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Subdivision Or Pluralism -- Where Will B2C Go In 2011?

2011/3/7 9:29:00 160

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B2C Brand E-Commerce

One side is increasingly blurred by category boundaries, while the other is increasingly subdivided vertically.

B2C

People,

Two thousand and eleven

Where will the year go?

The penetration of commodities and the influx of department stores and capital are the two most noticeable focuses in the field of B2C e-commerce in 2010.

The independent B2C led the Jingdong mall began to break through the category boundaries, gradually expanded from 3C to food and books. This year it will also launch luxury B2C website; platform based B2C e-commerce.

TaoBao

Mall is also independent of the C2C Taobao platform, gradually expanding the category, and even expanding to automobile and food. And the clothing brand B2C, which is started by B2C, has launched the platform B2C e-commerce V+ for clothing and footwear.

Compared to these B2C enterprises' close combat, Le Tao and fast book bag still stick to the category of early business.

Le Tao CEO Bi Sheng told us that "Le Tao only sells shoes, insoles and socks will not sell".

One side is the increasingly blurred boundary of the category, while the other is sticking to the original category. Under the help of capital, B2C will be on the two intersection from left to right, and where will it go in 2011?

Survival Logic

In 2010, the most hustle and bustle of the B2C expansion war was the Jingdong's entry to the book market, causing Dangdang and outstanding two to be slaughters - after the book channel was quietly online, in December 10, 2010, Jingdong President Liu Qiangdong announced through Sina micro-blog that Jingdong adjusted the price system, "each book is 20% cheaper than its rivals starting next Tuesday."

Soon Liu Qiangdong's micro-blog brought in the support of the Internet users, also will be involved in the price war, and finally the "relevant departments" to stop the matter.

Jingdong started with 3C, is currently the largest independent B2C company in China, but Jingdong has more than ten billion revenue in 2010. Compared to the huge 3C market, Dangdang and excellence are mainly audio-visual products, but not more than 2 billion yuan.

Why does Jingdong need to further penetrate the book market from the huge demand 3C market?

First of all, from the composition of Jingdong's business, compared with other commodities, 3C has a fatal weakness in consumer habits.

But book category can increase customer shopping frequency and enhance stickiness. After all, consumers may buy a computer on Jingdong, but books can be repeated many times.

Secondly, from the perspective of competition, the three e-commerce companies in China, such as "department store e-commerce" and "China's Amazon" potential, have been established by books, whether Dangdang or Amazon China (Zhuo Yue). Dangdang books occupy 80% of total revenue, while Zhuo Yue is about 50%.

When Dangdang and excellence have all entered the 3C category and started department stores, Jingdong has not been able to give up the category of books since competitors have entered the core category of Jingdong.

Books are defensive categories in Jingdong's competitive strategy, and they are firewalls that should be built to cope with Dangdang and excellent competition.

Thirdly, from the perspective of Jingdong's cost structure, Jingdong has invested heavily in building 3C logistics system. Compared with the small products such as books, the distribution of 3C products at the same time, increasing the number of books will not cause greater pressure on logistics, and marginal cost is very low.

Finally, for Jingdong with revenue of over 10 billion yuan last year, it has been ahead of the independent B2C company. From a strategic perspective, it will inevitably develop to department stores and satisfy consumers' different shopping needs.

From the expansion of 3C category to books, food and even department stores, the most direct purpose of Jingdong is to expand its scale and maintain its competitive edge.

In fact, from the perspective of the history of B2C development in the US, category expansion is of great help to enterprises in improving cross selling, increasing user stickiness and increasing the scale of revenue.

Category expansion of several B2C enterprises is a concentrated expression of intensified competition in this field, which is still the persistence of e-commerce in terms of scale.

"B2C scale means the industry's right to speak and profit."

Chen Huru, vice president of Le Tao, said.

Even Jingdong whose sales revenue has exceeded 10 billion is still "scale means safety", Liu Qiangdong said in an interview.

B2C's desire for scale is not only the necessity of venture capital's harsh demand for enterprise growth, but also the nature of e-commerce's Internet nature.

The blurring of category boundaries announces that B2C e-commerce has stepped from the initial positional warfare to the close combat.

Like the portal and other Internet industries, the B2C industry is characterized by a typical marginal cost that falls first and then rises again, and then a downward curve of anti smile (as shown in the chart below).

Whether it is the network promotion cost that rises or falls, or whether the B2C enterprises are seated like needles and increasingly expensive customers, the dispute between B2C enterprises has shifted from the original "barbaric growth" positional warfare to today's "war of grabbing people".

Unlike the offline retail form, which has natural geographic restrictions and high customer pfer costs, the user pfer cost is almost zero in the highly symmetric e-business area.

Therefore, only enough powerful shopping platforms and enough scale of pactions can be enough for safety.

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Hidden danger of efficiency

Category expansion is the result of competition and scale inertia. However, the vertical B2C enterprises who stick to subdivision category have their own logic. The core of this logic is efficiency.

If the category expansion is the logical extension of the "long tail theory", then the vertical subdivision of B2C refers to the "28" rule.

B2C, in the final analysis, is a counterattack to the large and full department store mode through efficiency and shopping experience.

Coins always have their positive and negative sides. The expansion of category will increase user stickiness, increase cross sales volume and total turnover, and at the same time, it will cause many problems of low efficiency.

"The pace of category expansion is too fast and easy to pull eggs."

Bi Sheng, President of Le Tao, said with a smile, "how big a plate is.

Electronic commerce is not a SKU pile up, which is called the smallest inventory unit, the English is the Stock Keeping Unit.

The expansion of category is too easy to cause systemic operating pressure. "

The so-called systemic operating pressure is more closely linked to the Domino effect. The category and SKU are too large, the first shortage and unsalable goods are more and more, which in turn leads to a sharp increase in capital demand, which will also lead to a steep rise in after-sales service pressure, which will lead to slower distribution of goods and services, and a gradual decrease in customer experience.

The rapid expansion of category is bound to increase the pressure of business operation. We can take a look at the business earnings report of Dangdang.

As early as 2007, Dangdang tried to break through the category restriction of book audio and video, and gradually moved toward department store and platform opening. However, in 2007-2009 years and in the first three quarters of 2010, the financial data showed that Dangdang stock was 169 million, 300 million, 540 million and 930 million respectively, and the total inventory accounts for 44.69%, 64.86%, 67.52% and 67.79% respectively.

In the 2008-2009 year, and in the three quarter of the first three quarters of 2010, the inventory turnover rates were 2.72, 2.69 and 1.65, respectively.

Dangdang expands the category, makes inventory increase and turnover rate decrease, while operating pressure increases sharply, it also brings back-end logistics distribution slowly.

It is in the face of the drawbacks of efficiency and speed in the book e-commerce market that Xu Zhiming founded an e-business enterprise, a fast book package, which only sells books for production and sale, and guarantees delivery within one hour after placing orders.

The founder and CEO Xu Zhiming analysis of the fast book package, if Jingdong and Dangdang are compared to the online WAL-MART merchants, will maximize the SKU through the infinite shelves of the network. He hopes to optimize the SKU of the fast schoolbag and sell only the best sellers.

No matter how to expand the category of Jingdong, the category of fast book package will still focus on bestsellers in 2011.

Efficiency and shopping experience are one of the core of B2C enterprises, which stick to subdivision.

This is the commercial value of vertical B2C e-commerce Diapers and Zappos in the US.

Vertical e-commerce such as Zappos and Quidsi can establish good relationship with customers through specialization, and at the same time, it also has higher efficiency in operation.

For example, Quidsi has built warehouses for some popular products in cities, so customers who order diapers can even receive goods in a few hours, which is difficult for Amazon to imitate.

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Close combat

Starting from 8848 and Dangdang, by the year 2003, Jingdong was founded, and B2C e-commerce has ushered in the two wave.

The two wave representative categories are books and 3C.

With the help of the new wave of capital waves, the domestic B2C e-commerce has also ushered in the third wave.

The third wave of B2C e-commerce wave in category is the blurring of category boundaries and department stores.

From the Dangdang, Jingdong and other parties to the separatist, they are kept in the category of books, audio-visual products and 3C, and penetrate into each other's categories. The boundaries are becoming increasingly blurred, and they are marching together in department store e-commerce. It also indicates that B2C e-commerce has grown from accelerated growth to speed up growth, and has officially entered the competition era of "close combat".

Chen Hu, vice president of Le Tao, said, "in 2010, B2C enterprises got a lot of venture capital, and large B2C enterprises formally marched toward B2C of department stores. The phenomenon of mutual penetration of products would be more obvious.

2010 is the year when the layout of B2C enterprises has been completed, and the brutal market competition and the elimination tournament have just begun.

In the early days of e-commerce competition, the B2C market is in the doubling market, and the boundaries between enterprises are clear, with obvious location, books, clothing and 3C.

Enterprises are in a "barbaric growth" state, and have been entrenched in various categories of "horse racing enclosure". Everyone is busy catching new customers, and the competition is not fierce in the industry.

However, growth is always the limit. With the pfer of time and space, with the promotion of consumer one-stop shopping demand and the logic of existence, the category boundary will inevitably be broken, and then enter the integration period.

Although e-commerce still has great potential, as the traditional retailers and manufacturers (such as Suning, Gome, Lenovo, Lining) gradually step into B2C e-commerce, the market space of the B2C website represented by Jingdong and Dangdang type will inevitably be squeezed to a certain extent.

The typical entry of traditional business into B2C is Suning, BELLE and so on. For them, Taobao mall is undoubtedly a great boost. In November 11, 2010, on the day of Singles Day promotion, Taobao's daily turnover amounted to 936 million yuan, while Dangdang's annual turnover in 2009 was 1 billion 460 million yuan.

Of course, it is not known whether the great appeal of Taobao mall can give the traditional retailers and manufacturers the ability to compete with independent B2C enterprises.

The intensified competition makes the promotion cost of enterprises increase.

B2C enters the competition state of "close combat", which means that the promotion cost and customer acquisition cost of e-commerce enterprises are rising.

Alipay's chief user experience planner, white crow, revealed his concern in the blog -- marketing cost (i.e. customer acquisition cost, average of the industry): last year it was 0.8 yuan, now it is 1.2 yuan, next year at least 2 yuan.

Not long ago, a magazine hosted an innovation forum.

Chen first came to the stage to speak. He described the competition of B2C e-commerce this year with "sudden changes in the wind and the warlords," and said, "I can not predict the tragedy of war."

On the forums, Chen also announced to the audience at any time that in 2011, Vic would raise the advertising budget to 1 billion yuan, and the B2C media competition would burn up.

In the face of old confidence and the aggressive spirit of VCG, Chen Hu, vice president of Le Tao, appeared somewhat worried. After all, the scale of the third round of Lok tau's arrival was only 200 million yuan.

He carefully analyzed and said: "from the advertising campaign of van customer's product last year, the 1 billion yuan advertisement is only the publication price, and there will not be so many actual funds."

But media resources are limited and price increases are inevitable.

Whether Jingdong or B2C giants such as van Kee pin are trying to build up the cost threshold through capital, establishing operational threshold through various means such as promotion cost, logistics system construction, IT system, and gradually infiltrating through category, pushing the new wave of B2C electronic business affairs to a new integration period.

The trend of the world is different from each other. Internet portal competition is also the same. The dispute of B2C e-commerce is still the rule of "leftover is king".

The elimination tournament has already started. Is B2C going to be a bloodbath?

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21cbr: what do you think is the most important thing in 2010, or what is the biggest thing that touches you?

The founder and CEO Dong Lu of apple: Apple once became the most powerful company in the world, which means that serving small and high-end enterprises can become a powerful company.

The average price of underwear on Taobao is 39 yuan, and the average price is 100 yuan.

How does 21cbr: view the mutual penetration of categories between B2C companies in 2010?

Chen Hu, vice president of Le Tao, the big B2C company began to expand its category and formally entered the B2C of department stores. From the end of the year, the phenomenon of mutual penetration became more obvious.

In 2011, Le Tao continued to make shoes only.

Xu Zhiming, founder and CEO of the fast book package: category expansion is what B2C giants do. The biggest goal of the fast book package is to live.

Our mode itself is reverse. We will not expand blindly on the category. The biggest challenge this year is not the expansion of category and SKU, but the improvement of customer unit price.

21cbr: 2010, Jingdong, excellence,

Dangdang

There are several trends in the Taobao mall, which are permeating each other. 3C is the best. Jingdong has started selling books. Are you worried that Jingdong will also sell diapers one day?

Red child founder and CEO Xu Peixin: This is definitely the trend.

But every website has different reasons and passivity. When capital chasing growth is confronted with bottlenecks, it can only sell other products to achieve growth when a particular subdivision can not reach a special professional level.

Also have the initiative, and now do a good category, can be extended according to the characteristics of their customer base.

21cbr: in 2011, if there were a lot of good VCs to hit you, what would you do with the money first?

Xu Zhiming, founder and CEO of the fast book package, is still talking about angel investment recently, and the exact amount will not be disclosed for the time being.

But this money will not be too much. In terms of dissemination and promotion, we will continue to maintain our daily operations.

After all, our model is not yet able to predict whether there is any future because there are no similar companies in the US.