The reason why Chinese traditional enterprises do not do well in electricity business

Huang Jo that after 10 years of development, the Internet enterprise exploration, the capital of burning money, has been the electrical business of this area has been burned to the land, the traditional enterprise is the time to enter. But the most difficult thing for the traditional enterprises to do is to jump out of the original thinking, it is easy to carry baggage walk. Huang Jo suggested that the traditional enterprises should be a relatively independent of the electrical business to operate, do not start thinking of the line, online integration. This article extracts from Huang Jo new book "Out of the electric business predicament", the Oriental publishing house, the Entrepreneurial State website has edited deletion

In the past 10 years, China's traditional enterprises to test water e-commerce many, but few achievements, the most fundamental problem is that can not really start from scratch, burdened with too many molding mode of rigid thinking, to pay a large price to buy new shoes, but still the old road.

In this era of the Internet, how to look at the so-called traditional enterprises into the Internet industry? Speaking from the industry scale, China's electricity business is now Taobao a single big, and Consumer-to-consumer add up, Taobao accounted for about the electric business industry 85%~90%. And the 5%~6% that the electric trader achieves the social retail is only used in China for about 10 years. By contrast, offline retail retailing has been developing in China since the 1990s, and more than 20 years later, it has not yet reached this volume.

Electric dealers in China for almost 10 years, with the expansion of the market will naturally ask a question: How to look at the future of the main power business enterprise? So far, China's electricity industry is basically some internet people dominate, so how to look at the traditional enterprises? How to look at the traditional enterprise next touch Why is it that in the past 10 years, traditional enterprises have not been doing much in this respect?

Let's take a look at the difference between the US figures in China: the 10 largest electric companies in the US have 9 from traditional companies, and only the Amazon is the only internet company that really starts from scratch.

The names and transactions of the largest 10 electric companies in the United States are as follows:

What about the situation in China? The situation in China is that 9 of the top 10 are internet companies, and from here we can see that two countries in the United States and China are developing radically different situations.

Moreover, the U.S. electric industry, although led by Amazon, but did not appear a single big phenomenon. On the scale of the deal, the first Amazon and the tenth place CDW difference is 10 Laibe. The phenomenon of China's electricity quotient is a number of leading enterprises occupy a high proportion of net-purchase sales.

China's traditional companies over the past few years have been trying to touch the "net", touch "electricity", doing online sales attempts, including the offline retail companies mainly, but also include some brand manufacturers, but these attempts are mostly unsuccessful. Give a few examples. 2007 I was in Taobao, when Gome began to do electricity business, they have hundreds of of people's team, also found Taobao expressed the hope that cooperation. But after all these years, they are now doing it themselves through online platforms and even buying Bowser nets, but they have not seen much improvement. There are many other enterprises, such as Li Ning, Nike, Adi, including some cosmetic areas such as L ' oreal and offline clothing brand companies, they are trying to do the expansion of the electric business, but basically there is no big, fruitless. We now see in the electric business industry a little influence of the traditional enterprises are only suning family. From the sales scale, Su Ning is also the only one to enter the first 10 Chinese electric business offline traditional enterprises.

Traditional enterprises If you want to do e-commerce, you must have a zero-point mentality, this is actually you can not succeed in one of the most important core. Many people will feel that this is not a cheat, the reason is very clear, to have a new team, new ideas, from scratch. There are many people who have this idea from scratch, or there are a lot of companies that are prepared for this, but there are very few that really can be done. Share an example, two years ago I was when there was a domestic top three electrical brand Enterprises said can give them a little advice, I said as an industry personage, as long as can share a certain share, not to mention the other side is a respected enterprise. So we sat down and talked.

I asked each other why do you want to be a dealer? How do you prepare to do it? The other side told me that there are 3,000 direct stores nationwide, there are a lot of employees, these 3,000 direct shop is that they do a good job of the basis of the electric business. At that time I was very impolite to tell each other, in fact, this conversation can be stopped here. I say at least I still can't see the future of their electric dealers. The other person asked why, I say very simple, you do not start from the market, not from the user, but from what you have started. This is a typical example of successful reverse success.

I believe that a business, when you have nothing, there is no first bucket of gold, no first business, you will certainly from the market angle to look for opportunities, from the user needs to enter the market. But when a business is successful, when it tries to get into a new field, it almost always unconsciously from what I have, how I integrate resources, and how to make better use of existing resources, which basically limits the enterprise from doing too well in this new field.

This is not an individual phenomenon, or even that this is a universal thing, but it is able to get out of this misunderstanding is the individual phenomenon. That's why we say that the success of an enterprise in one industry or field often means that it is difficult to really grasp the opportunity in another industry or another. We look at the global perspective, this is why Microsoft can surpass IBM, Yahoo can challenge Microsoft on the basis of software, Google can challenge Yahoo based on Yahoo's roots. Yahoo in 1996 before and after the portal, do mailbox when Microsoft can do? Google just started doing search when Yahoo can do? But why do new businesses often produce new giants rather than upgrade from existing ones?

As for the mental state of the traditional enterprise, I would like to say that I do not blame you for this kind of inertia thinking, this is normal, but if you want to enter a new field, and hope in this new field can achieve greater success, then you must not continue to have this thinking. This kind of thinking will allow you to fall from the beginning into a so-called "shoes old-fashioned" cycle.

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In the same way, if you want to get electrocuted with a traditional retail mindset, it's going to be a hit. Often you'll be overly stressed about the commodity resources you have, your supply chain, and your sales capabilities, but the forms of these resources are quite different from the ground in the air. Give two typical examples.

The first example is the presentation of goods. On the ground, the form of sales presentation is unique; On the Internet, the form of sales presentation is multidimensional. What does that mean? If you sell a bottle of water on the ground, this bottle of water is physically I can put it here or put it there, but it can only be put in one place, no matter what. You can put water and drink together, no problem, you can put water and chocolate together, no problem, but physically you have to find a place to put. But in the air it is multidimensional, because it is a virtual product, so I can not affect the composition of the entire community, which is a new concept for the ground retail operators.

The second example is the relative cost of buying between shopping and buying is very different. Retail on the ground, no matter what to do, in theory, the user exposure to the goods itself there is not a small cost. This cost is his time cost, journey cost and corresponding expense. But on the Internet, users come to you to browse the merchandise, in terms of the product display this link is almost no cost, or that the cost can be small to negligible. Therefore, the display of goods on the ground is unique, exclusive, the network of goods can have a lot of combinations coexist. For this reason, offline and online behind the sales force is also completely different. If you do not grasp this point, it will be difficult to do the electrical business according to the thinking mode of the ground.

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So I think, the traditional enterprise electric shock This thing said difficult also difficult, said not difficult also not difficult, is to see you from what angle to cut. If the online retail is the trend of the general, others do you have to do, then you can have other options, such as the supply of goods to the network, not involved in terminal sales. But if you think this is a representative of the future sales positions, must occupy, the company from the strategic point of view, this is the premise, specific how to do the most effective then need to start from the market. Many of the traditional business executives often feel that the electric dealer that little young do not understand business, play is not good, as long as they put the existing things up, can do better than them, have this idea of the first point of view is actually already wrong.

Traditional enterprises to completely change the original mode of thinking, really starting from scratch, do not want to integrate, optimization. Start with the knowledge of the market and don't think about how much you have. Start with the foundation, from the user behavior, market characteristics to find your development answer, that is, you want to go to the electrical business to expand new businesses with a new business should have started from scratch mentality.

China's reform and opening up only more than 30 years time, the overwhelming majority of the local brands and retail enterprises are relying on the beginning of the first kill, they understand the market, close to the user, decisive and timely, strong adaptability. This kind of enterprise development trajectory is very precious, it is easy to bring the boss of the Enterprise to himself too infatuated, like himself rushed to the forefront of the new business. The courage of the entrepreneurs to fight the bloody is undoubtedly very valuable, but you'd better make up your own bad. Network knowledge, I know a lot of the value of billions of of the business owner, usually surfing the internet is only limited to look at the news, even the mail to send and receive the Secretary agent, such a knowledge structure, easy to the enterprise's development process of the electric business misjudged.

Looking back, why are the 10 largest electric companies in the United States 9 are traditional industries, and China's largest 10 electric companies have 9 are Internet origin? Why is there so much difference between Chinese and American electric business?

The gap between China and the US is small if the amount of electricity traded or the overall retail sales ratio. If China were to achieve this absolute value of more than 1 trillion in 2013, 5%~6% the value of social retail, it would be relatively close to the size of the United States. Why is there a situation where the leading companies come from different industry backgrounds? Personally, I think there are two main reasons.

The first reason is that China has been in a fast-growing phase for the past 10 years, so offline retailing has plenty of room to expand in its most familiar areas, and it can sustain an annual 20%~30% growth that cannot be found in the United States. The United States as a mature society, the social retail basically does not have much annual growth dividend, coupled with the network sales squeeze, offline retail has actually been forced to the corner. If it no longer looks for opportunities to expand online, it is likely to become negative for the year, so the pressure is different. For China's offline retail business is a building block, in the United States may be a life and death choice, because it has been facing negative growth pressure.

The second reason is that the entire internet in China is about 6-8 years slower than the US. What is the concept of 6-8 years? It means that China is 6-8 years behind the United States in terms of the entire talent pool, accumulation and related environmental construction.

American offline Retail is also online retail after seven or eight years, the traditional enterprises began to focus on and actively involved. From the trend of development, we believe that China will also have a similar path, that is, the electrical industry is likely to be led by the Internet people to do the early pioneers, as the market environment matures and improve, the follow-up will be more and more traditional enterprises into this field. If you want to judge the point of time, it should now be almost entering this point in time. The forerunner of any industry, that is, most of the pioneers are those who do not bear the burden, do not have the existing business. Think of the first pioneers of China's the 1980s reform and opening-up, which we called Wan Yuan, the personal assets of more than million yuan, when it was a symbol of the rich. Where do these Wan Yuan come from? Stall, profiteering, set the market snack of the self-employed, that is basically some of their own conditions are not very good, did not appear to be stable occupation of those people. But the pioneers are often the martyrs. The early 80 's, the first to become Wan Yuan, the first in Beijing Yaxiu and show water to make gold, it is not the first batch of successful enterprises and successful people after China's reform and opening-up, as we see today, Lenovo, Vanke, Huawei, and so on, they are not the first batch known as Wan Yuan.

Same reason, in the past 10 years, the electronic business has basically been dominated by the Internet, and I think there are two main reasons for this, one is that the traditional enterprises in the past 8-10 years, the development of space under the online still exist; China is 6-8 years behind the United States, so this time lag has led many traditional companies to try to get electrocuted earlier.

So standing at this point in time, I will come to a different conclusion than I did three or four years ago. Three or four years ago in the face of traditional enterprises want to do electricity business, my advice is to please do not do, because I think that time is not mature. At that time if you must be overlord the bow, in fact, there will be no gain.

From the perspective of management to expand new business, I have two experience: one, the right time to do the right thing; An imaginative new business model doesn't make sense if it doesn't happen at the right time latitude, and the right time latitude actually means you're going to beat the market earlier. Not too early, unless you are a completely self-made person, let go, there is nothing to fear to lose. With my personal experience to share, at the end of 2007 I am the initiative to do Taobao Mall is ripe, then Taobao (market) heyday, the industry no one to do mall platform. And Taobao company has a market to do the basis, then we do shopping mall is the case. If there is no market to do the basis, then you go to do the mall this is meaningless, also do not. But from another angle, if you do not see the next commanding heights, do not take the first half to occupy the commanding heights, then the company in a few years may be very passive.

So we say that from the big environment, traditional companies are now the best time to get electrocuted. I am very optimistic about the traditional enterprises to go to the electric business this road.

First, after nearly 10 years of development, the entire electric quotient of the ecological group has become mature, from the behavior of consumers, it is no longer an individual consumer, but become a group of consumers behavior. And the relevant industries such as logistics and distribution, payment, talent building, Third-party outsourcing services, such as these things are also relatively mature. We have cultivated some large enough social groups.

Second, in the whole electric business link, internet people dominate the industry for more than 10 years, made a lot of contributions to create a lot of effective promotion and operation system, process, but the industry is basically do not earn money, in addition to Taobao in the platform operation, Jingdong in digital goods, when in the book audio-visual, these individual areas have strong influence, The whole does not form a real core advantage, industry barriers are only in the number of users stage, there is a quantity of lack of quality. And over the years the industry has spent a lot of money, has enough to burn the ground to mature, now can be said to be the traditional enterprises to participate in the work of the time. This time, the face of this land, if you can start from scratch, from the characteristics of the market, the traditional enterprise must have stronger stamina.

Third, I think the biggest threat to the traditional industry is to cut off the young population. If you don't catch the bus this time, you will find that you are not storing water. Not long ago, I talked to a department store manager about the average age of 28~35岁 in his department store 5 years ago. But now I am in the department store the average age of the customer is also roughly 5 years old, that is, department store's core user group age group moved back to become 33~38岁. This is actually the biggest worry that a department store can face. The consumer's choice of shopping place and shopping channel and the habit of using it will continue. In other words, I believe you can build your Air Force One day if you have the ability to build an army. But you can't build the Air force with the army's mind.

As a former management of the traditional industry, and then do the electric business, and then cross-border into the field of private investment in a Cross-border veteran, for the traditional enterprise shock, I summarize my personal advice:

The first suggestion is we mentioned earlier, if you want to enter the field of electricity, whether your background is a production-oriented enterprises or retail enterprises, the first prerequisite is zero mentality, starting from scratch. Do not hold what I have, and then just simply put the line of business extended to the line, that is not go through. Although the essence is to buy things, sell things, but the platform is not the same, the channel is not the same, the provision of this to the user's feelings are not the same. This is the first suggestion, that is, the mentality of zeroing.

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My second suggestion is to avoid the so-called shoes old-fashioned, where I suggest that it is best to be a new team, a new organizational structure, and not to talk about aggregate effects from the outset. Not to think about the aggregate effect, or how much chemistry can be produced by putting this new business and existing business together, you have to take it as a whole new hatching behavior first. Why? I used to talk to the boss of a big traditional business in China, and I talked about the problem of electric quotient incubation, for example. Now mature business is your big son, 18 years old this year, want to be an electric dealer is equal to you want to raise a son. You tell me now that this little son is going to be completely different from his older son, then you can't keep him with his big son, or he will learn from his son. Would you consider putting your youngest son in another cradle, for example, the youngest son to be very yang, then put him in the United States, training in 10 or 15 to tell him, hey, you have a big brother, you two are the same blood, the two of you can actually join forces to conquer the world. But you don't want to tell him on the first day that you have a brother, you want to live with him, but you have to be different from him. You can't tell your brother that you have a little brother, you have to take care of this brother from the first day. If that's the case, I'm sure this little brother looks just like the boss. This analogy is to tell you that your traditional industry has been very mature, how many sales a year, how many people, how many VP, several senior executives, several organizational systems, several processes have been very stable. If you want to do something new, how could it be different from the old one in the old system?

The third proposal is also the most important one. When you enter the electricity business, the first is to exert yourself or borrow power this must be considered good. You have a different choice, in fact, you can directly do the electrical business, you can also indirectly to do the electrical business. For example, Su Ning, open a suning easy to buy how? can do, but the investment is big, the risk is also relatively high, not necessarily every traditional enterprise has this condition. And there are many ways to be indirect, can do online retail supplier, this is a kind of indirect; you can do retail companies on the Internet, in the existing website to open their own flagship store, which is also an indirect, but also with Taobao, Taobao Mall, the package of one of its channels, this is an indirect. Every business is different, there is no pat, I want to share with you is not necessarily have to rally.

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In many cases, people always want to create their own traffic. Flow is like air, no no no, but can be carried out in a shared way, whether through the mature electric business platform, social marketing network, or with other enterprises. Online, large retail, such as shopping malls, department stores are created by the flow, but many stores, brand stores, shops are shared in the flow of traffic in the mode of operation, electrical business is also so. Especially for the start-up period of the enterprise, no visibility, head-on hit the money to burn money to buy traffic is not necessarily the best strategy.

My fourth suggestion for the traditional business is to study the cost structure of the electric dealer, especially the marketing and logistics cost, which is the most important cost for the majority of the electric companies in the past few years. Traditional enterprises into the new field of network sales, to understand their own in these two costs of what new practices, how to manage it in a manageable, preferably with business development can gradually decline level. These two costs are handled properly, and your dealer expansion solves the 90% cost-structure problem. Traditional enterprises usually have better cost management ability, but the key cost items of the electric business industry are different from the physical retail labor, rent and so on, and need new management skills.

Last suggestion: Understand and use "O2O". O2O is a foreign word, referring to the network to bring more sales opportunities to the offline store. In my opinion, O2O first is the passenger flow sharing. Although the net buys the crowd in the domestic already more than 300 million, but for many retail industry, the line user group has not already overlapped, the online purchase crowd has a big part is not your shop guest, but through the O2O collaboration, may increase your traffic quickly. Second, O2O is the sharing of commodity information. For example, a lot of clothing, shoe bags, jewelry and other physical stores need to show the sample, O2O can make up for the lack of network pictures, and the long tail effect of the electric dealer can greatly reduce the number of stores under the line of various SKU inventory pressure, under the 80/20 rule, borrow O2O can improve the turnover of goods, improve the efficiency of square Again, O2O is a good sales interaction tool. In recent years, for example, experience shops, building shops and community shops are impacting the ancient law of retail location "Location Location Location".

All in all, about the traditional enterprise electric shock, if must say a general view, that is the bright future. We should admit that history has actually given the Chinese Internet 10 years, but in this period the industry did not succeed. This industry by constantly financing, burning money, in the loss of operations to expand the scale, but did not find an effective way to profit. At the same time, in this process they have also brought a very rich legacy, this rich heritage is what I said above, a piece of raw land made a piece of the first-hand, this is basically already can sow cultivation, with such conditions.

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Of course I do not agree with some of the electrical business people said that the traditional industry for the new industry can not see the two can not understand the three prejudices. 20 years ago, knowing how to use Microsoft on a computer was a technology, now almost everyone will be, a few years ago, many of the road to the traditional industry people may not understand, but as a sales channel, many principles are the same, traditional enterprises once awakened, their stamina is full, often can come from behind. Internet people often easily despise the experience of traditional enterprises accumulation, which will pay a large price, from the traditional enterprises in the production of control, sales operations, market positioning and other aspects of the practical experience, once mastered the network sales methods, will have a greater chemical effect. Taobao Mall was just founded, clothing sales in the top ten are almost all Amoy brand, the last two years, the rankings have changed dramatically, traditional brands have occupied most of the position and momentum is fierce. The future of the electric business industry, is bound to be Internet entrepreneurs and traditional enterprises share the world.

Forget about the glory of your army, enter the Air Force, you are a complete recruit, start with the learning line-up stance. (Edit/marina)

Huang Jo is the consultant of Warburg Hua Tiandi Investment Management Co., Ltd., original Dangdang COO, the founder general manager of Taobao Mall