Dialogue With Huang Ruo, A Famous Retail Expert In Real War

In 2012, the electricity supplier suddenly fell into silence. Many B2C were caught in mergers and acquisitions, and Guan Zhang heard rumors that the stars were dim.

2 years ago, this is an unthinkable scenario.

At that time, the electricity supplier only hated not having time to discuss the future, and investors were scramble for it.

With a little effort, N listed companies are ready to come out.

Has the wave of B2C really passed? The famous retail real war expert and Tmall's general manager Huang Ruo explained to reporters the essence and future trend of B2C's dilemma.

Reporter: a year ago, you said, the whole Chinese electricity supplier has failed for ten years. Is your opinion changed now?

My judgment is not pessimistic, and I do not want to fight the enthusiasm of the industry, but rather look at the industry from a rational and pragmatic perspective for ten years.

I divide the electricity supplier into two business environments, one is the Taobao environment, the other is the 3 W B2C environment. Now, it seems that only Taobao can be regarded as a success. Looking at B2C, all of them are dead, and none of them has formed the core competitiveness.

If it is only a question of one or two enterprises, it can be explained, but if the whole industry is like this, it shows that the overall electricity supplier has failed in the past ten years.

Reporter: two or three years ago, everyone's enthusiasm for the electricity supplier was very high. Now, the voice of the electricity supplier is very loud.

Do you think there is a problem with the electricity supplier mode?

Huang: I think this is not the problem of the electricity supplier itself. The Internet has changed many consumer behaviors. It is a new trend to provide consumers with the help of the Internet.

But in the past few years, the electricity supplier industry has not really realized the nature of the industry, such as customer retention, cost optimization, detail management and efficiency improvement.

The industry has been burning money for the past ten years. As a result, a piece of raw land has been cooked to the ground, that is to say, many consumers have been trained, but the industry itself has not formed a healthy development mechanism.

I have concluded that ten years of electricity supplier made three major mistakes, one is that traffic is everything, two is to equate scale with efficiency, and three is to know price war.

For so many years, what you did not understand is that the operation cost of the electricity supplier is even higher than that of the traditional enterprise, which is difficult to sustain.

For traditional retailers, they are new entrants. They must provide better selling points than traditional retail outlets to attract consumers, such as better services, better products or cheaper prices.

In the past ten years, B2C basically stared at cheaper prices.

But the problem is that online prices can be lower than offline, but there is no lower operating cost than offline.

For example, the selling price is 100 below the line price and the purchasing cost price is 80, so there is a 20% operation cost under the line.

The line is not good, because the competition is too fierce, the price can only be 90 or 95, but the procurement cost is also the same as that under the line, even higher than the offline.

At the same time, there is no savings in operating costs compared with offline, so you must be caught in the middle.

A simple analogy is used to illustrate the problem. They are all miners who dig coal in tunnels. For traditional enterprises, they have a space of 1.8 meters, whereas for B2C, there is only 1.6 meters in space. At this time, you can only use 1.6 meters of miners, or you can invent ways to sit and dig coal, otherwise you will not be able to maintain operations.

In this regard, there are two ways, one is to reduce procurement costs, the other is to reduce operating costs.

For electricity providers, reducing procurement costs is not realistic, and the rest can only be reduced operating costs.

For example, the price of an electricity supplier is 100 yuan, the cost of goods is 80 yuan, and the operating cost of 30 yuan is not enough. It must be within 20 yuan, which is a simple concept of X minus Y (price reduction cost) greater than zero. Only X minus Y is greater than zero, so this business can be done for a long time.

Whether an industry can make money is not because your gross margin is high or low. Gross profit can be high or low. The problem is that the electricity supplier creates a sales scale with low gross profit, but the operating cost can not be reduced. And the electricity supplier industry generally does not attach importance to this problem. All of them want to find the wind and invest money in a round of rounds, then smash the market and refinance the money, but this is not a permanent solution. Burning money is not sustainable.

Reporter: improving operational efficiency and good service is a slow job, but the electricity supplier must be crazy to grab the market, so most of the electricity providers will worry that price wars are being fought, and if I do not participate, I will not get clients at all.

Huang Ruo: I never agree that only price war can be competitive on the Internet. This is because you are too bad and have no characteristics to talk about it.

Also in China, customers can order a McDonald's or KFC takeaway, 20 yuan to the office, and then charge 7 yuan for freight, which is acceptable to customers. No one has complained that this is too unreasonable.

Why? Because they sell more from the perspective of service guarantee, product differentiation, and value-added, instead of buying 100 to 50.

As for why a price war on line now is essentially caused by the electricity business itself, we did not start with the provision of better commodity mix, better service, better user purchase experience, but the price war, free courier, cash on delivery, even four hours flash express. All of these are costs. Can you afford to trade on your own goods?

If we look at the development of foreign fast food in China, maybe we should be enlightened.

Western fast food is developing very fast in China, and competition is fierce. But you can't see any price war. McDonald's, Pizza Hut and KFC are competing with each other for the market share. But they don't have a price war. Today, you are promoting sales. Tomorrow I will broadcast extensively, issue coupons, make time concessions and packages, but I will not engage in price competition.

By contrast, the domestic retail industry is too keen to attract users at lower prices. This is a very serious problem in retail business, because people will enter a vicious circle - no minimum, only lower.

A company, when you blindly hold the price war strategy, you are actually giving the future competitor a knife to kill you, because later you can always force you out when the scale is not as good as yours.

Reporter: X minus Y seems to be a formula that everyone should understand.

Huang: Yes, it does not need a MBA graduate to understand that junior high school education level is OK.

They do not want to understand this truth, but rather do not pay much attention to the basic logic of retail business, and spend money that is not their own.

When we go to the back, we find that the long term losses of venture capital can not last long. In this case, many people say that this mode can not be done. Then can I do something else? I don't buy self selling B2C, I do open platform.

But strictly speaking, this is a false proposition. Under the line, Shopping Mall and Supermarket Hypermarket are different modes. Hypermarket emphasizes the ability of selecting products, category construction, pricing and inventory turnover. The core of the shopping center is to do a unified cash register, engage in activities to attract customers and build enough parking lots. These two different abilities are hard to get together, which is not related to their size.

Is there anyone who can bring two abilities together? Yes, but few.

Look at the line, making Shopping Mall and making Hypermarket is the two person. Why can you grow two heads at the same time? Why is it that Taobao doesn't own a brand? Why do they sell hundreds of billions of dollars a year, and they don't buy and sell businesses, and Taobao people are much more rational than B2C people.

Reporter: so you don't like B2C to be an open platform?

Huang Ruo: not optimistic, this is basically a blind man who has no future.

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First, the biggest difference between B2C and open platform is that B2C is a one to many mode. The platform is many to many modes, and it needs completely different skills. It is not so easy to move past.

Second, the business mode changes greatly and the risk is great. From the selling price to the selling volume, it is two different models of financial profit.

WAL-MART, for example, earns a price difference between the sale and sale. It also has shops that sell pictures and sell glasses, but very few, only 1% of it.

If WAL-MART self accounted for 60%, the platform accounted for 40%, which would be too difficult.

The third point is the most important. B2C, an open platform, misinterprets Amazon. Amazon is the platform to solve the problem that the proprietary platform can not solve, for example, Amazon's cloud computing. This technology leads the supplier to feel that Amazon sells itself better than its proprietary price.

No one in China has the idea that they only want to sell traffic to merchants and charge some traffic fees and royalties.

In fact, it is impossible for an enterprise to use new business expansion to solve the predicament of the existing business.

Why do B2C want to be an open platform? Seeing Taobao traffic fees receive a lot of envy, once again, we want to keep losing money and have so many traffic flows. Why don't we also do something about cash flow? In other words, I don't know what I want to do and what is my core competitiveness.

Reporter: where do you think Amazon open platform is stronger than Jingdong's open platform?

Huang Ruo: there are three aspects, one is exquisite in category and business choice.

Second Amazon has the rhythm of doing an open platform. It is to make a good category and start another category.

Third, Amazon open platform has a principle that Amazon can do and businesses can not do, or businesses do not have Amazon.

For example, merchant shipping, the cost may be 5%, and Amazon's unified delivery cost as long as 3%, merchants will certainly cooperate with Amazon.

The Chinese electricity supplier does not think this way. No matter whether the cost of the merchant can be saved, in any case, it can bring a little traffic to the merchants, and I will have to pay a deduction. This is the advertising business.

Reporter: what I mentioned before is the failure of B2C. Do you think B2C still has a play in China?

Huang Ruo: B2C has just started in China. This is an emerging industry in the rising stage. There must be some drama, but some changes are necessary.

First, history has given Internet entrepreneurs ten years to do B2C, but they have not been able to grasp this opportunity. In other Internet industries, such as games and social networking, people have already gone through a broad road in recent years, but the electricity providers are still struggling to earn profits.

A few years ago, I once said that I am not very optimistic about traditional enterprises doing business, because they do not have Internet DNA, and there is still much room for development under the Chinese line of retail.

But over the past few years, traditional enterprises have also learned many lessons, and their control over commodities is far stronger than pure B2C. When they wake up, their role will become more and more important.

Second, the self marketing B2C should be able to gradually pition to the non price leading stage. As long as the comprehensive factors such as convenience, service, quality and price will be more important, the coal mining space of 1 m 6 can be solved.

In the short term, I can not see that the cost of online can be lower than that of offline. If the cost can not be lower than the line, then at least the service is more in place. This is a very simple logic.

Third, self financing vertical B2C must go deep.

Whether they sell other brands or sell their own brands, they can not be too wide.

In particular, private brand B2C, it is very difficult to build brand value-added in a category of merchandise, and then expand to other categories, no more brand added value, virtually no brand.

Reporter: now that pure B2C is completely dependent on itself, it is very difficult to go on. The day before yesterday, even Dangdang network has been stationed in Tmall. Now, apart from Jingdong, B2C has entered the open platform. Do you think they want to control the sales of their official website?

Huang Ruo: look at how to locate. If you position yourself as a product Brand Company, this problem is not important.

No matter where to sell, customers will know my brand.

If it is positioned as a channel brand, this is very important.

For example, you like to buy things from IKEA, not just like IKEA products, but also like IKEA's shopping environment.

If you sell IKEA products to Carrefour, it won't work.

At that time, when I was in Taobao mall, I was more welcome to enter the brand business than retailers, especially large retailers across the same category. Why? Because retailers sell other people's things and then add a layer of skins on the original sales channels, which is not an efficient way.

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We should remember a basic principle. Whether online or offline, the value of large retailers is that they have the ability to expand their channels. If they can't build up channels, they need to rely on the platform of their homes to borrow money, so the value of retailers will be greatly reduced. In the end, why do brands need to find you? Can he find a few people directly on the platform? Unfortunately, B2C business people do not think so far, and they only see the flow value of the platform.

Reporter: some people say that Dangdang has been marginalized for two years. What do you think of Dangdang now?

Huang Ruo: Dangdang is an old brand electricity supplier. It has a good user community and many years of accumulation. Now they are losing their share price and losing money. They are being marginalized.

Dangdang's fault is not rational. He stepped on the best time to list and grab a good prize. If the book is steadily extended to a few categories, such as cosmetics, mother and baby, and home, the core strengths of these three categories and books will be even stronger.

As a result, in order to achieve great performance, we should not only make our own brand, but also make clothes, sell wine, sell jewelry and watch.

But the problem is, Dangdang is a small volume company, and they can't take advantage of that market.

This can not be learned from Jingdong, because Jingdong users buy 800 pieces of stuff, then buy 200 department stores, which can be carried.

Dangdang users are buying 50 pieces of books, you want 50 users to drive 200 stores, which is very difficult.

For Dangdang, the best strategy is to start with a few categories and build their own advantages from there.

This is a truth with a trailer. You can't see that people always drag behind the road to imitate. You can't drag a truck with a car, but it's easier for people to use a high-powered Trailer.

The same applies to business, but not for others.

Reporter: let's talk about another listed B2C Mcglaughlin. They made only a few categories and made their own brands very early. The result is not very good. What is the problem?

Huang Ruo: there are two main reasons for Mcglaughlin's failure. First, they turn from line to line and start late than ordinary electricity providers.

Two, their brands have not really been established.

The clothing industry is characterized by the fact that the sales brand is the sense of sale for users to purchase and use.

If the user thinks you are a brand, your price can be a few times or even a hundred times the cost of production, but if you do not establish brand value, you can only sell the price of the goods.

One of the best examples is women's bra, wholesale market 3 yuan, one department store, 300 yuan each, and then high-end can sell for 1000 yuan, in fact, the difference of production cost is very small, more is brand added value.

Now Mcglaughlin has not built up the brand additional value, but it has to sell more expensive than the brand in the wholesale market, which is logically impossible.

Reporter: the whole industry is all over the world. Whose life will be better?

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Huang Ruo: relatively speaking, the B2C of self owned brand will have better living space.

First, the cost of private brand may drop.

Second, the pricing of private brand can be flexible and the space controllable is relatively large.

But unfortunately, 99% of its own brands are not doing well in China. The biggest reason is that no one has ever considered the need for a brand to add value to its own brand.

For example, the overall price of IKEA can be sold at a relatively high price. Will its product be much higher than others' production cost?

But consumers will like IKEA furniture, because IKEA's design and shopping environment is brand added value.

Now we look at the private brand sold by the electricity supplier, basically do not form a brand value-added, this time can only be low price; secondly, the brand of the electricity supplier is not enough focus. When you are not focusing enough, it is difficult for people to connect the product with your brand. The most typical example is the customer, who originally made casual T-shirts, did a good job, later made shoes, made cosmetics, made mops, and one-sided pursuit of scale. In fact, the scale expansion of private brands should be deep, such as IKEA and Watsons.

In the long run, I am very optimistic about the growth of private brand in China.

First, in terms of the general trend, China's brands are few and the market space is relatively large.

Second, China's manufacturing industry is strong and its production has advantages.

Third, the Internet has given us a chance and platform to create brand quickly.

Reporter: now, Taobao's brand name is more than B2C's own brand, and runs healthier.

Do you think that the brand will become the main body of the net goods brand in the future?

Huang Ruo: in the long run, Amoy brands have become independent B2C's own brand genes.

Why is the Amoy brand now doing better, and B2C's own brand is not doing well? That's because the brand has relatively few user sources and marketing costs, and can concentrate on production, design and sales, which is impossible outside Taobao.

Second, people who do brand names are more practical than those who do B2C outside. Cosmetics make cosmetics all the time. Shoes that make their own brands insist on making shoes of their own brands. The people outside Taobao are generally too impetuous. The Amoy brands use their own money to start their own businesses, so they are more reliable in the gene, not more than B2C, and the money they lose is someone else's money.

But the general problem of Amoy brands is the size of the growth ceiling. There is, of course, the reason why Taobao policy is limited. As a platform, he does not want the sellers to be too strong, strong means independence, which means the dependence of platform is reduced.

At the same time, the majority of Amoy brands are still lacking in scale operation.

Reporter: there is another interesting phenomenon. Foreign brands are very popular in China, such as Watsons, but most Chinese brands do not make their own brands. What is the key mistake?

Huang Ruo: the most difficult part of brand is positioning. Everything is around positioning, such as making luxury goods. That is positioning the rich, without worrying about the high price.

If positioning is fashionable, you need to quickly add new models.

Chinese brands often fail to give a brand a word that can be said clearly.

Many enterprises now have such a statement - the goal is to make first-class products, three price.

How can that be? Rational business logic tells us that the three price can only provide three streams of products.

Reporter: whether or not to do its own brand, now the comprehensive B2C pattern has been set, the rest can only take the vertical B2C road.

Starting from the end of 2011, some vertical B2C appropriately expanded several categories, such as good Lok to sell.

Extended to sports products, do you like this way?

Huang Ruo: not only is it good, but many B2C do so, but most of them fail because you sell no features.

If you want to buy a comprehensive category line, incomplete or single product, then why should I buy it from you? If you only sell shoes, whether it's your own brand or manufacturer's brand, as long as you are deep enough, I only need to buy shoes and I can find it here, which is great.

In fact, it is a contradiction between the depth and the width of the category. Do not want to be deep and broad.

I must have been very focused on my own brand. I have never seen a well done Brand Company that is a whole category. There is no such thing in the world.

For thousands of years, you will find that wheels are always round, not square.

But now China's electricity providers, we must ask why the wheels can not be Fang's.

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Moreover, what is more serious is that the electricity supplier not only constantly imagines the wheel as a square, but also constantly adjusts the direction. This product can not, I change a product, this marketing method is not good, I change a marketing method, this plan does not work, I change a plan, they are always changing direction, this is fatal for an enterprise.

We always say that all roads lead to Rome, and every road is connected, but you must stick to it.

Reporter: electricity providers are crossing the river by feeling the stones. Is this process not a way to adjust at any time?

Huang: adjustment can be done, but changing direction is always a big problem.

This is rooted in the Chinese way of doing things. A river is blocked by a big stone. The Chinese style management is to open a small canal from the side, and the water flows into the canal. After the small canal is blocked, I open another small canal.

And Western management thinking is different. No matter how big the stone is, they must remove the stone, because they know that water must flow forward.

In the short term, Chinese style management is very skillful or very skillful, but it loses its direction over time. When it comes to problems, the whole company lacks the spirit of biting teeth.

Coca-Cola became Coca-Cola because it sold only carbonated drinks in 100 years.

In the past 100 years or so, did Coca-Cola not face difficulties? Did not meet new opportunities?

Therefore, the key to our communication is that an enterprise can constantly explore new ways, but do not explore new directions.

At that time, when I was in Taobao mall, I also encountered similar problems. On the one hand, we should reject the big seller of C class, and at the same time, B class sellers and brand manufacturers were not enthusiastic. Finally, we thought whether we should adjust the direction or let the C sellers come in.

There are a lot of disputes about this. Until now, I still remember an email I wrote at that time. I said that Taobao mall is like a pathfinder who enters a dense jungle. Before entering, we had discussions, judgments and decisions on the general direction. When we went in, we could not see anything. At this time, we need to clench our teeth and move forward, even if there is danger of failure or extinction.

The most inconvenient situation is your master's mind is not sure, 500 meters east, there is no confidence, and then turn to the direction of 300 meters west, then next to the north, and you are still in the original place, no harvest.

Reporter: this year, the electricity providers are reflecting on the past and readjusting their mindset. Do you think they still have time?

Huang: time is not a problem, because the industry structure has not really formed. The key is whether they really have the sense of reflection and adjustment.

An enterprise, like a person, is three years old, and his genes have been solidified.

For example, these electric providers used to burn their money desperately, and now their genes are hard to change. Now he doesn't burn money or burn money, but he has no money to burn, rather than he has made a clean sweep of himself.

Therefore, for today's electricity providers, whether they can survive without burning money is the most important. Even if this is not enough, we should not talk about business models and economies of scale in the whole sky.

Reporter: now that some B2C are seeking to survive, how much time are left for them?

Huang Ruo: the time left to them depends on two factors.

One is the speed of traditional enterprises entering e-commerce. According to the current situation, without two or three years, the traditional enterprises will not be on the right track.

The other is whether they can keep up with their follow-up funds.

This year, the electricity supplier business is relatively good, and everyone is cutting costs.

But most of the enterprises still do not last for a year. For example, the group buying website that I used to say is lack of business logic, burning money to buy traffic, but it can not stay down. After the bubble, it is the overall aphasia of the industry.

Reporter: if the pure Internet entrepreneurs do not play well in e-commerce, then the opportunity to enrich the two generation like the excellent purchase network and Lok bee net is coming?

Huang: they are standing on the shoulders of tall men and overlooking the world, but they need to know that they are not stepping on the ground, so whether they have a sense of hardship is very important.

Without this sense of hardship, they will always become an appendage of the original industry, for example, only a sales channel, rather than a company that can grow independently.

But on the whole, I am more optimistic.

Reporter: in the first place, your point of view can be summed up as "self financing B2C is very difficult", "private brand B2C has hope," "rich two generation has prospects"?

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Huang Ruo: since the self marketing B2C has no pricing power, the sales side will go along with the market, unless the efficiency is higher than others, and the operation cost is less than others, so that we can survive well.

If you can't make the cost lower than others, you can only watch others take away the fat.

But I am not saying that self financing B2C has no future. Selling all brands is certainly much larger than selling a brand market. The key is to break away from the inertia thinking of a price line. Now we only know the strategy of citing WAL-MART's EDLP (every day low price). Few people know that the premise of this strategy is EDLC (every day low cost).

The space of private brand B2C is large in profit space. The advantage lies in the high loyalty of customers, because customers can not find products of this brand elsewhere.

If the customer loyalty is high, it can enjoy a larger premium space, so we must dig deeper to cultivate customer loyalty.

Traditional enterprises have ready resources to make electricity providers, and they can't depend on whether they can wean as soon as possible. Just like they can't take pacifiers to college, traditional enterprises want to make bigger electric power providers. That's not just a supplement to existing businesses, but rather a brand new company.

Reporter: who will become the mainstream of the future electricity supplier in these three categories?

Huang Ruo: under the online brand, no matter how successful it is, it has failed to become the main form of retailing, because it is very difficult for the brand to attract users' loyalty.

For everyone, there may be only 2 of the 100 brands.

Therefore, the entry point of private brand is relatively narrow.

A few brands can be seen as strong, but in most categories, they can not be dominated or dominated by their own brands.

The main retail format must be the form of Zhongguancun and WAL-MART, which sells all brands of goods.

In the past, the electricity supplier gave pure Internet entrepreneurs ten years, but unfortunately they basically did not make anything.

In the past, traditional enterprises have been doing electric business for several years.

Today, the two of them are basically on the same starting line, each having their own advantages and disadvantages, so as to see who can overcome the shortcoming in a shorter time.

Reporter: finally, what is the future trend of the electricity supplier you can see at this time point?

Huang Ruo: I have four judgements about the development of electricity providers in the next few years.

In the next 5 years, there will be more and more M & A cases in the field of electric business, and not limited to mergers and acquisitions between online enterprises, more traditional enterprises' Mergers and acquisitions on online businesses.

In the future, one of the development trends of e-commerce is buying and selling. They must rely on buying and selling to increase market share. Not only is the sale and merger between online businesses, but it is likely that more online mergers and acquisitions will take place online.

More opportunities for future electricity providers in the vertical field, multi category B2C will not be many.

Offline retail started with shopping at department stores and supermarkets, and then went to exclusive stores to buy things, so later there was a cosmetics store like this.

Online retailing is still in its early stage, and the development of vertical websites will take a larger share of the market.

The PC terminal business association is declining, and the mobile business will be on the way.

Moreover, for mobile providers, it can be concluded that the mobile electricity providers must not be the big electricity providers on the PC side. I believe very much that success in one industry will become another industry barrier.

The trend of Taobao's dominance will not last for long. The market share of the platform mode electricity supplier will continue to decrease.

Platform mode has special soil development in China, such as low labor cost in China, so it can support a large number of customer service, marketing personnel, warehouse managers online shop mode, according to my understanding, Taobao monthly sales per capita is only about 5000 yuan, even if everyone can get 15% of the salary, monthly salary is less than 800 yuan.

In addition, China is a big manufacturing country, but not a big brand country, so this model can also be the first to develop.

But in the long run, platform mode is difficult to become the main mode of retail formats.

Take the line down and say that offline retail has MALL, but Buy and Sell mode is the main reason, because Mall only solves the traffic problem, and does not solve all kinds of problems from inventory to sales terminals.

The mode service of Buy and Sell is done by one side. The service of MALL is made by many merchants. The quality of service done by a single person can be constant. The quality of service provided by many businesses is very difficult to maintain. Even if Tmall has a screening policy for businesses, it will be difficult.

Moreover, with the gradual standardization of the market, the operation of platforms under many irregularities will be gradually restricted, such as tax tickets.

In addition, the platform is actually an inefficient industry, which may offend some people. The platform itself has a good effect, because he only needs to honor the winners and not to pay for millions of unsuccessful people. Now we see how many successful shops there are in Taobao, but how many losers behind it? How many businesses do not sell them? Sorry, these are not related to the platform.

Such an ecological environment is more suitable for China's rapid development in today's national conditions, but it will not last long from the social benefits.

So, I think when China's labor costs rise to nearly the developed countries, the platform mode will be difficult to continue when Chinese brands are increasing.

But at the moment, it will take quite a long time for B2C to exceed the platform mode.

Finally, what I want to share with you is that it is said that the electricity supplier is now entering the severe winter, and it is dangerous to prepare for the winter. Because the electricity supplier still does not see the nature of the problem and still yearn for the good times of yesterday. In fact, today's temperature is normal. It is a retail environment that returns to normal development step by step. Yesterday, that kind of PPT can raise millions of tens of millions, that is the abnormal state.