E-commerce in China's tenth Year of development

E-commerce in China's tenth year of development, the Chinese market ushered in the era of online shopping blowout. In just a few years there have been thousands of corporate shopping sites, and companies that have relied on a vertical category to gain a foothold on the market have also begun to pursue the dream of "Wal-Mart" online.

However, when the business logic encounters the real operation, the problem will follow: Supplier management, inventory, logistics problems, background system challenges, consumer experience maintenance ... How will they respond?

Cross-border games for vertical Business-to-consumer

Excellence, when the site is no longer just selling books, Jingdong Online mall is no longer a simple online 3C professional stores, red children are starting to operate products other than the mother and child, and even to sell shirts started from all customers sincere products also sold home supplies ...

Vertical business-to-business Transformation is the result of the interaction of consumers, merchants and markets. In this regard, Dangdang Vice President Chen Tenghua's view is: All aspects are ready, vertical nature will be integrated transformation, which is a subjective and passive dual role of the process.

However, the transformation of the integrated Web site is always around the topic of profit. Dangdang founded 10 years, 2009 years before the official declaration of profit. When the experience is representative in the field of business. In the logistics, payment and other e-commerce supporting system is not perfect market environment, standardized books and audio-visual products are the easiest to adapt to the market. But books and audio and video of the soft rib is the user's low unit price, profit margin is not high. Only, initially for and offline channel competition, online sales should not actively reduce profits to attract traffic.

But when the traffic increases to a certain extent, the user's demand also begins to diversify. Increase the variety, can obviously increase the conversion rate of flow, can even increase the customer unit price.

Jing Dong Online Mall from IT products, to mobile phone digital products, and then to home appliances department stores, in order to increase the product line, category profit margins are also gradually increasing. Xu, vice president of Jing Dong Online Mall, interprets the decision-making process of the integrated transformation and thinks that the consumer needs should be put in the first place. Consumers on the site will have search behavior, the search represents the needs of consumers, in other words, when consumers in the Jingdong Mall on the search for home appliances more frequently, jingdong Online mall will naturally expand the category of home appliances. Trying to meet the needs of consumers is almost all of the transformational motives of the consumer, who will waste traffic?

Business logic is interlinked. Although Wal-Mart boasts a low price every day, consumers ' shopping list is often more than just the products that make special offers. In the case of excellence, as an example, many bestseller discounts are very low, but if the same user buys a book at the same time, but also buy a lot of high margin products, the overall profit of their customers will certainly improve.

Jing Dong Online shopping mall regardless of 3C or home appliances products, although the customer unit price is high, but users repeat the purchase rate is low. and daily necessities, in addition to high profit margins, the user's repeat purchase rate is also high. Whether it is advertising or any way to attract traffic to attract users to the site is a cost, but any mall does not want users to buy things only once. It is also a good way to increase profit margins if you can convert old users of Jingdong online shopping malls to purchases of daily necessities. Therefore, the vertical consumer transformation of a comprehensive category of websites, profit is one of the important business logic.

But the business logic meets the reality the operation, the difficulty then will follow. It is hard to imagine how book buyers face cosmetic suppliers, and how buyers of digital products and food suppliers negotiate is a test. Books will not have shelf life, but food for the shelf-life requirements are very high, 3C products can be stored at room temperature, but cosmetics need the storehouse of low-temperature and humidity environment.

In addition to supplier management, there are inventory, logistics problems, the original standardized bookshelf, now to store a variety of irregular products is difficult to imagine. Jingdong Online Mall The original largest volume of the product is a computer chassis, but the face of large household appliances, warehousing and logistics is completely another appearance. Xu told the "China Business newspaper" reporter a Jing Dong online mall initially do home appliances encountered embarrassment: A county in Guangxi, a township users bought an air-conditioning, the results of the shopping mall in Beijing east of the cost of goods nearly spent 1000 yuan.

The network is just a sales platform, involved in the supply chain, that is cross-industry. In the interview, the reporter found that, whether it is excellent Amazon or when, or Jingdong online mall, red children, in the process of expanding the category are the first to form the management team, and from the traditional enterprise mining talent is a fairly consistent practice of these e-commerce enterprises.

In addition, the face of SKU (minimum inventory unit) of the huge growth, hundreds of thousands of or even millions of categories of products, for the background system to form a huge challenge, upgrade ERP system is the company in the expansion of the category of the compulsory. In addition, the increase in warehousing, expansion of logistics centers to speed up the supply chain response speed is also the goal of the home. Because it takes only 1 seconds to move from one mall to another in a borderless internet, competition in the future is a consumer experience, and the consumer experience is a key factor in retaining the user, as we all know.

Transition Strategy A

When: Affiliated sales + investment joint venture

Dangdang, who started out as a book, was the first company to try many categories. Dangdang Vice President Chen Tenghua that, from vertical to integrated business, not artificial subjective factors decided, but need upstream and downstream industry chain, payment, logistics and other links are ready.

Dangdang in 2004 began to try the department store products business, but at that time, does not sell brand products, only Dangdang OEM products. At that time, the supplier of network channels have not fully recognized, operating brand products is not realistic.

With the development of E-commerce, user needs in the change, especially to 2007 years later, the transformation of the general category shopping site almost become inevitable. For example, Dangdang purchase mother and child books of the customers of the mother and child products have corresponding needs. The children's book is Dangdang on the sale than the larger bookstore, these customers on the child-like department store products are also demand. "Chen Tenghua said.

By studying customer needs, in the foreground array, Dangdang excavation of the book category of joint sales advantages, one of its strategies is to book reference books related products cross array and recommended display, such as in the Mother and child category, children's books display, you can see the mother and child products in the display, linked to each other. This will achieve joint sales, can significantly increase the customer unit price.

However, it is not easy to transfer from books to General department stores. For example, books in the inventory has no shelf-life restrictions, there is no inventory temperature requirements. But the daily necessities category products are completely different, food has shelf life, cosmetics on the stock has the temperature requirements, daily necessities products involved in each management process is completely different from the book. Lack of understanding of upstream suppliers is the biggest weakness of e-commerce enterprises.

Although electronic commerce, but electronics is only a means, once involved in the retail industry, the formation of traditional retail industry procurement team is to support the development of E-commerce is an important strategy. Digging people from traditional retail is the biggest preparation for Dangdang. Chen Tenghua introduced, the current Dangdang of a VP (Senior Vice President) has been Wal-Mart's procurement director, by his special set up a daily necessities procurement team.

2009, Dangdang United President Guoqing said the Department of General merchandise accounted for 30%, 2010 This data was adjusted to 50%. Based on this goal, the expansion of the category is Dangdang next efforts to the direction. But Chen Tenghua frankly, to achieve the one-stop Dangdang shopping, each category is set up their own team is not realistic, the best way is to work with the outside professional cooperation, which in the form of Dangdang is called Shop Street channel. Chen Tenghua called "Investment Pool", through Dangdang platform further integration of payment, logistics and other services. In other words, Dangdang uses its own user resources to work with partners. Partners can be settled through the Dangdang, but the distribution of logistics by their own responsibility. At present, the number of affiliated shops Dangdang has been nearly thousands.

One of the benefits of partnering with a corporate web site is that it can quickly expand the category, but the risks are obvious. Whether the partners can provide quality goods and good service directly affects the user experience of Dangdang itself. In addition, the reporter in Dangdang search for goods found that the results of the search for both Dangdang products, there are also from the shop Street partners of Goods, Dangdang itself and partners also exist products competition.

Chen Tenghua that limited internal competition is seen as a strategy, not a risk. The key to investment cooperation is the choice of shops, because to protect the user experience, the first choice is brand manufacturers or brand products agents shop. Dangdang can not each product to each other warehouse inspection, because, the other side of the sale of branded products, they require the other party to produce brand-name product authorization documents to ensure product quality.

Transition Strategy II

BEIJING-East: Brand communication + mergers and acquisitions

At the end of January 2010, Jing-dong Online mall received more than 150 million dollars of venture capital from Tiger Global Fund, and in March, its chief executive, Liu, announced a discount loan of 500 million yuan from the government. The capital of the Beijing-East Online Mall from the 3C Professional store transformation of General department stores also have a capital-driven characteristics.

March 17, Jing Dong Online Mall announced a high-profile sponsorship of the super. In Jing Dong Online mall vice President Xu View, this is a large-scale marketing communication input. Jing Dong Online shopping mall has done some precision marketing, effect marketing, but in the brand marketing little investment, the sponsorship of the super is the dissemination of the first war.

Jing Dong Online Mall main business is 3C products, its competitors have other e-commerce companies, there are similar to Gome, Suning line chain giant. Brand communication can not only give users confidence, but also to the supplier with confidence. Because the current 3C products are mainly based on large brands, only Jingdong Online mall has become a big brand, suppliers can be more influential.

In addition, Xu that the expansion of department stores, more suitable for marketing activities, such as the use of sponsorship in the Super this opportunity to enter sporting goods category. With sponsorship in the Super, Jingdong Online mall is going to open their own in the supermarket. This highly provocative move immediately attracted a large number of suppliers, such as in the last two years, the taste of the network sales of Li Ning to the Jingdong Online mall opened a very favorable terms of cooperation. In sports category sales, the successful marketing campaign to the Beijing-East Online Mall in the face of supplier negotiations become easier.

Xu said that the Beijing-East Online mall so far has accumulated 7 million users, of which the proportion of male users 70%~80%. 2009, Jing Dong Online mall sales of nearly 4 billion yuan, 2010 target is 10 billion yuan. Therefore, effective brand communication can gain a wider range of users, thus resulting in a rapid increase in turnover. Sponsorship of the super, sales can be with the Super game to pull a certain area of sales. For example, Chongqing, Xi ' an is more than fans of the region, but also the Jing-dong online shopping mall needs to exert the area of marketing.

3C products have advantages over those of daily necessities. The former unit price is high, but the price fluctuation is very fast, the user repeat buys the rate to be low, the gross margin is also low, the latter although the gross margin is higher, the duplicate purchase rate is high, but the return rate is also very high, moreover the daily necessities irregular goods many, the inventory loss also is At the same time insiders, although Jing Dong Online Mall has formed a 30-person daily-use category management team, but it is impossible to master all categories.

At this point, the acquisition of a large-scale, characteristic of the Web site is an effective approach. March 11, Jing-dong Online mall announced the acquisition of SK Telecom's Chihiro network, Chihiro nets to clothing, shoes, hats, jewelry and other fashionable goods, with more than 300 independent suppliers, 270,000 of goods, the main user group for women. Xu told the "China Business newspaper" reporter, Jing-dong Online Mall to male consumers, while the search nets just the opposite, and the search network involved in the overseas purchasing, customs and other business is Jingdong Online mall has not known before. The acquisition of Chihiro Network has expanded the category, but also the customer base can be studied. At present, the team is still in the running-in period, the first network of thousands of business teams and Jingdong online Mall team integration, and then carry out other business specific planning, expansion.

It can be imagined that the acquisition of thousands of search nets is more like the Beijing-East Online mall more than one category expansion of an experiment. This experience will become the Beijing-East Online Mall in the future to expand the acquisition of integrated department stores to provide reference. Xu said that the next Beijing-East Online shopping mall will have a series of acquisitions, to take the acquisition to expand to unfamiliar areas will be Jingdong online mall long-term strategy.

Transition Strategy Three

Red Children: Tapping the needs of home users

As a mother and child shopping site, red Children's biggest advantage is that members are the main decision makers of home shopping. "Red Child senior Vice President Chen Yu believes that the first red children's shopping group is mainly expectant mother or mother group, baby products, such as milk powder, diapers, etc., which is characterized by the frequency of consumption is very fast, which let red children have been very focused on the speed of logistics, in the country to establish a warehouse and their own logistics center.

Mother-level members in the childcare period will be frequent shopping, the site stickiness is very high, so the Red Child category expansion revolves around these families to buy decision makers consumption characteristics. In the category mentioned by Chen Yu, the emphasis is placed on cosmetics category. In the eyes of red children, the mother-level buyer's personal direct demand is cosmetics. Because the cosmetics international brand for the network channel attitude has been relatively vague, and mother-level customers due to put more energy on the children and the family, the demand for make-up is very small, so red children in the cosmetics category to adhere to the main skin care type of some young brands.

Food is another important category of home shopping. Many web sites are not good at food operations because the essence of food is fast-moving consumer goods, with strict requirements for shelf life and inventory conditions. Red children from maternal and infant foods extended to a variety of other categories of food, regional is its important strategy.

Chen Yu that the food in China's regional characteristics are very strong, such as Guangdong people like to burn in the north may not have the market, Sichuan people like chili sauce, in Shandong's purchase rate is very high. The way red children adopt is local sourcing and local inventory. Those products that are mainly consumed locally are stored locally, thus reducing the overall logistics cost.

When the website chooses to display the category on the shelf, also adopt the principle of regional discrimination, such as a customer in Beijing, he saw the page or recommended to his product portfolio and the Guangdong customer's product portfolio is different, so as to increase the customer unit price, but also at a lower cost to expand a variety of products.

Multi-category expansion is not a product. The winter of 2009 on the Red Children's website, a Xinjiang and Hetian JuJube sell very well, and the product in the supermarket channel is very difficult to see. Chen Yu said, red children in the country has a number of branches, branch of an important task is to buy some usually difficult to see in the traditional channels of some special products.

Transition Strategy Four

Amazon: Brand Monopoly ten system upgrades

Excellence was originally a book, the comprehensive category is bought from Amazon began to dabble, the first choice to enter the department of the category is mobile phones. Excellent Amazon President Wang Hanwa explanation is: The logistics is not developed at that time, small volume of goods more convenient transportation.

Another reason to start with a cell phone is that the unit price is higher. At that time, book products stranded in the customer unit price and gross margin are relatively low, into a higher unit price products just can make up for this shortcoming. To the delight of Amazon, the mobile phone, which has a unit price of three thousand or four thousand, is selling pretty well.

Amazon from the beginning of the mobile phone, expand to digital cameras, cosmetics, watches and clocks, a principle of category expansion: Small size, easy to transport.

Then, when the Amazon became an American company, the integration route came with Amazon's style. In the domestic, many websites in the category expands most is from the household product and so on the brand concentration degree not high the category starts, because this kind of product gross margin is relatively high. In addition, brand products are often more stable traditional channels, by its traditional channel policy tired, the network channel Open posture is also relatively alienated. But Amazon's first insistence on expanding from branded products. Wang Hanwa that for excellence in the Amazon, the supplier of small-scale products, although the high margin, but quality control, qualification management and so difficult, the business quickly access to so many categories of product expertise is more difficult. But like the brand mobile phone, no matter from the quality or after-sale, do not need to do how much homework, the first category expansion principle in addition to small size, the most important one condition is to adhere to brand strategy.

Wang Hanwa Tan Chen, at the beginning, the brand product quantity is small. Excellent Amazon in cooperation with the supplier of constantly brainwashed. Slowly, some brand suppliers are willing to cooperate with the superior Amazon.

Perhaps the American Amazon's influence on some international brands. At home, Amazon's ability to convince international brands seems stronger. With the rapid development of E-commerce market in recent two years, some international brands have been laying out e-commerce channels. Excellent Amazon brand brand for the launch of professional shop services, such as Procter and Gamble, L ' oreal, Apple and other stores have been opened.

Although more than 500 items are visible in the Amazon's Procter and Gamble stores, Wang Hanwa emphasizes that Amazon has done its own work from online sales to inventory distribution. In the view of Amazon, the core advantage of these brands is in product development, brand building, channel construction, the last kilometer for consumers distribution capacity is relatively weak. Therefore, the role of the Amazon is more like a distributor than a store counter rental. Wang Hanwa made it clear that the consortium model is not yet considered as an excellent Amazon.

The ability to convince international brands is, in a sense, an excellent Amazon system. To cope with the increase in the number of SKUs, Amazon's exclusive weapon is the world's leading IT system. Excellence Amazon in the expansion of the category at the same time, constantly upgrade the system, 2009 system switching has been completed. All the processes that consumers shop through are automatically calculated and distributed by the system. Consumers under the order, the system automatically calculates the most economical and efficient distribution warehouse, the product is issued by the warehouse, for example, the product recommendation on the page is based on the system for such consumers of the consumer habits of automatic calculation, such as expedited orders, the system will automatically identify and priority to enter the distribution delivery process. Unlike other logistics centers, Amazon's inventory is placed in random order, the system automatically records the location of goods, the distribution personnel hand-held distribution terminal system to automatically calculate the optimal route for distribution, and so on, all the problems are solved by the system.