Analysis on the problem of O2O in home electric business

(This article is April 20, 2014 in China Building Materials Circulation Association and NetEase Home co-sponsored the "China Household Industry O2O Conference" on the theme speech transcript, slightly edited text. ）

Good afternoon everyone, first of all thank the organizers of the conference, let me have such an opportunity and the Chinese Building materials field of the elite in the exchange of household electricity.

Today I mainly talk about three aspects of the content, first, talk about what is O2O. We're talking a lot about O2O now, but what exactly is O2O, everyone who understands what everyone wants to say or what everyone wants to do is different. So first I'll talk about what is O2O. Second, I talk about some of the problems in the O2O process, the common problems. Third, the traditional enterprises how to do O2O, this may be our most concerned about the topic.

First, talk about what is O2O. About O2O, I generally talk to you when they talk about O2O may be a topic of no result, because all the O2O, all kinds of O2O come out after everyone's understanding may be different. Beauty Lele Hao, qi Jia Net Hao, are called O2O, even including online payment also called O2O.

What is O2O? Today I'll tell you how we can understand O2O. I think, understand O2O also start from the Internet, because have the internet to have the electricity quotient, have the electric quotient only then O2O.

What is the nature of the Internet? I summed it up as a networking information interaction. First of all we talk about the Internet it is to provide information, no matter what kind of information, text information, video information and so on; the second feature is interaction, its vitality lies in its interactivity; the third is the networking, formerly the PC, is now moving the end of what we do not know.

If we take these three features to see the Internet is very simple, is the networking of information interaction.

We again from the networking information interaction to see what is the electricity quotient. When it comes to electrical business, the first concept we think of is that we sell things online. I have always thought that selling things on the internet is not a characteristic of the electrical business, or even a major feature of the electrical business. I call the electric dealer who sells things online as a traditional electric dealer or a 1.0-version electric dealer. The development of the Internet is very interesting, we all from the perspective of traditional enterprises to see the current development of the electric business, we go into the electric business industry to see the word is now the electric business industry has a traditional electric business.

Ma Yun is a big banner, but Ma Yun is now moving behind, he now desperately want to build O2O, but I think he built up, like our traditional to do the electrical business as hard, he will be very difficult to build O2O, and later we analyze why. So we have to understand what it is that the electricity business has to go back to the nature of the Internet.

What is an electric dealer? I summarize two points, one is the user and users of the network information interaction, the second is the user and merchant networking information interaction. If we grasp these two characteristics, the content of the electric quotient can not be separated from these two information interaction. The electrical quotient is actually the two information interactions we are talking about.

How does information interact? What kind of information interaction do we have? This is also very interesting. We can do it through social networks. With such a concept back to see the success of millet, are said to be the internet thinking, rice noodle participation, but we grasp the concept of the electrical quotient back to see that the user and users of the social interaction between the information, users and merchants information interaction.

Some people say that without social power, the core point of the future is not that we sell things, but that we are interacting with the user's information.

Home electric business marketing chain. I put this concept forward for a long time, the model came out as a straight line, and then I put it round.

You see, this diagram is actually very interesting, although very simple, it describes the consumer of the entire consumer process, looking for what kind of home improvement Company, where to buy building materials, buy what kind of building materials, what price and so on information, and then to shopping, after-sales service, customer service and so on.

I divided the picture into two colors. Where the blue represents its information flow, which is what I just talked about the core of the electricity quotient: information interaction. Yellow indicates the function of our traditional channels.

We can see a lot of things from this picture. First, after the development of our electric business, the future of our industry should be the theme of home decoration, because regardless of building materials or furniture, is a part of the process of home improvement. So at home we can really understand what consumers need. Therefore, the whole environment after the home decoration consumption, domestic consumption we have building materials sales, we have furniture sales, this is the first concept.

The second concept, which explains what the electrical quotient is. We now talk about electricity business, is in Taobao Jingdong opened a shop, we are the electrical business. And we are here to see the electric business is to expand the traditional channel marketing connotation and extension. Extension of its outreach is a more than a propaganda channel, a more than a sales channel. But the connotation of its expansion is often neglected by us, which is what I just said about the user's need for information.

I refer to this information as a precursor shopping guide information. Why does Merlot grow so fast? Why does Qi Jia net develop so fast? How many people will not go online and search for this information in a year when we do the renovation? The search for this information will eventually form the traffic entry for our entire home improvement industry. This traffic is equivalent to a few years ago when we surf the Internet, the first time we go to Baidu, we search for information.

Therefore, as a traditional enterprise in the consideration of the electric dealer, the first thought is not how much sales of electricity, but from a strategic perspective to consider the electricity quotient: how can we occupy such a strategic commanding heights? This is our most fundamental consideration of the electrical business.

Third, from another point of view we can see the concept of Electricity Quotient 1.0, O2O is actually the electric quotient 2.0, so that everyone can easily grasp the essence of O2O. We turn the top into a circle and turn the following into a circle, which is a O2O. In this way we are no longer an abstract model, but essentially understand what we O2O should do.

I just introduced the O2O with a simple model. This model includes buying, paying, and customer service. We are now talking about mobile payment must be O2O, this is to make payments to these enterprises to do one thing, pay can be online or offline. We do not have a closed loop in this model, closed loop is the site for their own creation, I'll talk about this concept later.

Simply review what O2O really means. We repeat, starting from the nature of the Internet is the networking of information interaction, networking information interaction constitutes a consumer demand for online information, so there is the electricity quotient. The further development of the electric business, we must come down under the line, because we just said this piece, must be wired under the co-ordination, so in this case we have a O2O.

The concept of O2O is very complicated. For example, from the beginning I think that the line of the Express is a part of the O2O, we do not think is, because the concept of O2O is very behind the development. I then summed it up as a O2O pattern. The service under the home electric Business Line is served by the third party, this is called the non-experiential electrical quotient. This is also a kind of O2O, and this is also a market, this market is absolute existence. From the development of home electric business, I mentioned in a seminar in Haier that through three aspects to strengthen: the first is the brand of products, if I trust the brand of this product, my experience of this product needs will be reduced, the second is the standardization of product materials. After setting these standards, I know that the sofa is soft and hard, once the standard comes out, I know; the third is the standardization of after-sale service. With this model, the O2O market can grow. Of course this is not the mainstream, mainstream or to the physical store experience O2O mode.

The second part is mainly about some problems in O2O.

We are often referred to some problems in practice, either by some suppliers or by some consulting firms. These questions should be clarified in our practice first, and then we will see how we do it.

Why O2O? First the line to come down, if it does not come down, its development is hindered by bottlenecks. Second, as our home industry, we all know that O2O must go. The beauty Lele grows so quickly, is because its pattern all of a sudden has gone through.

I define O2O as a business process. How to see O2O? And how to construct O2O? From positioning, from the perspective of understanding, I see it as a process. Beauty Lele O2O is online drainage, online experience sales. Very simple process. Later I will say, in fact, the United States Lele has surpassed the electricity quotient 2.0. QI Home Network is also online under the line group buy sales. But the pattern of the family net is totally different from that of the beauty Lele.

Seeing O2O as a business process, we can solve a lot of problems. O2O in the design time to have a judgment standard, in the end O2O need? We sometimes do a o2o for O2O, we forget what the purpose is. In fact, the essence of O2O is that we need to improve our core competencies.

I'll start by talking about O2O this process. With this concept, it is possible to analyze the circumstances under which O2O can exist.

Because O2O is a business process, this business process must be a whole, must be a combination of line online, the second must be a business process, is a line down, not two lines. For example, we can judge a lot of things by the concept of O2O. such as the day cat and Yintai cooperation. I think this is a business process isomorphism concept, isomorphism is the most fundamental concept. For the current, I think the most important thing is the cost structure, the cost structure of the electricity quotient is completely different from the cost structure under our line. If this cost structure is not the same, the line of an O and line next o is not add up, it is impossible to form a business process, O2O doomed to failure. For example, the cat has long been doing home o2o, called Love Honeycomb. Yesterday, I was with a friend of beauty Lele to examine a bit, desolate. The reason is that its offline experience shop cannot be isomorphic to the cost structure of the cat business process.

Beauty Lele Offline If you do not make money, it is impossible to invent today's model, offline mode, so that it can increase the space rent to overcome. This includes the distribution of benefits, the cost structure includes a variety of costs, is actually a benefit distribution problem. The traditional enterprise does the electricity business to have the cost structure the question, the benefit allocation mechanism is not good, if we take it as a business process to look very thorough.

O2O need a closed loop? Let's take a look at this closed loop. Actually last year when the double 11, we are familiar with the core of the link is the day cat to take the POS machine to the offline shopping malls to collect. It's going to be a closed loop. Do you think consumers need to do a closed loop? All the people who lift the rings are 1.0 of the electric dealers doing this. He wanted me to do the O2O and collect the money again. If from the consumer's point of view, our payment can be online can be offline, for consumers is no difference. So everything should revolve around the needs of consumers.

The cat recently made a new O2O strategic deployment, to help the brand to get through the line, and then pull the members online, the money to the line. This problem is very important, the concept of closed loop puzzles the whole O2O development. We talk about so many mobile payments, in fact, is the electric business standing in their perspective to promote. This is another question.

Most of our traditional brand enterprises are doing electricity business, but do the electrical business only to establish a business sector, we operate on the line of product prices separate mechanism, I call it a dual-track, more than a year ago I first proposed the concept. Online and offline are two business processes that cannot be connected. Everyone think about it, double 11 when the O2O line under the World War, we generally talk about online and offline game. Not really. This is the line of the days of the cat chariot and the line of the channel between the game, the real hit is the line of the brand enterprises and offline brand dealers. I am online, the cat has shops, online channels have shops, I can do O2O.

So the O2O of the cat, I think if it does not change the way of thinking must not go down, even now the structure of the cat is also hindered. Cat has a home improvement E station, it seems not good, mainly selling design, but we do design this piece of domestic decoration is not to sell money. From our most fundamental structure, the whole mall's structure is no way to land, the cost structure may be the most critical problem.

Where's that o on the line? I raised this question today. Our traditional business to do O2O, where is the line O? No one answered the question, and I don't actually see where this o is, not yet. Everybody does O2O, where is the line O? The cat said I was the one on the line, and it wanted to be as close as possible to that O. As a new channel, such as Qi Jia Net, beauty Lele, is very small, although the trend is very good, but it can not bear so many brands on the line that O. This question may be the most important question I have to say today: where is that o on the line?

After talking about this question, our question is what do we do in the case where the O is not on the line? How does home enterprise do O2O? This is the third part of today's share.

I just said that the electricity quotient, 1.0 edition is the pure online electricity Merchant, 2.0 edition is O2O, including the day cat line sale plus the line third party service's this mode, but for most household enterprises we are still groping, before a person walks through. I just said the type of pass is down from the line. In this case, we only have to explore where we are, the current online o is not the case of how to do the electricity business.

The idea of the development of the electric business in the traditional enterprise I formed a year ago, written in the recent. March 17 at the Dongguan Furniture Fair when I made a speech, I first openly put forward this concept: four basic principles. This four is a basic program to guide our electrical business development. I have self-confidence, if you think back to look at this four, see through the no problem, at least this direction is right, as far as to go to see the executive power and investment.

Before we talk about the nature of the Internet, we propose a basic concept of information interaction, which is actually a direction. Four, I summed it up to four points, a fundamental purpose, a core business, an organizational change, a lasting war. I answer the question of the development of home enterprise all around these four points. Now everyone is doing electric business, why do you want to do electricity business? Many companies that do electrical business are doing it blindly, are we just doing electrical business to do electricity business? Let's go back to the question: what do we do for electricity dealers?

I am here to say a fundamental purpose, which is to enhance the core competitiveness of the enterprise in the future. To firmly grasp the purpose of enhancing the core competitiveness, from this perspective to think about why do the electrical business. Now, our most common situation is that after 2012 years of Double 11, many companies are considering how many goods to double next year, but after 2013 years of double 11, more enterprises are considering what we have in addition to the day cat. We found that doing the electricity quotient is not incremental, this is very bad thing: we do the electricity business is booming, but the calculation is no increment. One time I proposed to our home business of the electric quotient of the dual track must be a transition, it is the transition after the future is what it looks like, we do not know. Then we must adhere to the fundamental purpose of the development of electric business, that is to enhance the core competitiveness of enterprises.

A core business, which is critical. Our core competencies must fall into the core business. What is our core business, the electrical business? Certainly not, most of the business sector in the meeting when all the people do not talk about electricity, only the electric business sector talk about electricity. This is terrible! Because if you do that, your traditional business will grow by 100% or 300% a year, but your traditional business is shrinking day by day.

What is your core business? The fundamental development of the electric business is how we can make our traditional business more powerful in the future through the electronic commercial. As a traditional enterprise, the Internet is a challenge, the other is a big opportunity. But be sure to identify your core business.

Determine the core business after how to do, this is an organizational change, organizational change is not to say just set up a power business sector, a few years of sales to complete the line. No, it is the change of the whole organization. A little more thorough is called the Internet of enterprise.

The internet includes a lot of content, is a culture, traditional enterprises do home, they look at the market is completely different, they treat the standards of consumers are different, this is the problem of corporate culture, organizational structure. Your organizational structure must be able to meet the concept of the Internet in the future, which is a gradual organizational change.

If we put the electronic business into such a big framework for organizational change, the development of electrical business to the end of the entire enterprise to realize the electricity quotient, must be organizational change, including culture, including the way of thinking, including your business processes, your organizational structure, your cost structure, your profit distribution structure, all to change.

Finally, a lasting war. Internet is a long process. We have not yet gone to the electric Dealer 1.0 to become the Electricity Business 2.0, our Idol Ma has started to lag behind, this development is very fast. In fact, we also have the opportunity to go beyond, we spoke in the morning curve beyond, now the electric Quotient 1.0 has been at a disadvantage, the sky Cat Jing Dong's structure may not be suitable for future O2O development, now we are not likely to create better mode to go? Just now I am talking about our online o for the vast majority of enterprises is not exist, this is not a new model to appear?

In my opinion, the future of our business is definitely not like our current mall this mode, the mall down is very unfriendly. From the perspective of information optimization, there are new technologies coming in, there will be new changes, and this change is very large. Of course, it may take more effort to achieve it, even more detours to go. The Internet of our enterprise is a protracted war, only intermediate goal, no ultimate goal.

The development is too fast, now the age is already old, 00 after all come out, their changes, like face book out only a few years, behind there are instagram,whatsapp. The internet has grown too fast. The key is how we know, how to plan our direction, my side is the basic principles.

I'll talk about electricity quotient 3.0 in my eyes, which is very important to our traditional enterprises. We set out from O2O, but our ultimate is not O2O. O2O is just a temporary intermediate product, just like our electric quotient dual track. We do not exist in the company in the electric business sector, we think it is impossible to exist. O2O is also, our end is integrated, line online integration.

I will do an example of beauty Lele. March I went to Shenzhen to participate in a CITIC Securities O2O Seminar, a big help fund managers in the tangle of beauty Lele is online or offline sales, I replied that the United States Lele is online under the integration of the line.

I said earlier to simplify, to O2O as a business process. From the consumer point of view, consumers see the United States music music will be divided offline? Let's have a look. First of all, I passed Baidu into the United States Lele website, when the United States Lele reception My shop is the second is the experience Shop shopping guide. Is this a line or a line? I went to the store, after reading, a lot of products are not displayed in the shop, I want to go back to the line to see, back home I also want to carefully discuss the site with the family information, and then go back to experience shop. When I finally in the beauty Lele experience shop through the computer in the Beauty Lele website to order the time, you said this is the line or the line?

It is a business process that is integrated. So I said the future must be integrated, which day we figured out, standing in the consumer's point of view, do not split line under. The more we look at it, the more we find it. It's simple: hold on to what your goal is, what your core business is, and then you have to do a whole organizational change.

What does the enterprise do now, want to do O2O words, the line O and not, in the end do what? This is one of the things that every business, including our channel, has to do at the moment. If you do this is not wrong, that is to build line under the integrated business model.

We may not think at once, what is this concept? We have cable on cable. There are days on the line cat, Taobao, Jingdong, Suning easy to buy and so on these channels, and even now the United States Lele, Qi Jia Network also began to recruit platform enterprises. We also have the traditional channels under the line, online under the dual-track. The problem now is that it's dynamic. At present, the process of development of this channel has been changing. Traditional channels are also undergoing change, what is the future of this transformation? We are not quite clear. We will continue to optimize the distribution system in such a dynamic channel change process, you have to walk in front of others. This is the actual organizational change.

We must make the integration of the distribution system clear, we must be based on a specific situation to plan. Fall to more implement, that is the terminal reengineering. That's what every business has to do. I think the future of the terminal is the line on-line integration, there is physical display, there is information display, but also a combination. Now a large number of terminal stores are through shopping guide to do, your terminal information more perfect, the role of the shopping guide may become weaker, and this time through the terminal reengineering, you can collect more data, for your future marketing will have greater help. You can go to understand what I said integration is what the concept of the future terminal is what it looks like.

Future home channel development trend. I just said that we are online development, offline also want to change, this change after the trend of what it, I summed up six points, simple to share with you.

First is the line of online integration. Your final terminal is coming offline. It is unclear what the concept is on the line, whether it is a micro-trust platform or a new platform in the future. Enterprises can also build a platform, terminal platform, this terminal platform is not our line O? So we do not emphasize according to the existing pattern to set, but from our needs, starting from the needs of consumers to redesign, internet development is always so, you go to imitate is always unpromising, only innovative things can have a big.

The second is the transparency of information, clear prices, of course, with the price of electricity on the line on the transparency of a certain distance, but in any case already in the beginning to go ahead.

The third is the virtual reality interactive display. Future consumers to your store, is the information and physical reality of the interactive display.

The first is user experience. We may not feel it now, I've always said the user experience is vital to the Internet business. We're talking a lot of things, including internet thinking, about the user experience.

The five is high efficiency and low cost. The online experience shop will be smaller but more efficient.

The sixth is the difference, in our future channel positioning, take the United States Lele with the home network, their positioning is very different. The future positioning will be very fine, competition is very cruel, as a brand, the future will also choose channels. Some channels will cause great difficulties to the operation of the brand.

That's all I'm saying today. Thank you!

Tang people, home electric business practitioners and explorers, focused on the traditional household enterprises in the development of electric business strategy and implementation. More articles, please Baidu "Chinatown home Electric Dealer."