How should the vertical electric dealer continue to essay

Absrtact: Vertical Electric business focus on market segments, the understanding of the industry and products is more profound, so it is easier to make characteristics, to meet the personalized needs of a group of users, there is a market value. But in 10 years of rapid growth in E-commerce

Vertical electric business focus on the market segments, the industry and product understanding is more profound, so it is easier to make characteristics, to meet a certain type of user groups personalized needs, has its existing market value. But in the 10 years of rapid growth in e-commerce, the development of vertical electric business has been difficult to be satisfactory, although there are only goods will, Poly-Mei excellent products, such as a few industry stars, but not wishful is the vast majority, we have seen red children at the sale of suning, wheat forest gradually wither, Fank is experiencing the transformation of the sleepy, There are a large number of former star enterprises such as Cotton network, product poly Nets, the first time fade out of the people's vision.

The last two years the development momentum of the comprehensive electric business platform has been more and more fierce, robbed almost all of the limelight, occupy the majority of the market share. In their squeeze, the vertical electric business is a quiet, almost no power to fight back, the deceased has died, the living people are also suffering from the flow and the continued decline in turnover. What is the reason for this? How should the vertical electric dealer continue to essay?

The dilemma of commercial logic of vertical electric business

Vertical electric business Enterprises today's dilemma is caused by multiple factors, including the inherent defects in the business model, but also has its own business problems.

1, vertical electric business model of the war

The vertical electric quotient is compared with the comprehensive electric quotient, compared to the latter's full category coverage, most of the vertical electric operators focused on a particular category, and because of this so that the vertical electric business model has some natural flaws to overcome, so many people are discussing whether the vertical electric quotient is a "pseudo proposition."

First of all, consumers have a natural demand for a one-stop shopping, because only this is the most convenient, coupled with a comprehensive electric platform on various effective member incentives, more incentive to consumers on a platform to complete all merchandise procurement. In the choice of goods, consumers are also more inclined to face a rich variety of goods, rather than a limited number of options, this is the same online, so we see the line of business more and more fixed focus on the market, but this is not the advantage of the vertical electric business. For vertical electric business, also often faced with the confusion of category management, because generally 20% of the best-selling category accounted for 80% of the sales, if the remaining 80% of the category, then the richness of the category greatly reduced, affecting the user experience. If you supplement the remaining 80% of the category, it will lead to a significant increase in inventory costs. In a word, because of these reasons, the comprehensive electric business platform has more and more strong scale effect, and the user's stickiness is more and more big.

Second, for retail to complete the transaction need to have enough traffic, this is both online and offline truth is interlinked, but the line and the flow under the line structure is completely different. Below the line most important is "the lot, the lot and the lot", in essence is the stream of people, chooses the position to be destined to have many natural flow. But the line is completely different, the flow of the line more concentrated, in addition to relying on the brand effect gradually improve the natural flow of the account, but also need to go to search engines, portals or through the Federation of the way to buy a lot of traffic. At present, the overall flow of the Internet prices are very expensive, the cost of access to new users is very high, if the flow of money to buy over the formation of a relatively high conversion, or the user came to transform once lost, then the enterprise will always spend a lot of money to do marketing, Once the reduction in marketing costs is followed by the flow and sales of the sharp decline in revenue, which is a lot of vertical electric operators are facing problems. In this case, for many enterprises once the capital market to stop blood transfusion, the plight is doomed. But for the comprehensive electric business, because the category is richer, the user base is also bigger, relatively is diluted the expensive flow purchase cost. As a result, we can see that the marketing cost of Jingdong is basically maintained at about 2%, while the vast majority of the vertical electric operators in more than 10%, even more crazy time to reach 30%-50%, such business model is difficult to continue.

2, vertical electrical business problems

We talked about the flaws in the business model of the vertical electric quotient, but in fact, the model is largely without the so-called good or bad, it will not be perfect, just for the different business model needs to have a completely different play, the so-called vertical can not use the platform of thinking and logic, unfortunately, many enterprises on the wrong pace, failure is inevitable.

The vertical electric business is fastidious is the more specialized operation, through the differentiated goods or the service and the consumer produces more emotional interaction, thus produces the platform cannot replicate the user loyalty and the stickiness. But what we're seeing is that most of the vertical electric dealers are no different from the General Electric. Even as a result of logistics system defects to provide services rather than the Beijing-east and other electric platform, and the so-called vertical only to do the surface of the vertical goods, operation is not professional, it is difficult to form a moat, but fell into the cycle of price competition, Gross margin continued to lower.

The reason behind this is a few years ago the entire e-commerce industry impetuous atmosphere has a great relationship, everyone's focus is on the size of the enterprise, or in order to desperately open the distance with the competitor, or for the next round of financing, or for a few of the few listed places. This is understandable, because the retail itself is a very emphasis on the scale effect of business, no scale is difficult to form the bargaining power of suppliers, also can not effectively stall thin various operating costs, no certain size of the enterprise is doomed to be very difficult to achieve too much success. But it needs to be clear that E-commerce is not only a scale of the game, but also a cost of competition, the management of the refinement has a very high demand. For the vertical electric business, but also in the goods or services to the difference between the great effort. Many companies do not realize this, lost in the pursuit of scale, and finally become unsustainable.

3. The extrusion effect of the integrated electric business Platform

Due to the inherent defects in the pattern and the misguided management, most of the vertical electric operators did not seize the short time window to show their professional operation ability, make the characteristic and form the brand. When the Beijing-east and other electric business platform covered by the category gradually penetrated into the daily life of all aspects of people, when the traditional brand began to embrace the Beijing-east, the cat and other integrated electric business, the comprehensive electric business platform for the vertical electric operators of the extrusion effect began to appear, and more and more strong, as the goods provided by the two, service is difficult to reflect the difference, On the contrary, the Beijing-east, which features its own logistics, provides better service for consumers.

In the comprehensive electric business platform to carry out a certain category expansion, it is also often selected in the field of operation of the best vertical electric operators as a target, the most direct competition. For them to sacrifice a certain category of gross profit, because through the related category of the company's overall profit level to maintain a certain standard, and for the vertical electric business is a disaster. Jingdong was relying on such a strategy to the book as the core category when the profit directly hit the loss, the stock price repeatedly fell, this is basically when the development of the history of the turning point. Red children is also due to the comprehensive electric business platform for mother and infant category of the involvement and sales fell sharply, had to sell to Su Ning.

Finally, after a series of projects, investors gradually understand the internal business logic and play, the capital market of winter began to cut off the vertical electric operators continue to rely on the possibility of external blood transfusion, and the lack of their own hematopoietic capacity makes many enterprises become unsustainable, encounter "merge" Doom.