Unbearable vertical business: Where is the real knot?

A recent rumour about the sale of Amoy has allowed the long-lost vertical electric operator to return to the public eye. The acquirer is the Guangdong crown-Peng Footwear industry and an investment agency in Hong Kong, which was scheduled to release information early this May. In the face of selling rumors, Bi Sheng in Sina Science and Technology interview said, is currently with children, inconvenient to answer the acquisition, can be in the end of the holiday around May to receive an official interview. This is consistent with the rumored release time of the message. and view Lok Amoy letao.com domain name whois information registrant is: Luxianglong, that is Lu Xianglong, Guangdong Crown Peng Shoes Company's general manager, Amoy was sold is a certainty.

Where is the knot of the vertical electric dealer?

Whether it was last year's "Default supplier Payment", "layoff 20%" of the van, or rumors of the sale of the Lok Tao, the last year, the day of the vertical business of the electric trader is not very good. The reverse platform-type business operator has survived the hardest times, Jingdong is about to land on Nasdaq, Dangdang in the fourth quarter of last year also recorded the first profit since the IPO, and only the goods will also be in the transition to the platform-type electricity business, the market value of tens of billions of dollars, a leap into China's fourth-largest listed internet companies. One side is the platform-type electric dealer's spring flowers, one side is the vertical unbearable. Vertical business operators seem to have never entered the spring, and constantly have a rising star in the winter into the market, and then round and round the venture capital into, and then the spring when they fell. Where is the knot of the vertical electric dealer?

Knot One: The cost of not to open

The cost of the vertical business platform includes logistics cost, warehousing cost, flow cost, operation cost, etc., the CEO of Bi Sheng has bluntly thrown out the view of "vertical electric quotient is a scam", the reason is "one-way logistics 10%+ warehousing 10%+ Reverse Logistics 3%+ Customer Service 1%+ Technical 4%+ management personnel 10%+ Market promotion 10%+ Collection handling fee 2%+ packing 1%=50%. Although the 50% cost is exaggerated, the cost of 20%~30% is widespread. For example, the gross profit margin for the second quarter of 2013 was 23.5%, while the total operating cost accounted for 22%. In all of the costs, the flow cost is to do the business to avoid the deadlock. In the PC field, the main flow of the current entrance is in the hands of the three big bat, money to buy traffic is the main source of the flow of the operators. At the mobile end, the bat control the flow of the entrance trend is also more and more obvious, taking into account the major's own profit growth needs, in the limited flow of resources, with the intensification of industry competition, flow costs rise is completely irreversible.

Knot two: Too low customer unit price

The cost of the flow can be increased by increasing the customer unit price to be diluted, but in recent years the main electric platform of the customer unit price is not in the rise is in the decline, the 2013-year customer unit price is about 400 yuan, and in 2011 the customer unit price has reached nearly 500 yuan, And the only product will be the customer unit price from the original 300 to more than 170 yuan, when the customer unit price is less than 100 yuan. Such a low customer unit price hangs in the vertical Damos sword, a slight carelessness will devour the original thin gross profit margin. There are several reasons why the customer unit price is too low.

One is related to the category. Throughout the years the rise of the vertical consumer electronics, in addition to the 3C category, the general industry is in the FMCG and commodity industry, the customer unit price less than 500 yuan. Second, with the supplier's bargaining power is not high. These declining vertical producers, though they are the dealers ' coats, are essentially one of the sales pipelines for the brand. For brand-name business, if the sales contribution of the platform is not high, they are not easy for the electric business platform to reduce the price impact of the original offline channel, and not much price advantage. Third, in recent years, the major brands and their distributors of the net, the price further transparency, the major platform-type electricity price war and one after another, coupled with the homogenization of products more and more, the price of diving every year, hope that by increasing the unit price to reduce the flow cost is unrealistic.

Knot Three: Repeat consumption frequency is low

How to crack the rising cost and the annual price of diving? The best way is to improve the site's repurchase rate or increase the user stickiness of the site. The factors that affect the repurchase rate are two, one is the category positioning of the site, from the category, vertical manufacturers tend to focus on a certain category, such as selling books, selling shoes, selling clothing and so on. A single category determines the consumption cycle will be longer than the platform-type electric dealers, without frequent purchase, the user's stickiness is not as good as the platform, a simple example is that veterans can not buy shoes once a month. The second is the site crowd positioning, the advantages of vertical electric quotient is more able to attract a specific group of people. But is it good for this particular group of people to provide a product? Or do you have all the products for this type of person? It is obvious that the latter is more scalable than the former and has more potential for growth. If only positioning in a certain category of products, expanding the scale to educate consumers, but also by the platform-type electric dealer's strong counterattack. Amoy chose the first product-based demographic orientation, and the only product would be the second to sell all the products for young fashion women.

Knot Four: first-scale profit

The electric dealer is creates the connection with the consumer, they are concerned about the product and the service itself, you are the vertical electricity merchant or the comprehensive electricity merchant and they do not have the half cents relationship. If your products and services aren't enough to make them scream, they'll always vote with their feet. The vertical producers of electricity that have fallen or declined over the years have all fallen into the fallacy of first-scale and profitable, first of all thinking not how to profit, but how to seize the mountain. As a part of the whole retail industry, the vertical consumer electric trader, if there is no profit in the beginning of the gene, why do you think scale can step achieve scale profit? This cognitive fallacy, which lacks basic knowledge of retailing, has led to a lack of risk-resistant genes from the day they were born, often falling into a pool of blood before the next round of VCs came in.

Knot Five: The competition of own brand and platform

Is it better to be a good brand or just a platform? Over the years, vertical electric dealers have been in their own brands and platforms wandering. Amoy first from the channel to start, and then in 2012 to transform the introduction of 5 private brands, but this has not saved the fate of the Lok Tao, the transformation of the pain continues to this day. And every guest has gone the opposite way, first from own brand start, then launched V Mall, now again forced to return to its own brand. The advantage of doing own brand can guarantee enough gross profit margin, but need very long brand construction cycle and brand promotion expense, need very strong supply chain ability, for example winter exactly how many pieces of down jacket suitable? How to effectively improve inventory turnover level? How to control the quality of products? While the platform is relatively simple, but the price is subject to the brand or its channel business, no advantage to say.

The vertical business platform that has fallen over the years tells us such a few things.

First, a single Internet experience may not be able to play a good vertical manufacturers, at least now do not see what success stories, the future of the electrical business must belong to the traditional industry in both the electrical and industry experience of a group of people.

Second, do the electrical business, to control the good rhythm, must not leap forward. Scale is important, but more important than the scale is the profit, first live to see the future.

Third, to do the electrical business, spell to the end of the actual fight or resources integration capabilities, product innovation capabilities.