The influence of the value 2--sales on the stock market

Section 1: Rapid sales growth (impact on share prices)

Investors prefer the myth of rampant turnover, which can be at a glance from VCs. The so-called gambling, is often agreed to a certain performance growth, if the wind is lost to the entrepreneurial team a certain stake, if not meet the venture team lost to the wind to invest a certain share (often will lose the holding power). The earliest understanding of the domestic venture bet may start from Montamer to gamble, September 03 Agreement between the two countries in 04-06 years three years, such as Mengniu's earnings per share annual composite growth rate of more than 50%, Morgan Stanley and other three institutional investors will be up to 78.3 million shares (equivalent to Mengniu milk has issued 7.8%) transferred to Mengniu Management, Eventually, Mengniu Management won the end. Jingdong also had a four-year bet on the first round of financing, but only in one year. Winning more stakes, Liu disclosed that today's stake is now less than 30%. Two melts when the VC did not gamble, in the 8th year of entrepreneurship is still achieving stunning from 3 billion + to 10 billion across, keeping 300% Growth, respectable, I do not have to gamble with Beijing east.

The impact of sales on the value of the company is most obvious, compared to net interest rates, asset yield and other indicators are more easily achieved, more scalable (people like to say scalable).

Given other conditions, assuming the retailer net interest rate of 3% (generally less than 3%, last year about 2.6%, 08 years or even 2.2%), in the fiscal year 06 retailer sales of 36 billion U.S. dollars, multiplied by the net profit is 108 million dollars. If 06 to 09 of these three years each year retailer growth of about 45%, 09 sales can reach 06 times around three times years, and its net profit can be correspondingly grow to 324 million dollars, very impressive.

Unfortunately, this three-year three times-fold growth did not occur in the retailer body, but the flower fell amazon.bestbuy actual 09 years of sales of only 49.7 billion U.S. dollars, three years total growth of 40% less than the annual compound growth of only about 11%. So retailer's P/E ratio is only about 12 times times, equivalent to traditional industries such as the steel industry valuation level, or even lower than the Gome Su Ning's 18-20 times the P/E ratio, and Amazon's P/E ratio is about 50 times times, the share price is up to 100 + U.S. dollars, which is the goal of

Take a look at BlueNile's performance changes, as shown below:

This is more obvious, after 07 years of stagnant sales growth, stock price growth also fell sharply, but 06-07 years of the hottest price from 30 U.S. dollars to 100 dollars. .

How can a business enterprise sales grow at a high speed?

The most basic is the rapid development of the main business, whether it is Beijing-East new eggs, excellent when, or red children le friends, diamond birds Nine diamonds, every customer dream Bazaar, in the industry when the time is ripe for high-speed growth is as usual, only from the traditional competitors to rob the market share is enough to support the growth of enterprises. The average growth rate of online retail sales is 100% per annum, and excellent companies have similar resumes.

Common tricks include but are not limited to:

Trick One: Expand the product line.

Jing Dong new eggs first extended from 3C to home appliances, the recent Beijing-east is further extended to cosmetics, department stores and even sold up the price of diamonds, but also acquired a Chihiro. All of this is basically replicating Amazon's expansion path. Amazon09 year main business growth mainly depends on the media products, the growth of the book and audio and video has slowed down, to rely on more 3C, CE, home appliances, department stores, footwear, etc., which incrementally City bankruptcy and Newegg growth slow to Amazon in the electronic products provide a lot of room for growth, in addition to light Zappos mergers and acquisitions can provide 1 billion U.S. dollars in sales, accounting for nearly 5% of Amazon's total sales. Although Jingdong sells shoes later, But Xun had already started selling shoes before Amazon bought Zappos. As a brand of VANCL also not idle, product line from the shirt to men's, women's wear, children's clothes, bags, shoes, recently more than 29 yuan on the sale of hole shoes, the tide is very. In the final analysis, as long as new products fit the needs of the target population, the potential is very large.

First, expanding the product line can significantly increase the number of items per order. As a result of meeting the potential needs of the diversified target customers, combined with bundled promotions, Also buy recommendations and other web functions, maximize its effect.

Secondly, when the product line expands to the high unit price product and eliminates the user to purchase the worry, can increase the average price of goods significantly. For example, Jing-dong first to get through the logistics of the two vessels, the sale of electricity, in order to increase the rapid growth of sales in 09 contributed a great help, new eggs, Century electrical appliances, Taobao Electric City also up the wind. Diamond Bird is from 05 opened the first experience shop to win the trust of consumers, online only dare to buy 2000 Yuan Diamond in the experience shop to see the real thing to buy 10000, and suddenly improve the order unit price, also led the diamond industry a wave of mouse + cement boom, continued to date, No one dares to open the experience shop except Davigny.

Again, if the department store's strategy succeeds, it can greatly increase the user's shopping frequency, and then seduce him to buy a lot of things each time he comes.

Trick two: Reduce the user's difficulty in shopping, reduce freight, or open from the point, open shop. When, Jing Dong New egg long dozen full xx Free shipping consumption war, Diamond bird is a long-term free shipping (and is FedEx). Jingdong in order to facilitate consumers, for more traditional users, from the point of Bloom, the Beijing-East Bulletin board has become a point of view from the opening list, Jingdong sales if the contribution to the point of 20% please do not be surprised. Diamond Bird opened 4 stores in 09 years, and recently opened the 11th City of Changsha Experience Center, nine diamonds, such as Ke LAN followed. Although the red child does not open the physical store, but its competitor has opened the shop, Le You even launched "Hundred City Thousand Stores" the plan, although the cost will rise but may contact more users. The recent interview also revealed to open shop, and the best to open in Uniqlo opposite, currently suffering from the store difficult to find. Although the past two years, the consumer and Taobao is accelerating the impact of China's retail, but after all, only accounted for 2%, more consumers are not accustomed to direct online shopping, if you choose not to do their business as well as the development, such as red children and Jingdong (vigorously develop logistics, and Beijing East opened its own point and began to provide door-to-door pick-up business) But if you choose to do this part of the business, then opening the shop at this stage is unavoidable.

Trick Three: Use quality service to motivate users word of mouth is always the most effective way, both to increase the number of new users, but also improve the conversion rate. These services can be low prices, many things, fast, after-sale good, new products strange, high quality customer service, brand has feelings and so on. Jing Dong before the user vote to show that more than 50% of its new users from Word-of-mouth, and then Jingdong is low prices, and many things, other aspects are not retired. These veryls signature file said n many times, no longer repeat.

Trick four: Spend money to buy traffic. If the ROI is healthy, you can also improve the sales of one step after another, this aspect of VANCL, M18 are very good representatives, regardless of the line or offline of the launch, to catch users. But if the word of mouth effect is general, buy flow more lead to sales step-type upward, rather than linear upward development.

Soldiers, to the positive, to the singular victory. The above several strokes is "with the positive", but the enterprise really must be in the valuation to win a person, lead the colleague, had to have more innovative tricks. Let's first analyze what new skills Amazon has practiced under the industry boss.

The first and foremost trick is the Kindle and the ebook.

E-books, even in the US, are still an emerging market with less than 1% of the total population of the United States. Although the Kindle's sales figures are not disclosed, CNBC analysts estimate that it accounted for 2% of Amazon's sales in 09, or about 400 million dollars, and that 10 could account for 4%. Growth will multiply. If you remember the previous data, the Amazon09 year was 3 times times bigger than 06, with an annual compound growth of 45%, compared with the Kindle and its E-book business as Amazon's future star.

But the E-book reader and the electronic publishing market also have rivals.

Apple announced in June that its ipad sales reached 3 million units only 80 days! Amazon's Kindle, it is speculated, has sold no more than 3 million units, so Amazon recently reacted by lowering its small version of the Kindle from 259 to $189. But the reader's own sales are not the main battlefield, as early as a week after the release of Kindle2 in February 09, Amazon has announced the free release of the iphone and itouch Kindle app in the App Store, and has become the top reader in the iphone, Also quickly opened to the new ipad. It is clear that Amazon is not afraid, as long as you still look through the Kindle app, you still want to buy Amazon things. So the real battlefield is in content and publishing, who has more good book Resources, who publishes more good books, which is the core advantage of Amazon's years of operation.

What is really scary is that Apple is also entering the electronic book publishing market. On the one hand, Amazon, which has argued that new books are priced at $9.99 trillion, has had a new option with Amazon's traditional publishers, which have rubbed much of the price, to know that Apple's itunes, after multiple rounds of gaming, eventually allowed differential pricing. Even more worrying for Amazon is that Apple contracted a publisher for personal publishing services in late March smashmouth! Amazon's major innovative advantage in publishing is that individuals can publish e-books on their Kindle, without any publishers, as long as they have written a book in Word, and the conversion process is easy to use. The partitioning mechanism for, according to the actual sales author take 35%,kindle 65%, this greatly changed the rules of the publishing world. But according to Apple's contract with SmashMouth, individuals can also publish works in collaboration with Apple IBookstore, and the authors can get higher royalties--60%, while Apple takes only 10% of 30%,smashmouth. Although IBookstore is only open to Apple products, and the ipad is online soon ibooks book is not much, but the battlefield is the initiative in Apple's hands. Apple's strategy is still to sell electronic consumer products, but if one day the new product is not selling so well, if one day Apple wants to turn the sale of books into an important source of profit for the company, then Amazon will be in big trouble. (let alone a crazy Google doesn't know what to do ...) ）

Careful readers will find that in the stock chart of the previous article, Amazon and Apple's share price grew at the same rate, from the beginning of 06 to the end of 09, in 170-180%. But 10 began to widen the gap, especially in late April, and Amazon fell slightly. The following figure:

This is precisely the April ipad release on Apple's good, bad for Amazon. Amazon, with its fast-rising value from the Kindle business, will have a direct impact on the ipad for the next time in 10, and the halo around the Kindle will fade, with a 3-year 3 million and 3-month-a-3 million-strong gap; and in the E-book market, Currently, the Kindle's 9.99-dollar ebook is actually sold by Amazon (the traditional publishers charge an electronic royalties of $12), the market is still in the breeding stage, not yet become Amazon's main sales component; and in the long run, Apple poses a big threat to Amazon, and when the market is nurtured, maybe Apple will come out This piece. My crystal ball says that, starting in April 10, Amazon will be permanently suppressed by Apple if there is no new innovation.

Fortunately, Amazon, in addition to the Kindle power, also practiced a few sets of work, although not as magical as the Kindle, but also has a certain potential. First look at Fba,fulfillment by Amazon and other related businesses. Veryls has a more detailed introduction, roughly divided into the construction of large customer service, the services to small and medium-sized users (09 of the sales of Amazon 30% of the number of sold, unit sales), no longer repeat. The concern here is the amount of the total, which accounts for 09 of sales, according to the following Securities analyst estimates, the total of about 09 to bring Amazon about 500 million U.S. dollars in sales, accounting for 2% of total sales, and the Kindle almost. (Note: 12.45*20%+4.73*53%= about 500 million USD)

But FBA has developed for many years, and will occasionally lose some of the long-term cooperation of the big customers, such as Toys "R" Us, Borders, which with the former lawsuit also let Amazon lost 51 million U.S. dollars (after the GSI). This year will attract the biggest customer target.com contract expires, the current analyst expects Target solo (perhaps also change to GSI? may also be large. That would cost Amazon 250 million of dollars in revenue, or about 1% of its income of 09. The income growth seen in the previous calendar year is small, lower than the annual composite growth rate of Amazon's overall 45% over the past three years, so the impact on valuations will not be too great.

Another proof is that Amazon is engaged in FBA for many years, far earlier than the Kindle, but in the 07-09 years of a long time, Amazon stock price floating up and down in 80 U.S. dollars, changes are small, until 09q3 blowout, if FBA can also 100% Hing Hing every year, early spray. In addition, GSI has not yet proved itself, although Q1 earnings per share is still negative in the case of the highest price to 31 U.S. dollars to the current fall to 28 U.S. dollars, but the next Wall Street investment is expected to increase by up to 10%. Under such a share price, if GSI maintain the Q4 0.35 dollars of EPs last year, probably PE is almost 20+, and its sales growth in the past two years is limited. It could be an excellent business, but it's not as good for Amazon as it can have a big impact on valuations.

BTW1, look at Amazon charge up to 20% of the service charge, the domestic Bertelsmann, Wuzhou and other estimates are going to cry, when you can run so big and fat customers ah.

BTW2, speaking of Target, had a total income of about $65 billion in 08, with the figure estimated to be about 1.2 billion dollars and less than 2%. The retailer is 09 gross income of 49.7 billion, online part of 2.45 billion, accounting for about 5%. Both are online operators that are pretty good, The retailer even surpassed Newegg in 09 years. But the valuations of two companies have not risen sharply, on the one hand because online revenue growth is unlikely to be too big in the future, market competition is fierce, and the proportion of total retail sales is low. Therefore, the company is not a specific medicine, can not change the value of Suning and Gome, but will only be the impact of the online more severe, opened to ensure that companies with the times not to eliminate. The same is true of other traditional retail companies, the desire to change fate with the company, optical Amazon, retailer useless, only to learn 07-09 of Amazon can be interesting. Brand business or traditional brands to enter E-commerce a little better, especially if the latter do worse online, desperate to a fight, the line may do better, become an important pillar of sales, but at present it seems to go to Taobao to open a flagship store more reliable, independent to do the business is not so easy.

Amazon's last effort is cloud computing, and may have the opportunity to prop up future stock prices. Analysts said Amazon's revenue from cloud computing in 09 had exceeded $100 million trillion, accounting for about 0.41% of total revenue. Although it still does not affect the overall situation, but the potential is enormous. Because the industry's giant Salesforce has earned more than $1 billion trillion in cloud computing, with a net interest rate of around 6%, and three times times as much as Amazon in 09, the current PE is 130 times times +. In contrast, Amazon's cloud computing services are more infrastructure-enabled, Freeing up idle computing power does not yet provide high value-added to users, but Amazon's 09-year report says it is worth looking forward to accelerating innovation. This piece of relatively biased technology, read all do not understand, waiting for it master to later decrypt, direction.

Section1 Summary:

To be a good business, entrepreneurship at the beginning is based on the main industry, rapid development, to do the boss. The strategy of the period is not necessarily how many new ideas, just to go along with the success of the current boss of the experience, expand related product lines, optimize the supply chain and logistics last kilometer, strengthen word-of-mouth, effective delivery. This road with many is to spell executive power, spell service consciousness, you can achieve.

Big companies are lucky to be listed, and there may be a good valuation because of the rapid growth in the start-up period. Small companies can also win the favor of VCs.

However, once the market is saturated and competition intensifies, growth slows, forcing companies to excel. In order to improve the valuation of enterprises, enterprises must innovate continuously and devote limited resources to the innovation strategy which is the most effective for sales growth. Because in many indicators, such as boosting sales, raising net interest rates and raising returns on capital, boosting sales is the most scalable and can best sustain long-term growth to increase corporate valuations.

In how to innovate, platform class the consumer has a very good teacher Amazon can follow suit, Jing Dong is actually doing so, in addition to the content mentioned above, Jingdong even do their own web site Alliance, gift cards, points exchange channels, The imitation of Amazon with very tight, but also very executive power. At the same time to maintain sensitivity, any innovation in the industry to do research after choosing whether to follow up, inferior can expect. But the biggest increase in Amazon valuations, the Kindle's imitation, Jingdong does not have a natural advantage, so to reach the height of Amazon, Jingdong also need to go out of the different innovative road, otherwise its PE in the long run may not reach 40 times times. Newegg is even worse, given that its US growth rate has slowed and irresponsible speculation may be only 20-30 times after its IPO. And when it came to the current range of business and sales growth, it would be a little better to be listed on Nasdaq than the new egg.

Brand class Consumer Although the model is different from Amazon, it is just on the way to Apple and the Kindle, you can take Apple as a teacher, think about how to launch products that subvert the market. And in how to raise net interest rate this piece, Section2 will have more elaboration.