Gome Electric Business Integration unveiled

Absrtact: December 3, Gome online shopping interface to officially enable the United States of the brand logo. and located in Beijing Zhongguancun Core Area Ding Good Electronic Mall building, Gome online headquarters, operating scale has also expanded to occupy 5 floors of office space. A series of changes in

December 3, Gome online shopping interface officially enable the "Gome online" brand identity. and located in Beijing Zhongguancun Core Area Ding Good Electronic Mall building, Gome online headquarters, operating scale has also expanded to occupy 5 floors of office space.

Behind a series of changes, Gome (00493.HK) is the strategic reorganization of its electrical business. The newly appointed Gome online President Handepeng told our correspondent that Gome will integrate Gome's online mall and Bowser network to achieve a unified management and resource sharing in the background. At present, the Gome online shopping mall has been officially renamed as "Gome Online", comprehensively promote the implementation of Gome's E-commerce strategy.

Prior to that, Gome, which had two electric-business platforms, was considered by peers to be undesirable. Take 2011 years as an example, at the same time to operate and cultivate two electric business platform-Bowser and Gome Online mall, so that Gome produced a net loss of 390 million yuan, and the net profit of the year was only 1.84 billion yuan.

For the adjustment, Gome President Wang Junzhou said: "We are committed to building a difference between the current unprofitable electric business model, reduce the duplication of investment, the establishment of a sustained, healthy development of Gome, and then build the line under the strong retail industry, the adjustment in line with the entire group's future multi-channel development strategy." ”

Two-platform mode change

Gome for the Electricity business Restructuring plan, just announced in the December 2, 2012, the second day was published in the newspaper, from the side reflects the market for the Gome electric power business of high concern.

This reporter understand, gome internal electrical business restructuring plan, has been discussed, but, until November 2012, the Gome board of Directors formally through the Gome Electric Power business restructuring plan.

In the past 26 years, Gome has been adhering to the development of multi-brand strategy. In particular, offline retail business plate, in addition to Gome, the brand also includes Yongle electrical appliances, dazhong electrical appliances, North electrical appliances. This competitive multi-brand strategy can ensure that gome effectively occupies a regional market share.

In 2010, when officially entered the online retail business, Gome copied the model to the online platform. October 2010, Gome acquired Bowser network, in April 2011, Gome's own electric Power platform "Gome Online Mall" officially online. From this, the dual-brand operation of the electricity quotient pattern formed.

At that time, Gome senior to our correspondent said, with two platform strategy, can make gome combined benefits more than monomer efficiency, so as to achieve a better market share. At the same time, the electric business does not have a profit model, so that the operation can enable Gome to flexibly respond to a variety of electrical business model changes.

However, home appliance retailing and electricity business changes exceed Gome's expectations. August 31, Gome Annual report showed that in the transition period of the transformation of the Gome sales revenue of 23.13 billion yuan, down 22.4%, comprehensive gross profit of 3.785 billion yuan, fell 30.8%, net loss of 501 million yuan, and the same period last year to achieve a profit of 1.25 billion yuan. Gome's third quarterly report, released in November, showed that the three-quarter gome loss scale narrowed to 186 million yuan.

In the history of Gome's worst performance, two platform of the electricity business investment led to a heavy loss. By the end of September 2012, the total sales of electric dealers for 3.1 billion yuan, an increase of 160%, gross margin from last year's negative 4.9% rose to the end of September this year 3.4%.

This is not an ideal financial situation, so that Gome must consider restructuring two of the electric business platform.

The choice of reorganization plan

Gome's board of directors has received a variety of restructuring models, including direct and simple merger mode, as well as from the business to make a division of the restructuring model. Finally, Gome's board of directors chose to merge two platforms into the "Gome online" restructuring model.

In accordance with the program, in addition to Gome Online mall and Bowser Network merged into the Gome online platform, Gome will be gome online mall and Bowser network can combine the use of resources, including information systems, logistics warehousing distribution, procurement and human resources.

In the reorganization plan, Gome clear Bowser net and the original Gome online Gaza partition. The original Bowser network part will focus on the electric business platform operation, the business section will involve platform business, group purchase business, OEM business, catalog sales business. And the original Gome online mall part, will focus on their own business content, including home appliances business, new products, such as business sales.

Along with the above plan, a series of personnel changes have also been created. Former Gome Online mall general manager Handepeng will be gome online president of the post, directly to Gome Senior Vice President Shangui First report. Former Bowser network president Dingdonghua will serve as Gome online deputy general manager and Takuba platform. In addition, the original Gome Online mall Technology Center Director Yu Binping for the Gome Online Technology Center Director, Hong as Finance Center Director.

In addition, in order to tie in with the Internet shopping business landing, Gome Online has been in the domestic planning of 6 large areas, respectively, the North China region, east China, central China, the region of South China, the western region, North Nord. The regional leaders are responsible for the operation of the entities within the region, including purchasing and logistics of some commodities.

Handepeng said, "In my opinion, Bowser net and Gome online mall reorganization, not a simple merger, but a mode of innovation." Because of the openness of Gome's online and the ability to gather resources, not only can the bowser net be accommodated, but also more brands can come in. While taking into account the future development of the electric business, the advantages of the two platforms are concentrated together, and the expense of expenses is reduced.

The problem of marking billions

With the official launch of Gome online, Gome's business objectives are clear: Gome online to achieve the scale of business in 2015 to reach hundreds of billions of magnitude, at the same time, Gome hopes to become the most profitable power of the electricity business.

Gome's data show that in 2015, the E-commerce market will be more than 2 trillion yuan in size, and in accordance with Gome's planning goals, Gome online will account for about 5% of the market share.

As of this year three, the army's less than two years of Gome online sales figures for the overall only 3.1 billion yuan. According to industry estimates, Gome Online 2012 annual sales will be about 5 billion-6 billion yuan. In the next 3 years to achieve from less than tens of billions of dollars leap, very difficult.

On the other hand, just get the fourth round of the financing of Jingdong Mall, the rapid growth of suning easy to buy, as well as Wal-Mart's actual control of the number 1th stores and other enterprises, will be the gome online profitability and growth poses a great challenge.

Taking into account the dual objectives of scale and efficiency, Handepeng felt a heavy burden.

Handepeng said that all appliance business enterprises are in the exploration and development, no matter what the target, there will be real pressure. But after the merger, Gome Online has nearly 80 million members, the huge number of members will bring gome online stable revenue increment. Gome's online opportunity is that it is now hard for consumers to rely on electrical goods, and has completed 400 of all types of logistics center in the country's layout of Gome online, will be able to service and effective arrival rate to attract consumers.

As for how to do as soon as possible profitability, Handepeng said, the merger, Gome Online will achieve more than 30% of the main cost savings, at the same time, the Bowser network to develop platform business and in addition to the new category of electricity outside the accelerated introduction, will thicken the profitability of Gome online.