The electric trader raises the free shipping threshold successively, the multi-sale difficultly supports the small profit

After the Beijing Jingdong Mall, new eggs China to increase the net to buy "free shipping" threshold, February 2, the Amazon China issued a notice that consumers need to buy more than 29 yuan and their designated goods, can enjoy free shipping. It is understood that prior to this, Amazon China has been the last one to advertise "free shipping" large enterprises.

In fact, Amazon China's move to abolish "free shipping" is not without warning. Earlier, Amazon China President Wang Hanwa said that although free logistics delivery costs to consumers a good online experience, but free shipping is only applicable to the development of E-commerce in China's primary stage, "as the E-commerce industry matures, free shipping is likely to become a history."

Multi-sell hard profit margins

The domestic "free shipping" activity was first launched by Amazon's predecessor, the Network of excellence, but after 16 months, it ended. However, including excellence in Amazon, Dangdang, Jingdong Mall and all the customers, such as goods, and other electric dealers have joined the free Shipping Corps, a time "free shipping" seems to be the industry's "standard."

However, under the influence of cost pressure, one after another of the electric dealers did not hold live. At the end of last year, Jingdong Mall and the new egg China began to adjust the freight policy respectively, at that time, the Amazon Chinese government still stated that it would insist on free shipping policy.

There is even the view that "free shipping" is an upgraded version of the price war. In their view, the distribution fee is the hard cost of the Web site, which accounts for a large share of its operating costs, thus testing a site's cash flow. If the long-term implementation of a free shipping competition strategy for any of the Web site will be a test.

It is worth mentioning that the entire business of the industry is not a high margin. According to billion state power network survey, the 3C industry is generally around 5% gross margin, mobile phone industry is generally around 3%, cosmetics industry in 10%-15%, clothing industry is generally in the 15%-20%. According to Huang, founder of the Show Network, the entire business of the industry's gross margin of about 10%.

The industry is also aware that free shipping is not a long-term solution. "As a promotional strategy, free shipping can no longer adapt to the competitive environment of the current market," said Eric Su Huiyan, an analyst at the International Finance journal. "With less investment in the Internet, there is no obvious advantage to even individual big companies under the pressure of capital tightening."

Su Huiyan pointed out that the low price of the product implementation of free shipping, will expand the operating costs of enterprises, for slightly higher prices of products, its gross margin itself is also lower than the physical store. Therefore, the price war is not conducive to the healthy development of the industry.

Reduce costs and seek profit

A "Mail Oh, kiss!" "The temptation to consumers is not to be overlooked. Industry Analysis, the free shipping policy can increase more than 30% of sales, and research institute comscore in its latest report that 47% of respondents in the online shopping, if the merchant can not avoid the freight, will give up their own shopping cart goods.

"While expanding market share will certainly contribute to profitability, the" burn money enclosure "approach may have the opposite effect. Zhang Zhouping, senior analyst at the China Electronic Commerce Research Center, told reporters that it was undeniable that the free shipping strategy could attract consumers in the short term, but it was difficult for consumers to base their expectations on low prices, which were difficult to satisfy the consumer website.

Zhang Zhouping that, free shipping will bring the growth of enterprise operating costs, but the current e-commerce industry is moving towards a tight-money era, coupled with the marketing costs and the cost of human resources, the industry's net profit level is low. Therefore, in the long run, the consumer Web site will be burdened with heavy cost pressure, will eventually directly affect the user's satisfaction.

In fact, due to the impact of the capital market, not long ago, pull nets, Fank are not listed in accordance with the plan, even the domestic e-commerce giants Taobao also said that there has never been an IPO plan, and Jingdong Mall has been in a similar situation, there are investment banks said, Jingdong Mall actual financial situation and future earnings

Even Amazon, known as the "online Wal-Mart," is no exception. According to the fourth quarter of 2011, Amazon's total yield was $17.43 billion, up 35% from the same period in 2010, but its net income was only 177 million dollars, a drop of 57% from the 2010 period. Analysts expect Amazon's profits to fall in the first quarter of this year.

Zhang Zhouping that the new phase of competition will be opened, and then the electricity business will be mainly through the "cost reduction and seek profit" stage. Expert analysis, the Beijing-East increase free shipping threshold of the initiative, can make its annual savings of 50 million yuan cost.

Let Express "slow down"

In Zhang Zhouping's view, the new stage of competition will not only be conducive to the healthy development of the electric business, but also to a certain extent for the express industry to achieve the "burden", the development of the electric business has greatly exceeded the speed of the express industry, an orderly e-commerce environment is to achieve and express docking, improve the entire industrial chain premise

It is understood that from 2008 to 2011, the number of electric dealers increased by nearly three times times, but the new Total Express Company only 40%. At the end of 2011, the collective price of the express industry, the electrical business of small pieces of goods is difficult to profit, often need to the merchant to send freight. Small pieces of distribution costs can reduce the cost of logistics, promote the healthy development of the electric business sector.

A private courier company said that due to the delivery of the cost of the seller to be divided, so, for the electricity business site delivery is not as good as ordinary business delivery profits, and the express industry margin has been 100% to 200% from 2001, to now less than 10%.

Su Huiyan also believes that the express industry and E-commerce complement each other, improve the free shipping threshold to express the enthusiasm of the industry will also play a certain role in promoting, electrical business needs from products, logistics, services and other aspects to enhance competitiveness.