storage system. After 4 years of development, shop number 1th has been upgraded in several versions.

Wang Haihui told the "investor" reporter, initially, 1th stores are everyone holding an order details, need to go to the warehouse picking, check and packaging, now has long been the transition to paperless operation. As long as the handheld terminal, the system directly tells you where to go in the first step, where the second step to go, do not need you to look at, using the system to optimize the path to calculate the best route. At present, shop 1th contains an average of 16.7 items per order, and the time needed to pick up the goods is about 80 seconds, and Gege's goal is to control within 50 seconds.

Shop number 1th takes the agile development approach, and has a few minor upgrades and updates for two weeks. "Technology is the first productive force in our full embodiment." We've just been on line a very small program, at the last kilometer, save tens of thousands of of dollars a day. This program can be traced to the order to avoid the distribution of the same customer multiple deliveries, but to all the orders together. Sometimes, different warehouses to the goods need to be combined, this program can also help you reminders, the alarm prompted the logistics to let different warehouses of goods rushed to. Wang Haihui the investor newspaper.

vigorously build supply chain

June 25 this year, 1th stores announced, officially launched the "SBY" project, that is, "Service by Yihaodian". This project is mainly aimed at the traditional enterprises that want to enter the field of electronic commerce and lack the ability of electric operators. In fact, this is the number 1th store in the use of their own supply chain platform, in helping traditional enterprises to enter the electric business, but also to make their own supply chain to achieve profitability.

Gege has always emphasized that supply chain management is the core competitiveness of e-business development. And the industry for just evaluation is, the founder of the electricity business enterprise most understand the supply chain of people. This actually has a lot to do with Gege's professional experience.

As we all know, logistics and supply chains are the core competencies of Dell and Amazon.

"The model we've done helped Amazon's inventories drop sharply and the shortage rate has fallen," he said. This is a surprise to everyone, because it is generally believed that the stock drop will increase the shortage rate, but we let it stock down, the shortage rate also fell, this is all rely on the optimization model. This is called science is productivity. "Just said.

It is a rich supply chain management experience, as early as the beginning of the inception, Gege began to design and plan the 1th store supply chain system. It can be said that the supply chain of shop 1th started from a very high starting point, standing in the industry advanced level strategically.

Supply chain management is a complex project, especially the 1th number of shopkeepers hit the FMCG category doomed its supply chain cumbersome. For ordinary consumers, supply chain is a relatively virtual concept. In the terminal delivery stage, the consumer only has the intuitive feeling to the product, the service and the price, but behind it has a series of complex supply chain management process.

The entire supply chain requires different shelf life, packaging form of goods in the experience of warehousing, shelves, with a variety of different combinations in each order, and then experience picking, sorting, packaging, out of the library, distribution, and finally sent to the hands of customers, and even may have to keep up with the after-sales service including returns, It is not easy to make these links work efficiently and harmoniously.

What about the supply chain system in store 1th? Gege has said that the supply chain system at store 1th meets several conditions: first, flexibility, to adapt to the development of business and market changes; second, can be expanded, processing 10,000, 1 million is also the case; third, real-time, at any time can see accurate information; four, integration, under a platform, the same database, the function of sharing. Therefore, the supply chain management in store 1th has been praised in the industry.

In addition, shop number 1th also opened its own platform to allow store mode.

"Shop in the shop before the merchants, there is a" training department "to guide the introduction of the operation, so that businessmen familiar with the entire operating system. Product Audit section, Title + text, very strict, less the same content does not pass, so that consumers clearly buy things. The key word index in the Web page, do a better job. Activities, the activities of the selection is absolutely normal sales are very good, will be selected, or certainly not. To some extent, the conversion rate of exposure resources is ensured. Wang Wei, marketing manager of Shanghai China Information Technology Co., Ltd. told reporters that the shop in shop 1th was feeling more satisfied.

However, the improvement of the internal supply chain in shop 1th does not mean that the outside is also perfect. A supplier of 1th stores, who asked not to be named, told reporters that in the receiving process, suppliers often need to queue for a long time, this is usually, if you encounter a sales promotion or the Chinese New Year festival, the estimated supplier will have to queue longer time.

Two one kilometer

In August 2010, store No. 1th suddenly announced the start of its own logistics for distribution. The decision was a last resort for Gege. Before the 1th store has been the logistics distribution to the third party to undertake, so that their focus on the electricity business, but the domestic Third-party service level is really difficult to satisfy. Shop 1th has found that 60% of customer complaints are from the last kilometer.

The last kilometer distribution is the last link in the entire supply chain, delivery, service is not professional, bad attitude, customers have problems can not be dealt with in a timely manner, will lead to customer dissatisfaction, so even if the front-end spent a lot of money to obtain customers, as long as the back end of an inattentive customer offended, the whole process of white busy.

The 1th Shop's self-built logistics in the first one weeks on the line achieved good results. They found that distribution success rate, satisfaction and so on are better than Third-party logistics. A report from DDMA, a research organization, shows that the logistics of store 1th now has a 92% customer satisfaction rate, well above the level of the third party distribution industry. The goal of the No. 1th store is to achieve "customer satisfaction, logistics and distribution satisfaction industry first".

In order to be able to intuitively feel the last kilometer service of No. 1th store, the reporter of "Investor" has followed the distribution of the distribution station of Shanghai Zhangjiang (600895, Stock bar) of the No. 1th store to deliver the goods together.

Zhangjiang Distribution site is mainly responsible for the distribution within the scope of Shanghai Zhangjiang Development Zone, enterprise customers, less family customers. Similar sites, no. 1th store in Shanghai, there are 68, basic coverage of Shanghai urban area. The site two times a day distribution, one is 8 o'clock in the morning, one is 2 o'clock in the afternoon. The average customer orders yesterday, can arrive today, the morning orders, the afternoon can arrive.

In the "investor" reporter interview survey, the majority of customers on the 1th store evaluation is very high, mainly distribution timely, good service attitude, cheap.

Shop number 1th to improve the customer experience, directly linked to the company's employees pay and bonuses and customer experience indicators. "We often do customer calls, including a few shipments," he said. We have to do this for every executive, including the Chairman, and I am in store 1th a week, mainly to experience the process. Wang Haihui the investor newspaper. He had found that many problems appeared on the packaging, so shop 1th set up a special packaging group to test the package.

In addition, compared to the last kilometer, store 1th also proposed the "first kilometer" concept. "First kilometer" that is the first kilometer to take goods, usually, the supplier for the ordered goods too little unwilling to send, more may not send over. This leads to frequent inventory and shortage of two results. "First kilometer" can let the platform to take the goods according to their own frequency, at the same time can take back the goods of multiple suppliers at once, this to the platform and the supplier, both improve efficiency, also reduce the storage cost.

Then, the "first kilometer" management, the need to integrate the system platform to form a unified whole, so that everyone can always understand the current status of each item. And that's the strength of store 1th.

Whether the first kilometer or the last kilometer, this is for the ultimate customer experience. And the customer is the number 1th store in the corporate culture of the words in the second place.

Low margin of FMCG products

April 2011, Store 1th after 4 years of development finally began large-scale expansion category. Shop No. 1th has said that this year to prepare for the current 200,000 kinds of goods based on the new 500,000, will focus on the introduction of mother and child, digital 3C, books and jewelry and many other large categories of goods.

In June 2012, the 1th store book channel was online, and 900,000 kinds of goods were sold on line, and more than million were expected in the year.

"Shop No. 1th had no competitors in the past because the ultra category was a loss. How do you make money selling food and drink? These categories of jingdong and when it is not impossible to do, but do not want to do, because the margin is too low, not as good as selling milk to earn more. So store No. 1th must be transformed to increase the high margin category. Independent electric Business Observer Ruzenwang to the investor newspaper reporter said.

In the past two years, Jingdong Mall, Dangdang, Amazon China has been a whole series of routes, now Suning easy to buy, shop number 1th has also begun to expand the category to the big comprehensive shopping site. In this way, when the major electric enterprises of goods and settled businesses tend to be the same, the major electric business enterprises inevitably fall into the "thousand net side" embarrassing situation.

And the business model of E-commerce enterprises down the development, basically no difference. Category richness may be different, home appliances, 3C are basically such channels. Major electrical enterprises are in the big department stores, open platform.

But when everyone is the same, look at your cost control, financial strength and supply chain management. Because the richer the category, the more unsalable, the larger the inventory.

Although the future homogeneity of the competition is inevitable, but for now, the major electric enterprises still have their own advantages. "Jingdong Mall is the first advantage, has established a brand image in the country, at the same time in recent years, the logistics, system development has seen the results, the disadvantage is that the supply chain is not very strong, and suning Gome can not be compared to, at the same time also by the capital, wind investment restrictions, there is also a bit of Beijing East due to the development too fast too strong, has become a public enemy of the whole industry, all major electric business target is Jingdong, are to kill Jingdong. Industry personage Yang to reporter said.

Suning, Bowser, Gome Mall almost, the advantage lies in a strong supply chain and capital. The advantage of the newsletter is the flow and capital, short board is the supply chain, at the same time in the expansion of the category is too slow, the category is mostly 3C digital, margin is too low.

"No. 1th Store advantage lies in the maintenance of the system, and now rely on Wal-Mart management experience and supply chain, the disadvantage lies in the rapid elimination of gross margin low, low unit price, logistics difficult to do, to other categories to expand too slow, and there is no supply chain advantage in this area." "Yang told the investor newspaper.

Push the virtual supermarket

July 2011, Beijing, Shanghai, Shenzhen and other subway stations overnight 1th shop "commodity wall", above the same as the traditional shelves covered with a variety of goods, from imported food to groceries department stores, from computers to mobile phones, is everything, dazzling. People in the gap between the bus, if the fancy of a certain item above, just download the "Palm No. 1th Shop" mobile phone, the merchandise below the two-dimensional code shooting scan, you can achieve the purchase.

"This is our chairman to see the Tesco in the South Korean subway station launched a" virtual supermarket "inspired by the idea, the day to make a decision, the next day meeting request development. The idea at the time was to use the debris time of the user's commute. It was expected to be one months and the result was three weeks. It was July, and we were promoting beverages, food and beer, with clear positioning and a commitment to half-day delivery. Yulili, director of wireless division 1th, said to reporters.

Sure enough, after the line, 1th store media attention increased 4 times times, brand attention to improve nearly 3 times times, Palm 1th store orders also increased by more than twice times.

On one occasion, Yulili to meet the Tesco people, they expressed pressure on it, did not expect you speed so fast.

"Last month we rolled the feature together. Two or more people shake, you can get preferential prices. For example, now this bottle of water is two dollars, but four people shake can get a discount price of 5 cents to buy, or even recruit 1000 people together to shake the ipad, each more than a certain amount of price drop. In fact, this is the thinking of group buying, but only their own groups, and then to find someone. "Yulili said.

It was originally used for social networking, shop 1th for the first time, allowing customers to share experiences and shopping with Word-of-mouth.

Yulili, who responded well to a virtual supermarket last year, said this year's store 1th will also launch a second phase of the upgrade, which will be released in August, and this year's upgraded version is a big difference from presentation and media choices.

Return to the role of professional manager

In the early stages of entrepreneurship, because the business model is not optimistic, Gege and Liu Junling did not melt too much money, so the initial development of store 1th is the two people to use their savings to maintain development.

And E-commerce is a burning money industry. Like most E-commerce companies, at last in 2009, store 1th encountered a financial bottleneck.

At the beginning of 2010, China Ping An (601318, shares bar) group shares a stake in shop No. 1th. Although the transaction did not disclose the actual financing situation, but the media reported that Ping An group invested 80 million yuan in exchange for 1th stores 80% of the shares.

After less than two years, equity changes again. In May 2011, Wal-Mart, the world's largest retail retailer, took stakes in shop 1th and received a 20% per cent stake in 1th at a high price of 65 million dollars.

An entrepreneurial company to hand over most of the equity, outside an uproar. More interestingly, at the beginning of shop 1th, its slogan was the online Wal-Mart, which is now owned by Wal-Mart, which is also well deserved.

There is no way of knowing how many shares the founder Gege and Liu Junling still hold. But after most of the shares were sold, the two founders returned to the position of professional managers.

Faced with doubt, Gege wrote in a post: "We do not care about other people's conjecture will not be pursued, we do not have this mind can not do today, but do not want to see young people and in-transit entrepreneurs are misled, feel that capital is the opposite of entrepreneurs, feel lost holding how terrible, the financing of entrepreneurship pessimistic attitude. You can look at the world's successful internet companies, no founder of the company is listed as holding. It doesn't make sense to have a holding but only a small business, even a 100% stake. Mr Ma accounts for only about 5% of Alibaba's shares, but no one can discredit his leadership in Alibaba and his outstanding contribution. The electric dealer is a scale game, if all relies on own ability growth, the process will be very slow. How big a business can be depends on how big a leader his heart is. ”

While it may seem that Gege's attitude toward controlling power does not seem very sensitive, the passed of controlling power will have some impact on the management of store 1th.

Think twice about marketing planning organization CEO Wang Penghui had contact with the management of Shop No. 1th, "shop number 1th, some of the old staff is actually very confused, after all, now the 1th store is not the same as before, the former leader is an entrepreneur, now is a professional manager." The change of identity also means attitude and attitude towards the cause. He told the investor newspaper.

However, some people in the industry said that this is not the main problem, these are nothing but the distribution of benefits, the key to see how shareholders do. Whether a change in identity means a change in career attitudes may take time to prove.

However, from the point of view of the development of store 1th, China Ping An group and Wal-Mart's shares do give a lot of impetus to the development of store 1th in the future.

Wal-Mart in particular, as the leader of the global retail business, its financial strength and procurement advantages can certainly bring a lot of benefits for shop 1th. First of all, do not worry about funds, can quickly use funds to market, expand the scale. Second, if the procurement system can be shared, store 1th will be more competitive in price.

Store 1th and Wal-Mart have complementary strengths, both of which can share resources in the procurement and warehousing system. Now shop 1th is going at a very good pace, the future will also occupy a more important position in the electricity market. Wei Couqi, a lecturer at Shanghai Fudan School of Management, told reporters he was doing research at shop 1th recently and was optimistic about its future development.