Where Is The Way Of Vertical Electric Business?

When the cat advertised ten ten brilliant data that day, when the media was still expecting Jingdong, Suning and Amazon to announce the sales data, the vertical electricity supplier was already thrown aside by us.

CEO, a success of Le Tao, pointed out that "vertical buying and selling e-commerce is a hoax". This view has been affirmed by many people in the industry.

Jingdong mall CEO Liu Qiangdong said, "vertical electricity providers, only vertical brands can survive, not the value of its e-commerce platform, but the value of the brand.

The vertical retail platform must die, and of course it can be sold.

Li Shubin CEO thinks that from the user's point of view, users expect good services, so they do not need so many shopping websites. They need category websites.

Yi Kai capital CEO Wang Ran gave different answers, but its core significance is to see the development of vertical e-commerce.

He believes that the vertical retail platform must be dead, but only for the vertical platform facing the mass market. The vertical platform for specific populations, distinctive features and services will probably survive.

But at present, the mainstream vertical electricity providers should not meet the specific crowd and distinctive positioning.

Traffic is a problem that almost all vertical business providers are facing. The common solution is to enter the open platform of major integrated e-commerce giants.

In Li Shubin's eyes, cooperation with open platforms can bring traffic and orders, and the cost is also lower.

Therefore, from the present point of view, the choice of cooperation is beneficial to both sides.

According to media reports, after the cooperation of liquor vertical electric providers, such as brewmaster network and Tmall, the revenue from distribution platform has accounted for 1/4 of the annual sales target.

For vertical electric providers, it is inevitable to promote their brand with the help of comprehensive e-commerce platform, but the advantages and disadvantages of the model are self-evident.

First of all, for retail, to complete the paction requires enough traffic. Whether online or offline, there is a good connection. The line is "lots". In essence, it is a stream of people. If the location is chosen, there will be a lot of natural traffic.

Besides relying on brand effect, online search engines, portals, or buying large amounts of traffic through alliances are also needed.

At present, the overall traffic price of the Internet is very expensive, so the enterprise will spend a lot of money to do marketing. Once the marketing cost is reduced, then the flow and sales revenue will decrease. This is the problem faced by many vertical electric providers. Once the capital market stops blood pfusion, it will be doomed to encounter difficulties.

For the comprehensive electricity supplier, because the category is more abundant, the user base is bigger, relatively speaking, it has diluted the expensive flow purchase cost.

Therefore, we see that Jingdong's marketing expenses accounted for about 2% of the total revenue, while the vast majority of vertical electricity providers are above 10%. Even when they are crazy, they can even reach 30%-50%. Such a business model is very difficult to sustain.

Secondly, the vertical electricity providers pay more attention to differentiating goods or services to generate more emotional interaction with consumers, resulting in user loyalty and stickiness that platforms can not reproduce.

However, what we see is that most vertical electric providers have no difference compared with the comprehensive electronic business. Even the services provided by the defects of the logistics system are not as good as those of Jingdong and other electronic business platforms. The so-called vertical is just the vertical of the surface goods, and the operation is not professional, so it is difficult to form a moat. Instead, it falls into the vicious circle of price competition, and the gross profit margin continues to fall.

In addition, it is comprehensive.

When the platform expands to a certain category, it will often choose the best vertical electricity supplier in the field as the target and launch the most direct competition.

For them, they can sacrifice the gross profit of a certain category, and the operation of multi category makes them have more space in operation, which is a disaster for vertical electric providers.

Jingdong was relying on such a strategy that the book as the core category Dangdang directly from the profits into a deficit, the red child is also due to the comprehensive e-commerce platform for mother and child category sales and sales fell sharply, had to sell to Suning.

Due to the inherent defects in the mode and the misguided operation, most vertical electric providers did not seize the window period to show their professional operation ability, make the characteristics and form the brand.

When the category covered by Jingdong and other electronic business platforms gradually penetrated into all aspects of people's daily life, when the traditional brand began to embrace Jingdong, Tmall and other integrated e-commerce, the survival space of vertical electric business is becoming smaller and smaller.

How did jumei.com survive?

If vertical electricity providers will be left behind by the encirclement and suppression of comprehensive e-commerce, it is obviously overstated.

In fact, vertical business like jumei.com, Shun Feng optimization, net wine net and so on, are still playing in their respective fields.

So what kind of magic bullet do they have in the gourd?

Unlike the shoes and clothes and food industries, the vertical power supplier of beauty makeup almost depends on the traditional venture capital mode.

Jumei.com's rapid development relies on the following ways: attracting large numbers of users through mass advertising and hype, and then get a new round of sharing investment, advertising and topic speculation to attract new users.

With the development of traditional VCs, jumei.com will boost sales to $817 million in the short term and maintain an annual growth of more than 200%.

As beauty is a large enough market, and the price difference between online and offline is very large, so the online beauty market still has a lot of room for growth. The oligopoly effect also makes jumei.com have more imagination in the later stage.

And COFCO, I buy the net, downwind optimization, net wine net and other enterprises are more "backed by big trees to enjoy the cool".

The numerous food brands in the COFCO industry chain provide goods support to me in a certain sense, and this part of the products will have advantages in terms of synergy and price.

With the help of the parent company's resources, I can also get the cooperation rights of many international food companies. As a large group, the large purchase order of COFCO can also provide an objective cash flow for me to buy the network.

And SF preferred not only can help the distribution advantages of the parent company, but also the direct investment resources of Shun Feng Group and the purchasing resources of SF's large customers.