The whole category is the trend of the development of the electric business chairman and founder of Shop No. 1th

The chairman and founder of Shop 1th, a veteran of the 48-Year-old who started his business at the University of Texas at Austin, was a tenured professor at the School of Management at the United States of America, and also served as vice president of Amazon's global supply chain and vice president of Dell Global Sourcing. 2008, carrying the honor of the first half of his life, in the beginning of his business, at that time he did not know whether to realize that he entered the field of E-commerce, China will be the most brutal battlefield, he will have the strongest and most formidable opponents. At that time the veteran Gege, or just killed into the electronic commerce of the newborn calf, without fear from the consumer goods market, joined the fight that has continued.

Phoenix Finance and Economics: Shop 1th is from the day-to-day consumer goods, FMCG started, when there is a slogan called Online supermarket, it seems to be a small category into such a development of the start, now you think that in your mind under the guidance must go to all-inclusive this way?

Gege: Actually this is our first definition of the mission, in fact it is a whole category, it is not a vertical. At that time we mentioned the online supermarket, left us enough space, so that we can develop in the future. In fact, the entire FMCG in our now 1th store sales accounted for less than half of the proportion, that is, the rapid other categories slowly get up, such as clothing, such as 3C digital and so on.

I think E-commerce is a scale of the game, in fact, once you win the trust of customers and trust, you can provide them with a lot of goods and services, we want to do a whole category, contains a lot of goods and services platform.

Phoenix Finance and Economics: Do you think that there are two different ways of development of the electric business, such as small and beautiful and all-inclusive?

Gege: I think the future is still a all-inclusive trend. Early of course many vertical electric dealers have its living space, because in a certain category it has a certain degree of professionalism, or there are certain policy barriers, but in fact, if it provides goods and categories, our large platform can also provide words, even just a little bit more professional, but it can be more abundant goods, lower cost, In this way, in fact, the development of the vertical electric business space is still limited.

Phoenix Finance: Limited And then what is the next step, it will be integrated acquisition?

Gege: Be integrated. Yes, as you can see, Amazon, for example, buys a lot of vertical categories, shoes, and groceries, and it has a lot of acquisitions.

Phoenix Finance: So from the size of the game, small and beautiful vertical electric trader will inevitably face the fate of being integrated, can so understand?

Gege: To see it do this category, whether there are policy barriers, or professional barriers to industry. If there is, it can survive for a long time. For example, if it sells medicine, it has policy barriers and the state only issues limited licences. Some are particularly specialized in this industry, and large electric dealers do not have that kind of expertise.

Phoenix Finance: For example what kind of?

Gege: This is to see category, some category professional degree is particularly high, this aspect of the industry to form a professional barrier.

Phoenix Finance: Can you give an example? Not very well understood.

Gege: I have to think about this example.

Phoenix Finance: Fresh count?

Gege: Fresh count, because its supply chain is very special, very professional, if you can do it, it will survive for a long time.

Gege: In the future, there are 3 to 5 big electric dealers.

In the strong cloud of E-commerce battlefield, 1th stores occupy 1 seats. January 2014, store 1th announced 2013 annual sales of 11.54 billion yuan, into the tens of billions of electric business camp. According to the report of China's e-commerce research, as of the end of 2013, China's top ten companies are: Cat, Jingdong, suning easy to buy, Tencent, Amazon China, store 1th, only the goods will, Dangdang, Gome online, where customer prudential products. Shop number 1th ranked sixth, it is not easy for a young company that has just been set up for 6 years. Able to survive and thrive in this bloody battle, he has just relied on the supply chain management he is best at.

Phoenix Finance: Shop 1th can be from the fast-moving consumer goods in the limited margin of the industry, and you are in the supply chain management of the experts is a great relationship?

Gege: Supply chain management is indeed one of our core competencies.

I give you an example to you, is the inventory turnaround days, which is a measure of the efficiency of a supply chain is very important an indicator. Shop number 1th started with a turnaround of about more than 50 days, then to more than 40 days, more than 30 days, more than 20 days, this year's goal is 15 days, now has done 18 days, this is quite remarkable, because you go to the traditional retail, usually 50 days up and down, do a good job is more than 30 days.

Inventory turnover days short on the one hand, the contribution to our cash flow is very large, on the other hand, if you make a turnover of so many profits, you turn two times that you earn a profit.

Phoenix Finance: You just said that in fact, the daily consumption of consumer goods is not low, if the analogy, it with 3 C, electrical appliances compared to which margin higher?

Gege: It's a bit higher than the gross margin of 3C digital, and it's a little higher than the gross profit ratio. But the gross margin is not as good as 3C digital, because the customer unit price like to buy an air-conditioner, a digital camera, one is thousands of dollars.

Phoenix Finance: So in fact, said that the traditional it product sales, the industry used a word is the towel in the twist water such an industry, in fact, compared to the daily consumer goods are better?

Gege: From gross Gross margin it is not low, but the whole supply chain it is indeed a lot of complexity, for example, it's relatively large goods, heavier, easy to damage leakage, short shelf life, I think we are operating a very difficult category, but if the category to operate well, then our supply chain is very good.

Phoenix Finance: Now your profit situation is how, has the profit?

Gege: We haven't made a profit yet, but our development has been very healthy.

Phoenix Finance: That sounds a bit contradictory, is that you have to the highest level, but now has not made money?

Gege: No, the key is to see what your strategy is. Now I think the first or the expansion of the territory in the stage, I think the scale is very important, this is the first. Second, we are still experimenting with a variety of new business models, so there are costs involved in these attempts, and I feel that at this point, profitability is not the most important point in time.

Capital is not our biggest difficulty, we have a safe investment, and then Wal-Mart investment, the whole amount of investment is not small, so that we can very fast development.

Phoenix Finance: You repeatedly talked about the electric business is a scale game, if we think about a period of time, the real field began to mature, is not the final result will be left only a few big giants?

Gege: It should be so, not too much.

Phoenix Finance: How do you think there will be several?

Gege: I think it's 35 at most.

Phoenix Finance: No. 1th Store is one of them?

Gege: Yes, I'm still very optimistic (optimistic) about our development.

Long-term development of enterprises is more important than equity

As Gege said, the electric quotient is a scale game, the scale game means to burn money game. In May 2011, Wal-Mart, which intends to enter China's electric-business sector, shares the number 1th, in response to doubts about the founder's loss of control. Gege on his blog an article entitled "The Entrepreneurial Mind". "We believe that the time window for E-commerce development in China will be very short, the competition in just a few years is known and the speed becomes paramount," he said. We have chosen Ping An and Wal-Mart's investments to get enough money and to gain strategic value that can help us develop quickly. We do not take their own holdings and the number of shares in the first place, more emphasis on the cause of how big and how far enterprises can go, with their own equity in exchange for long-term interests of enterprises is our willingness. ”

Gege: We choose Wal-Mart, in fact, a few points, one of its 50 years of retail experience, it became the world's largest enterprise is its customer attention and emphasis on customer experience, great success no accident. 2nd, Wal-Mart's supply chain is very good, the world is very good, this is why it can help him improve efficiency, reduce costs, for the vast number of customers with very high quality but very inexpensive goods. 3rd, Wal-Mart's global E-commerce has been done for more than 10 years, the whole experience is very rich, I think these points are worthy of our learning. But one of the things that gives us direct value on these points is its global sourcing, a very good price. I think this is a great value to us.

Phoenix Finance: Including this internet market has such a trend that is, strong dragon pressure but bully. Is the foreign giants, although they are in the global market is very good, excellent, but in the Chinese market seems to always beat the Chinese local internet companies, do you think in the E-commerce market is also the case?

Gege: Yes, actually. I think there are several reasons, one is that a lot of these companies simply copied its global successful business model to China, which is wrong. Because the Chinese market, Chinese consumer behavior is not the same, you can see many times, China's business model has changed, such as Taobao's business model and ebay's business model is completely different. The other is that his decision-making speed is too slow, because he is the global architecture, many times his decision to the headquarters to do. But the entire Internet business requires very fast decision-making and localization decisions.

Non-typical "Chinese partner"

Whether it is the introduction of investment or strategic direction, the development process of No. 1th store several important resolutions, are Gege and CEO of the partner Liu Majestic together to make. In recent years, domestic enterprises have burst the founding partners split even the story of the enemies, Gege and the 1th store CEO Liu Majestic relationship can be described with intimacy. To this day, the two have shared an office. Two desks stood side-by, only one metre in between.

Phoenix Finance: Your division of labor and decision-making when exactly how to distribute the relationship between you?

Gege: The first is to say that in making decisions, either one of us can make a decision, and after making a decision, we move forward wholeheartedly.

Phoenix Finance: This person does is the final decision?

Gege: The final decision, of course, we have some division of labor, for example, according to some of our personal past background, experience, etc., such as mountains before the sale, the market is very understanding, so he spent more time in the product department and HR, I have done a lot of system and supply chain operations, so that it, Operation Wait, I spend more time. For the market, we are together and spend a lot of time.

Phoenix Finance and Economics: the same question when you two have different angles and disagree, what do we do?

Gege: This is actually often the case, and we don't want everything to be exactly the same, so there is no collision, and if we decide not to come down later, we will pull together our colleagues to participate in our discussion,

Phoenix Finance: What if it can't be persuaded?

Gege: If it's really a matter of decision not to come down, we still a little slow, after a few days to think about it and then come back to discuss, because sometimes very important decision, we do not want to rush to the level of implementation, we still want to think about it clearly.

Phoenix Finance: In fact, we go to see the successful large companies abroad, he often has such a co-founder mode of cooperation.

Gege: Yes.

Phoenix Finance: How big the company has. But to return to China's entrepreneurial, this "co-founder" is less, more still have a more powerful leader. Do you think this is because our cultural background is different, or is different from the way we think?

Gege: Maybe, but I think it's not easy to have a successful cooperation with a partner. Because first of all, everyone's values to be very consistent, we all put it as a cause, but also a commitment to both of us. You do this as much as we do, and there are plenty of opportunities in the whole process, but we are all committed to it, and we have to maintain this total transparency.

Gege: Mobile e-commerce is a revolution

When Gege was a student at Cornell University 30 years ago, the most wanted was to go to a very great company to practice, the company called Kodak. More than 10 years ago, as Dell's global sourcing VP, it was just perhaps unthinkable that the hardware-era giant would be marginalized in the internet age so quickly. Six years ago, when the establishment of shop 1th, in the newly entered or very cutting-edge e-commerce field. Now, the subversion itself is facing subversion, mobile internet waves and challenges, has been to shop 1th.

Phoenix Finance: I saw you said a word, said, the mobile internet trend is not e-commerce from the PC end to the mobile end, but a new revolution, it is different in what the truth?

Gege: First you see at the end of last year, smartphone users have reached 500 million, China's PC users are only 590 million, and mobile devices are growing faster than the growth of the PC, which means that the future of E-commerce in the main battlefield is moving, rather than the PC.

For example, some of the characteristics of mobile devices, it has the characteristics of the anywhere, scanning, image recognition function, it has the function of positioning, it has the function of sensing between devices, which is some of its characteristics. These can be used to make the most of the words can play its advantage.

Phoenix Finance: What is the ratio between the mobile end and the PC side at the 1th store?

Gege: We are now moving sales in the overall sales ratio has done 23%, at the end of the year we hope to achieve close to 40%.

We call the full movement, that is, our thinking methods, first from the mobile start, before the PC on the transfer of some functions to move up on the line, we say no, we want all the thinking method to start from the mobile, the function first developed, let the customer enjoy, These special features of these modes are transferred to the PC.

Phoenix Finance: But inside your two department managers will not be contradictory?

Gege: This contradiction is always there, may be often, but in fact we are very determined, so we have a lot of resources on the mobile investment, and even some resources tendentious, for example, I can have mobile special price, can hold a lot of activities only on the move to enjoy, so, More and more customers will be attracted to mobile devices.

Phoenix Finance: Then you will not worry about the original PC side of the executive?

Gege: Once we have made up our mind, we are very determined, we know that mobile shopping is a trend, we can not miss this opportunity, this is a good chance for us to overtake.

Phoenix Finance: What is your judgment on this trend?

Gege: I think that is not out of years time, mobile shopping has become the main battlefield of E-commerce.

Gege: I think this mentality is better, to dare to leather their own lives, to quickly accept this era, accept this change, embrace change.

Phoenix Finance: So we also see that often this subversive innovation is often generated in marginal industries or small and beautiful companies, can really elephant dance ship can turn, big company also can very good leather own life, subvert oneself, cater to new trend is very few, you think this is what reason?

Gege: Of course the ship is a catastrophe. That's what your corporate culture is all about, so store 1th we always think that we are an entrepreneurial enterprise, we need very fast decision-making, in this era I think the speed of decision-making is often more important than the quality of decision-making, because at this point in time, you do not make decisions, Lost the opportunity.

Phoenix Finance: The speed of decision-making is more important than quality, so if wrong decision that is not?

Gege: Yes, you have to have an error-correcting mechanism. This is how we make decisions, and once we look at the direction, step fast and go in this direction. Find this road wrong, quickly corrected it, this is our one error correction mechanism. Me and my partner, Majestic, once every two weeks, we shut the door, half an hour of face-to-face communication, during which we looked back over the last two weeks, we made decisions about what was right and what was wrong, and quickly pulled us back from the wrong path.

Phoenix Finance and economics: so people say the internet is fast fish eat slow fish, is really right?

Gege: Sure yes, why do you say that? Small step run, I do not want to take a big step, but it is very difficult to go to this step, we can go a little bit every day, progress a little bit, this is very good.

Gege: Three points, 1th, I think it is a marathon, not a sprint. In fact, we start with the enterprise's Cultural Foundation to play well, the system structure, to build our core competitiveness, this is a very systematic, mature entrepreneurial, I think this makes our Enterprise Foundation play very well, may be new entrepreneurs to think from this aspect, do not think of making quick money, resulting in a bad foundation, This is a little. The 2nd I think is to meet the difficult. It's important to find out. Because you can have barriers after facing difficult, others are not easy to copy, can let you have long-term development path can choose. Must be difficult, otherwise it is too easy to replicate. The last point I hope is that the entrepreneurial words must have a passion, like our words, no one looked at us at that time, no one think this thing can be done, it is entirely on our own this belief and this passion, to do it today, so that a lot of passion can not become possible.

Hosting/Phoenix Financial right static