Vertical electric business lost: Wind-bubble burst merger reshuffle intensified

The Silicon Valley network news according to Tencent Technology King could March 20 report

Over the past few years, the domestic vertical E-commerce experienced a roller coaster general excitement, out of control, and return to reality after the calm.

The peak of financing for vertical electric dealers dates back to 2010. Macaulay, Dangdang listed, the capital to a new round of climax. Public information shows that in 2010, the electricity dealer financing more than 24, the amount of 600 million U.S. dollars, 2011 Electric Business Financing 95, the total amount of more than 4.691 billion U.S. dollars innovation high.

In the era of e-commerce investment overheating, the birth of a group of Internet-owned brands, such as personal apparel business-dimensional cotton, Internet women's brand first carved, home textiles 100, men's brand NOP, etc. at that time, the earlier batch of vertical electric dealers such as Amoy, good buy price war is hot.

In the vision of these electric dealers, there will soon be a next round of money, hoping to expand by burning money. According to elegant 100 founder Chen Tenghua (micro-blog) at the beginning of business planning, 2012 elegant 100 sales target is billion. Similarly, Cotton has expected 2011 sales will be broken billion, and said that 50% of sales for advertising.

But it backfired. Starting in the second half of 2011, E-commerce investment environment plummeted. Victoria Cotton started a round of financing from 2011, but August 2012 was still unfinished until the capital chain broke down and was forced to stop operating.

Now, the first moment by all the buyers, Lok Tao transformation of its own brands face challenges, elegant 100 from the beginning of last year to strictly control the market costs, including advertising, gift certificates. "In 2011, we worked with group buying to send a lot of coupons, in fact, some false prosperity." Will users come back after they run out? Not。 Chen Tenghua.

"For the first moment, there is at least hope for the sale to the visitors." A brand, the need for commodity quality assurance, the need to go up and down the supply chain, the accumulation of style judgments. Accumulation is the operation of the market constantly trial and error to correct the process, trial and error is the need for money. The more money, the more the frequency of the test, the faster the optimization, the quality of the more assured, the more distinctive brand. From the point of view of the founder Xu Xiaohui (Weibo), the present situation is not up to the state he wants. Said a person in the electric business industry.

Still in the independent development of the vertical electric dealers have to reduce costs, their own hematopoietic, settled, sell and other ways to save themselves. It can be expected that in this process, a group of vertical electric dealers will be eliminated, a group of electric dealers will be acquired, there will be a number of vertical electric operators will survive independently.

Capital promotion is never a stable state. Some entrepreneurs say VC is starting to deal with some of the projects in hand. VC has to face the reality is: Each fund has a short 5-8 years, a long 8-10-year cycle limit, when the capital maturity or lack of patience, can cause the project to resell or sell.

Under the condition that the platform-type electric trader forms the value depression and the VC driving mode is unsustainable, the only thing the vertical electric trader can do is to cultivate its core competence, to find the fit point of vertical and scale, and to develop its own hematopoiesis ability. By the time they form a unique value, these surviving electric dealers will be ushered in the spring of capital markets.

VC Drive Mode Bankrupt

In the case of the cold reality of the investment, the VC-driven development mode of the electric quotient will be terminated.

Investment sector people pointed out that the so-called electric business in the cold winter, on the one hand, the capital market to the electrical business return to rationality, aware of the essence of commerce (E-commerce) or commerce (business), or to make money, and no magic. On the other hand, the platform of the power of the opportunity has no longer exist, the image of the subdivision of the business to play a large discount for VC less attractive.

"Investors in a, B round, is to give you the money to prove that your concept is feasible." In the C round, it depends on where you are in the market. and D-round, you have to tell investors a clear path to profitability. Many people mistakenly believe that investors do not vote for me, is the investment is too cold, in fact, different stages of your evaluation criteria are different. "Warburg Huang Jo, capital investor, said.

In addition, for investors, the project return cycle is not unlimited. VC Unit is a fund, most of the fund's cycle is 6-10 years, when the fund needs and VC checkout.

Therefore, in the case of a fund, it will not survive indefinitely, and the investment return cycle of the project is not unrestricted. This is one of the reasons for the sale of vertical electric dealers.

"A fund does not necessarily invest in you on the first day. A fund to enter a business, usually only 5-7 years to allow enterprises to develop time. Many electric dealers, have gone to 3-5 years time, the Foundation considers the exit mechanism. If the fund does not see a clear exit (such as listing), rather let you sell, sell the best, even if not sell well, also recognize the loss. "Huang Jo said.

Home Textile Class 100 founder Chen Tenghua revealed that VC is indeed doing some work, such as in some projects early exit, in some projects on the stop loss. "Because everyone has put money in, a fund for about ten years." Electric dealers in China has been cold for two years, for a few years of VC, may fund itself only four or five years, he certainly want to hand in the project as soon as possible some changes. ”

A shoe company founder example, a male shoe Amoy brand, development is not bad, but due to the expiration of capital, had to sell. VC will also be accountable to their investors. ”

The contradiction between vertical and scale

In addition to capital constraints, the other problem that vertical electric operators have to face is the contradiction between vertical and scale.

NEA partner Jiang that from the point of view of capital, the vertical electric trader still has to face the problem of market capacity and scale: The market segment is too small, or the model cannot scale, it is difficult to gain the favor of capital.

"The vertical electric trader is too narrow, because if this area is too narrow, he has no way to support himself a more independent platform, it is difficult to meet the customer experience." It's too wide and it's more obvious to compete with the platform, so I don't think it's particularly good to be sure. "Chen Tenghua said.

There are two ways to do it on a large scale: horizontal way, expanding category, introducing brand; the second is the vertical way, each category to do deep through.

"Vertical electric operators have to be really vertical to survive." Now a lot of vertical electric dealers do is the level, is simply to do some horizontal expansion. If the horizontal expansion of simple, in each area drilling is not deep enough, the final result is the platform-type electric dealer acquisition or merger. "Le Bee net CEO Wang Licheng thinks.

Really do deep through an industry, from brand positioning, brand imagination to the brand, from product design, packaging, development, canning, delivery cycle need to have professional, this road is more difficult to go.

At present, large electric business platform has formed the value of depression, whether it is the wealth of goods, logistics and distribution are superior to the vertical electric. Vertical electric quotient, either commodity differentiation, or service differentiation, cultivate their core competitiveness. Commodity differentiation now has a certain degree of difficulty, service differentiation also need time to explore and accumulate.

Sent to the CEO Kongkong (micro-blog) that Le Bee, poly-Mei in the vertical electric quotient is relatively excellent case of vertical electric. Le bee through experts, star Tatsu people, do their own brand, poly-Mei excellent product is the core advantage is the channel brand. "Le Bee to do its own brand, patience is more important;" Poly-mei Excellent products to do the channel brand, the need for rapid expansion of the scale, rapid access to the upstream and downstream, the process of forming a competitive advantage and competition barriers. For some time, the advantages of these two vertical electric operators will be more obvious. ”

The wave of mergers and acquisitions of electricity dealers will come

The electronic commerce industry goes to today, the merger tide is inevitable. For the acquisition of the party, the new entry into an industry more and more time cost; for the acquisition of small electric power, high flow costs, there is no clear profit path, funds can not support, facing the survival dilemma.

Huang Jo that the merger of the electric quotient is divided into three categories:

The first category, Internet or retail leading enterprises to enter the electric business, their own time to do high cost. Direct acquisition of an electrical appliance business Company, to upgrade the transformation. For example, Gome (Weibo) buys Bowser.

The second category, the large electric business platform to acquire vertical category. For example, Suning buys red children. Suning's core is 3C home appliances, the first to expand the mother and child category is more difficult to acquire a vertical type of electricity, directly into the mother and infant market before three.

The third category, similar acquisitions, such as the acquisition of the first moment. Every guest is a first-time old club, both do their own brand casual clothing. "The initial stage has a modest basis, do it on their own, may not be scale, it is difficult to bypass the shadow of every guest." From the point of view, not only at a lower price acquisition of the initial and market share, while the acquisition of the first carved user groups, the basic team. ”

"From the beginning of last year, the future years, the situation of domestic electric quotient merger will become more and more obvious." "Huang Jo judged.

As a representative of the vertical electric business start-up, Chen Tenghua 2010 at the end of the time when the resignation of the founder of the home textile business Elegance 100. In the current investment climate, he stressed the cost of control, hoping to have their own hematopoietic capacity before the next round of financing, rather than relying on the success of the next round of financing.

For mergers and acquisitions, elegant 100 founder Chen Tenghua said: "For the elegant 100 phase of the enterprise, any choice may be considered." But for acquisitions, it's certainly not something I'm trying to pursue. Because the enterprise if has the value, naturally will manifest. If it's not worth it, you can sell it everywhere you go. ”