Orchid Pavilion set potential into the "into also marketing, failure also marketing" embarrassing situation

4-year total growth rate of 3,075%, 2012 quarter to achieve a profit of 1.115 million U.S. dollars, June 2013 to the NYSE, listing 4 trading days, the price soared 60%, if this is a power business performance, may be very few people believe, but the fact is so.


　　


It is the Orchid Pavilion set potential, a focus on doing foreign trade, the electricity trader.


　　


when China's electric business enterprises in the quagmire of price warfare, and constantly burning money, it is a leap to break the deadlock in the stock, with the rising share price continued to write miracles, by the media dubbed "Demon shares."


　　


"Demon Stock" is not a day of kung Fu. 2007, the Orchid Pavilion is officially on the line, at that time, the mode of China's electric business has been very clear, not only by Amazon acquisition of the outstanding network mode, as well as the ascendant Alibaba Business-to-business and Taobao Consumer-to-consumer model. How to survive in the cracks? Guo went to the disease--go out and do foreign trade.


　　


but China's foreign trade is still in the brutal development period, because the entry threshold is low, as long as the discovery of domestic and foreign products have spreads can do, sellers up to tens of thousands of, sales generally in tens of thousands of to a hundred thousand of U.S. dollars, so the market is quite dispersed. At present there are a small scale of the orchid Pavilion, Tai Long network, Milan Network and DX.


　　


from the tens of thousands of competitors, become China's "foreign trade first shares", thanks to the Orchid Pavilion set potential unique business model and excellent founding team. However, behind the scenes, perhaps there is a hidden worry about the inherent.


　　


Foreign Trade


　　


Orchid Pavilion has been 40% high gross profit margin, and Amazon for 24.8%, only goods will be 22.3%, Dangdang 13.9%.


　　


Although recently affected by China's economic environment, the stock price of shares in collective diving, as reporters press, the Orchid Pavilion set potential of the stock price of 13.65 U.S. dollars, compared to 9.5 U.S. dollars in the opening, still rose 44%.


　　


The strength of the stock price and the first quarter of the bright Eyes of the pavilion is inseparable, according to the results, 2013 Q1 Orchid Pavilion Set Potential to achieve net revenue of 73.3 million U.S. dollars, the year-on-year growth rate of 99%, net profit of 2.61 million U.S. dollars, the profit of the chain expansion of 133%.


　　


is also the electric business, why the domestic electricity business is the bitter days, orchid pavilion set potential but stuffy sound made a big fortune. The root of this is the unique business model of the Orchid Pavilion.


　　


at the end of 2006, Guo to disease for the Orchid Pavilion set up a basic model: to do multinational, with Google promotion, with PayPal payment, with UPS and DHL shipments.


　　


looks like a simple foreign trade to the operation of the light assets of the empty shell, its essence is to shorten the entire foreign trade industry chain.


　　


"We represent a class of new e-commerce companies rooted in the supply chain, compared to the Amazon, when the relationship between the supply chain is a very simple channel-type relationship, and the Orchid Pavilion is the traditional supply chain of reorganization and rewriting." Guo went to disease once bare one of the mystery.


　　


traditional transnational electronic commerce, generally includes 6 links: A. China's factories, B. China's exporters, C. Foreign importer, D. Wholesalers of foreign countries, E. Foreign retailer, F. Foreign consumers. Alibaba only completes the link from B to C, at best it only affects the link from a to D. But the Orchid Pavilion collection potential has realized all links from a to F, and has skipped the C, D, e three links.


　　


and from the D to f of the three link is to produce a real high profit link, not flow outsiders field, orchid Pavilion set potential will be all of the three links in the bag, thus breaking the Chinese manufacturing can only rely on cheap meager profit to win the rut, at one point more than 40% of the high gross margin. At the same time, Amazon Gross profit margin of 24.8%, only goods will be 22.3%, Dangdang for 13.9%.


　　


from China's factories directly to foreign consumers in the hands of the intermediary agents to eliminate the layers of exploitation, this is the Orchid Pavilion set potential to obtain high gross margin of the main reason. Even so, the price of Orchid Pavilion is still known as "cheap".


　　


At the beginning of the creation, the Orchid Pavilion set potential to use China's Low-cost "cottage" electronic products and cheap wedding dress to pry open the tip of the foreign trade market. In the case of wedding dresses, the average American wedding dress is priced at more than $1000 trillion, while the average price for the Orchid Pavilion is just 209 dollars over the same period.


　　


such a low price in addition to greatly shortened the supply chain, strong procurement capacity also makes it significantly reduce costs. Orchid Pavilion is currently in a total of 6 procurement offices nationwide, due to the needs of category expansion, the current number of suppliers from 2010 to 600, increased to 2000 in 2012.


　　


In addition to the high margin, orchid Pavilion set potential 21.7 of the inventory turnover speed also makes the peer, Amazon's inventory turnover rate of about 9.3, only the goods will inventory turnover of about 5, which is determined by its special supply chain management model.


　　


for custom-made dresses, orchid Pavilion set potential to take the practice of daily updating orders, to ensure that suppliers on-demand, usually 10-14 days to send goods to the Orchid Pavilion set potential warehouse; For standard products, suppliers are usually able to deliver the goods to the Orchid Pavilion warehouse within 48 hours.


　　


in order to minimize inventory pressure, to improve the efficiency of order processing, starting from the fourth quarter of 2011, the Orchid Pavilion set has begun to require some suppliers to stock in advance and stored in the Orchid Pavilion set potential of their own warehouses, and this part of the inventory is not counted into the Orchid pavilion set potential, only when the user orders, The ownership of this part of the assets to the Orchid Pavilion set potential, counted into the orchid pavilion set potential revenue and costs. When goods are popular, they are more stocked and unpopular. Throughout the preparation process, the Orchid Pavilion is only responsible for the provision of warehouse space and to pay the supplier to the remaining inventory of logistics expenses.


　　


Chinese partner


　　


Google former China chief strategist, a former vice president of China, a former Vice-President of excellence and a premier supplier.


　　


and the film "China Partners" in the male lead cock silk reverse attack of entrepreneurial story, Orchid Pavilion set potential partners can be called "high rich handsome", entrepreneurial process is also less difficult to survive the Chinese electric business of the solemn and stirring color.


　　


2006, Guo to disease and Wen Xin Exchange, two people began to imagine how to do overseas consumer business. At this time, the returnees Guo to the disease back to China, as Google China's chief strategic officer, the same is the post-Chinese vice president of the Wen Xin blog. Guo went to the disease also find excellent former vice President Liu, Liu and pull into the outstanding supplier Zhang Liang. Four people's rich experience in the internet has laid a good foundation for the future development of Orchid Pavilion.


　　


at the end of 2006, their ideas are basically shaped: doing multinational corporations. Just started using Liu's website for small-scale testing, the effect is good. March 18, 2007, Orchid Pavilion set potential official online operation, at that time to run the company is the Wen Xin and Zhang Liang.


　　


at the end of 2008, Guo, who resigned as Google's chief strategist in China, is officially chairman and CEO of the Orchid Pavilion. Among the four founders, he is responsible for strategy, financing and so on, President Wencen is responsible for marketing, Liu is responsible for the operation, Zhang Liang is responsible for purchasing. Such a gold combination is no more than "Ctrip four swordsman" bad.


　　


Guo to disease is orchid Pavilion set potential core figure, Sichuan people, "not tall, chubby, round face, fine eyebrow thin eyes, love laugh, cargo" is his impression of the media.


　　


Guo to disease appearance although inconspicuous, but has a very bright resume: 1999 Chinese University of Science and Technology class graduate; 2001, a master's degree in electronic engineering from the University of Illinois, 2001 to 2003 as a software Design engineer at Microsoft Headquarters, and in the Amazon Business Development team in 2004, Participated in the acquisition of a network of excellence, an MBA from Stanford University in 2005, and a special assistant to Google's China chief strategist and Google China President Lee Kai-Fu in 2005 to 2008, and previously served as product manager in the US.


　　


almost all contact Guo to disease people think he is very "smart", Kai-fu Lee is "extremely clever" four words evaluation Guo. However, "smart" seems to have a natural blood relationship with "ego", and Guo is no exception.


　　


It is said that in Google, there are not many people who like Guo to go to the disease, because from finance to procurement, from personnel to product managers, there is no one he does not criticize. He was so blunt and sharp that he couldn't stand. "Smart, strong, highly perceived, not only despise the pure theory of the returnees, but also look down on domestic turtles, feel that they are the best." A man familiar with Guo said so.





even now do foreign trade, Guo to peer also disdain, he would rather in micro bo attention to beauty, also do not pay attention to e-commerce people.


　　


However, in the effort to attract others to pay attention to the site, Guo to disease and his team is outmanoeuvred. Traffic for the electricity business is crucial, in order to improve sales, Guo to the disease in the network marketing has resorted to all the tricks. It can even be said that the explosion of the Orchid pavilion is mainly benefited from the team's good internet marketing.


　　


Orchid Pavilion Collection potential mainly through search engines, display ads, Alliance advertising, mail marketing, as well as social marketing methods to promote, in which, search engine is the first large flow entrance. According to Hitwise data, in March 2013, www.linghtinthebox.com North America visited more than 45% of the traffic from Google, followed by social networking site Facebook about 3% of its traffic, including ebay, Yahoo! Search, Bing, ask, Yahoo! Mail, Amazon and other sites to bring about 2% of the traffic.


　　


of course, the electric dealers who burn money are not the only money from Angels and VCs, and the Orchid Pavilion is no exception. First Xiaoping to 100,000 dollars to become an angel investor (registered capital of 300,000 yuan); In 2008, the joint venture entered into a second round of investment with the Jinsha venture in 2009, with two rounds of $17 million added. October 2010, received from the Trust capital, joint venture sources and the Jinsha River venture investment of 35 million of dollars in financing.


　　


is good at marketing team and capital support, let this started in China's low-cost electronic products and wedding dress Orchid Pavilion Set the momentum, successfully boarded the first Chinese foreign trade.


　　


according to the Orchid Pavilion collection potential prospectus, as of December 31, 2012, LightInTheBox on its own www.lightinthebox.com and other sites, providing a number of categories, a total of more than 200,000 independent products. The company's core categories include clothing, home and all kinds of accessories.


　　


From its financial data, the company's net turnover in 2008, 2009, 2010, 2011 and 2012 was 6.25 million USD, 26.05 million USD, 58.69 million USD, 116.2 million USD and 200 million USD, with annual growth rates of 316%, 125%, 98% and 72% respectively. In the fourth quarter of 2012, the net profit of 1.115 million U.S. dollars (last year fourth quarter only goods will net profits of 6.4 million U.S. dollars).


　　


hastily listed, short board


　　


and Orchid Pavilion set potential high marketing does not match is: customer viscosity low.


　　


Orchid Pavilion after the listing, in investors for the rising share price cheered, the industry is from the Orchid Pavilion set potential reported the hidden worries.


　　


The biggest question is "marketing-driven" sales lead to high cost of marketing, which makes the orchid pavilion may fall into the "into also marketing, failure also marketing" embarrassing situation.


　　


according to the public data show: 2010, 2011, 2012, the marketing cost of Orchid Pavilion is 22.6 million, 38.46 million, 53.41 million USD respectively, the proportion of net revenue in the same period is 38.5%, 33.1% and 26.7% respectively. In contrast, Amazon 2012 marketing costs accounted for 3.9%, only the goods will be 4.7%. High cost of marketing also to a certain extent to offset the higher gross margin.


　　


More importantly, Orchid Pavilion set potential marketing seems more quick, it is not like every guest this more pay attention to brand marketing, Orchid Pavilion set potential seems more enthusiastic about those to pull sales can play a direct role in marketing means, such as search marketing, can directly bring traffic and orders, on the contrary to build channel brand is not enthusiastic.


　　


therefore, and orchid Pavilion set potential high marketing does not match is: customer viscosity low.


　　


U.S. stocks Lee that the logic of e-commerce is to achieve large-scale operations through new users and repeat purchases, thereby reducing variable costs on a scale basis, resulting in sustained cash flow, supporting and investing, and forming an eco-circular circle. Amazon in 1999 has achieved a repeat purchase rate of 73%, the only product will also achieve more than 70% repeat purchase rate. This has led to a substantial reduction in marketing costs.


　　


Lee that there are three reasons for this result, one is the Blue Pavilion set potential choice of the market determines their user base generally price sensitivity is very high, often because of "low price" and transfer. Second, a lot of participants, but also to the overseas market, the general use of search engine marketing This set, participate in bidding more, the price of the key words will naturally rise. Third, the main wedding dress, 3 C, accessories, these categories of their own consumption frequency is not high.


　　


Although the recent blue Pavilion set potential marketing costs are falling, but this trend can continue to keep, how much room for decline, is still a question.


　　


In addition to marketing issues, "Orchid Pavilion set potential in the customs clearance of goods, business development, the return of money, tax standardization and other issues also face some problems." Zhang Zhouping, a senior analyst at the China Electronic Commerce Research Center, told the weekly financial news reporter.


　　


such as foreign trade in Cross-border logistics, will face the choice of bulk logistics mode or "International small package" way of customs clearance. The former is slow, while the latter is highly likely to be identified by relevant departments as "export irregularities."


　　


business Development, Zhang Zhouping that the main customers are Europe and the United States in the mature market, but the development of emerging markets is difficult, on the one hand, the purchasing power of emerging markets is still deficient, especially the price of Chinese products in many developing countries do not have much advantage; Due to the lack of credit system and logistics system in emerging markets, the turnover rate and return rate will be much higher than that in Europe and America, which will greatly increase the corresponding cost.


　　


"If the Blue Pavilion set potential energy to solve the problems I mentioned, it should be said that the future prospects are still more clear, it has the advantage of first." Orchid Pavilion Business is now mainly concentrated in Europe and America, if you can continue to expand business, it should be said that the future is still more clear. "Zhang Zhouping said.


　　


However, some people in the industry think that in the case of low valuation, the Orchid Pavilion is still the choice of listing, on the one hand may be the pressure of investors, on the other hand is to occupy, because domestic trade of the Big boss of the day generally bad, by contrast, the business of the consumer is undoubtedly a Last year, international giant Amazon has launched a "Global open shop" business, testing water foreign trade. It is said that Jing Dong also intends to test water foreign trade. If these big guys are all here to grab food, I'm afraid the days of Orchid pavilion will be even worse.





, a former foreign-trade-speaking executive, is more blunt about the possibility of a U.S. company suing the listing of the Orchid Pavilion. Because the foreign trade "shanzhai" nature is difficult to change, in intellectual property will encounter great challenges. And the scale of the financing is small, so that people can not understand the purpose of the listing.


　　


　　


wise Guo to the disease will face these questions, at present he chose silence. Reporter Call Orchid Pavilion set potential A Lin's PR learned that the company is now listed after the silent period, up to two months. But generally speaking, the silent period of the listed company is before the listing period.


　　


However, Guo may have been aware of the problem, consciously to the foreign trade to the domestic business-open Taobao shop, the creation of a clothing brand TS, the acquisition of Chinese consumers of the consumer website, Europe Cool Mall.


　　


but for the inherent problem, Guo may be inclined to mergers and acquisitions, "My ideal is to buy one or two companies each year, a enough, two will be earned." We hope to make an aircraft carrier-type enterprise, we can park a lot of ' fighter '. Guo went to the disease had previously said to the media.