The path of the vertical electric dealer

Source: Internet
Author: User
Keywords Vertical electric quotient for competition electricity quotient

The emergence of vertical electrical quotient may be based on such considerations: 1, the traditional retail origin, that based on the existing procurement, warehousing and industry experience, can be a smooth expansion of retail channels to the line; 2, that professional operation, will have a better quality of service and operational efficiency, as well as to bring consumers a more complete category and lower prices.

But it's all a sham.

The first kind of traditional retail thinking, underestimated the competition and marketing investment, because the traditional retail is localized competition, and as long as the site is a good flow of people rolling. As the business expands to the Internet, regional brands and the flow of people are no longer there. Moreover, the Internet logistics distribution, and traditional retail completely different. Traditional retail is door-to-door, and online retail is a package separately packaged, distribution, high cost.

The second kind of specialized thinking, may be caused by the mindset, because in the traditional field of specialization can indeed bring better product quality or service quality, thus forming a competitive advantage. But commodity production and commodity circulation, after all, for the distribution of electricity dealers, consumers pay attention to the price and convenience, professional management is not the solution, the scale effect is the essence.

From marketing
Let's talk about the integrated electrical business first.
Recently, we should often see Jingdong book promotions, but also strong, absolutely accompany this earn a yell. Puzzled amorous feelings of the book dealers, such as Bookuu network immediately follow up. Ask, Beijing East is the intention is to flush sales? In fact, it is to find a reason to do the promotion: let the users to the station to buy their high margin products, while resisting strong competition (when, Amazon and Suning). Then chose the general demand for books, books and how many losses?

Moreover, Jing Dong sits on more than 10 million active users, already is a media, and each publishing house is rushing into this site; careful users will find that every time he is now a special promotion of the promotion of a publishing house, the publishing house cost price is taken for granted. The end result is that Jingdong's marketing costs are passed on to the book supplier.

It's not just books, it's a similar gimmick.

If Jingdong, or other integrated electric business of the low cost of marketing, can drive the whole network of whole category sales; then, for vertical electric business, such as selling tea or selling books, its high marketing input, let users buy so little, input and output seriously mismatch.

For example, many large shopping malls are now open in the suburbs, if it is an isolated restaurant? Would you like to drive to a meal? and the vertical electric dealer's marketing input, is equal to drive to the suburb to eat a meal, is not worth the money.

For the vertical electric dealer's marketing, also has another kind of thinking: manages the user. For example, the red wine Retail site, its large-scale marketing investment, may be in order to find a specific user group: The successful person of taste, only through red wine to cut. When the successful people in the formation of brand and reputation, and then provide other value-added services, such as golf card, golden Sunflower card, the organization to meet high-end network of online clubs.

If it is to run the user, rather than staring at the low price of goods to sell, it is not part of the discussion in this article: online retail.

The supply chain disadvantage of the vertical electric supplier
Like Jingdong, the reason for large-scale category expansion, supply chain scale advantage should be a core factor.
When the size of the sale, it can get a lower purchase price.
Also because the size of regional sales can support localized warehousing, resulting in lower distribution costs, but also the formation of competitive delivery speed.
Because of a huge amount of orders every day, the regularity of sales provides the basis for inventory forecasting, which can greatly reduce inventory backlog, improve inventory turnover, and further reduce operating costs, thus forming a price competitive advantage.

For the vertical electric business, even if there are a large number of users, but to reach the National warehouse sales scale is still difficult, which directly lead to high distribution costs, delivery speed is difficult to upgrade.

For vertical electrical goods category, is generally the top 10% of the best-selling goods contribute 80% of sales. For the integrated electric business, if the top 10% best-selling products of the vertical electric dealer, plus the price advantage brought by the bulk purchase, as well as the distribution of the national storage advantages of faster delivery speed, why the vertical electric business competition?

When the comprehensive electric power company reaches a certain scale, the general will platform, through attracts the brand merchant to settle in, expands own category (similar to the traditional retail business real estate model). In this way, vertical electric operators will lose competitiveness in category, logistics and price.

For traditional supermarkets such as Carrefour, its profit margin is mainly to be eaten by such unsalable, but it can not be like convenience stores, only to operate the best-selling goods.

Vertical electric dealers are also facing the same embarrassment as traditional supermarkets. If you cut off the last 80% categories, your category advantage will no longer exist. If you keep 80% of the category, it will create a backlog of inventory. If you purchase a small amount, will reduce the bargaining power of suppliers, the high cost of purchasing, directly affect its sales price.

Customer purchase frequency and lifecycle challenges for vertical electric dealers
For certain categories, such as mother and child supplies, building materials furniture, the user life cycle is very short, that is, the main one-time customers, which means that the vertical consumer marketing costs very high, because each time is to open up new users. and the general consumer development to a certain stage, focus on the old customer marketing, low investment.

From the point of view of the durability of goods, such as mobile phones, digital, furniture and so on are durable goods, users buy low frequency. For the purchase of low frequency of vertical electricity commodity classes, users are generally new users, buy a time to choose a merchant, to allow users to buy the thought of you, but also from the competitor where the user, you have to constantly promote, increase marketing efforts. At the same time, this kind of commodity is generally a large amount of rational purchase, the user tends to parity, the vertical electric business because of the size of the supply chain constraints, it is difficult to have a comprehensive electricity business low-cost advantages brought about by price competitiveness.

In addition, from the customer point of view, he is inclined to go to his familiar shopping site (trust + custom to bring convenience), which increases the vertical electric business to open up new users difficult.

For an in-depth analysis of this topic, please refer to my previous blog post: How often e-commerce is purchased and the customer lifecycle

  
The most basic way to do business on the Internet is to drive competition. In the homogeneous competition field, only the top three, no fourth. For pure Internet economy, such as instant messaging, microblogging and video, often even before Du, only first and second.

At present, the total loss of the electric business industry, competition is the most fundamental reason. Now the competition is the capital, the future competition must be the supply chain and operational capacity of the contest.

Traditional retail enterprises are generally regionalization, once into online retailing, the market seems to expand, but also face the national rivals. If you want to survive, I think it's best to focus on local use of local brands and warehousing and distribution advantages. Furthermore, the cost of regionalization is much lower than that of the whole network.

The future of the electricity business, will be a few home alone, these integrated business platform (B2B2C) is also the electricity quotient, the current several big electric Shangdou already started, such as Jingdong, Amazon and a number of shops, also means that the market will appear a few days cat.

For brand-makers, this is positive. Because they enter the online retail, do not need additional it investment, or even marketing can be saved: the Internet to rent a storefront, business is rushing to (traditional department store business model). In this way they can focus on brand building and product design, and this is easier to form a differentiated advantage, splitting and homogenization of vicious competition.

Moreover, Internet users have gradually formed a habit: shopping on the shopping site, search engines are generally used to understand the commodity information, directly from the search engine shopping less users. There is no need for the brand to build independent business, at most, is a brand image site. In this way, the power to enter the platform is the best choice.

Traditional retailers, such as the Chengdu Suning flagship store, also on the 4 floor, it will not expand to 10 floors to operate department stores, if you want to operate, is also a real estate model, such as Suning Plaza.

On the Internet, for a general department store, the business site from the 4 floor to expand to 20 floor, and did not increase the number of costs, but also can use the flow of people, then, vertical electric business competitive advantage?

For the vertical electric business platform for investment, compared to the integrated electric business is much more difficult, because people flow restrictions, you can hardly start to bring considerable benefits to others; In addition, you let others operate, is generally complementary category, these goods sales situation can be imagined. From a competitive point of view, the choice of vertical platform, compared to the integrated platform, the quality of people higher? Lower operating costs?

Starting from the vertical platform, there seems to be no successful precedent. Platform, is generally based on a mass user channels, it is not difficult to understand Baidu, le cool days, the product of a flat network of Taiwanese businessmen poured out.

Vertical electric quotient, where is the road?

For more power business thinking, please visit my Sina Weibo: Http://weibo.com/zwchen



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