Le Tao Net: Confused Shoes Brand Whole Store

In June 8, 2010, the B2C website, a shoe dedicated business, was invested by millions of dollars from Tiger Fund, one of the largest hedge funds in the world, and the German capital of the United States.

Why does a vertical B2C website run for more than a year be favored by capital? In the view of Chen Xiaohong, general manager of Tiger Fund China, B2C is a field of long-distance running, while Le Tao can also control the input output ratio with precision in pursuit of speed and scale, and its prospects for development are more sustainable.

　　 The logic of not advertising

Le Tao net was founded in May 2008 by Bi Sheng, Baidu's former president assistant and marketing director. The former CEO Lei Jun of Jinshan group serves as director of Le Tao network. Although the background of the two people is inexplicable to the B2C website, the focus area at the beginning of Le Tao net is children's toys, and the shoe industry has only a year to go.

As we all know, many B2C financing after 80% of the money is used to advertise. Because the general mode of operation of B2C is to constantly advertise, gain popularity, form scale effect, and make profits later. But unlike other B2C websites, Le Tao insists on a logic that does not advertise. Even after the success of the financing, Bi Sheng also said that Le Tao would not consider advertising on a large scale.

Why does Le Tao construct such logic? This is also one of the problems often mentioned by investors and Bisheng in their early communication. Bi Sheng said: "in general, Internet advertising Click to buy conversion rate to 3/1000 has been very good, and the average price of each click cost of about 1 yuan of Baidu ranked ads in the industry is the cheapest and most efficient. Even so, for our shoes that only cost 300 yuan, we spend 1000 yuan, and the final sales volume is only about 1000 yuan. At the same time, we need to calculate the cost of logistics, the cost of packaging, and the cost of warehousing.

In the view of Bi Sheng, in addition to advertising investment income ratio is too low, in the B2C website is not ready to do a good job of advertising, in a sense is "scolding", but not conducive to the maintenance of customer relationship.

Since it will not spend a lot of money in advertising, what will the funds be used for? "Bi Sheng said," Yue Tao plans to build more than four to five logistics centers in the whole country, including Beijing centered North China, Shanghai centered East China's Yangtze River Delta and other regions. After the completion of the logistics center, consumers can receive goods almost 24 hours or 48 hours after the completion of the logistics center, and the input of this item is very large. Secondly, investment in software, such as the simultaneous deployment of five goods, is quite complicated. If a user orders, our system needs to determine which DC (DELIVE CENTER distribution center) the physical location is closest to. If the DC is not available, we need to deliver to the sub DC.

The huge cost and cost will create pressure on the capital chain of Le Tao. But Bi Sheng believes that this kind of payment is valuable. He hopes to build up a good word of mouth through such details and services. {page_break}

　　 30% gross profit

In fact, "increasing user experience" has become the choice of more and more B2C websites. At the end of 2009, another online shoe store, known for its emphasis on user experience, also received millions of dollars in investment from Sequoia Capital. Many people used to compare the two. However, in the view of Bi Sheng, good Lok is selling online dealers, and Le Tao is doing shopping online.

"We are not dealers, because we do not buy goods. If I am a dealer, you are Lining, your goods I selected to give you money, 6 months ahead of time is called futures, first set and then sold, sell no discount, then sell the gift, and finally can not sell it will be destroyed, this is what dealers do. And we are shopping malls, not buying goods because your goods are placed in my place, provided by us with a unified service, "Bi Sheng said." in the cooperation mode with the brand, whether the branding price is down to the bottom price, if we can guarantee a gross profit of 30%, we will do it, otherwise we will not do it. The current situation is that we will increasingly adopt the reverse mode. The selling price on the Internet is priced by the Brand Company itself. As for the price system, it is their own affairs that we mess up. We don't care.

However, now it seems easy to talk about Bi Sheng, in the earliest cooperation with the brand is quite tough. The earliest cooperative brand of Le Tao is only 5, and now it is 39. "When I talked to people, they fell asleep and didn't know what I was talking about." Bi Sheng said.

However, many international brands have long recognized the charm of e-commerce (e-commerce channel). Bi Sheng mentioned cooperation with ADI (China) and communicated very smoothly. Adidas has cooperated with ZAPPOS in the US, which is the largest shoe net in the United States in 2008 with a net income of 625 million US dollars. It has shown the future development of Chinese e-commerce for international brands.

In fact, the difference between Internet channels and traditional retail channels is making many brands see the value added space of the former. Take Nike as an example, it has 300 new shoes in one quarter, but at the traditional shopping counter, you can see 180 new models in the whole North China area, and the other 120 may be in East China and central China. But in Le Tao online, consumers can see as many styles as possible because they are not limited by time and space. Bi Sheng said that unlike the physical counters, Le Tao only had no counters, and brands could bring their styles as much as possible. For example, because Nike bought 38 women's shoes very little, and 36 yards of women's shoes might have bought a lot, so they used the "reverse Pyramid" stocking mode, a yard of a few pairs, which sold automatically and replenished according to the background networking system. In this regard, Le Tao has developed a sales forecasting system, you can relatively accurately know how many pairs of shoes Nike will sell in the next period of time. The Nike side will produce a replenishment sheet according to the results of Le Tao sales forecasting system, so that the fastest speed replenishment can be guaranteed, and the sale rate of Le Tao can guarantee 100%.

In the concurrence space between the three brands, distributors and shopping malls (both offline and offline), there are always two brands and shopping malls doing well, and the profit margins are large. The distributors in the middle are more difficult, because dealers need to solve the problem of inventory. And Yue Tao hopes to increase the number of shoes to 5000 by the end of the year, which is equivalent to helping the brand operators to add more "terminal counters", while online counters will save more costs and costs than traditional forms.

Bi Sheng said that the aim of Le Tao is to focus on making shoes, hoping that one day, customers who want to dance ballet but can not buy the right shoes will also come to le Tao. In his view, ZAPPOS, the largest online shoe store in the United States, has nearly a thousand shoe brands and more than 60 thousand shoes. However, there are only 39 cooperative brands today, and nearly 3000 shoes are still quite different from those of ZAPPOS. Now Le Tao has not made any profit, but it is the most important thing to do well first, Bi Sheng said. {page_break}

　　 Investment story

Chen Xiaohong, general manager of Tiger Fund, thinks that the footwear business of Yue Tao has increased rapidly in less than a year, but the most important thing is that this growth is achieved almost without advertising. The business strategy and direction of Le Tao are very clear, and it does not come up to be aggressive; at the same time, Le Tao's internal training is relatively fine. In the field of B2C, there are few such things as Le Tao are so calm. Tiger Fund has been in the global electronic commerce field for many years. The netshoes website we invested in Brazil is Brazil's sole footwear B2C. This round of new two party investors can provide more help to the development of Le Tao in addition to funds.

　 third eye

Independent analyst Constantine believes that at present, the B2C market has formed a Pyramid pattern. "Spire" is platform B2C, such as Taobao mall and Jingdong mall. Such B2C threshold is too high, and the market will accommodate several companies. Only super players can afford to play. In Tazhong, B2C is turned from a vertical B2C to a department store. At present, it is typical of Dangdang, excellence and customers. For them, the scale is the pursuit of the first goal; and for B2C, the scale, service and quality of B2C that can be sped up in any subdivision industry are equally important. But the most important thing is speed, because a bit slow, it may be overtaken by rivals. Obviously, the risk facing Lok Tao is the risk of tower base.