Cross-border reasons for the extension of the territory by the electric trader: The pursuit of scale-driven expansion boundary

Where is the cross boundary?

From the book-oriented network mall, expanded to home appliances, food and other categories of comprehensive platform, and then recently said that will again launch their own clothing brand, Dangdang is constantly exploring new areas, this can not but say is a "cross-border."

Such "Cross-border" is not uncommon in the field of electronic commerce. BEIJING-east from the beginning of 3C, has been involved in books, home appliances, food and many other fields, labeling the mother and child supplies of red children, has long been open to sell home appliances, food and cosmetics; even suning easy to buy also entered the mother and child supplies market;

With the rapid development of internet shopping, especially the business of the consumers, many vertical electric dealers have transformed into "department stores".

Continuous happy enclosure to all-inclusive mode of development, the network scold war, advertising war, price war. Analysys data show that the overall scale of China's online retail market to break through 800 billion yuan, but why most of the dealers in the loss side regardless of long-term strategy to open up the territory, the boundary of the electrical business across borders where?

Reasons for cross-border extension of Xinjiang

For when the expansion of its own clothing brand, Shanghai Jiaotong University professor Yu Mingyang to the "first financial daily" said: "Success rate may not be optimistic." "There are many failure cases in the entity retailing, such as the communication industry turning into the middle of the garment industry, and the brand extension strategy of different industry grafting has not only brought new profit growth point, but gradually eroded its advantage in the field of communication."

In fact, this is not when the first attempt to launch its own brand, as early as in 2007, when modeled after PPG and Van Bondstreet model launched the brand, but soon the offline. Analysys International analyst Shou that when the project is restarted, there should be more preparation.

But in his view, the private brand clothing and electric business platform model is completely different industrial chain mode, whether it is the form of outsourcing, or set up its own design, play version, production and other teams, do clothing is obviously not when the good and familiar.

But from the point of view of boosting product profitability and reducing order operating costs, Chenqing, an E-commerce analyst at Kearney, said it was understandable when looking for higher-margin growth. Private brands have tried in traditional retailers, and their profits are much higher than the traditional retail models such as joint ventures and consignment sales.

such as Watson's own brand (including Watson's own brand and Watson named Products, and Watson's exclusive agent brand) commodity system development is the most outstanding, including skin care, bath, hair care category, such as more than 2000 kinds of goods, sales accounted for Watson's total sales performance of 15%. Carrefour, Wal-Mart and Tesco and other large foreign supermarkets own brand system has been relatively perfect. "The key is to be prepared for the risk of supply chain management and inventory management," he said. "Chenqing said.

Pursue the drive of scale

2011 Day, every guest CEO aged came to the warehouse, in the corner he saw a pile of mop, then furious, "who will buy a mop here?" Last year, where the category expansion to an alarming extent, not only stockings, masks, canvas shoes, even kitchen knives, dishes, mop, electric hotpot are all beginning to sell.

Several proprietary web sites from the focus of a category to the road to expand the category, Yu Mingyang that the important reason lies in its behind the capital forces such as investment, they pay more attention to growth and size of the imagination space and short-term profit demand, but also promote the power of the scale and speed of the pursuit.

The relationship between quantity and quality of retail trade lies in the fact that the quantity is too small to be a market, but it is difficult to form. Yu Mingyang said that in order to see how companies choose the strategy, if they choose a more vertically narrow areas, they need to add more value, and if the choice of a broader and faster category strategy, the enterprise's supply chain management has higher requirements.

"There is nothing wrong with the pursuit of scale and growth itself. Zhang, general manager of the company's marketing strategy consultancy, said that the mistake was to replace the strategy and get bogged down by unscrupulous growth. The simplest way to achieve growth, if left out of the strategy itself, is to sell more products at the expense of profits, by selling and expanding the category at lower prices, which is what domestic electricity dealers are now doing.

In fact, from the strategic point of view, the expansion of the category and lower prices, the two themselves are inconsistent. Brands that focus on the category are more likely to gain credibility, and even with the same quality of cosmetics, consumers believe in the music bee rather than the time. Moreover, a brand that dominates a particular category is more likely to have a negotiating voice, making it profitable at a lower price, rather than winning the market at the expense of profits. In his view, the electricity business to expand the category, will only cause vicious homogeneous competition.

"Europe and the United States generally only the last 1~3 of the entire category front of the comprehensive Electronic Business platform." "Shou that more other electric dealers need to make their own characteristics in their own vertical areas, but also through a mature platform to show their own."

Expanding borders

Compared with the traditional retailer, the electric dealer expands the business category faster. Chenqing that this is because the electric business investment restrictions, the platform to expand the category after the cost of low, but in fact, blind expansion is also more likely to damage the brand. Just like Fank on behalf of "clothing" but the sale of MOP, a brand trying to represent the more things, the strength of the brand is weaker.

Ais Riss, chairman of the global marketing strategy consultancy, believes that the key to survival in the industry is to "create category, focus category, leading category", because the brand's competitiveness and profitability are derived from leading a category. and positioning needs to have a long-term clear planning, at what stage to form what image. Every customer from the original T-shirt products gradually expand to all kinds of clothing products, dream Bazaar from the initial positioning of women's underwear gradually transformed into a female supplies is a more successful transformation.

In the field of retail electricity, domestic electricity dealers will be the world's largest E-commerce website Amazon as an example to start with books, Amazon has now successfully extended to hundreds of different business areas. But Zhang that the cost is extremely high: first, the cost of long-term losses in the 78, followed by competition for professional vertical websites, which have had to pay dearly to buy these sites, such as the latest in a 500 million-dollar purchase of paper diapers by the electric dealer diapers.

"The boundary of expansion is that to differentiate the advantages of competition, sustainable competitive advantage can bring about continuous profit improvement." "In his view, Amazon could have done better by enabling new brands to build new sites when entering new categories, rather than" Amazon "branding. and domestic electricity dealers, like Amazon, will pay more than Amazon. Because China's competition is more brutal, the bigger the market, the more intense the brand differentiation.

In the fierce competition in the field of E-commerce, must have a clear and accurate market positioning, can occupy the user's mind, so that users think of a certain kind of products, the first time can think of the site. Zhang that focusing is a good choice.