Li Shubin Vertical distributor: Low price Sales Inventory is self-anesthesia

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Entrepreneurship is a difficult journey, if you can predict the way ahead of the possible traps and fork, the probability of success is higher. As a result, entrepreneurs are equally eager to get a mirror from their own entrepreneurial woes, compared with the almost perfect example of successful packaging.

"Entrepreneurship Revelation" is Tencent technology in the second half of 2013 launched the in-depth report column. The content includes the most famous startups, stories and characters in the Internet in recent years, telling about the real experience of Internet entrepreneur, sharing the experience and reflection.

What we are doing is to think about the case of Chinese Internet entrepreneurship from multiple perspectives, and to summarize the most naked and shocking entrepreneurial truth based on business knowledge.

Tencent Technology King could report December 16

People are not unfamiliar with the footwear electric business good buy. In particular, two years ago, in the capital of the push, with good music buy, Amoy as the representative of the vertical electric business is strong.

2010, 2011 is the golden period of vertical electric business capital, the vertical electric business large financing, advertising, mapping out a flourishing scene. However, since the second half of 2011, the vertical Electric business collective "Winter", in the capital cooling environment, the shoe vertical electric quotient seems to fade out of people's sight.

What are you doing after everything is cool?

Amoy has undergone two transitions-from footwear to consumer transformation to a customized platform. Good buy is in the internal adjustment, reposition.

In the past, when capital was pushed and large sums of money were held, almost all vertical electric operators had a dream of a platform-the pursuit of scale, sales, but neglected the core of the retail industry inventory, sold out rate, sold out turnover speed.

Good happy to buy CEO Li Shubin the past summary of the main three points: first, focus, shrink category, reposition. Second, pay attention to inventory, sold out rate and turnover is related to life and death. The third is to grasp the rhythm, "too fast must not be a good thing."

Focus: Product line shrinkage positioning in the high-end

Li Shubin Frankly, these two years of good music to buy a lot of reflection, the first reflection is "focus."

In the past, good music to buy and did not have too many significant labels, positioning the "shoe sales" site, and there is no crowd, price zone subdivision positioning, all-encompassing. Li Shubin had also thought that it might even be possible to start from selling shoes, gradually expanding to other categories like Jingdong, even to do proprietary category.

"At that time, most companies, the pursuit of goals are too big, including us." Everyone wants to start with that field and become a whole category company. Everyone holding a big tens of millions of U.S. dollars, the earliest time Jingdong also but take 10 million dollars. So everyone thinks I have a chance, ' maybe Jingdong is wrong '. ”

But the reality of the problem is that platform-type companies have formed a flow of black holes, has not depended on the difference to make money, but through the open platform, services and other models to make money. For the limited flow of vertical electric operators, if not to avoid with the cat, Taobao direct competition, but to do a "kitten" does not make sense.

"It is not possible to attract all users, good buy does not have this ability, should look for a more accurate user base." "Li Shubin said.

Nearly a year, a good buy gradually adjusted, cut off the female bag category, excluding 150 yuan below the low-end shoes, positioning in high-end, facing the 18-year-old-35-year-old user group.

Why focus, positioning in the high-end?

First of all, in terms of gross margin, only the middle and high-end, the higher the absolute value of the margin. He example, if sell 50 yuan of shoes, even if gross profit margin 50%, only 25 yuan of gross profit. This is the same as the cost of the warehouse operation of 300 yuan shoes. If the absolute value of gross margin is low, can not offset costs, can not be profitable.

"Only in the high-end positioning, we will be Maori space, in order to operate the company well." Sell the low-end only to pursue how the service becomes worse. Sell low-end products also want to serve good, can never have such a business. "Li Shubin said.

Second, the low-end price belt is Taobao's strength. He calculate a sum of money, Taobao women have about 70 million products, close to 1 million shops, but 100 yuan below the goods accounted for more than 30%, 200 yuan below the goods accounted for more than 70%. "Taobao's best price band is 0 to 200 yuan low price band." If the price, Taobao is always cheaper than you. Because Taobao operating cost is low. High service necessarily means high cost. If the competition with Taobao is the strongest, we will never compete. ”

Taobao, the average of goods in each store within 100, even according to 1 operators per shop to calculate the average operation of 100 goods per person. "But good music to buy the operating capacity is limited, it is impossible to raise so many people, not only the operation of 100 yuan of goods, but also to operate 1000 yuan of merchandise." Therefore, to form a differentiated with Taobao, the price belt must be improved. ”

Third, the flow is limited. Li Shubin that, the day cat, Taobao traffic is approximate unlimited, the user group is large, operators enough. But happy to buy the flow, the location of the home display is limited. "We used to say that the long tail, the added value of infinity, you can sell all the products." But ignoring the flow is limited, only the best products in the most important position. ”

Li Shubin found that from the beginning of the first half of this year, many of the business has upgraded the main commodity price belt, the pursuit of gross profit. "It shows that the pursuit of low-end products, pure low margin price war products have gradually lost patience." ”

Inventory is a matter of life and death

People in the retail industry know that the selling rate and the rate of sold out are at the core of retailing. On the control of inventory, Li Shubin has its own reflection.

"Previously, 20% of gross margin is already high relative to digital products," he said. Now, 20% of gross margin needs to be jittery to not lose money. I'm very concerned about inventory, but it's a long way off. These numbers are vital. "Li Shubin said.

What does 20% of gross margin represent? He counted the accounts:

If you buy 10 pieces of goods, sell the eighth item before you can take back the cost of the purchase. For example, 8 yuan to purchase 10 pieces of goods, the procurement cost of 80 yuan. Each item sells 10 yuan, the gross profit is 20%. Sold to the 8th, only to earn back 80 yuan in the cost of the purchase.

and add advertising, operation and other costs, means that the sale of the eighth is certainly a loss of money, even if sold to the 9th is likely to lose money. So it takes a very high rate of sold out to make money.

The net profit of the retail trade is very low. Suppose net profit is 3%, sell a pair of shoes 300 yuan, only 9 yuan net profit. If the purchase price of 300 yuan, 20% of the gross profit, the purchase cost is 240 yuan. This means that, as long as a pair of inventory (240 yuan), nearly 27 pairs of shoes sold in vain.

"20% of gross margin should be scared to sell. The 80% per cent sold out rate is already high for many companies, but it is still very far away. You have to make sure that most of the goods are sold out, and occasionally some of the goods are left broken code, you can make money. Sold out rate of less than 97% I am in vain. "Li Shubin said," I have seen a lot of Taobao shop, gross profit margin of 40%-50%, after several years of operation still did not make money, make a lot of goods. And what about the 10%-20% of our gross margin? Unless you're doing a very good job. ”

In the past, he argues, all companies have paid far less attention to the rate of sold out and the rate of sold out. "At least from 2007 to 2011, people are not too concerned about the sold out rate, sold out speed, because we have more money in hand, lose some money does not matter." Everyone comfort themselves, sell well, can engage in an activity, sold below the cost price, as the market costs to attract customers. ”

But it is extremely wrong to treat low priced stocks as market costs, and it is in the self anesthesia. The production of inventory, the Representative is not at a reasonable time to sell out, means that the wrong goods. "Maybe this time you only lost more than 100 goods, maybe two years later, and so on scale bigger, the loss may be tens of thousands of pieces, hundreds of thousands of pieces of goods." ”

He admits that good music buys a lot of stock in the past. "Happy to buy is still considered one of the surviving enterprises, we still pay attention to early, action early." I would have been better off being on thin ice a year or two earlier. ”

So, how to achieve high sold out rate, to achieve profit status?

Li Shubin's answer is, keep out of stock, thirsty state, rather lose a certain sales, also do not have more inventory. If the procurement system, is expected to sell 100,000 pairs, should buy 10,000-20,000 pairs, need a strong self-control. "The economy kills a lot of people because it's easy to paralyze." Is it true that every time a bomb is taken? If 10 times there is a bad bet it will die miserably. ”

This is why the good buy began to "focus".

Li Shubin that the expansion of such a wide range of product lines, means that the operation is very rough, the purchase is very rugged. Taobao stores only 100 items per store, while the past good music to buy each hand average operation of 1000 items, "It is impossible to manage well." After the adjustment, Li Shubin that each buyer could not operate more than 100 items.

"I used to think that shoes do not have shelf life, shoes are actually shelf life, about two years or so." The user's pursuit of the new model is much higher than the old one. "Li Shubin said.

Reduce unnecessary advertising

In the era of expansion of the pursuit of scale, the subway, bus station, the site can be seen everywhere vertical electric dealer figure. 2011, a good buy million yuan on the subway ads, in Haidian Huang Zhuang (micro-BO) subway set up brand station, set up a "commodity wall."

With the strategic adjustment, the strategy of good music to buy in advertising has also changed. Early this year, good buy suspended the cooperation with some navigation sites.

Traffic is important, but the premise is to do your own thing well. If you do not do a good job, flow is meaningless. Traffic is not cheap, the net profit cannot pay the flow cost.

"Only goods will be able to obtain traffic, the internal comb very well, positioning is very clear, users repeat the purchase rate is high enough, margin space is high, do not backlog their own inventory." We are not a brand, and our gross margin is not that high. We have not solved the problem of inventory, but also to play so many ads, it is not to find death? Li Shubin said.

Li Shubin thinks, good buy although spend a lot of money to buy goods, cause a lot of pressure to the company, but fortunately is to spend money to sell goods, not disorderly spend, at least these goods are able to maintain value. If they all advertise, there may be nothing left.

Li Shubin Frankly, the reduction of advertising, the new user is indeed less than before, there is loss of sales, but the loss is less than expected. "Those who don't come without ads are not our target users," he said. He bought me instead of losing money. ”

It's too soon to be good.

After several years of entrepreneurial experience, Li Shubin came to a conclusion: too fast must not be good, rhythm is very important.

Every company makes mistakes, this is the natural law, no one can cross the domain. "Not because you listen to a lot of other people's entrepreneurial experience can avoid these mistakes." From the first day I started my business, I knew that inventory was important and turnover was important. But you don't experience this painful lesson, you may not realize how important this is. ”

Many companies have suffered a great loss in their mistakes.

"Traditional industries will make mistakes for four years, and E-commerce may make mistakes for four years." But the traditional industry development slow, make mistakes may be a small mistake, aware of timely correction, easy to reverse. and the development of E-commerce is too fast, the fourth year of mistakes may be a big mistake, it is difficult to turn around or die. "Li Shubin said.

A company's energy is limited, if the speed is too fast, means to give up a lot of things, to take money to make up the so-called "fast." But he believes that the BoE needs speed, because Jingdong is not a model of earning difference, can do open platform, do finance, open logistics and distribution system.

"In the past, everyone was at a rate of less than 200% or 300% per cent growth," he said. Now no one is more than speed, but it is better than whether the company is making money, how it is operating, the cash flow is not healthy. ”

"If you make a steady growth of 30% to 50% a year, this year's sales of 3 billion, next 373.8 billion, to achieve profitability, to do a billions of of the company is also very comfortable." Why do I have to pursue a company that grows hundreds of a year, but is a mess? People will not pursue such unrealistic goals. ”

Li Shubin said that good music to buy is about to achieve break-even, fast to "comfortable" time. "But the break-even is certainly not the company's goal, but to go further, to achieve steady growth and profitability." ”

Change of mindset: no longer subject to external interference

Good Lok Buy is the second time Li Shubin business. Looking back eight years of entrepreneurial experience, Li Shubin mentality has undergone a lot of changes.

Li Shubin was born in 1980 and was 26 years old when he started his first venture, and founded a music-sharing website songtaste.com. In 2010, Li Shubin sold it to a public company at a price of 10 million yuan, becoming his first bucket of gold.

"2009 When I got the Sequoia investment, I was 29 years old, and I can't say I'm not proud of myself." It would have felt like it might be available in a few years. I'm not now, I'm 33 years old this year and I think I'm a ' normal ' adult. ”

"If I start a new business now, I'm not going to be so disturbed," he said. The development of E-commerce has a big ups and downs, and e-commerce practitioners lack of experience, resulting in a lot of external interference. "Li Shubin said.

"Maybe a lot of the founders of the company want to be quiet, but they can't be quiet, because there's always some invisible power to push you forward," he said. He believes that these external factors include the promotion of venture capital, the rapid development of the entire industry.

Really can have a particularly stable heart, can not be disturbed by the outside world, such people need to be extremely strong, but a strong heart must be from the industry experience. The retail experience of e-commerce practitioners is too lacking. Although some traditional industry people have relevant experience, but not necessarily retail experience.

"Now I will follow my own judgment, do not feel that the industry is hot in a year or two, and will not because the industry in a year or two will not be able to dry." "Li Shubin said.

When it comes to personal goals for the future, Li Shubin's answer is "no goals." "Those who really set their goals cannot achieve them." Be lofty, down-to-earth. Don't sailed you can't do small things because you've seen big things. Now that I can write a program, I should still do something on the ground. ”

Three Tips for electric entrepreneurs

The stage has passed since the establishment of the official website. Now the founder of vertical electricity should be from Taobao, Cat, Beijing-east platform to do, rather than directly set up official website. In the above platform operation can regardless of the system, just goods, operations, services, if the establishment of their own official website, the need for their own management technology, design, promotion. The official website investment is very high, should put the money on the blade.

"If the cat and the east are not competitive, how can you prove that the establishment of the official website is competitive?" If in the days of the cat, Beijing East Operation Good, in the future have the opportunity to do their own platform. If the platform on these platforms are not good, not to mention the establishment of the official website, because the difficulty of making a platform is far greater than in Beijing east, Taobao on the operation. "Li Shubin said.

Do not blindly pursue fast, but must pursue the purchase of the users are willing to continue to spend. "If they're not willing to continue spending, you don't need to expand blindly," he said. How can you attract other people to start from around and if people around you don't want to come here to buy something?

Selection and presentation are the core. Taobao, Cat is already a full platform for competition, new entrants do not do all-inclusive, but to do fine refinement.

He thinks, in Taobao open shop "marketing is the core" point of view is wrong, the selection plus show is the core. The show is not designed to be beautiful, but to tell the customer the selling point.

"In Taobao, the cat does not need too much cost, if the product selection is good, show doing well, from around people began to start, slowly accumulate, do not require the number so fast, you can do this three points well." These points are not good, others not to mention. "Li Shubin said.