China Electricity Supplier Warning: Bubble Devil Is Approaching

Pandora's box has quietly opened, and the devil of foam is approaching the jubilant Chinese e-commerce industry.

Following the "happy group buying" cut off more than 100 employees, after the "Gao Peng net" laid off 25%, a benchmark position of fan Ke Cheng recently made a decision to lay off 5%. For the massive layoffs, Van guest The attitude of "no comment" has always been adopted. The industry has concluded that this is undoubtedly related to its internal cost reduction and its preparation for IPO.

This is perhaps a sign that China's electricity supplier environment is turning rapidly.

In the past two years, the once conservative and steady development of e-commerce in China has suddenly been injected into the "catalyst". From the commercial mode development to the financing environment, it has ushered in an unprecedented spring. But behind the hopeful is greed, false prosperity and vicious competition.

"At present, many companies have accounted for 30% of the total sales revenue." CEO, an anonymous e-commerce company B2C, told reporters that this has pushed the profit schedule of many e-commerce companies to a further push.

The cost of flow acquisition is too high, and the cost of marketing exceeds Marketing "Forehead" and "serious gangs" and so on, like cancer, encroach on the healthy development of electricity business. Bubble has become an unavoidable fact for China's electricity supplier industry.

With the sudden change of the overseas capital market since the beginning of this year, the financing window for listing in the US has tightened, and investors and business people are beginning to reflect and change. According to reporters, taking into account the rate of return on investment in electricity business may be reduced, a few VC, PE has begun to turn its main attention to the wireless Internet.

"We talk about cooperation with Baidu navigation station 123. We need to pay 700 thousand yuan per month. We thought the price was too high. But I didn't expect that when the group purchase website came in, it would directly raise the price to 2 million 700 thousand yuan / month. CEO, an anonymous electricity supplier, complained to reporters.

China's e-commerce accounts for less than 2% of the total retail sales in China, while the developed countries such as the US, Korea and Japan are generally 7%-10%. The huge imagination space has attracted many investments, and the electricity supplier is thriving. Development Eventually it turned into overheating, and the most obvious manifestation was the rising cost of traffic acquisition.

According to the reporter, there are mainly three ways of online marketing channels: network alliance, navigation bar and search engine keywords. Among them, the navigation bar and search engine keywords are monopolized by several monopolies, and the cost is relatively high.

Insiders told reporters that the advertising price of the navigation bar is increasing at a speed of doubling every quarter. By the third quarter of this year, the price of the navigation bar has been 8 times that of the first quarter. According to some e-commerce companies, the cost of acquiring new customers through the navigation bar has reached as high as 100 yuan / bit.

Baidu and Google, which represent the key words, have higher purchase cost, and the average cost of acquiring new customers is about 80-90 yuan / bit. "However, this part of the launch can be dynamically adjusted according to the needs of the website itself." The person said.

In terms of network alliance, because it is the establishment of many websites, the relative cost is relatively high. reasonable The cost of the new customer is about 30-50 yuan / bit.

The rising cost of online marketing has made electricity providers miserable. Dangdang CEO Li Guoqing even dispatched the nearly 1000 colleagues in the Forum on behalf of the e-commerce forum in 2011. "What is the cost of Baidu hao123 so expensive?"

In addition, according to the reporter's understanding, due to the high cost of displaying banner ads on portals, most of the electricity providers in the fourth quarter of this year are expected to abandon the investment in this field. And offline outdoor advertising, because of the input-output ratio is difficult to calculate, in addition to a few newly entered e-commerce favored, Jingdong, customers and other large electricity providers tend to be cautious, less and less.

Nevertheless, this can not reduce the advertising marketing expenses of some electricity suppliers. Take van customer service as an example. Its advertising sales in 2010 amounted to about 400 million yuan, and its sales volume was about 3 billion yuan. But at the beginning of this year, von CEO said that in 2011, the cost of marketing would reach 1 billion yuan and sales increased to 10 billion yuan.

This is a double-edged sword. Huge advertising expenses can bring sales. increase 。 However, excessive advertising expenses may squeeze the procurement cost and product quality, and also affect the profitability of e-commerce companies.

It is understood that at present, China's main e-commerce is difficult to achieve profitability. Jingdong mall needs to wait until 2012 when it first realizes profitability. Dangdang, which has been listed, has a net loss of 4 million 400 thousand US dollars in the second quarter of this year, an increase of 60% over the same period last year.

It is undeniable that the way of burning money without making money is dragging down the competitiveness of the electricity supplier. Electricity providers are also beginning to think about reducing costs in disguise, and layoffs are one of the most important measures. In March this year, the scale of staff was 6000. With layoffs of 5%, the layoffs will cut about 300 people. If we calculate the monthly salary of 4000 yuan per employee, we will at least save 1 million 200 thousand yuan per month.

In addition, reporters learned that the beginning of this year, the business sector frequently broke out high salary poaching, starting from the beginning of the year, the pay premium capability gradually tightened. An industry insider told reporters, "people who want to job hopping will basically choose to finish their work in the middle of the year, because by the end of this year, the situation will be completely different."

For those who want to finance, they will try their best to finish this year. By the end of this year, I am afraid it will be very difficult.

In fact, the craziness of e-commerce over the past two years can not be achieved without the help of capital.
According to the China Electronic Commerce Research Center, there were 44 investment and financing projects in the electronic commerce field (including B2C and B2B, excluding online group buying) in 1-6 months in 2011, including 42 venture capital investments and a total of more than 1 billion 830 million US dollars; 2 IPO took place in the domestic gem, and a total of 837 million yuan was raised.

"At the end of last year, we looked at projects every day and saw a lot of e-commerce projects." A venture capitalist told reporters. At that time, the electricity supplier has become the standard of venture capital providers. Whoever fails to invest in e-commerce will miss the next star. He told reporters: "now we feel that the investment opportunities of electric providers are few, and more wireless Internet has begun to be launched."

The frenzy of money in this round of business began with the financing of 2008. Most of the A round of the electronic commerce company's financing mainly concentrated in the second half of 2009 and the first half of 2010. The amount of financing is generally less than 20 million yuan, the second round of financing is 20 million to 40 million yuan, and the third round of financing is basically more than one hundred million yuan. Currently, including Diamonds More than 40 business companies, including birds, wheat bags, Le Tao, Marceau and Dunhuang net, have received two rounds or three rounds of investment.

But with the ups and downs of the US capital market, the integrity crisis of the Chinese concept stocks broke out in April this year. In addition, after the US debt crisis triggered a global stock market crash, the window for us listing is tightening, and the financing environment of e-commerce is also deteriorating.

"The turbulence in the public market has some influence on the mentality of investors. For example, when the terms are invited, they will be more hesitant. Valuations will be more conservative. " Yi Kai capital CEO Wang Ran believes that China's e-commerce has become more rational than it was six months ago.

It is understood that in the past two years, when investing in e-commerce companies, venture capitalists focus on sales, market rankings, team operation capabilities and industry space. "During the financing process, there will be discrepancy in each case and there is no specific calculation ratio. However, according to the current situation, if the company expects business revenue to exceed 100 million yuan this year, it is expected to invest 150 million yuan in the first half of this year. If the revenue is expected to exceed 500 million yuan next year, it will reach 5000-8000 yuan in the second half of this year. An insider told reporters.

"For the electricity supplier, the annual operating income of 100 million, 500 million or 1 billion yuan, are different thresholds." The source told reporters that every breakthrough in a bottleneck, the latter need to pry the market capital leverage relative reduction.

However, compared with the previous craziness, e-commerce and investors are aware that not all fields are suitable for e-commerce. CEO, a B2C company who does not want to be named, told reporters: "in fact, in the field of e-commerce, Development The opportunity is not as big as imagined. "

Over the past year, in addition to 3C, clothing and footwear and other fields, in different segments of the market, there have been electricity supplier companies, including liquor, food, decoration and building materials. "However, in some areas, the cost of replacement is too high, and the phenomenon of capital shortage is serious. It is not suitable for all B2C providers." The person said.

Tong Shihao, managing director of Qiming venture capital, said: "there are more than 50 China Internet Corporation listed in the US. When new companies come to market, American investors will compare the stock of Internet companies. If new businesses can't shake or replace, even if you do well, American investors will never take notice of them. In other words, the capacity of water in the pool is limited. When more containers are used to grab, the difficulty of scramble will increase.

Reporters learned that the current financing difficulties of electricity providers have increased significantly. An industry insider told reporters: "for those who want financing, they will try their best to finish this year. By the end of this year, I am afraid it will be very difficult. " For enterprises that have not yet obtained the third round of financing, their development will be difficult.

New spoiler

As for the coming of the bubble, different household appliances have different mentality. Some people are expecting, some are nervous, others are actively looking for new ways of thinking and development.

The most noteworthy thing is the spoiling of sina and Tencent in large Internet Co. Wu Xiaoguang, senior vice president of Tencent, said in an interview with the newspaper: "we have begun to think about how to help the electricity supplier not only rely on search to get traffic, but also get more effective traffic from the social networking field."

Social networking sites are the strengths of Tencent. It is understood that if exposed to the amount of exposure alone, QQ daily exposure of more than 30 billion, Tencent web page traffic increased by more than 8 billion, the wireless Internet traffic is about 15 billion. In addition, the SNS traffic is about 3 billion. If its traffic is fully utilized in the field of e-commerce, its size and scale should not be underestimated.

Wu Xiaoguang said: "we have noticed that the original Internet Co is a strong and strong phenomenon. It is hard for the latecomers to break the monopoly of the first mover. However, in the field of e-commerce, the whole industry chain is very different. Although Taobao still has a strong advantage, it can not block the rise of vertical B2C with unique experience. "

It is understood that Tencent network is planning to promote e-commerce from three aspects. field Development. The first is to launch a new B2C mall in the fourth quarter of this year, and cooperate with many large B2C companies to provide one-stop e-commerce platform. Second, provide a more open module to improve the conversion rate of the entire business. Third, through the opening of wireless traffic, strengthen cooperation with the electricity suppliers.

In addition, at the 2011 Internet Conference held a week ago, sina CEO Cao Guowei said Sina would make an attempt at "light e-business", such as the sale of virtual goods, which is less dependent on logistics. At present, Sina has formed a strategic partnership with Jingdong mall, and launched micro-blog, which can directly click on shopping. In March of this year, Sina announced that it would spend $66 million on Mcglaughlin's 19% stake.

For the B2C companies that have taken the lead, they expect the bubble to burst as soon as possible. "We hope that the bubble will burst as soon as possible, only in this way can the market enter a stable and healthy development," Bi Sheng, CEO, told reporters. At present, Le Tao net is the first camp in the field of Chinese footwear B2C, but it is subject to the high cost of marketing and the trouble of talent and market "burn money war". The company needs to constantly explore new market opportunities, including wireless Internet, pre shop and post factory.

As soon as the bubble burst, a group of potential competitors will be eliminated as soon as possible, and the marketing cost will not grow rapidly with the new drivers. In a stable market environment, enterprises that are in a dominant position in the market can deepen the improvement and development of product and service quality.

And for the lack of financing, and rushing ahead. Online retailers For enterprises, their life is the most difficult. Tong Shihao said: "the company that has joined the capital has begun to prepare for the winter. However, companies that have not yet reached the C round are relatively hard. Although some CEO betting on gambling will continue to focus on scale expansion, more companies will try to pay attention to the balance of cash flow. And, to be honest, investors will be more cautious about C financing. "

In other words, compared with the past two years, such as "losing money and making money", "scale is king" and "speed capital", Chinese electricity suppliers are now more rational and cautious.