Tripod: the only product will be the business model

Tiger sniff Note: Huang Ruo if e-commerce leader in China's ebony, arena called Huang Yao, former chief operating officer when the net, Lynx founding general manager. This article from Huang Ruo latest book "look at e-commerce." The only product will have been called demon shares by others, two years, the stock rose more than 30 times, the article from the business model, business model interpretation of the only product will be worth reading.

For the investment of e-commerce, I have my own summary of the theory of three cups of tea, that is, to evaluate an e-commerce business, look at its model, look at its operating efficiency, and look at its customer retention rate. In these three areas, the only product will have shining performance.

Mode: Only product will Weihuo sales model to further expand, set up its online limited-time sales of new positioning.

Operating efficiency: As can be seen from the listing documents, the only product inventory turnover, the average sales of a single product, the cost of gross profit ratio, are much higher than their peers.

Customer retention rate, the only product will be positioned mainly in third and fourth tier cities and county-level users, the lock is to buy brand goods with small purchases buyers, repeat purchase rate, loss rate is low.

Tripod: the only product will be the business model

An American investment community analyst once found me and wanted me to analyze the business model of Vipshop in the perspective of an old retailer. At that time I thought for a moment, trying to explain the only product by using the graphic of the ancient Chinese tripod. In my understanding, Vipshop's business model has three basic support points. Brand, special, limited time, this is the only support Vipshop network Ding three feet.

First, brand goods. From the earliest international brands to more local brands. Brand does not mean that brand names, each brand has its own brand, have their own identification features, have large or small user groups. Vipshop will define itself as an online sales channel itself does not intervene in brand development, but purely retail terminal sales. As early as entering, they and thousands of brands signed the right to operate online sales, and even many are exclusive, this way, the only source of goods will be guaranteed. The brand, the only support for Vipshop will attract users, especially when it turns to local brands, greatly enhance the user's purchase fit with third-tier and fourth-tier cities.

Second, special sales. It is difficult to form a strong chemical reaction alone, the price is the most sensitive. The only product will be the mode of operation discount discounts, this way, the desire of consumers have been stimulated.

Third, limited time. Each organization's sales floor, the sales cycle is usually five days, 10 am on sale. Such arrangements tempt the appetite of potential users ahead of time. Consumers need to pay special attention to the time to pinch in order to catch up with a brand he likes and the sales of a certain product. Another time limit is to avoid the sale of the brand to other normal sales channels. To know the channel price control has always been the core of the brand company. Brand companies not only use your website to develop new sales, but also to maintain the daily operation of other channels.

With the support of the three feet, the only product will be this station Ding steady heel. But this tripod as a container, which is installed? Product? wrong. It is installed on behalf of the agency operations.

For many brand companies and even offline retailers, it is a good thing to have traffic to help them develop their sales. However, how to achieve this is still a problem. Someone needs to order goods, stock in warehouses, upload pictures, describe details, and order processing , Delivery tracking, customer service ... ... This series of online business operations, the vast majority of offline businesses are not familiar with, although Taobao and Lynx mass passenger flow, but Taobao and Lynx itself is not involved in operational aspects, it is just the only product The various aspects of the sales operation are themselves bear, so as to ensure that brand companies can use the most peace of mind to sell their own products.

Brand name Weihuo turn local brands: the only product will be a milestone

The only product will be the first to rely on on behalf of the brand over the quarter tail start goods, Nike, Adidas, quarter off the backlog of inventory, with 40% off the sale price, cost-effective, for many do not care too much about the new user That is a very cost-effective purchase option.

The advantages of well-known brand Weihuo is easy to drive sales, high sales, it is said that the sale of such products can reach more than 80% of the sales rate, but also inevitably encounter the following problems.

First, gross margin is low. Big brand companies have strict price pricing specifications, you can not get the goods at the price of two fold, you can not sell 50% off the price of the stock. Selling brand-name goods Weihuo online, gross profit margin of 17% to 18%, such a profit margin to profit, very difficult.

Second, limited supply. Big brand companies have well-planned production and marketing, they are not for your Weihuo production. As a result, the Internet by selling the goods Weihuo although easy to sell, but the scale up, ran into a shortage of supply. You want to double annual sales, can not always expect Nike, Adidas more and more backlog of goods every year. This seems to be a knot.

Precisely right here, Vipshop will have a leapfrog breakthrough in the business model of Tailor Wei: Instead, look for local brand products. Supply and profit problems solved.

I really want to know who thought of this breakthrough, in my opinion, this is the only product will be able to break through the difficulties of a milestone.

China is a big manufacturing country. Once the network management turns its eyes to selling local brands such as Nike and Adi, regardless of the Amoy brand or the small and medium-sized local brands of clothing, shoes and hats, luggage, jewelry and household items, Adequate supply, worry about the goods can be sold. Furthermore, local brands have huge margins for gross margin. I estimate they can sell these products at a gross profit margin of close to 30%. It is also this transition that ensures that Vipshop will maintain a super-high-speed growth rate in the past two years. It is necessary to know that in the mere clothing category, there is a need to clean up the backlog of inventories reaching billions of billions each year in China.

On behalf of operations, cash flow, exposure: the only product will be the advantage

Professional generation operations

Vipshop will build a strong anti-competitive barrier in its operations. A lot of Weihuo is a one warehousing, five days a cycle of product scheduling, which means oversized uploads of goods, just taking pictures of a link is a heavy task. Moreover, there are returns, inventory adjustment between regions, this is a retail finesse. Taobao, Tmall no order processing capacity Needless to say, Jingdong, Dangdang and other B2C website while operating their own products for many years, but they are long-selling model, the introduction of a new product, followed by continuous sales, replenishment, even if it is seasonal Goods, there are several months of the sales cycle, which is with Vipshop every five days a set of goods into the sales cycle of recycling is completely different, the latter to achieve perennial, large-scale operation, the need for strong system support And warehouse management of specialized personnel.

In order to prevent more peers in the brand and supply of competition, the only product will pay special attention to the introduction of the exclusive network cooperation terms, so that at least those who are more familiar in the field of online shopping brands have been its top priority.

2 billion in cash flow

Vipshop's model and buy site is similar, because it does not buy out the stock, is the consignment model, so basically there is no backlog of inventory funds, the sales revenue before the payment to the supplier of the balance owns dozens of days The period is almost pure cash flow. A rough calculation, if the only average daily product sales of 50 million yuan, with an average account period of 50 days, it means that the business has more than 20 billion in cash available for scheduling, which is a considerable potential benefit.

Very high product natural exposure

Vipshop will launch each online sale of about 2000 to 4000 kinds of goods, including international brands, domestic first-tier second-tier brands, a large number of Amoy brand, as well as three or four small brands. My observation is that international brands, after their sale at 10 a.m., are usually sold out within a few hours due to limited availability. That night, the domestic first and second-tier brands are also selling almost the same, the rest of the days, by the three or four small brands in the support field, which is typical of large brands to promote the sale of small brands linkage effect. Like the offline shopping mall, must rely on McDonald's McKinsey to attract passenger traffic, or to take Coca-Cola supermarket sales promotion, the same reason.

I tried to explain with simple math, the only product will visit about 300 million users a day, nearly 200 million Taobao, from the traffic point of view, the former is the latter 1.5%, the number of products on sale, the only product will be 2000 ~ 4000 species, hundreds of millions of online Taobao (of course, there are many repeated uploads), the former less than one hundred thousandth of the latter. This is very clear, the only product will use Taobao 1.5% of the traffic, shows the number of goods one hundred thousandth Taobao, this way, the natural exposure of each product is a few times the natural probability of Taobao, which Explains why in the sales activities of Vipshop, the average sales value of each item is much higher than other e-commerce. In the Taobao platform, of course, have a super flow, if you are a new seller, unless with the ad, you can hardly get the user clicks.

This is a smart.

I have summarized this: Taobao market is a category-driven, Taobao Mall is now Lynx is brand-driven, the former lively, a large number of products repeat, businesses rely on advertising to do marketing, Taobao rely on CPC to make money. The latter has brand recognition features, businesses rely on their brands to attract customers, Lynx sales commission profits. Now, I see the only product will be a single product-driven mode.