Eric Cao: In the future, the whole increase of electric quotient education will shift to the two or three-line city.

News and technology information March 22, by Eric Consulting Group hosted the seventh annual Iris Summit held in Beijing today. This year's 2-day annual meeting, the first day of many industry leaders to participate in the Summit forum for Exchange and discussion. March 23 The next day, the industry elite on-site Multidimensional Analysis of industry dynamics, sharing the successful experience and unique insights. Eric Cao, dean of research Group, published a keynote speech.

"It has been said that the development of E-commerce throughout China has entered a new stage, this phase will be from the rapid increase in the next 4 years into the mature period." It can be seen that the rapid growth of China's online shopping in the 10 is a worldwide concern, "Cao said.

Cao also believes that the future growth of the entire electricity quotient's education scale will shift to the two or three-line city, but its regional expansion cost and difficulty is increasing.

The following is the transcript of Cao, dean of the Research Institute of Eric Consulting Group:

Cao: Thank you! So many friends to listen to the idea of e-commerce sharing. The morning of the interaction is very exciting, the impact of various points of view, I believe that today's microblog is also very active. Eric has been looking at E-commerce for 10 years. Many friends look at how to value E-commerce, the last six months what kind of trend, eventually will form what kind of situation? Does this still have a chance? Does that still have a chance? Every time we communicate from a point of communication, this time I want to start from the entire Chinese electricity business 10 years of data presentation, to help you analyze together. This may be expressed more stereoscopic.

The first is to look at the Chinese electricity Business Decade concrete presentation form. This data is from 2001 onwards to 2011 and the next 5 years. This data histogram represents the size of the entire network retail turnover. We can see that by 2011 it was 766.6 billion, an increase of 66%. 10 from 2001 to 2011 accounted for the total retail sales of consumer goods from 0 to 4.2. The change in the blue curve represents the change in the growth of China's online retailing in the 10, 2003, 2004 when there is a wave crest, this wave is believed to be a friend of the electrical business is very clear, that time is the SARS period in Beijing, whether it is when or Beijing East suddenly volume. Then we can see that the next 100% years of sustained high growth were 07, 08, and 09. By 2010 and 2011, the size of the entire online retail trade had grown to 60% to 70%. From this year onwards this increment can also achieve a year-on-year growth rate of 50%. By 2013, 2014, 2015, the net retail turnover rate grew from 25% to 30%. Such a substantive chart shows us the macroscopic judgment of the industry market. If we do the Internet service industry or do any of the emerging industries from this chart can see this development process and stage. Can be divided into several stages, brewing period, germination period, early development is a high-speed growth, to high-speed growth period, about 100%, about 80%. The next stage begins to mature. This is an analysis of the current development process of the whole Chinese electric business in the 10.

Some people say that now the development of E-commerce in China has entered a new stage, this phase will be a rapid increase in the next 4 years into the mature period. We can see that the rapid growth of China's online shopping in the 10 has attracted worldwide attention. Like Ji also talked about China's online shopping. The volume of Chinese online purchases is breaking billions next year, and 2012 is a trillion, and 2013 will surpass the overall size of the US retail deal.

This concept many people do not understand why the Chinese people can be so fast ahead of the world's online shopping level, China's electricity dealers and the world's electric business is really different. Does reaching such a standard represent the growth of China's entire e-commerce future space should be to see bottom? In fact, we use another set of data can see the net purchase user size penetration ratio, China is 40%. If it is a mature level, this ratio should reach 70%. That means there's a 30% increase in penetration. Which companies will get this increment? This is a matter for everyone to consider. Who can gain incremental growth in the next few years? In the regional city, in the two or three-line city. Because the fastest-growing Chinese online shopping in the first 10 years of harvesting is a front-line city and coastal cities, economically developed areas. This data is based on the sample monitoring China online purchase orders provinces distribution, we can see the top three provinces are Guangdong, Zhejiang and Jiangsu, if the municipalities include Shanghai. In 2011 we saw the growth rate of the whole online purchase order, ranked in the top 5 of Xinjiang, Shaanxi, Gansu, Liaoning and Inner Mongolia respectively. What does that say about a problem? The problem is that the future increase in the size of the entire electricity business will shift to the two or three-line city, but the cost and difficulty of its regional expansion are rising. There is no doubt that the basic conditions of the two or three-line cities and the three-tier cities are far worse than the first-tier cities. So the most easy to chew the piece has actually been chewed off by many enterprises. More difficult to get into a piece now is a market opportunity. Who can make this opportunity? Is it a giant enterprise or is there some innovative mode or O2O mode or regional electric dealer model? This is what we are looking forward to in the next 4 years in some of the brewing changes.

We can see the following characteristics in the macro-view of the changes in the total amount of online shopping volume. This axis is only from 08 to 15 years. If you start in 03, Green is always the biggest proportion in the last few years, and that's the size of the Consumer-to-consumer deal. Do not underestimate the size of the Consumer-to-consumer, it is because China has consumer-to-consumer of the scale of the transaction, it is possible to surpass the United States. Because 540 billion of last year's more than 700 billion were from Consumer-to-consumer. But as the whole market matures, it can be seen that incremental increases are reflected in the yellow color blocks of the business-to-consumer. There is also a blue color block is a service class online shopping transactions. This part of the growth in the next few years will be heavy. Therefore, China's electronic e-commerce and virtual services in the kind of growth from now on to a new pattern. In the new pattern we can see the next step from the rapid growth stage to the process of rapid maturity development, the great influence of the electric quotient on the whole real economy, whether it is business-to-business trading or the scale of Internet transactions, is the proportion of total retail sales of consumer goods, or in some subdivided categories, clothing industry, cosmetics, 3 C, home appliances, net purchase of turnover accounted for the highest can reach 16%, clothing 16%. The proportion of other categories is also rising rapidly, which means that we can see which industries have the biggest impact in the era when the scale of China's electricity business has multiplied over the first 10 years. But then there are more categories waiting for you to open up. But its difficulty and market space positioning is different. The first 10 years of the category basically formed the existing pattern, the next green block accounted for more than 40% of the proportion we do not subdivide out, if subdivided out each proportion is less than 1% of the share. What are the possible categories? We think it is a department store, home, office, food and so on. This category is the previous E-commerce environment inside the category is difficult to achieve breakthroughs, or is more difficult to harvest, ROI or relatively difficult to achieve is quite large. But the next category will achieve this breakthrough. This is the general situation of 10 years of electrical business in China.

Let's take a look at China's 10 years of development because of the characteristics of China's e-commerce, it really and the United States, and Japan, and Korea, and Europe are very different. The reason for this is that it is difficult to simply consumer-to-consumer in this field because E-commerce is not simply the service and product of the Internet. The word e-commerce is very appropriate, business is the core, electronics is a service model. The reason why China's entire electrical business has grown so fast and China's physical retailers and brand manufacturers feel such a big impact, and this is completely different from the United States, China's total number of dealers in the amount of the transaction is a lot of pure electricity dealers appear, and the physical retailer here the force is relatively slow. The core reason is that the whole entity retail, the development of China's retail industry chain and foreign countries have great differences. We know that with the most mature America it comes from stores, department stores to chain management to shopping malls, to supermarkets and network sales after more than 100 years of evolution, in each time period, every few decades have the core of the form of change, from the first consumer revolution we think is the department store, at that time in 18 years , the third sales revolution is the chain, the third is the supermarket, the fourth is the shopping center. China's development of retail business has only been concentrated for the last twenty or thirty years. The United States network sales in the entire retail business development to a more complete chain before the appearance. It has become symbiotic with the entire retail industry. And China should say it is a leap-forward development. From supermarkets to shopping malls, as well as many physical retailing, when the business is not fully present or present, the electric quotient is also out. This is because the development of the whole retail industry in China is not very very full and fierce competition, China's entire retail sales in 2000 years or early 2000 is not the case, the impact of the electricity business is very large, because the electricity business is paved to the country, the price of transparent mode of impact, So we can see that this data can also be a good representation of the differences between the development of E-commerce in China and America.

The green bar is the United States online retail trade size accounted for the total retail sales of consumer goods, 2001 was 1.1, 2011 is 4.6, more than 10 years from 1.1 to 3.5%. When did China 1.1 appear? Came in 2008. 2008, 2009, 2010, 2011 Four years of time through the United States 11 years. This feeling of the impact on an entity's retail can be felt and why there is such a change in China. The size of China's entire online retail trade will be so different from that of other countries that it will have to rush to the world's first level.

In this case, it is not difficult to understand why the domestic physical retail industry, especially with Suning as the representative of the transition line, it has completely put forward its own transformation of the route. This year's sales are the top ten in China in the 2011 ranked online trading retail companies, suning Tesco last year is 5.9 billion, last year has been ranked third, this year to prepare for 300 Paul 200, proposed such a goal. Why? If not to do so will be revolution, if done although there are many difficulties, but perhaps a good transformation, is a nirvana. This is completely different from the United States, the United States this chart we often see, by explaining that we are also relatively clear, it is not a complete impact, but symbiotic. China is a shock type.

Generally do e-commerce everyone aimed at the enterprise is all Amazon, we look at Amazon and China's e-commerce comparison. Guoqing said the profit level was the best controlled. Let's look at the level of Amazon. Here you can look at an indicator, Amazon and as a contrast, marketing Amazon is between 3% and 4%, Dangdang slightly high blood. The cost of warehouse allocation is about 15%, and Amazon is 8% to 9%. The gross margin situation in Amazon is around 22%, when the fluctuations are larger and are now ranged from 22% to 13%. That is to say, the level of profit control in China is very different from that of Amazon. Another indicator, compared to the size of the comparison is not, Amazon is nearly 40 billion U.S. dollars in sales, according to the sales target to do the turnover when it is a small fraction of others. But another feature of the electricity business is that it can only be achieved on a scale to govern the market. So this is the dilemma of China's electricity business. But we can see that China's electric business enterprises in the first round of China's e-commerce rapid growth period formed its own distinctive characteristics. This is the characteristics of China's differentiation. Taobao everyone is relatively clear, China's e-commerce in the entire 760 billion of the Big Mac, 5000多亿来 from Taobao. Another is Jingdong Mall, from 08 to 1.3 billion, to 11 more than 30 billion. Suning will grow 5 times times this year, but its core features are different from that of Amazon, and even the next Amazon is learning China. And why? Taobao is characterized by media plus commercial real estate, Taobao really earn money is to do the difference, the entire income of nearly 10 billion from advertising, the remaining more than 3 billion of the income from commercial real estate. Is it Amazon? Not Amazon, but at present it is the most powerful enterprise for the whole Chinese electronic commerce control. Jingdong is the target of Amazon, from the storage configuration and from the development of the focus of attention is focused on the warehouse, which is the core of the Amazon, is doing the best. In the profit model relative to a more than in the control is too far, so this afternoon also in the material to confront the model. But what if the money solves the problem? This is worth exploring.

Another is suning easy to buy, which is also Chinese characteristics. In the previous PPT, 10 of the top 4 and 5 retail companies in the US were retail entities. Although it is the top of the list. But the entire line under the online transaction size generally does not break 10%. Wal-Mart only accounts for 1% points. What is Su Ning's goal? Its goal is to become an online e-commerce company over the next 5-10 years and expand the category to the entire department store. This feature is not in the United States, so far there is no benchmark, the world has no benchmark, but the target of the company is China. Its core advantages everyone is familiar with the 1400 stores and some of the warehouse with logistics, of course, 2 C is a breakthrough focus, so this is the decisive year.

Therefore, China's electricity dealers in these 10 years formed a special structure and industry. Taobao's characteristics here is not the traditional sense of e-commerce is to do a media advertising revenue. This advertising revenue should look more biased search engines. Directly cut is Baidu's search engine advertising revenue, the electronic business search advertising revenue. Because all advertisers are basically controlled by Taobao. These pictures we can go to see more clearly, advertising revenue in 2011 Baidu is 14.5 billion yuan, Taobao is 8.8 billion yuan. Active advertising in the number of earnings shows Baidu is 490,000 + advertisers. Taobao is estimated to be 400,000 or so, because Taobao sellers are more than 6 million. Taobao can through the through train horse should be in these numbers, the ARPU value is more than 20,000. What is the potential for future growth? Think about it, I think it may be directly to the customer to bring the transaction of the advertising delivery relative effect can be measured more directly, so its potential is still still there. On the other hand, fully formed the Alliance Enterprise, the Alliance Enterprise has created the whole Chinese electronic Commerce new business mode growth, including the social electronic commerce actually is relies on the Taobao Alliance to carry on the partition. Last year is divided into 1.5 billion, Baidu points is 1.16 billion, the whole of Taobao is in the strategic layout, basically make money are divided, Baidu is the Alliance for Baidu is a big profit. This is a big difference.

The evolution of China's electric power is really a form of e-commerce with Chinese-style Chinese characteristics that are very different from other countries in the world. This and the previous Internet development of the law and trajectory is not the same. So the next few years looking forward to the future of E-commerce still have the opportunity? What kind of business and pattern will it appear?

First, there is no doubt that the market concentration is further enhanced. If the whole turnover is a statistic, 760 billion of the 80% is from Taobao. If you pick up the business, the company last year is 180 billion, 70% of the two companies accounted for, one is the cat, one is the Jingdong mall their two annual growth is 200%. The pressure on other e-commerce companies below this level is indeed very large. So, there will be a change in the merger between the company will certainly appear, as if the Amazon mergers and acquisitions of a variety of vertical categories including shoes, mother and child will be carried out, there is such a law. When will this situation happen in China? It's a wait and see. Another point in the electrical business from the line point of view of the flow of the entrance is certainly next to some new areas of innovation. From the data point of view, the comparison of the use of shopping users in 2011 growth rate is ranked first, in China's various fine classification of services are ranked first. What does this feature represent? After the development of e-commerce to a certain extent, it created a new service model for the conditions of the soil, the new flow of the entrance, social programs are familiar with the new entrance of the electric dealer, around it has a certain amount of cash flow, now basically 80%, this year's turnover will break 1 trillion, 1 trillion if the market share of the Commission is 50 billion. What are the current patterns of business? Which ones can eat these dishes. Last year I heard it seems like a commission income has broken tens of millions, if the transaction volume, there are still 5% of the transaction volume, basically 10 million is from 5% Commission. The size of the transaction brought to us can be counted. Does the deal scale to the top? It's a long way from the 50 billion we just counted. So growth has, but why in the market there are a lot of new innovative models and background is related. Because this pattern can be calculated. Of course, may be the last to go around with Taobao PK.

On the other hand, the mobile Internet is not clear, but the characteristics of the electricity dealers I think is to create a new consumption habits and needs. The demand for transactions, which is difficult to achieve in the PC Internet age, will emerge and be intensified in the mobile internet age. So at present many of the companies doing this creative is also in this direction to look for. And this is not simply through the mobile phone to achieve the user's traffic entrance also realized the transaction, this is certainly not the. Next certainly is the direction of the mobile Internet to the time and the urgency of shopping, trading the instantaneous distance of the short, and regional consumption market depth is closely combined, because there are many entrepreneurial projects are also around such a point in doing. There are a lot of warehouse points under the line, and some of the new business, retail, convenience stores in China before the cooperation, which is also worthy of attention in a number of new directions. The other is that when E-commerce is created by innovation needs, it should be closely related to payment. This payment link in the next few years if you want to achieve an essential breakthrough, it will lead to a further breakthrough in the space of E-commerce transactions, just that picture. We predict that the growth rate of the entire network retailing will change over the next decade, which is due to the changes that have been brought about by the several trends I have just mentioned, because this trend is unpredictable. Mobile payment Now foreign compare fire is called Square, last year, we said that the credit card payment, the recent period of time is to pay the brush, do not need to swipe, but that only need to put your credit card and card after the case and credit cards, just to the coffee shop inside show your face shop assistant know you can, It is the ipad end, via location and merchant information is an online CRM complete online transaction. This kind of offline trading is creating a new demand, in the overall e-commerce next trend of development, the flow of the entrance changes, mobile internet and offline combination. Buy why not recently because the last payment chain can not get through, can only walk advertising mode, this is the electrical business model is not the same nature. Advertising mode is also only Taobao to do, buy words in the short term is difficult. But if you get through the chain of trading and payment, it's a different story.

In the end who is the winner, in China I think is a very white-hot stage. Three different models, China's control of the entire electrical business structure of the enterprises have represented a different development model, have their own core characteristics, have their own special weaknesses. But there is no doubt that all three of the total turnover will certainly increase in the overall market concentration. The space below will come from the points that have just been analyzed, which I think is related to the course of e-commerce development in China as a whole, because the previous model is difficult to come out if the maturity stage is to harvest some two or three-line cities and new shopping growth areas. There must be some innovative models to make your level of profitability and scale to meet the requirements of entrepreneurship. Therefore, I think the whole development of E-commerce in China is still worth looking forward to, because it did come out of the world a different way, and hope that all the friends here can find their own position in this field of witness or to create the miracle of this history in person. Thank you!