The plight of the electronic business

Today, search engines, social networks and E-commerce are the three most popular areas of the internet industry, but while the search engines and social networking giants have made high profits and solid market positions, the company is still struggling alone, and one of the biggest focuses of the fight is price.

The plight of the electronic business

There is no doubt that the consumer E-commerce has brought a great progress in the history of personal consumption, price transparency and information easy to obtain characteristics, so that the cost of comparing the same commodity prices reduced a lot, and hit the use of asymmetric information to seek improper interests of profiteers. However, with the intensification of competition, the legitimate profit space is also being squeezed, causing the company to burn money, the current large enterprises are rarely profitable, and price war is undoubtedly the direct cause of this phenomenon.

How can traditional business withstand price wars when it is so difficult to profit from a price war? I think the profit space of the traditional mode comes from: The information is opaque, the cost of geographical location to the consumer. Information opaque no longer analysis, on the geographical impact, one is to compare prices to walk, talk, resulting in higher costs, consumers tend to make a choice of several, not necessarily to find the cheapest one, even if there is a price war is limited to a smaller range, Another effect of geographical location is the difference in the extra cost of purchasing in different places, for example, we tend to choose the most recent supermarket consumption, sometimes the price is a little higher but not very outrageous also recognized. Theoretically, the scope of the extra cost from geographical location is the profit margin of the merchant. And for the electric business, the geographical location to the consumer caused by a great reduction, resulting in a corresponding reduction of profit margins, and information transparent and lead to a fierce price war, adding fuel, I think this is the main cause of the electrical business dilemma.

From this we may get a conclusion: e-commerce has no profit space, can not make money, so it is a scam. But from the perspective of social development, E-commerce is the great progress of commercial civilization, it should exist, this is also the author is more willing to accept the conclusion, then the electric business enterprises in the end how to make money?

Can retail make money?

For merchandise retailing, give consumers a reason to choose their own apart from the price. I think the following aspects can be considered: unique goods, quality service.

Unique commodity, first of all, its own brand of goods, the market already have or will have some of the electric dealers own brands, such as Taobao on the Amoy brand, where guests, Amazon Kindle Fire, Jingdong, poly United States also in the plan. The advantage of own brand is first cannot compare price, second, formerly belong to the profit of middleman, can let a part of the consumer to attract buy, part becomes own profit, realize win. I think the private brand is more important to the larger vertical electric quotient, also easier to do, because the first professional knowledge can bring the advantage of own brand management operation, the second consumer psychologically may be more easy to accept the electricity trader to launch with own domain related own commodity. Other types of unique goods, such as niche goods, limited edition, buy out distribution rights of goods, but this kind of goods is likely to be small, cost-effective, I think can only be used as an auxiliary means to attract consumers.

Quality service refers to the service which is obviously superior to other electric operators. Limited time, punctual Tatsu, xx days no reason to return, neat packaging, well-trained customer service and so on, these are quality services? First of all, these are important and should be the important management objectives of the business enterprise. But in the long run, there should be no significant gap in these areas for good companies, so it may be hard to become a core competency. How to achieve quality service? I think we should provide value-added services related to goods. For example, mother and child products, can sell products at the same time send care, send knowledge, computer can not sell geek fan. I think as a vertical electric business, the first question to answer is what their products can add value, in order to produce high value-added products for the center of the construction of their own category system. The choice needs the specialized knowledge, needs to have the love, has the original understanding, is easy to provide the individuality, the high quality service category, is advantageous to the vertical electric business development. From this point of view, I think red wine, maternal and child products may be more than the mouse keyboard, ordinary sneakers more suitable as a vertical electrical goods class.

Of course, even with the unique goods and services, cost-effective still important, crazy price war let us see how important the price for the business, cost-effective should be used as an important management target of the electric business enterprise. The comprehensive electricity trader uses the bargaining power, the management superiority reduces the cost to provide the low price, the vertical electric trader may obtain the higher profit in the unique goods and the service, but does not have the price to be obvious backward in the commodity which overlaps with the synthesis electricity merchant. For the lack of price advantages of goods, can use collocation to buy, promote sales, and other means. High cost performance must be based on scientific management means, short-term local special promotion is a healthy marketing method, but "the whole network price" may only be used as a marketing gimmick.

Sources of profit outside retail

I think the core of solving the problem is how to tap their own unique value, give full play to their own advantages. It is easier for the vertical electric dealers to use their professional advantages to excavate their own unique value, how to excavate the unique value of large-scale comprehensive electric dealers? Large category, popularity is the foothold of large integrated retailer, but I think in the electronic business environment, retail is difficult to generate enough profit margin. The platform-oriented service, which is built on the platform advantage and the key link of the industry, will become an important source of the profits of the large-scale integrated electric dealers. The use of huge traffic for the settled businesses to provide marketing platform, Taobao has been doing so, and the self-employed electric power companies are also active development platform. As the development early and early growth, infrastructure, such as self-construction logistics, information technology and other aspects of the obvious ahead of the small or vertical electric dealers, with the expansion of the scale, its cost-effective advantages will gradually appear, can be for other businesses to provide logistics and information technology services. Another typical industry platform product is online payment, such as Alipay, Tenpay, the most recent Yi Bao, are relying on the electronic platform generated online payment tools, but also to generate considerable profits. The use of large platforms and technical advantages, the development of light assets, Low-risk, high profit business, just like the good IT company to do, rather than a simple price war marketing war.

I think that in the future, by simply selling goods, consumers will find it difficult to generate enough profit margins, and vertical electric dealers will use their field and professional advantages to provide quality and professional services to customers and create more profits from the added value of service. And the large-scale integrated electric power company will use its platform superiority to build the entire industry service platform for the key link of the electronic commerce, if provides the marketing platform for the Cooperative electricity dealer, the high cost performance logistics service, the Information Technology Service, the on-line payment tool and so on, will become the profit important source.