Suning.Com'S Acquisition Of Red Children Has High Hopes For The Future.

What suning.com calls "major events" finally unveils the mystery.

Suning Appliance held a news conference in September 25th, disclosing that it will invest 66 million US dollars (about 416 million yuan) to buy the brand "red child" of the mother infant electronic business.

Suning.com executive vice president

Said that the first case of the red child e-commerce acquisition is of great significance to the development of suning.com, the electricity industry consolidation curtain has been opened.

Business observers believe that although the acquisition means a shortcut for suning.com to expand its business, it is difficult for buyout companies to merge easily.

Looking forward to the future, supply chain integration and management team integration need to be solved jointly by Suning and red children.

Acquisition and expansion business

According to the plan announced at the conference, Suning Appliance intends to invest 66 million US dollars to fully purchase the sales, brand and related assets of the products of mother and baby, toiletries and other products launched by the red children company in China.

Red children in March 2004

Its registered capital is 2 million yuan.

Since November 2005, it has attracted many rounds of financing, including VC, such as Aurora Borealis and NEA.

As an old vertical parent baby electronic business website, red children have built B2C website, direct investment in DM commodity catalog, community website and many other platforms, as well as distribution in 9 provinces and cities and more than 3 million users.

Data show that in 2009, sales of red children amounted to 2 billion yuan, sales in 2010 amounted to 1 billion 500 million yuan, and by 2011, sales of red children amounted to 1 billion 500 million yuan.

In fact, since the founding of the red child, the company has not been able to get out of the scale of the profit dilemma, attracting VC to invest heavily and even after gambling. It is not only IPO hopeless, but also hard to attract capital to capital injection again.

Against this background, the red child at the stage of life and death is actually rescued by suning.com.

At present, suning.com's business category extends from 3C and home appliances to books, department stores, daily necessities, financial products, virtual products and so on. At present, the number of SKU (stock unit) has reached 1 million.

According to the plan, the number of SKU will reach 1 million 500 thousand by the end of this year, and the scale of sales will impact 20 billion yuan. The development of female user groups is an important strategy to achieve this goal. The number of suning.com users will be increased.

Mother and baby products and cosmetics with large market capacity become suning.com's first choice.

In fact, the online shopping market of mother and infant is huge in China.

AI consulting data show that in 2012, the scale of China's mother infant online shopping market will reach 61 billion yuan, accounting for 4.3% of China's online shopping market.

Sun Weimin, vice chairman of Suning Appliance, said that the expansion of suning.com's category depends on the construction of an open platform, and on the other hand, the acquisition of vertical electric providers.

The red child has become the preferred target of suning.com's acquisition of vertical electric business.

Both sides have high hopes.

Suning.com and red children both considered this a win-win move for the acquisition.

Li Bin, executive vice president of suning.com, said the merger was good for Suning and red children.

For suning.com, it means the rapid expansion of the number of SKU products; it is conducive to the expansion of suning.com group users and the optimization of user structure; the two teams' experiences complement each other, and the supplier resources of both sides can be integrated together.

For red children, they can get 22 years' service brand image and high quality flow resources. They can get financial support from Suning, share logistics platform and cost intensive, and sell channels from one to four, that is, from red children to Suning appliances, Tesco, suning.com and red children themselves.

Sun Weimin believes that the main problem facing red children is high operating costs and weak financial capability. Suning can give red children help in these two aspects.

Xu Peixin, founder of red child, said that on the suning.com platform, the red child mother baby net and the colorful purchase network as the vertical professional classification brand will form an effective complement with the existing male dominated user groups.

In addition, with the help of Suning's ground retail channel, the service interaction between mother and Baby online and offline will be further developed.

Li Bin, executive vice president of suning.com, said that the brand of red children and branded purchase will be a subsidiary brand of Suning. It will maintain a certain independence in marketing and customer marketing, and will enter the channel under the Suning line and speed up the operation of Suning's ultra electrification.

Yi Kai capital, CEO Wang Ran, said China

Sunning is stepping into a period of intensive integration. Suning first took the lead in the acquisition of red children.

The merger will push the e-commerce industry to shuffle faster and will have a profound impact on the market structure.

The future remains to be seen.

For the acquisition, GF Securities appliance analyst Yuan Haoran believes that through the acquisition of red children, expanding market share, for Suning Appliance is indeed a good thing.

But looking forward to the future, the integration of the new business and traditional business is also crucial.

In fact, the expansion of the product line of B2C leading enterprises in China has become the same strategy, which is diversification. A large number of vertical B2C business enterprises are pforming into comprehensive department stores.

Suning Appliance said that based on the company's strategy of "super electrification", the expansion of category is the key direction of Suning's e-commerce development.

The company has clearly made rapid progress through various ways, such as strategic cooperation, equity participation and mergers and acquisitions.

Zhou Xiang, an assistant analyst at the online finance department of the China Electronic Commerce Research Center, said that the acquisition means is a shortcut for suning.com to expand its business.

From the perspective of Internet mergers and acquisitions in China, mergers and acquisitions enterprises often have problems such as actual control power and core competitiveness decline.

Supply chain integration, management group purchase integration and so on are yet to be resolved jointly by Suning and red children.