High Cost And Low Profit &Nbsp; Homogenization Competition Worsens E-Commerce And Faces Bubble Worries.

Several portals

This small case reflects the mentality of entrepreneurs and investors.

In 2010, the electricity supplier staged too many stories, and 42 publicly disclosed investment and financing cases, of which 35 were venture capital projects, with a total value of $550 million. Most of them were Jingdong mall. The total amount of the third round of financing was far more than US $500 million.

What metaphors do we have? Let's talk about it later.

The rich Jingdong began to roam their horses. In order to make a large scale, they would not hesitate to provoke price wars, or even lose money to earn money.

Taking advantage of the high valuation, Dangdang landed on the New York Stock Exchange to raise $200 million. CEO Li Guoqing scolding Morgan for lowering the issue price. Ma Yunchou set up a logistics and warehousing platform for hundreds of billions of dollars. Now the electricity supplier is being mentioned. 99% of the sensible people say that the bubble is very serious. Ma Yun, Liu Qiangdong and other bigwigs even more say that the bubble will burst in two years.

But people kept coming in.

"More players, more money, higher costs, higher valuations."

Liu Shuang, former chief analyst and assistant chief executive of Jingdong mall, told reporters that he left office shortly after leaving. Jingdong was in the limelight. Many friends advised him to wait a few more years, but he decided to go to business.

Although he also agrees with the bubble.

Zhou Yuan, the managing director of Boston consulting company, also holds the same view. She believes that there are 2.5 electricity suppliers in China, and the homogenization of competition is intensified. Jingdong, Taobao mall, Dangdang, and excellence are expanding to the same field, and the strategy is converging.

"The overall level of the electricity supplier industry is low, operational efficiency and profitability are low, and high level talents are extremely scarce. The support system can not match the development speed of e-commerce, such as logistics.

Hot money, blind investment, disorderly competition, and accelerating the deterioration of the industrial environment.

Li Molin, founder and President of the Nutcracker mall, reminded: "the electric business enterprises need to prepare for the winter and practice hard."

Nowadays, the overall situation of the electricity supplier is uncertain, so long as the bubble is not broken, everyone will have the chance.

For group buying, hundreds of homes are coming out in one year, which is very similar to the video websites a few years ago. Today's video websites are basically determined, and few of them can survive.

In the past, in the future, the comprehensive platform based electricity supplier can only survive two or three, and the vertical field is also, and every subdivision area will eventually survive.

If the bubble burst within two years, how will the electricity supplier enterprises themselves?

Size and profit?

Capital is a stimulant, and a lot of capital injection has accelerated the bubble. The business enterprises that get the money have started to keep their horses in the field.

In the field of B2C, it is a difficult choice whether to scale or profit.

The vast majority of e-commerce enterprises have chosen to expand and give up short-term profits. They often say that as long as I stop expanding, I will be able to make profits immediately.

But profit is not as simple as they say.

In addition to the best 3C, Jingdong tentacles extend to all fields. First of all, the price is reduced by 20% to stir up book wars. Dangdang and Amazon are involved in it. Dangdang responds with a promotion of 40 million yuan, and Jingdong pushes another 80 million yuan on the same day.

Since then, Jingdong has expanded to the field of home appliances, forcing Gome and Suning to jointly block it. In the future, they will enter the field of clothing and compete with fans.

CEO believes that Jingdong and Dangdang must have a life and death war, which is sooner or later.

With Gome and Suning competing for the site, Jingdong is somewhat reluctant to do so.

On the negotiation with suppliers, Jingdong is hard to compare with the big two.

Reporters have deliberately compared, the same household appliances, Gome Suning online mall price, cheaper than Jingdong.

An industry insider privately revealed that many business enterprises in order to attract traffic, seize market share, prove that their prices are the cheapest, and at any cost, they will buy consumers.

He believes that Jingdong is probably a big bubble.

Earlier, Jingdong mall CEO Liu Qiangdong said, Jingdong sales to 4 billion yuan can be profitable, now has more than 10 billion yuan, Jingdong is still in a state of loss, Liu Jier also said, to reach 50 billion yuan scale, Jingdong is "relatively safe".

The implication is that Jingdong must continue to invest.

In fact, the loss is also very good explanation, investment losses, build logistics storage base, is strategic.

"Not only Jingdong, Sohu, Sina, NetEase listed, but in fact, there are financial losses.

But as long as you can achieve your strategic goals and aspirations, there will be countless returns in the future.

Liu Qiangdong said.

The larger the scale of the business enterprise, the cash flow, inventory turnover and negotiation ability to suppliers will reach a safety critical point.

After the rise of group buying, people saw another great advantage of the electricity supplier, which was a huge sales volume in a short time.

It is said that mr.ing sold 7888 pairs of shoes in 4 hours.

Sometimes, the cost of huge sales is huge, and the rapid sales volume also reveals the problem of imperfect supporting services.

We will elaborate later.

Li Molin believes that the industry of electric business is very long, and the supporting development of all links in the chain can be healthy. The barrel effect is a good portrayal of the characteristics of the industry. If a certain point is very long, it is a bubble.

The development of Changxin XinDa, a well-known e-commerce outsourcing company, is based on profits. It has been established for more than 10 years, and has never introduced any investment. At present, its turnover is four hundred million or five hundred million yuan. Liu Lei, chairman of Changxin XinDa, frankly stated that although the scale of the company has not increased rapidly, the overall health is very healthy. In the field of e-commerce outsourcing, Changxin's competitiveness is very strong, and it pays more attention to internal practice.

High cost and low profit

The massive injection of venture capital has raised the overall cost of electricity supplier operation, especially the promotion of talent and promotion costs, which has raised the threshold for SMEs to enter.

Insiders said that compared with traditional sales channels, electricity providers are not cheap.

Cool man is a children's furniture enterprise. Yang Tao, chairman of the company, is familiar with reporters. This company has not been founded for a long time. Early expansion channels mainly rely on franchised stores and self owned stores. Due to the lack of funds, the development speed is limited.

More than a year ago, Yang Tao began to pay attention to the electricity supplier, but also had the idea of self built, but the investment was also astonishing.

In essence, every order made by an electric supplier has traffic support behind it, and there is sales volume if there is traffic. This is the same reason as traditional retail traffic.

In contrast, online traffic is much easier than physical store traffic.

Physical stores rely on location and location, that is, to get a good location for rent, a good location to ensure the flow of customers, and the same for electricity providers.

The difference is that physical stores are limited in size and can not accommodate too many people, and websites are unlimited.

In the past, it was often said that the electricity supplier had zero inventory. Now, this inventory is no lower or even higher than the physical storefront.

When Jingdong launched the book price war, it was said that there were 200 thousand volumes, but there were still many books that could not be bought.

Liu Qiangdong explained that this can only be said that our initial book sales volume is too low, that is, the actual sales volume is five times that of our original expectations, resulting in insufficient storage.

During that time, crazily preparing the library every day.

The shortage of manpower and the increasing cost of manpower are almost all the puzzles of all electric business enterprises.

In particular, the operation and promotion of talents, such people are never cultivated by the University, and experience is accumulated through the struggle.

Liu Shuang, for example, has very good treatment in Jingdong and still insists on starting an undertaking.

The electricity supplier's profit is low, which is usually compensated by scale and quantity.

Digital products such as standardized products, the profit margin is very low, consumers online pricing is very easy, who buy low.

And it is difficult to compare prices, such as clothing, shoes, bags and so on, will maintain a higher gross profit, advertising by gross margin.

A netizen of a network posted an account. A brand new shoe launched by Taobao, for example, sold 5000 pairs in 4 hours. According to him, the huge sales volume was invested in a huge advertising fee.

On the same day, the brand was advertised at least four locations in Taobao, home page focus, home page banner, three screen banne, and a category search sidebar. Roughly calculated, the advertising cost is about 200 thousand yuan (the amount may not be completely accurate).

If a pair of shoes is calculated by 99 yuan per hour, it will be 500 thousand sales.

If the profit is calculated, the cost of these shoes can not be higher than 60 yuan, if not guaranteed, otherwise it will lose a lot. The algorithm does not include other charges such as logistics, warehousing and so on.

Of course, this kind of advertising investment also enhances brand influence and lays a solid foundation for potential sales opportunities.

In recent years, PPG, which was very popular at the end, collapsed due to the broken chain. The main problem is the huge advertising and product quality. Although the sales volume is very large, it is not sustainable.

It is not a risky strategy to give up profits for large scale, but the risk is huge. If you can invest money all the time, you will be able to live very well. Once the capital chain breaks, it will collapse immediately.

Despite the recognition of the prospects for the development of the electricity supplier, every business enterprise wants to go public, but it will not be too good to come up with the financial statements.

Deterioration of homogenization competition

In many segments of the electricity supplier, homogenization is becoming more and more serious, such as jewelry, home, group buying and so on.

In 2010, the price war, which was launched by several large platform B2C business enterprises, was a concentrated outbreak.

No matter whether the Jingdong is spoiler, whether it is arrogant or if the Amazon acts as cannon fodder, the book price war will be harmful to the healthy development of the whole industry.

Insiders believe that in the first half of the development of the electricity supplier market, manufacturers choose price war, more motivation is enclosure, seize market share, this way of competition is understandable.

But in the middle and later stage, manufacturers should gradually reduce the price war and turn to other aspects of competition, such as service.

The continued investment of VC investment continues to determine the direction of B2C industry.

The competition in the future will be aggravated, and the less competitive enterprises will be eliminated, like the 2010 thousand search and rice grain mall.

The reasons for the exit are the fragmentation of capital chain, the unclear business mode, the oppressive competition of the leading manufacturers, and the impact of external policy risks (real name system, license plate, Guan Shui).

The demand of electronic business mode is high, and the test of supply chain management ability is also very strict.

The investment boom has led many manufacturers to rush ahead. However, whether the late investment is firm and whether it can guarantee the control of the supply chain system will affect the future direction of the electricity supplier enterprises.

"Electric business enterprises should be calm in the face of the upsurge, think about and build sustainable competitive advantages, and realize the upgrading of infrastructure, processes and management, and lay a solid foundation for long-term growth and prosperity."

Zhou Yuan said.