Three key points in the adjustment of Suning

To lead the line through the lines of Suning, is the internet thinking, or retail logic?

After the Alimi will underwriters, Beijing East announced a new round of 700 million U.S. dollars of financing, Su Ning has just completed a model, organizational structure to the brand image of a huge upgrade.

This strategy, known as upheaval, involves a lot of adjustments that many of Suning's in-house employees have struggled to digest: once described as the "Wal-Mart Amazon" model is no longer repeated, in order to "store business, retail service provider" of the cloud business model replaced, and organizational structure from the original matrix organization into a business group organization, With 28 Business Ministries on line, expansion of the number of regional and urban terminals, from 44 to 60, enhanced regionalization operations and localization services, and of course, more than 3000 staff promotions and changes, and in line with Suning's consistent commercial temperament of the replacement logo.

However, as the press conference, Su Ning's new strategy did not give too many clear details, the outside of the cloud business model is mostly the understanding of the speculation. Remove the "cloud quotient" and so on the new concept, with suning open line under the integration strategy of the process, it is clearly not a reverse or direct flutter on the line of the subversive changes, but a model of the upgrade or magnification-like.

In this process, how will su ning with innate physical advantages to merge upward? What is its imminent need to change? There are a few visible clues to the variety.

Procurement to achieve a unified

In this organizational structure adjustment, set up the chain development, marketing, service logistics, financial information, administrative personnel 5 management headquarters, as well as online e-commerce, offline chain platform and merchandise operating 3 major business headquarters. From a strategic point of view, the adjustment clearly will be "operating" in a more important position, 28 departments are subordinate to the operating headquarters.

Whether the "cloud Trader" is considered "just a concept" by the outside world, but from an organizational perspective, structural adjustment is relatively optimized for efficiency in the context of cloud business-a somewhat similar SOA architecture in the IT field, that is, within a unified platform, service-oriented functionality rather than management-providing functionality. Used to be a large modular synergy, any one thing is vertical penetration of the group always, and the new structure is the Department of Management in the overall co-ordination, through the internal independent operation.

If the biggest change is from the original matrix organization into the corporate organization, then and "business value" in the new strategy before the release of the consensus, the biggest bright spot is to achieve the procurement level of unity.

3 major operating headquarters, offline chain stores and suning easy to buy is two platforms, the merchandise Business department is based on physical goods as the core procurement and sales headquarters, was alone to carry out the direct co-ordination line and the line of the two platform of mining sales. All physical goods, content goods, services, goods, will be realized is the line on the two platform to share, together, Suning tried to get through the integration of commodity levels. To see the strength of a traditional enterprise transformation, this is crucial--and before that, Suning line shop and online procurement of easy to purchase in addition to everyone electricity, many categories of goods purchases are separate. This undoubtedly brings about unprofessional and excessive repetition of internal friction.

Suning has been trying to achieve full quality expansion, in addition to electrical appliances, mother and child, cosmetics, daily hundred, books and other physical products, in the content products will also focus on the development of video, digital applications, music, games and information, service products also include financial, business travel, logistics, data and other services. When Suning is faced with such a large expansion of the horizontal category, it is bound to require sufficient focus and vertical departments to operate. And every customer on the stock crisis is from disorderly and extravagant category expansion.

At the same time, electronic commerce and traditional retail, to increase the bargaining power of scale procurement is the most basic survival rules. "We focus on the entire procurement of goods and reduce costs through the scale effect." "Suning President Kim Ming-ming, electrical category to increase product differentiation, custom underwriting; New category on the introduction of professional personnel, such as the original procurement of electrical equipment to the new category positions, strengthen the procurement of professionalism.

However, on the basis of the open platform strategy, for these two platforms, it is not entirely dependent on the exclusive operation of the commodity management headquarters. According to the characteristics of the platform, can carry out its own commodity operations. For example, the purchase of some virtual products, such as business travel, lottery, etc., by their own complete independent operation. At the same time any category is allowed to the social investment. In the process of gradual selection of what is suitable for suning large-scale procurement, which is suitable for the opening strategy.

As the Suning executives in the face of the media in the "different from the past," no longer mention big and big "Wal-Mart Amazon", no longer to mention sales growth targets, not to mention profit growth. In fact, at this stage, Su Ning so-called New model, rather than the previous model of the upgrade, this is undoubtedly a snowball-like "slow process."

Localization objectives

Compared to the days of the cat and Beijing-east and other electric platform, Suning's traditional gene is how to play a unique advantage, which seems to be the most thinking of Su Ning's problem.

In the new organizational structure, suning in the area of action is very worthy of attention: 2013 Suning to the large area-subsidiary-Operation Department three, reduced to large areas-urban terminal management, at the same time the number of large regions from 44 to 60, the city terminal from more than 100 to more than 200.

According to Weimin, deputy chairman of Suning, Su Ning's "large area", fully consider the localization strategy: the one or two-tier market mainly to the Super shop, flagship store this upgrade, structural optimization as a major direction, some regional markets to further make up the blind spot; the channel three or four market further sinks. This is a very important move this year, and the structure of the region may not change much in the next few years.

More flat structure, fully enhance the regional operation and localization capacity, through the number of expansion and organization of the sinking, strengthen the capacity of geographical coverage and meticulous operation, Su Ning's contention for efficiency and cost can be seen.

Capturing the core of localization is to reduce costs through an open platform strategy.

A little forward retrospective, Weimin in the previous interview to the media, the online gross margin did not significantly improve the pattern has not been a fundamental breakthrough. Although now in commodity procurement and independent mining, Su Ning has formed a new unified management structure. But the low margin seems hard to turn around for a while because of high competition and a price war.

and online under the integration process, such as localization services, although not a short period of time to form a reasonable margin, at least to control costs.

The method of Su Ning is to divide the big area, make the role of the big area more autonomous, make its commodity and the resource of purchase fall to the ground, form the reasonable cost pattern. At the same time, the localization investment, through the local suppliers, to solve the two or three-tier market SKU limitations, to open the way of service rich category.

It is not hard to see that this makes the role of the "big area" change very much. In the past, the status of the large area and the physical store similar, but now more functions. All regions should be based on local e-commerce, strengthen regional capacity and strength. The assessment criteria are divided according to the area, as long as in this area sales, line online under the large area, rather than line down the lines.

It can be said that this localization is also a kind of O2O, because the entity store here is not a simple physical store, there are things in the region it can do, but also to assist the localization of life services, at the same time began to around the category of goods to do localized drainage, but the commodity level of drainage. However, the view that O2O is considered to be "online to do the experience under the entrance drainage line" has not received a positive reply from Suning executives. "Flow and sales-oriented is not really retail. "Weimin said.

Logistics into the easy to buy

"In view of the increasingly important role of logistics, this time we put Logistics division into E-commerce Cluster management." "Suning is mainly responsible for logistics, the chief Executive assistant Taokinghai said, as the largest investment growth point, 2015 suning will be 60 large areas of all completed, to an average of 200 mu/base, 10 tens of thousands of/mu of the magnitude calculation, investment amount will be in 180~220 billion."

Not set up as the "headquarters", but in the form of the business department to purchase, E-commerce in Suning's internal strategic position has been promoted.

In the 2012, one of the most important things executives thought was buying land and investing in logistics. "Buy their own built, others built warehouses, not tailored and difficult to operate." Jinjun, vice president of Suning, said that there are 12 or so in the large area currently in use, and 10 more will be built this year. As land prices soar, he thinks that the logistics of Jingdong Ali is just beginning. Asia, the only place in Beijing to buy land, seems to have been heard.

According to outside people speculate calculation, suning easy to buy average guest price in 800 yuan, at present each distribution a single logistics cost is very high, more than 20 yuan. and reasonable delivery costs should be reduced by at least half. In fact, this is also Su Ning will be logistics due to the purchase of the reason: Everyone high unit price, at the same time localized distribution mature in place, even if the unit price high freight can be diluted. The real cost is high in small pieces of goods, packaging costs high scale and not go, urgent need to do better optimization and coordination.

Logistics cost plays an important role in electric business enterprises. When Amazon was able to turn a profit, it was also due to the scale advantage, so that logistics costs within 5 years falling. Suning's former logistics strategy is mainly based on the main line, now easy to buy 70% of the goods are distributed from Nanjing, and for the current easy to buy, the way to pull low cost is the whole category of localization strategy.

Cloud business model, that is, stores to provide the final service, suppliers are corresponding to the procurement of goods centers, the corresponding consumers are localized, such as Beijing Cloud, Nanjing Cloud business. Nanjing's suppliers are only responsible for Nanjing's consumers, when the customer in Nanjing orders of goods do not have goods, even if the large area of Beijing show no goods. A more efficient approach would also include a system that combines efficiency and cost estimates and, if it is a high margin commodity, the possibility of deployment.

"Especially for small goods, the way to reduce costs is to minimize trunk transport, balance between inventory capital and transport costs." Jinjun said, Su Ning is doing the supply chain optimization also includes the improvement of warehouse mechanization, a reasonable combination of single, as well as the use of the advantages of the store, advocated from the mention. such as computers, to the store to provide testing machine installation and other services.

Su Ning's change, if use pure Internet thinking, seem to have a lot of "do not understand", but value cost and efficiency is the rule of retail unchanged. And just as Suning's "heavy business" strategy, compared to a seemingly full of imaginary space model concept, can do and how to do well seems to be more important.