Millet technology to do electricity business is not strange

Author: Huang, senior investment manager of Innovation Workshop, is the founder of the network

According to a lot of friends ' suggestions, this answer made a great improvement, straighten out some logic and text, adding and deleting a lot of content.

Preface: Don't be surprised to sell things online

Millet technology to do electricity business is not surprising. Millet must establish electric business, online sales of its products.

Online sales belong to the electricity quotient, which may be somewhat loosely defined. On this issue, @keso have some different views, it is worthwhile to open another issue to discuss.

Please note: A company has electric business, part or all of the goods through online sales, does not necessarily mean that this is a power company.

Ask Millet is not electric dealer, with @ hanbing Bill's words, this is like asking, Apple is not electric company, "Can not say that Apple is a design company, is a manufacturing company, is a chain store management company, are sweeping." "Can only say that millet has electric business, and must have electric business, but can not say it is a power company."

1. Capacity is not high, can only sell their own

Making mobile phones is too expensive. Millet technology has melted a large sum of money, but the money cannot afford enough capacity to pour into traditional offline access.

At the end of 2011, the Mine Army reported financing figures:

The end of 2010 A round, financing 41 million U.S. dollars, the end of 2011, B Round, financing 90 million U.S. dollars.

41 million dollars, about 260 million yuan, spent 2011 whole year. This year's staff costs plus rent costs plus a variety of other costs and costs, roughly estimated at 20 million yuan expenses, I think it is not too much. Millet has a team of 200 people, even if only the wages (not including social Security), 20 million yuan to maintain the team members in the average monthly salary of 8300 yuan, which has not counted the rent and other costs and costs. Therefore, 20 million yuan a year of the cost of manufacturing, in fact, can not fight, but we first.

260 million yuan, to remove 20 million yuan operating costs, then there are 240 million yuan all spent on the manufacture of mobile phones, that is, the cost of materials plus assembly. If a millet mobile phone costs can be controlled to 1200 yuan (Lei publicly calculated Cing: light material costs more than 1200 yuan), then this financing will be enough to produce 200,000 units.

What is the concept of shipping 200,000 units a year? This is just the size of a small cottage machine manufacturer. Shenzhen, a relatively large shanzhai machine manufacturers, optical Android phone (also not counted feature phones) of the monthly shipments are 100,000 levels.

Millet is a new company, can not do to let raw materials suppliers long-term advances to help you supply, I can't make a long advance for the assembly plant. To tell you the truth, I'm not quite sure which old company can do this, and the big thing is that the time of the knot can be dragged a little bit, or a few more installments, in any case, you have to give the money to others, The only difference is the rhythm control of the cash outflow therefore, a millet mobile phone material costs (BOM) plus manufacturing costs, is how much money, you have to shoot how much money out, to others. Your money, all changed to mobile phone, in the storeroom, when the sale, when you this money to collect back. If the sale is broken, you can cry with stock.

So, you know why millet last year the first round of sales and the second round of sales, each round is only supplied 100,000 units? Reason one: This is the first scale of millet production, any electronic products to the mass production stage, and the development of trial and error compared to the challenges are different, scrap rate, the wrong rate can suddenly soar, Apple's white IPhone 4 dragged for a long time can not be shelves, is entirely the reason. Reason two: Because the scale is small, single Taiwan cost still cannot press down, 1200 this karez is too dreamy. Reason three: This configuration is too unique, the raw materials and accessories manufacturers are far less than cheaper chips and motherboards, so the cost of raw materials itself is high. Reason four: The money in hand is not enough to make so much. For a company without revenue, the amount of goods accounted for billion, it is impossible to make their money all spent. A good entrepreneur does not have the ability to control the risk of cash flow so badly. Compared to the production of more, if not sell off will be too much pressure, lower risk is to produce less, verify the market at the same time exercise team, but also more conducive to the future accelerated growth lay a good foundation.

Remember: the so-called hunger Marketing is just the result of the passing, and can never be a goal.

For a company that sells mass goods, the so-called hunger marketing is nonsense. If you succeed in finding consumers who are in demand, you cannot meet their needs because of insufficient supply, and consumers will find someone else. In other words, you face the highest conversion rate of users, you are powerless to serve, it can only be you do not do not want to do. The same is true of the iPhone, and many electric marketers have already refuted "iphone hunger marketing in their knowledge.

The output of 200,000 units a year is difficult to sell through traditional offline channels. The quantity is not enough, it is difficult to cover the bigger regional market, the channel merchant does not have the meaning very much. Moreover, Millet also does not have so much money to encourage the channel business, because the traditional channel cost is too high.

Therefore, millet can only choose to sell their own. Sell their own mobile phones, of course, online than the offline open a store more reliable slightly.

2. Access costs are too high to be sold online

The core competition strategy of millet determines that it must choose the electric quotient.

What is the market opportunity of millet? Android's positioning is "the cheapest alternative to the iphone user experience", so Android is bound to rise, but the market's suppliers will focus on two extremes: high quality, low quality and low price. The market is seriously vacant, with high quality and low prices (or high quality and low prices). As the "IPhone experience" of the "internet phone" spelling is the ① software application experience and ② software and hardware perfect match, brand manufacturers and low-end manufacturers in the "Software application Experience" of the short board are more obvious.

@ hanbing bill in this answer to the comments in the analysis of the millet mobile phone brand positioning, write very exciting, for the avoidance of waste, cited below

For end consumers, all of the Shanzhai machine manufacturers of mobile phones are called Shanzhai, all apple production of mobile phones are called the iphone, Millet want to do one thing, in fact, in the minds of consumers to form a positioning, millet cell phone is no longer a andorid called Millet phone, but become a proper noun, To occupy a specific segment of the market space. Since then, all mid-range low-cost smartphone, called Millet mobile phone!

This is not a dream, he is in fact in line with the historical trend, mobile phone terminals have been from the era of hardware competition into the software era. Consumers need solutions, not hardware parameters, if a manufacturer can use a set of economically feasible way to meet consumer demand, consumers can give up the vast number of mobile phone terminals in the sea free, only one option is enough. The iphone is this way, millet fully understand the essence of the.

I always feel that if millet technology and production can keep up, the entire Chinese market is completely free of problems, its imagination space is unlimited.

Therefore, in the market high quality raw materials and spare parts capacity is not big enough, their own procurement volume is not large enough, the two premise, millet to provide quality low-cost/low-cost Android phone, it is necessary to do everything possible to remove intermediate links.

When it comes to intermediate links, here is a simple popularization of domestic mobile phone retail cost Composition: A 1000-yuan function of mobile phone (feature phone), Material plus manufacturing cost is 200 yuan, manufacturers add 300 yuan to channel, channel (general two-tier agent plus store sales staff Commission) plus 500 yuan. This is an approximate number. Therefore, when a mobile phone price reduction, not the manufacturers to reduce prices, but the channel feel that enough, the rest of the clearing goods.

Thus, in the domestic mobile phone price composition, the channel is divided into occupy the non! Often！ Giant！ Big！ A proportion. This is the day when the mobile phone why can suddenly rise to become the first reason: it will be from each cell phone sales revenue to take a full 100 yuan to the retail store salesman, so that stores on the sale of day language mobile phone enthusiasm is very high.

Previously said, millet mobile phone raw materials and accessories capacity is not high, their own procurement is not big enough, so that the cost is high, the average of each millet mobile phone materials plus manufacturing costs, even higher than the iPhone. Therefore, if the millet mobile phone in the retail side want to provide low-cost or medium and low prices, you must consider the removal of traditional intermediate sales links offline channels.

Millet can only choose to sell online.

3. No undue emphasis on electricity quotient, Millet also has a non-electric business channel

Compared to clothing, mobile phones In addition to self-marketing, there is no link between the channels: operators.

At present, Millet has talked about Unicom, the day before the millet has just released a telecommunications version (CDMA2000 EvDO format). Operator channels are monopoly, prepaid mode, the number of operators to purchase, will pay the number of Taiwan's money, so that millet can be clearly expected to manufacture and sales of many units.

Millet himself said in the forum, the telecommunications version is the decision of the user to vote, this is entirely to sing a ditty to listen to you, PR just. Telecom 3G mobile phone sales are almost all operators with low-cost bundled packages to promote the results of the user's purchase is too low, the country all telecom 3G mobile phone manufacturers, no one is not and telecommunications talk about a good purchase orders on the premise of their own start volume production.

However, the above conclusion is only a general situation, good know friend @pansz in the comments that

One: The current mobile phone is not fully customized, manufacturers sell their own. Now I know one: HTC s610d. In fact, there are more, but more than a year ago the spontaneous sale of mobile CDMA smartphones mainly this.

Second: to point out that most of the models within 2k, relying on the telecommunications bundle, such as Huawei ZTE's many models sold a staggering number. But in the 2k price above the telecom CDMA smartphone, the main customers are not necessarily rely on the results of telecom bundled promotion because of the package price of these models, its cost-effective is far lower than the iPhone, so that in the high-end CDMA models, the choice of a lot of the bare-package. More people would rather spend 500 yuan to find the code to buy parallel imports, also not into the telecom package, because in the middle-grade model, the package price of telecom is too virtual high, whether it is to pay or monthly rent.

4. Millet has not yet begun to face the real challenge of the Business-to-consumer

As a friend of the electrical business, said that the electricity business is a hard work. Of course, comparatively speaking, because of the way of booking purchase, Millet's hardship will be slightly lighter for a while.

One of the big challenges for a good electric dealer: Sales forecasts. Millet so far the rounds of sales, are in accordance with the booking go. How many bookings do I have to produce? Even the third round of 500,000 units to sell, users need to pay 100 yuan in advance payment. This 100 yuan of course not enough millet Xianchan manufacturing, only to ensure that the scrap rate will be lower. At the same time, millet mobile phone early strategy is to scramble for enthusiasts, after a long period of MIUI forum operation, Millet has successfully netting this group of users. Enthusiasts are a more delineated group, so capacity calculation will not be too bad, such as the third round of Millet mobile phone sales 500,000 units, is soon booked full.

The big challenge of the electric dealer: inventory management. Because booking system, how much to stock, can sell how much, so the warehouse basically will not appear backlog.

The big challenge of the electric dealer three: Quality control. The change of defective rate and return rate will directly affect the cost of the electric dealer. From the public opinion (the real situation only millet itself know), millet needs to improve quality control.

The big challenge of the electric business is four: logistics. To maintain the current booking system, how many goods to send, in which days, are now predictable.

In addition, if the operators of Millet walk Well, above these problems are operators to solve their own, the most worry.

Therefore, the real challenge of millet has not yet arrived. Wait

The target population of millet will be expanded from the fans, or

Millet began to bid farewell to the reservation, or

Operator channels are not giving power,

Then, Millet's electric Corps team will have to top up at that time.

But, as Lei said the 2012 Millet will sell 10 million handsets, these challenges will come true.

Of course, 10 million Taiwan and not enough letter, Bo Eyeball PR just. Don't get me wrong, I have no objection to such PR, millet need more people's attention, but also include the attention of operators channels, rhetoric type of PR is necessary. It's just that 10 million of the funds need to be too big. You can use the cost of 1200 yuan per reader to do a multiplication of the team is also a large pressure.

5. It is difficult to imagine that millet will become a pure electricity quotient, because there are more challenges

In addition to the above mentioned above, do a good job of the electrical business to consider the

New users to get the cost: advertising, marketing, traffic and so on to promote the cost of distribution, on the head of a single user, how much money to get a new user? User Conversion Rate: How many people read your ads, to your site, will become a real buyer? Repeat purchase rate/Purchase frequency: How often do buyers come back to spend again? Affiliate Sales: If a website visitor becomes a buyer, can he not just buy a single item? Customer Price: How much will a buyer spend on each visit? ......

And so on these problems, if millet really want to do electricity quotient, the answer is very not easy.

Above these several questions, only the customer unit price is the millet present can answer even if a purchaser buys only a millet handset, that customer unit price is also 2000 yuan. Contrast, the same is selling 3C started the Jingdong Mall, customer unit Price is now 300 yuan (transmission door: 122.97.248.126/index ...) ）。 However, the purchase frequency of 3 C is relatively low, which is why Jingdong is the main consideration of books.

Lei is the co-founder of the Network of Excellence (Amazon China today), an angel investor, who is familiar with the electric business.

However, Lei has been engaged in the operation of the electric business is a platform-oriented approach. Although it seems that all customers are brand electric dealers, not Amazon like the mall, any customer growth path is still the mall-style platform route.

There are actually two ways to brand electric dealers. One is the way most brands

Where the volume of traffic, where I sell, this principle, line offline is the same, for excellent Uniqlo, in three Li Tun Sanlitun open shop and shop in Taobao Mall, is the same consideration. Most brands are unable to afford the high cost of their traffic, so they choose to shop online (they occupy large areas of traffic and build up visibility) or on-line sales platforms (they spend a lot of money and build up popularity).

Another way to brand electricity dealers

I drive the mall myself, I spend my money on traffic. Because of the high flow cost, the money to attract users, if you can not improve their conversion rate, repeat purchase rate, customer unit price and a single purchase amount, spend so much money to get traffic is tantamount to suicide. Therefore, this approach is entirely a platform of practice (such as Jingdong, Amazon, Taobao), which is why every customer will be introduced v reasons, but also why Jingdong must expand the category.

Previously said, Millet is because the current production is not big, can not support a large channel system (including offline and online). If you're going to sell your phone everywhere (as Motorola does), then you need a strong enough brand, a large enough supply, enough channel control and enough to benefit the channel. These four points, the 1th millet temporarily do not, 2nd also temporarily do not, the third 4th millet flatly do not want to do (perhaps only temporarily do not, the future if there is a chance will do).

At present, Millet is their own marketing, their promotion, their own advertising, to make their own traffic, all marketing promotion behavior, point to are their own website. Other places do not sell millet mobile phones, so others will not share the cost of marketing promotion for you. This is a path to the early days of every guest. But will millet become the electric dealer like van? The question is doubtful. Quote @ hanbing Bill's comments under this answer

Millet marketing is to burn money, but is not burned to the electric dealer, is burned to the brand, in order to seize this segment of the market's psychological positioning, once formed, its natural growth will be completely different from the traditional mobile phone needs to continue to channel blood transfusion to ensure smooth access to the old method, the scale of its investment will be greatly reduced.

Off the topic: Millet is still very powerful

In a word, millet has done a very good job, the two-wheeled sales of 700,000 units, each 2000 yuan price, sales revenue reached 1.4 billion yuan. Only at present because of low production, raw material cost down, the profit is still very thin, how thin, I do not dare to estimate, but I personally feel that investors are willing to let Millet is now very little profit. Future profits depend on size.

Oh, sounds like a lot of it, huh?

In any case, because of the high unit price, the premium space for value-added is always better than other products. If 2000 yuan of mobile phone only 7% gross profit, then 700,000 Taiwan also have 100 million yuan of profit not?