Wal-Mart has lost its electric dealer

Absrtact: When Raymond Bracy, senior vice president of Wal-Mart China, said at the 98 meeting this year that China is bound to become Wal-Mart's biggest market outside of the United States and likely to rival the US, Wal-Mart faces

When Raymond Bracy, senior vice president of Wal-Mart China, said in this year's "98 investment talks" that China is bound to be Wal-Mart's largest market outside the US and likely to rival the US, Wal-Mart is facing Alibaba, BEIJING-East and other China's local electricity business challenges.

According to data from the second quarter of 2014, Alibaba controls more than half of China's business market, compared with 1th, which Wal-Mart bought two years ago, which accounts for only 1.4% of the market. At the same time, due to the face of the strong attack from Suning, Gome online, by the end of this year, the number 1th shop online share of the ranking is likely to continue to change.

All this is a huge strain on the world's biggest offline retailer, which has lagged behind in the era of electricity because it cannot find an effective way to control costs and gain profits in the era of electricity. In addition to not being able to rival Amazon in the US market, Wal-Mart is encountering a variety of unfavorable rumours in the Chinese market for its acquisition of the electric-business platform.

The more typical problem is that Wal-Mart, although holding the number 1th stores, but Wal-Mart and shop 1th in the end, is only to stay at the strategic investment level, or will use its supply chain advantage and global procurement bargaining power and 1th stores continue to share resources, and ultimately achieve synergy value? For Wal-Mart, is it more of a O2O or a pilot to reach Chinese consumers via the Internet, or a real part of its future strategy? Will Wal-Mart launch its own Walmart.com platform in China in the future? Everything seems to be a lot of variables.

The difficulty of Synergy

Wal-Mart now holds a 51% per cent stake in store 1th, according to Bo Rui. But the extent to which this holding position can allow Wal-Mart to share the supply chain with store 1th remains a problem.

September 19, "China Business newspaper," a reporter from the 1th shop, the news showed that "at present with Wal-Mart more cooperation in commodity procurement, logistics." On the one hand, shop 1th has begun to use Wal-Mart's direct-mining products, the current 1th stores of imported direct-production products already have nearly 400 SKUs, part through Wal-Mart's direct mining, such as Wal-Mart subsidiaries of Asda exclusive and 1th stores in the shop to sell its brand in the number 1th. ”

"On the other hand, shop 1th also sells Wal-Mart's own-brand products, such as its own brand, which is now sold in shop 1th, including mainstays/Mingting, great value/Huiyi, select Edition, and the choice of more than 400 SKUs for the three categories." ”

However, compared to the millions of SKUs sold by Wal-Mart, the hundreds of SKUs are too small. Wal-Mart insiders also told reporters, "There is a synergy, but a very small part of the supply chain between Wal-Mart and number 1th." ”

What is the reason behind the difficulty of supply chain synergy? Is the two sides online under the running-in is not in place, or the difference between the two in the consumer positioning caused a different product SKU layout? Or do they still have reservations?

Earlier (this year "6 18" big promotion of time), reporter interview 1th shop vice President Cheng Junyi, he told reporters, "shop 1th is launching a three-year strategy for the ' spicy Mom ' beauty ' most needed products for the category layout, such as beauty will cover eating, drinking, beauty, beauty protection, popular department stores, Fashion electronics, such as improving the quality of life, spicy MOM will cover maternal and child supplies, home furnishings, small household appliances. First of all, in these areas to achieve category-wide, followed by highlighting the product quality of these categories. ”

Cheng Junyi also told reporters that number 1th shop in the overall category layout for "spicy Mom" "Beauty", there is also an important background that can not be ignored, that is, "shop 1th is mainly female customers, female customers accounted for more than 2/3, and in some traditional 3C electric business, female customers generally will not exceed 40%, Emphasis on women's category layout is related to its inherent consumer population.

At the same time, its focus on the consumer groups, concentrated in the key cities, to the middle and high income white-collar workers, they have a relatively good consumption strength, the quality of goods requirements higher.

Wal-Mart, its consumer positioning is not simply "spicy Mom" "beauty" and other female consumers, Wal-Mart's crowd, a considerable portion of the high-income male population, and as the most complete line of the category of retailers, Wal-Mart's online ambitions certainly not limited to the sale of "spicy Mom" "beauty" of the goods. Perhaps because of this, there is a difference in positioning.

Let's look at the location of the shop. According to the data, Wal-Mart has opened 381 stores in China as of January 2012, 80% of which are in the 2~4 line city. Wal-Mart currently has more than 400 stores in China, but the distribution of the city has not changed much. Obviously, this 2~4 line city and the number of women in the big city of shop 1th is also different.

The existence of these differences makes it difficult for Wal-Mart and store 1th to fully realize the closed loop on the O2O. Therefore, in public, Bo Rui will say, "We in the United States are also very powerful electric dealers, called Wal-Mart. com." A lot of people think that it is the biggest electric goods card except Amazon, and now Wal-Mart's online store in China is not open, but we will consider it in the future. In the next line of online integration is a very good means. ”

And for shop 1th, Bo Rui's attitude is, "shop 1th has our 51% stake, we are major shareholders." There are other online retailers, are our partners, I believe that this partner can connect the business of shop 1th, which helps Wal-Mart diversified development model, I believe there are good business opportunities, we will be very cautious to develop. ”