Store 1th attack Artifact: Price system death bites opponent

Senior Netizen Mr. Li recently in the phase of a Samsung I939D mobile phone, he habitually in a Amoy comparison online search price. "No. 1th Shop 3499 yuan, Jingdong mall 3599 yuan, new egg net 3788 yuan." "The result made him decide quickly and buy it at shop 1th," he said.

Low price is the inevitable killing technology of electronic commerce. But low prices will also reduce the gross margin of the site. How to "dance on The Wire", this is the moment hovering in the 1th shop CTO June Mind inside the problem.

Shop number 1th is no stranger to many Shanghainese, towels, handkerchiefs, socks, shampoo ... The store can be bought in the mall, the number 1th can be done.

In fact, last August, the Ministry of Commerce approved Wal-Mart to buy No. 1th store parent company NIU Holdings 33 from China's Ping an. 6% stake, Wal-Mart's shareholding ratio from 17. 7% to 51. 3%. Store No. 1th has become a model for Wal-Mart to transform from physical store to electronic commerce.

For store 1th, the landmark event that occurred last year, in addition to the change in shares, is the IT system completes the upgrade integration. The industry's renowned system integrator Oracle has provided a set of database cloud servers for store 1th, which is the June's secret weapon for the 1th store IT system.

Automatic pricing system

Back to Mr. Li's case, the 1th store mobile phone price is much cheaper than Jingdong Mall 100 yuan, this is a coincidence or arrangement?

"Retailing is the art of detail (retail are all about detail)." June told the newspaper reporter that store 1th's IT system has a precise automatic pricing strategy. In the commodity price, the 1th shop uses the price Intelligence System (PiS) to the product pricing, maintains the price in the industry "the first three low" position. The system will collect 72 competitors a total of more than 17 million of the price of goods as data mining, after the establishment of a price model, and then adjust the price based on the model, so that the product always maintain a low price.

This April, store 1th and Jingdong Mall in the same period launched the annual "Mobile Festival", there are media reports that the 1th store mobile phone section will take the following price strategy: all Jingdong "explosive" goods, shop 1th will be corresponding to reduce the price of 33 yuan; all Jingdong main push models, 1th stores will be cheap 33 yuan to 100 yuan range. And not participate in the activities of the model, shop 1th will also rely on advanced PiS price intelligent system to ensure their own price competitiveness: more than thousands of mobile phones than competing goods at least 100 yuan, 500-1000 models low 50 yuan, 500 yuan below the model low 30 yuan.

Low price strategy does not hurt margin

Low-priced strategies are the secret to attracting consumers, but shareholders are less keen on them. Some websites have been exposed for years of losses, the price war is the main reason.

In this respect, June told the newspaper Reporter: "The price of intelligence system so that our sales and margin growth of 20%." ”

Facing the reporter's doubt, the ROK further explained, "The margin growth here is not the gross margin of the single one by one product, but the average gross profit of all goods." "In other words, the system is" one-on-one "to find competitor price information, and" head-to-head "to automatically cut the appropriate price. "Some commodities are low in profit, and some are of high gross margin, and the gross margin level can be maintained." ”

Korean Army also introduced that the current system pricing products have reached 95%,7x24 hours to stare at the entire internet, once the discovery of "enemy", immediately rapid response, start automatic price adjustment system.

"The price intelligence system is particularly suitable for the pricing of unpopular and general commodities. If it is a special promotional item, we will use system construction and manual intervention methods. ”

Indeed, the network sales platform is a big advantage is unlimited display space, "toothpaste, instant noodles in the shape of tissue box", "can be cut paper-like thickness of cucumber beauty slicing knife" and other novelty small commodity prices, although not high, can still set a relatively high gross margin.

Music system Pie

"Oracle's IT system is expensive, but we think it's worth it," he said. June admits that he is a firm system faction. "The system is the data pie, through the data analysis to win the right to speak, the past site out of the question, with a guess, the various departments of wrangling, now data to make the business situation at a glance." ”

Specifically, a new line of merchandise hits reflects the popularity of the year-on-year comparison of data, a brand of sales rise and fall, price changes, can be used to figure out the factors behind. "We call this system Pandora. June smiled and said. Therefore, the technology department of Shop 1th becomes the impetus of new business and new business model.

At the beginning of last year, Gege, 1th, chairman of the store, said that the allocation of funds for store 1th was financed 30%-40% for logistics storage construction, 30% for innovation and IT system construction, and 10% for market promotion.

Han Gang revealed that the proportion is falling sharply as sales of store 1th have grown rapidly. "The proportion of it human capital is now about 3% per cent." ”

Dialog

Shanghai Business Daily: No. 1th Shop What other recommended systems are there?

June: Personalized recommendation. This function accounts for about 10% of our overall income.

Specifically, when you enter a shop page, you will see "Hot recommended" merchandise, when the user expressed interest in a particular category of goods, we will have the "browsing related" recommendations and "one week ranking" recommendation, when the user put the goods into the "shopping cart", we will have "together single" recommendation.

Shanghai Business Daily: What is the effect of the product recommendation?

June: The recommended system has different algorithms.

such as toothbrushes, paper towels and other goods our recommended frequency is once a month, and mobile phones, home appliances and other commodity recommendation cycle will be elongated.

We will also make analogy recommendations based on brands, such as determining which brand of shampoo the iphone user might like. "As the data increases, the accuracy increases." ”

RELATED links: e-commerce it

Tags: Oracle

Store 1th is currently using Oracle Exadata Database cloud Server, to meet the growing business processing needs, the average processing performance increased 7 times times, greatly enhance the data service platform background data processing capabilities.

Keywords: Association recommendation

Behind the sharp rise in Amazon's sales performance, the engine of growth is the recommended system it has developed.

Amazon's more than 30% of every hundred orders come from affiliate recommendations. The conversion rate is so high that one reason is that Amazon's home page is personalized, for example, young people keen on fashion digital products will find Amazon's home page full of trendy electronic products, while the new mother to the Amazon, in the same position to see is baby products.

A well-known association recommendation is: Amazon once put a British mountaineer's "Touch the Peak" (Touching the Void) in the same book as the associated recommendation, the results of the book published ten years ago a night of popular, not only on the New York Times book best-selling list, but also adapted for documentary.

Key words: Jingdong Mall

From customer submission order to parcel packing, the average time is about 30 minutes, more than 10,000 servers distributed in 5 cities nationwide, 76% of traffic from direct input, more than 20% from search engines and other channels; Jingdong's mining and sales department has an interface to the information system, he will collect the demand of the sales department, and transform into the information system requirements, and information Systems Product Manager interface, daily Communication, to achieve the business and information department seamless docking; the Chengdu Institute in Beijing East is responsible for the development of products for the next 5-10 years, such as virtual test wear, the virtual scene of the room, face recognition, image recognition and so on.