Electrical Business Growth trouble: "Money" bad profit curse still no solution

How long can the electricity dealer's money burn?

"Jingdong's money is only enough to burn to August and October this year. "March 22, Dangdang CEO Guoqing said that after the money has been depleted, Jingdong Mall will have to continue to seek financing or to the U.S. listing."

Dangdang and Jingdong Mall always do not deal with, Guoqing and Jingdong Mall CEO Daiju East also frequently staged saliva battle. Not long ago, Jingdong Mall said the company capital flow is very healthy, not eager to find a new financing, and said 2013 years ago not to consider listing.

But in the industry's view, guoqing is not alarmist. "Which appliance dealers dare to say that they are not lack of money?" Moreover is still the loss has not listed the Jingdong Mall. An electric analyst who declined to be named told reporters that the electricity dealers entering the bubble period urgently needed financing for the winter.

Is Jing Dong lack of money?

"Guoqing's statement reflects the fact that the electricity dealers burn money seriously, the current difficulties encountered in the financial chain." "China Electronic Commerce Research Center analyst Mo Dai Green to" China Enterprise newspaper reporter Analysis said, not only Jingdong mall, other E-commerce enterprises also exist such problems.

However, Jingdong Mall said its money flow is very healthy is not without footnotes.

Early last year, Jingdong Mall completed the Russian investment group DST, Tiger and other 6 funds and some social celebrities up to 1.5 billion U.S. dollars in the C round of financing, the Internet market in China so far a single sum of the largest amount of financing.

It is reasonable to say that there is no shortage of money. "But in the technology news President Li Zhongcun, this WTF. "Beijing East's money can burn to a few months, do not see the financial statement is difficult to say." "Li Zhongcun said.

Li Zhongcun that more financing for capital and Low-cost rapid expansion of the Jingdong Mall, all useful when the end, "just sooner or later." ”

From 3C Digital to small appliances, large household appliances, and then to daily necessities, books, audio-visual, online hotels, and even included a luxury, a few years, Jingdong Mall to achieve from the electronic stores to the Integrated Mall transformation.

And the expansion of category, logistics construction, play price war need not small investment.

According to Jingdong Mall's plan, last year received 1.5 billion U.S. dollars financing, will almost all into the logistics and technology research and development of the construction projects, the next 3 years will invest 5 billion-6 billion yuan for logistics construction.

"This is the third year of large-scale investment in the logistics and information systems of Jingdong and the most expensive year." "Liu said in February, Jingdong Mall will invest 3.5 billion-3.6 billion for land, property and a variety of equipment procurement."

In addition to huge investment, huge losses are Jingdong mall can not avoid.

Some investment bankers said that Jingdong Mall 2011-year loss reached 1.2 billion yuan, sales growth overall lower than expected. If the Beijing-east continued to lose money this year, the loss could reach 2 billion yuan.

Meanwhile, the person revealed that Jingdong Mall has restarted the listing process in March this year, and has been secretly contacted by a number of investment banks.

Although Jingdong Mall to deny the resumption of the listing, but the pursuit of high return on the characteristics of venture capital Jingdong Mall must be listed.

"After all, Jingdong has taken 1.53 billion or so funds from venture capitalists," he said. "Wu Chunyong, editor of the Fusion network, said to the Chinese enterprise newspaper that as an investor, there is also a return period."

It is reported that from the original Jingdong Mall to get first-hand financing to last year's third financing, has passed 5 years time.

Wu Chunyong said that in the absence of a real listing, in fact, the money is spent on the risk investors. And the burning of the money is also in line with what these venture capitalists have set "the market and the main body of the corresponding field/industry-the scale of the burning of money-through competition to select the top three-to the capital market-and finally get high returns" such a route.

"The main capital market is a bad environment." Li Zhongcun Analysis said, Jingdong Mall listed mood is urgent, but to see whether the time is ripe.

Li Zhongcun said that only the goods will be the bleeding listing may affect Jingdong Mall listing process. March 23 Landing in the New York exchange, the only product will be open to meet cold. The opening price of 5.99 U.S. dollars/shares, far less than 6.5 U.S. dollars/shares of the issue price, and eventually closed to 5.5 U.S. dollars/shares, lower than the price of up to 15.4%.

In fact, it depends on the layout of Liu, how to do the concept. Wu Chunyong thinks, if still such blind expansion now, Jingdong Mall refinancing will be more difficult.

Still no solution to the profit curse?

"In the stage of burning money and market competition, profitability is not a major factor in their consideration," he said. Wu Chunyong said that only after their respective listings, for real shareholders, the profit is their consideration.

So, after the listing will be able to achieve profitability? The answer is obviously not affirmative.

"Dangdang is to make a flower two, while Jingdong and handle is to make a flower four." Guoqing's comments revealed that even Dangdang, which has already been listed, is still burning money.

Last year's four quarterly earnings and Full-year results showed net losses of $36.3 million last year.

It is difficult to make money easily, which is a common problem for electric dealers.

Although the overall loss of electricity dealers, but the industry is extremely optimistic about its development prospects.

"Now the overall e-commerce industry profitability is not optimistic, but the outlook is indeed the entire Internet industry optimistic." "Guoqing said.

Wei Mian CEO Lin said that the electrical business sector as a whole is still in the investment loss phase, the domestic electric industry also needs about three years time to form a social dependence of the profit industry.

Will the electricity dealers eventually make a profit?

"Portals, video sites and other fields of enterprises, or have a certain profit space." And the electric business is no exception. Wu Chunyong said that, relatively speaking, the field of electricity is more than other areas of a profit model, "other areas are basically relying on advertising, but the electric dealers or later group buying, they also have a personal consumption of the profit model." ”

"The electric business is essentially the retail business, the retail trade low buys the high sale is the basic rule, the electric business company appears the huge loss is very unusual." "And in the Ecapital Capital CEO ran view, the model of electricity business is healthy to see three aspects, the first is not healthy gross margin; second, the user's acquisition cost is not low enough; third, the user's repeat purchase rate is high enough.

Lin that burning money is not the goal, it should be seen in the development of electric enterprises in the process of determining what kind of competitive positioning, whether solidified the category advantage and sales model, attracted the number of target users, established how much positive word-of-mouth, set up a high threshold of competition, formed a management team.

For the electric business, the mode of financing expansion is not a long-term solution, looking for the profit point of the industry has become very urgent.

Every customer prudential products, Dangdang are doing such an attempt. In the listing after the resistance, where the customer prudential products will be profitable as this year's goal. Guoqing also publicly said that Dangdang this year will shrink strategy to consolidate the dominant region.

Citis, chief partner of the Fund, is divided into two types: The profit margin is negative from the first day of establishment, but the hope is to maintain through financing. He believes that this model is to make money for investors, can not be long.

Citis said the second type of electric power is not a problem, can have a positive operating profit, but in order to develop a variety of high-speed investment, resulting in temporary not profitable.

Citis believe that all customers prudential goods belong to the second mode of electricity, and said that every customer prudential products can quickly enter the profit status.

The annual target of profitability will be decided next year.