New egg: Where to fall, from where to climb up

"Where you fall, you get up." Zhou Zhaowu, who was the president of the new egg China in March this year, only recognized this truth.

Perhaps even Zhou Zhaowu do not know, they are the new egg net rooted in the Chinese market since 12, the first few presidents. But he never wanted to be a passer-by. Even his challenge is to let the new egg China from the acclimatized "mire", as soon as possible across the break-even line.

Just after his new egg China president soon came, another foreign E-commerce website "fell down" rumors by Japan's leading enterprises Lotte Group and Baidu jointly injected 50 million U.S. dollars to set up the company's website cool days, closed in April this year, the survival time is only 1.5.

And the fall of Le Cool day, again aroused foreign e-commerce enterprises in the Chinese market acclimatized to the waves.

Zhou Zhaowu admits the pressure is not small. After all, his new eggs in China, every change in management, is to break the fate of foreign electric dealers acclimatized "touchstone."

Self improvement

Zhou Zhaowu occasionally confused: why the new eggs in the United States to achieve profitability, new eggs China's profit is always out of reach? The gap between the two points, no exception to the foreign electric dealers in the Chinese market acclimatized?

He has been unwilling to admit that in recent years, the management team of new eggs in China has repeatedly changed the "pursuit of profit, customer experience" business model lost to "sacrifice profits, focus on growth" of the radical business model. Even before he served as China's president of the new egg, he was more or less aware of the plight of foreign electric dealers in the Chinese market.

In China, the electric dealers have lost money to make a yell, many means to reduce sales, the situation, Chinese users have been accustomed to free shipping, the day of delivery of the consumption habits, and in the United States, new eggs in the United States has always been the continuation of the user to pay freight and shipping 3 days of the

"If the new Egg China asks for new eggs the United States to increase logistics costs, the latter will be puzzled, why the new eggs in the United States Logistics Department sometimes through the Logistics Fee rebate rebate to achieve profitability, and the New Egg China Logistics Department is like a burning money machine?" ”

Zhou Zhaowu bluntly, the US side believes that the logistics cost of electricity dealers if less than 2% of the total sales revenue, electric dealers can achieve profitability, but the domestic e-commerce "blood spell" shipping charges free of charge with the day of delivery, so that logistics costs accounted for the proportion of total sales revenue increased to 3%-4%, the United States may feel that since the electricity quotient can not be profitable, why also invest in logistics sector?

What makes him more puzzled is that foreign electronic commerce strictly follow the relevant domestic laws, in the purchase of goods issued invoices to pay 17% value-added tax, resulting in a certain price competition of foreign-owned electric companies inferior.

As individual domestic electricity dealers can through certain procurement channels, the purchase of goods without invoices, resulting in new eggs China and other foreign electric dealers in the same price of goods than these electric quotient of nearly 17% higher, the result is the new egg China and other foreign operators of the original market share quickly swallowed.

The reporter learned that there have been new eggs Chinese employees to the new eggs, the U.S. executive reflected the problem, but the United States response, is the founder of the New Egg net "neat", the eyes can not tolerate "opportunistic" things.

"In the end, some foreign dealers found that vicious competition in the Chinese market was not enough to allow them to gain the expected operating profits, but rather to make their entire group's financial statements ugly, only to opt out of the Chinese market temporarily." "In Zhou Zhaowu's view, the success of E-commerce may not depend on the pursuit of high growth rate behind its reflection is the Chinese and foreign E-commerce in the profit of the money domestic e-commerce is can endure a period of operating loss, as long as the Web site high traffic and high income growth, they can earn the money of venture capital institutions pocket However, there is no certainty that the foreign-owned power companies can only rely on the actual operating profit to gain the investment income. The sweetest laugh is the one who laughs last. ”

Perhaps this belief is the biggest driver of the new egg China still remains in the Chinese market.

But Zhou Zhaowu clearly, to let the new egg China in the absence of high-speed growth, to find a profit breakthrough, is not easy. At least in the domestic e-commerce loss to make a yell situation can not change the circumstances, Zhou Zhaowu can do, can only be "internal potential".

Before he became president of the new egg China, he is more or less aware of the existence of the new egg network some management omissions, from the individual and close relationship with the supplier of employees do not "seriously" tracking the company to track the return of money to the account, resulting in the new egg China lost some profits; to the individual staff late to work but lied about their time to

Zhou Zhaowu cannot tolerate these management omissions still parasitic in the new egg China. Soon he decided to dismiss a department director who lied about not being late. Although this was once interpreted by the staff as "the three Fires of the broom", Zhou needed to do so.

In his eyes, this is the prerequisite for the success of E-commerce due to the electricity quotient "not see" consumers, can only rely on the optimization of product procurement, merchandise website shelves, promotional strategies and logistics distribution system to improve customer satisfaction, if the company can not do "honesty, responsibility and justice", how to win the trust of consumers.

"I don't think the new egg China is facing an acclimatized situation, but we may encounter water and soil. Acclimatized is doomed to failure, but water and soil is not familiar with the internal management process can be optimized, and slowly achieve success. "In his new egg China self-improvement blueprint, a number of new operational process management measures have surfaced.

However, for the new Egg China's internal transformation, a person who worked in E-commerce in foreign investment is still feeling "palliative", the biggest reason for the faltering of foreign electric power companies in China is that management decisions are still tightly controlled by foreign investors and cannot respond to the "first time" of the fast-changing competitive environment of domestic e-commerce.

For the new egg China, this is also an invisible constraint on the internal business process change.

Transition Light Company

Now, in the new Egg China Shanghai office, more than 9-10 employees work at night, they also need to take the time to carefully read dozens of pages of internal information.

Inside the new egg China, this dozens of-page information is dubbed the "3-month battle plan," which covers the sales of new eggs in China's previous procurement market, the future evaluation of product competition, how to optimize the logistics and distribution measures and the formulation of the pricing strategy to achieve profitability. Each product manager is required to spend hours a day reading the 3-month combat plan and regularly reporting the results to the head of department.

"3-month battle plan" turned out behind, is Zhou Zhaowu to optimize the new Egg network product procurement Sales process to take the new management ideas.

Triggering his "3-month combat plan", he found out that the new egg network in the past in the procurement of goods is too "generous" part of the product managers can always take a breath from a supplier to order dozens of items, but in the end only 10 of the goods have sales prospects and generate operating profits, And the rest of the inventory occupies the new egg China's large inventory resources.

This will undoubtedly result in a waste of resources. In Zhou Zhaowu's eyes, a purchase price of 100 yuan of goods once the inventory turnaround days more than 60 days, meaning that it "increases" the new Egg China's inventory impairment loss limit. In the new eggs in China, some of the inventory turnover days more than 30 days, may be 80 percent-90 percent low price promotion clearance, if the 60 days have not sold, the discount rate may be close to 60 percent-70 percent, and all the loss of product inventory impairment, and ultimately by the new egg China "pay".

"The 3-month battle plan allows the product manager to know which goods to bring to the company for sales and profits, rather than to receive them as they were before," he said. Zhou Zhaowu stressed, but the light has the battle plan is not enough, let the staff actively select "has the profit space" the commodity, also needs the supporting performance incentive measure. To this end, the new egg China began to improve the product manager's performance assessment scope, from the purchase of goods List, product comprehensive gross profit, sales, to the company's total profit, customer purchase volume and other indicators to do comprehensive evaluation.

While gradually optimizing the process of product procurement, Zhou Zhaowu began to gradually clean up the high inventory of goods.

In his mind, the new egg China should gradually transform into a "light power companies", the so-called light power companies, that is, the lighter inventory turnover pressure, the lighter operating cost pressures, and improve the efficiency of the business operation by optimizing staffing.

New eggs China's high inventory, as he set out to build "light power business Company" the biggest obstacle to clean up the inventory, means that Zhou Zhaowu in his early days, only to the founder of the new Egg to hand over a bad financial statement.

But he decided to reluctantly clean up the inventory, and the main commodity was cleaned up, not without sales prospects of the old inventory, but with a certain sales prospects, but inventory turnaround days more than 30 days of "new" goods. Throughout the two quarter, through a series of price promotions, Zhou Zhaowu Let the new egg China's commodity inventory turnaround time from the original 30 days to 10-20 days.

In his view, electronic commodity companies operating losses, either the high price of goods to buy low sales caused by operating losses, or in the low margin of goods, the higher operating costs swallowed all the profits.

And the new egg China is facing, it is the latter kind of business dilemma. Although the optimization of product procurement process can increase the gross profit margin to sputter, but the current background operating costs accounted for about 6% of total sales revenue, the two mutually offset, the new egg China's operating profit margin hovering in-2%.

How to reduce operating costs, once let Zhou Zhaowu worry.

Take the logistics department as an example, at present, the new egg China in Beijing, Shanghai, Chengdu, Wuhan and Guangzhou, respectively, the construction of commodity warehousing base, Beijing, Shanghai, Guangzhou area of goods logistics and distribution tasks to the new egg China's own courier company Austrian-Shuo Express completed, other provinces and cities in the country is the choice of Third-party logistics company mode

However, compared with Beijing, Shanghai and Guangzhou have formed a mature e-commerce consumer environment, Wuhan and Chengdu two storage base has not benefited from the electronic commerce scale effect of the drive. And what worries him most is that if the new eggs China has been slow to achieve high sales growth in the Midwest, Wuhan and Chengdu storage bases are prone to a large number of sluggish commodity inventories. According to the new Egg China's related sluggish inventory treatment, if the inventory days more than 60 days of goods are 60 percent-70 percent "clearance", the discount rate of more than 120 days may be reduced to 40 percent-50 percent, which is no one would like to see the loss of inventory impairment value.

What Zhou Zhaowu can do is to improve the new egg China's investment in marketing, and promote sales.

"We intend to increase the market share of sales by 1%, hoping to increase the user purchase conversion rate from the current 1.5%-1.6% to the ideal value -2%-3%." "Zhou Zhaowu said. He also considered and rebate site cooperation, by increasing the range of product concessions to improve user purchase conversion rate, but he also worried that once too many users value price concessions and buy, although the conversion rate for a period of time to improve, but may not be able to bring sustained loyalty to the user and high conversion rate.

At the ECIS2012 E-commerce Summit, Shangpai Vice President Cai Peng stressed that the essence of e-commerce, is that every enterprise can accurately understand the trend of consumer behavior, and ultimately establish a business and consumers zero-distance contact.

Ccoss's Reverie

For Zhou Zhaowu, by building "Light Company", and can not directly let the new egg China in the product homogeneity of the competition to stand out. Therefore, he must also find the differentiation of the breakthrough.

At this time, the new egg net set up the global unified Product procurement platform (Cross Country Online Shopping and Selling, referred to as Ccoss), to bring him a hint of inspiration.

The so-called Ccoss, that is, new egg nets break new eggs China, new eggs, the United States and new eggs, Canada, the regional restrictions on the purchase of goods in the group at the level of operation, and joint new eggs in the United States, new eggs China and Canada new Egg network channels to promote commodity marketing. In fact, the measure was once interpreted by the market as a new egg. The U.S. is further tightening its procurement authority for new eggs in China.

For a long time, the new egg China has been seen as a branch of the U.S. global business in China, in the marketing promotion strategy, category expansion strategy, logistics strategy, commodity procurement and other localized operations are criticized "lack of sufficient operational flexibility", because the new eggs in the United States Direct "command" the development direction of new eggs China.

In Zhou Zhaowu's view, the establishment of a global product procurement platform, in addition to the new eggs in China to reduce a certain extent of procurement costs, but also to the new egg China and some world-class suppliers of "e-commerce cooperation" tend to close. In the past, the new egg net employees in the procurement of some well-known 3C products, only through these enterprises regional general representative, regional agent, the total distribution of local enterprises to get through the purchase of goods and logistics distribution agreement, to ensure that goods on time to reach the new egg network storage base, but there is always information is not smooth and asymmetric, Lead to the purchase of goods delayed delivery of the situation, so that the new egg network is often facing the plight of selling goods broken goods.

"If the group level can establish a strategic partnership with these suppliers, the new egg China and suppliers in China will be able to form a closer information communication model, to ensure that we purchase goods on time." Zhou Zhaowu explained.

He is optimistic about the new Egg Network Global unified product procurement platform, is based on the platform with Cross-border commodity circulation concept, such as Europe and the United States, some best-selling goods can be ccoss into the new egg China e-commerce system, conversely, Chinese goods can find a new channel to open the U.S. market. New Egg China and these suppliers of the mode of cooperation can be diversified, including business, product agent sales and other models.

"This will allow the new egg China to sell exclusive best-selling goods, which is not yet available for other e-commerce platforms in the country." "According to Zhou Zhaowu plan, August should be able to see the first single cooperation products into the new egg China." In the coming year, the sales of new goods from Europe and America, brought about by the global product sourcing platform, will reach 20% of the annual income of the new egg China.

No. 1th Store Chairman Gege said that the advantages of e-commerce is whether to provide customers with personalized product services. However, the prerequisite of providing personalized product service is that e-commerce companies have an accurate and comprehensive analysis of each purchase behavior and consumption mentality of consumers in the process of electronic commerce.

Zhou Zhaowu will first choose Europe and the United States and the best-selling 3C category and apparel products, by letting them in the new egg China shelves, the development of promotional strategies and provide distribution services, new eggs in China from clothing products sales income of about 10% Commission, 3C products are 4%-5% commission.

However, the formation of a greater test of Zhou Zhaowu, is the new egg China to sell the authenticity of foreign goods how to debate. Zhou Zhaowu explained that, on the one hand, the U.S. and new eggs from the new egg China's own reputation, the other is to require suppliers to provide proof of goods.

You know, the new egg China into the ccoss is already a sword on the string.

At the beginning of the year, new eggs from the United States to transfer 6 people, dedicated to the new Egg China Procurement Marketing Network into the global unified product procurement platform, by Zhong Shaoming as the new Egg Trading (China) Co., Ltd. Global Product Management Center deputy general manager.

In Zhong Shaoming's eyes, the new egg China to seize the global product procurement platform derivative business opportunities, there is still a lack of customer feedback mechanism of the operation of short board.

Working for years in the new egg, he has his own understanding of the profitability of new eggs, such as new eggs. U.S. Agent a 3C products in the global starting, will be in the site in advance to show the characteristics of this product and style, for many users comments. Then the new egg the United States will be "valuable" user feedback to the enterprise, the latter to determine whether the need to adjust the user feedback according to the product tone, style and weight.

"User feedback with the business side of the interaction, is based on the new Egg Network has a large number of loyal users on the basis." He stressed, but the fierce competition in China's E-commerce so that users pay more attention to product prices and logistics delivery time, has not formed a customer feedback and corporate benign interaction environment.

Zhong Shaoming At present everybody main work, in addition to assist the global product procurement platform for some 3C enterprises new products Global start to do a good job supporting services, but also spend time to help new eggs China to improve customer feedback mode.

For the new egg China, this may take a while to see the effect. "But we can draw on some of the success factors in the United States." New eggs China's local management, does not mean that the new eggs in the United States management model discarded. "I do not want the new egg China to achieve 200%-300% growth every year, and this year we set a target of 50% per cent growth," Zhou Zhaowu said. In the domestic electric dealers burn money to make a yell of the big environment, walk steady enterprise, may walk faster, go farther. ”