The secrets of China's most incredible electric-power trader

The intermediary transaction SEO diagnoses Taobao guest stationmaster buys the Cloud host technology Hall

From the break to the IPO to the 1.6 billion-dollar company and last year's four-quarter earnings announcement, why would it become the most incredible electric dealer in China?

Article | Wang Haitian

Using the "reverse attack" to describe a Chinese electric dealer is more appropriate: it sells clothing and other goods average customer price of only 200 yuan, one months of sales have nearly 1 billion yuan; In the vertical electric dealers fell into collapse, the acquisition of 2012, it not only did not fall, the fourth quarter also profitable. In the independent business, except the cat, it can be said that it is a very small number of profitable dealers. Only product will, in the end what?

If you turn to the history of the electricity business profits, but also back to the 2009 Dangdang, and that is only a flash in the pan. Then when the loss again, until today. For the Business-to-consumer, scale is the first condition of profitability, because the scale can be diluted costs, diluted the cost of a single order. If only from the scale of the goods will be profitable, convincing is not enough, because jingdong sales than only goods will be much more, but still loss.

Gross margin! Only goods will be released 2012 full year gross profit margin of 22.4%, such gross margin can let Jingdong, Amazon and other giants "envy." Because they only open the platform of goods (East Jingdong Commodity margin of 5% or so) have such a high gross profit margin, and open platform of goods, the majority of profits are taken away by the merchant. In addition, and "Giants" another important difference is that only goods will not build logistics. At present, only the goods will be distributed to the third party Express company, only to build their own warehouses. Relatively speaking, the model is more "lightweight".

Considerable gross margin, a good scale, coupled with enough light logistics system, only goods will be able to profit is not difficult to understand.

For the success of the only product, some people say it is benefited from last year's apparel industry inventory, some people say that this model is too vertical, it is easy to be copied by the Giants, the good is only temporary. Is that so?

In fact, for the only product, the business model itself is not much of a secret. Not only foreign have, domestic also has a large pile of peers, ihush, walk show Net, Jiapin network, etc. even, Ihush almost is the only product of the replica. However, why only the goods will do the boss in this field, and the successful listing? Is it possible to explain it simply by using the term "business model"? In addition to the business model itself, more than the mode of Kung Fu, enumerating two points:

1, the ability to control goods. Just as the website of the article will introduce: a special sale of the website. And in a heap of limited time special selling goods, how to ensure that the goods are fashionable enough, big names, but also to make these merchandise customer unit price can not be too high, this is very high demand for buying hands. So Lian Jindong in the face of non-standard products (clothing, shoes, home textiles, etc.), is generally the choice of open platform, so that brand enterprises, rather than self-and. Only goods will be close to the mass of goods sold to achieve the ultimate, at least the product will have enough control of this piece: The brand's sense of smell, consumer preferences, special sale of goods and so on.

2, the dynamic operation of storage capacity. The change of SKU is quite fast because of the special sale during limited hours. This puts a higher demand on the management of warehousing, from IT system to the sorting of goods, then to the final payment reconciliation with the supplier. According to only one of the early investors said that the goods will be in storage every seven days will be replaced, and jingdong such as the 20 days.

From the above two points we can see that only the success of the product will not simply benefit from the apparel industry inventory. Because inventory on each of the limited sales site is equal, not only the goods will.

From the release of the 6.5 U.S. dollars, to the listing below the IPO price, for a period of time fell to 4 U.S. dollars; But with the release of several quarters of earnings, only the goods will be the trend of the stock market upside down to today (as of April 5, 2013) 1.684 billion U.S. dollars (equivalent to five Dangdang), This is hardly ever seen in the history of the stock. Today to see only the goods will, its business model has not too many secrets, but others are difficult to copy, copy the only product will scale, also can not copy only the user stickiness ...

What is the core competitiveness of the product?

Interview: Liu Xing

Managing director of Sequoia Capital China Fund

What is the situation when the goods will be listed?

The investment bank was optimistic at first, but the market was not very good. We pulled down the quote range because the market was bad and we needed to attract people with a low range. The quoted price is also much lower than our psychologically expected price, but we want to be priced on the range when it is issued, but it is much more difficult to find on the road, and the market can not accept the stock, no matter what company. After the city fell to five yuan, but when issued a quarterly, two quarterly, the stock price slowly rose up. Because you not only said to do it, and did more than say, okay.

What are the benefits of listing to the goods?

Generally speaking, the enterprise listed mainly has two purposes: the first is financing, the second is the brand level. In a sense, only the goods will be listed is a good IPO, because the listing help only goods will achieve these two purposes, although the money to the present most of us is still useless.

At that time, although the amount of money to melt than expected much less, but at least in the winter to add a layer of cotton-padded jacket. Brand, for the partners, only goods will be listed in the United States, indicating that the company has the strength. Increased psychological security for brands, at least not at all, because of Wall Street regulation. Compared with a year ago, more brands are willing to work with the company. The impact on consumers is not completely not, but not so big, or less than partners to the company's trust. The company still uses the business, the product to impress the consumer.

From the listing to now, compared with a year ago, in all aspects of the only products will be to a new level-brand partners, staff morale, investors of the company's interests and other levels.

What is the difference between the model of the product and the luxury website?

and luxury sites are different, only products will do is the famous brand special sale, the average customer price of two hundred or three hundred yuan. For some luxury sites, they do not have a stable, effective, scaled way to get the goods they need. There are from overseas, from the supplier hand, from the retailer's hand dug, take the second-hand, etc., supply this piece does not have a stable foundation. Customer base this piece, the current online purchase of luxury people have, but too loose, not an effective means to arrive, access to customers or more difficult.

Luxury sites are sold without a sustainable supply chain, which has no foundation.

One of the requirements of the commercial model is to allow the brand to deal with the inventory more gracefully, so as to minimize the exposure of the brand. If a special sale site can deal with a large number of brands of tail goods, then he can hardly find a second cooperation. Because there is absolutely no need to do so, in addition to the volume of goods do not go, but also let the brand in the hearts of consumers left "everywhere" impression, such a transfer is negative. To a large extent, the only product will be a winner-take-all business, this model left a small space for the second home.

What do you think the two founders of the sole-product Council gave the only gene? What are the reasons for success?

Shenya and Hong Xiaobo have always been online under the international trade business, this experience is very helpful. For E-commerce, the business model is based on business, and electronics is just a means. Sometimes I joke that "you are Wenzhou People 2.0", both the traditional Wenzhou people's sense of smell and shrewd, but also international perspective. Shenya and Xiao Bo have a better understanding of the relationships between different value chains in the business world than an IT technology guy. For example, the only product will have a supplier of the time, they are very crisp, said a few days is a few days.

Another reason for success is that there is a very good corporate governance (mechanism), from the first day of establishment to the institutional access has a board. After we went in, Shenya the initiative to find us, let us participate in a monthly board. In this way, every month we will have a Half-day seminar, whether strategic or business, is the use of modern scientific decision-making (way). Shenya is very objective and fair to people, and is always right and wrong. These traits play an important role in the development of the company.

Last year, the entire apparel industry was plagued by inventories. If the future clothing brand inventory reduction, what will affect the only product?

First of all, only the product will cooperate with a lot of brands, not only the so-called big-name, in the brand's concentration is not very high. China's apparel market is a trillion-scale market, apparel industry inventory is usually in the 10%~30%, whether it is the season or off-season, inventory of the overall market capacity in the size of the Chi. And only the current sales scale only in tens of billions of dollars, still far from the inventory of the ceiling.

Only products will be the current customer price of 200 yuan, and only the goods will be guaranteed enough "fashion", the only product will be how to do?

Only products will have a dedicated team of buyers, there are currently more than 250 people, this is also the only product will be one of the core competitiveness. The first is to choose the category, the second you have to choose the brand, and finally the choice of goods. For example, style, cloth, price and so on, this needs professional personnel to do. Only the buyer's team is the original fashion industry, retail industry, apparel industry veteran, in addition the company has its own accumulation of a large number of sales data. On this basis, on the one hand, relying on the experience of buying hands, on the one hand by data analysis, in the two superimposed, can decide tomorrow's activities to sell what category, what brand, what commodity. To the end is a combination, each day is not the same, dynamic. The combination is exquisite, this is the only product will merchandising core competitiveness.

We note that only goods will be listed in the tourism, home textiles and other categories on the expansion of the future will not reduce the proportion of clothing and turn to the whole category?

We will also be positioning in the lifestyle, fashion-related categories. Category will certainly expand, but will not go to Jingdong, suning easy to buy such a whole category of electrical business expansion, we will maintain a unique, personalized positioning. Speaking of the proportion of clothing, it is always fashionable, personality, lifestyle consumption of a large part. I believe that for a long time clothing will also maintain a very high ratio, will be a big category, because it is related to people's needs.

Why is the current electricity dealer's profit difficult?

Interview: Zengzhenyu

DCM Venture capital directors, investors of only commodities

How to view the current problem of the general profitability of electric dealers?

The key factors that determine the profitability of the electric business: Order Amount and gross profit, logistics cost, market cost.

Order Amount and gross margin. If planed off the home appliance, 3C such high guest unit price category, clothing, department stores and so on General SKU's customer unit price average in 150 yuan ~300 yuan. Such a low customer price plus the commodity itself is not high gross margin, meaning that there is less space left. If it is a high order, but the gross profit margin is very common, the margin is also a lot of imagination space, such as selling diamonds, if a single diamond sold 5000 yuan, even if the gross margin is only 10%, also has a profit of 500 yuan. If your customer price is only 120 yuan, even if there is a 15% gross profit margin, and only Seventeen-Eight yuan profit, so the profit is very difficult.

Logistics costs. Because of the competitive relationship, the various terrestrial electric dealers in logistics are basically free policy, and even returns are free. If your gross profit margin is 25%, the logistics expense is 10%, only then the logistics this piece has removed more than 10 points. and logistics costs in a certain period of time to optimize the space is limited.

Market costs. In recent years because of vicious competition, the flow of rising prices. The market cost to remove more than 10 points, logistics, the market these two add up to have more than 20 points, it is easy to lose money. Not to mention the company level of profitability, even the order level is not profitable, that is, the contribution margin is not profitable. Market costs, the cost of acquiring new users of various appliances are not very different, so can only measure the repeated purchase rate of the appliance manufacturers. Repeat purchase rate is high, the cost of sharing each order is lower, the market cost of individual order is low, repeat purchase rate is high, single customer's lifetime value is high, and the more easy to profit.

Therefore, the key to truly determine the profitability of the appliance business is the order amount, gross margin and repeat purchase rate.

Why will Q4 be profitable?

Only goods will be a selling fashion. The only product will be the business model of special selling hours, selling are well-known brands of consumers, the model itself is very attractive to consumers.

Repeat purchase rate is one of the major advantages of the product. is also the only product will be one of the core competitiveness. In the purchase of users, only the cost of goods and other electric operators are not very different, but the difference is that the only product will be able to retain these new users. Cost control, only goods will always decline, the market costs this is continued to lower, this from the only product will be the fourth quarter of the report can be seen. The reason for this decline is that the rate of repeat purchase is higher. In addition, the logistics of this piece is also continued to lower, because the only product will always be optimized. Gross margin also continued to rise, which was reflected in the four quarterly earnings report. There are many reasons for the increase in margin, on the one hand, customer purchase frequency increases, on the other hand, because of the increase in sales, only the goods will and brand manufacturers bargaining power in the increase.

Simply put, only goods will be able to profit, by virtue of the advantages of the business model. Because only goods will be limited to the mode of special sale, goods are low discounts, positioning is very clear. And only product will not be long-term sale of goods, is limited, to a certain extent, the creation of scarcity, the commodity itself attractive.

If the Beijing-east and Amazon China go into a big sale during the limited hours, how will the goods look at such competition?

Of course, such competitive risks exist. However, the only product will still have a lot of their own advantages, for the time being, competitors still learn. There are business models and operational.

If a large online department store sells discounted goods aggressively, this will form the right and left side: You can't put a love horse's original price package, there is 20 percent special sell, this logic is conflict, the brand image also has hurt. This business model has a congenital mishap. To solve this problem, unless you want to do a separate site, but it is not easy to dump the existing Web site traffic to the new site.

Investment team. Only the goods will this business to the investment team's ability to request very high. For example, how to choose the brand, how to understand the consumer's demand, the pricing strategy of special selling during limited hours, need to have a deep understanding of the fashion industry. This is not a new company coming in and can learn it soon. Is it that competitors will never do it? Nor is it, but the difference in time is very obvious, not after a long time to find it difficult to do.

The difference between the logistics system is also obvious. In short, only the SKU is outflows, fast forward. The goods will not be sold for seven days and will be refunded. The SKU came in quickly, and the SKU went out quickly. This dynamic data is very strong. From business logic, technical logic to operational logic, only the goods will have the essential difference with other electric quotient. It takes a long time to learn this process. It is difficult for general to learn the whole series of processes.

Where do you think the challenge of the only product will be in the future?

First, external competition risk.

The pressure of competition is still there, and we will always focus on new competitors ' initiatives in this area.

Second, the brand's visibility to further expand.

For the only product will, although the market share is already independent of one of the top ten, but compared to the previous several electric dealers, the popularity is not wide enough, but also need to further expand the user base.

Third, the exclusive cooperation brand to increase, do a good job and brand relationship.

Brand cooperation, the next step will further expand the number of exclusive cooperation. Only product will brand positioning is never the highest end, is lower than the gilt, will be more close to the public. The only product will continue to focus on products and brands related to lifestyle in the future.