Why Do Community Electricity Providers Not Do Well?

　　 Spicy mom Gang those under one's command Online retailers Platform " Lotus seed The "farewell declaration" issued indicates that the transformation of the electricity supplier has been suspended. In fact, as early as April 6th, there was an announcement that the hot Ma Gang would face significant personnel adjustments, and it was possible to shut down the electronic business module and return to the original business of the community. At that time, the hot mother side responded that the electricity supplier business was not closed, but the development direction was adjusted and the third party interface was opened. Now, it seems that the rumors were not groundless.

First, let's briefly review the development process of freaky's business development: in September 2014, freaky helped launch the cross border maternal and child e-commerce platform, "freaky Ma mall", the main concept of self run, and tried for the first time "community + business" mode. In March 2015, the freaky group announced that it had completed the $100 million financing and plans to expand the market share of the electricity supplier. But just a year later, the freaky gang has to open the third party interface, which shows that its own e-commerce business is not satisfactory.

In recent years, the popularity of the community business is rising, but it is rare to really do well. Beauty is considered a well done project, but it was eventually merged by mogujie.com, indicating that its electricity supplier business has not yet been able to satisfy investors. With today's growing community influence, why is it that community electricity providers are not doing well?

There is no advantage in commodity characteristics and supply chain.

It is undeniable that many communities do well, topics are rich in content, and the quality is high and popularity is strong. But once the transformation is done, the advantage of the former social atmosphere will be zero again. We must start to compete with other e-commerce partners on the same starting line, together with genuine products, price fixing, service spelling, and logistics together for the same group of target users.

Whether it is beauty, clothing or maternal and child, community e-commerce and vertical electricity providers will inevitably compete directly with Tmall and Jingdong. Compared with the comprehensive electricity supplier, the volume of the community electricity providers is smaller, naturally speaking right on the supply chain will inevitably be lower. In terms of the price of goods, the period of refund, and the guarantee of commodity supply, the community electricity providers may have no other advantages except a so-called emotional card, which will ultimately be difficult to embody the characteristics of the commodity.

On the other hand, Ali and Jingdong and other e-commerce platforms are increasingly aware of the importance of content for e-commerce, and have taken actions in turn, resulting in the diversion of social content. For example, Ali launched the Taobao headline, the recent video broadcast, the main content of the business, and recruit a large number of net red to give flow support. Jingdong is also unwilling to lag behind. Following last year's launch of the Locke wardrobe, which is the main dress for young people, it has launched a similar mother's community, which is a hot mom's help group. It starts the baby's growth plan, and leads the community economy through content with live users.

Underestimated the difficulty and cost of the operation of the electricity supplier.

Whether sellers or platforms, e-commerce has always been a high investment industry. Such as IT development and maintenance, traffic acquisition, logistics and services, etc., all need larger capital investment. In subsequent operations, it will also face competition from large platforms and vertical electricity providers, requiring huge manpower and material resources to invest. Many communities usually underestimate the difficulty and cost of the operation of the electricity supplier. The difficulties encountered in special operations may be unforeseen. As a matter of fact, the cost of obtaining customers by electronic commerce is getting higher and higher, even less than offline stores.

Many emerging mobile APP, in developing e-commerce business, in order to protect the quality of service, and the difference between the third party sellers, often use proprietary mode. This is particularly evident in the recent hot cross-border e-commerce business. It is true that proprietary business is easier to control in quality control and service, but it also increases the cost of building assets such as warehouses, equipment, or related rental costs, and customer service, operation, after-sale, logistics and other team building costs. For example, in order to keep up with the current fierce market competition, the main cross-border electricity providers have built their own warehouses in the bonded areas. This is not a small investment for initial projects with less orders.

Under the shopping guide mode, it is equivalent to using advertising or sales commission to achieve cash flow. Although the scale and amount are not high, the imaginary space is slightly smaller, but the input resources are also very few. The ROI value is actually quite high.

　 Overestimated user conversion and consumption habits

One reason why policymakers are optimistic about prospects is that they often overestimate users' conversion rates and spending habits. Perhaps in the survey, users will keep saying that the quality is reliable, even if the price is slightly higher, I will buy it here, but when it comes to real shopping, many users still have to choose three goods.

After all, users are buying things on new platforms and new businesses, which is relatively risky, especially in terms of health related categories, such as maternal and infant foods. The results of user surveys may be more optimistic before the online version of the electricity supplier. But when the real electronic business platform is launched, consumers will actually consider whether they are worth buying or not, and what is the difference and risk between the purchase and other places. The final conversion rate may be far lower than expected.

Users' consumption habits are also difficult to change in the short term. Some consumers are accustomed to using Alipay checkout, spending more on Taobao Tmall, and some consumers are accustomed to the way of supermarket self-service purchase, like Jingdong or shop No. 1, and many young netizens like to login by using WeChat's authorization, and use WeChat payment to order, which is obviously more in catering and convenience stores.

Registration of an account, binding a bank card, any more steps, may make some users feel that learning costs are high, and thus give up. In addition, in recent years, security and privacy cases are frequently exposed by news, and many people pay more attention to information security. If there is no greater benefit drive, users' consumption habits will be difficult to change rapidly in the short time like taxi subsidy war.

Content and e-commerce business is difficult to separate and operate independently

In the process of communicating with operators of several mobile social or community attributes, APP felt that they seemed to regard electricity providers as the best means of cash flow.

Usually, I will ask them a question: how to treat content construction and e-commerce operation? And they often confidently answer that we will divide the two parts into two different departments to operate independently, and the contents should be classified into contents.

The original intention is always beautiful, but in the actual work, if the same boss manages these two departments, eventually the business department that can always earn money will gain the upper hand, and the content department that only spends money will become the service support unit of the electricity supplier department.

For example, beauty says that in the early years, a social media dominated by women's fashion sharing was brought together, and people who had the same interests were gathered together. In this vertical field, these people can share experiences and recommend commodities and produce a lot of quality. But if we now log on to their website, we will find that they are very similar to Taobao, but only focus on women's clothing, beauty and makeup. The layout of content has been very small, and most of the quality resources have been given to the electricity supplier business.

Of course, it does not mean that the strategy of online shopping platform in 2013 is not correct, just to illustrate the common problems in APP community transformation. In the face of performance, under the pressure of profit, most people and companies will choose to compromise. Beauty says so, many other applications are also very hard to avoid. The choice of customers between customers and users has resulted in a loss of users and a decline in activity.

It is easy to ignore the opportunity cost of station traffic.

Many entrepreneurial projects think that the traffic in their APP is not expensive, and there is no cost. So much traffic is idle. It's better to do business to see if there is any opportunity to cash in.

It is both right and wrong that the flow of stations is not cost. It is true that there is no cost for actual expenditure, and no cost can be considered in financial relationship.

But on the other hand, we should also see that if these flows do not lead to the electronic commerce section, they will directly bring the advertisement displayed by the brand, which can also bring some income. And this part of advertising revenue is the opportunity cost of traffic. In addition, the introduction of traffic into the electronic commerce section will inevitably result in a decline in user experience to some extent, which may lead to user churn. The degree of user experience damage should also be regarded as one of the constituent costs of traffic. For example, since Ali became a shareholder, it has brought a lot of advertising to Sina micro-blog, but at the same time, it also caused serious harassment to users, resulting in a decline in user activity and viscosity. Then, the cost of losing user groups and the cost of production lost are the actual cost of micro-blog advertising traffic.

In big cities like Shanghai and Beijing, business owners are rarely successful in their own businesses, and tenants are often more prosperous. A very important reason is that without cost pressure, it is difficult for the owners to actively improve the quality of goods and services, but not as high as the profits directly rented out. Similarly, when project operators regard the flow of stations as free resources, it is not easy to have the concept of cost. Compared to improving user experience and quality of service, they are more inclined to strive for greater free resources to improve their performance.

The smaller the group is, the easier it is to succeed.

Back to the business of freaky's help business, Yang Li, vice president of the company, is mainly influenced by the cross border tax reform policy, and the profit of the e-commerce business is bound to slide, but it will not give up this business because of user needs. Since last year, Frederic Frederic began to transfer the electricity business to the third party, that is, the open access port, allowing the brand to enter, and the platform itself as a traffic provider. It is hoped that the operation pressure will be transferred to the third party through the form of open ports.

It's a bit awkward to turn the operating pressure onto the third party. In short, the trend of freaky's business to help businesses is to gradually shift from self run to landlord selling traffic to earn money.

But in fact, many people earn money by making electricity from the community, such as road shops. This flagship subculture youth community, the goods on the shelves are unique products that can not be found elsewhere. Based on similar interests and similar values, we can find the best users for these unique products. Another example is the story of Uncle Kay, who made the biggest brand of parent-child education in China through the parent-child story. The sale of related products is very popular. Only one of the 249 yuan listens can easily break through 30 thousand units.

The essence of social business is electricity supplier, not community. Perhaps the more precise the location is, the smaller the group is. The goods offered are unique and valuable, and the social electricity providers may be relatively easy to succeed.

Whether it is spicy mama or beautiful, it has entered a very large 100 billion level market, facing many competitors, so the effort to be paid is naturally much larger. For content driven communities, the way to cash in is not necessarily the only way for electricity providers to go. What is worth developing is telling us that as long as we stick to the core values, we can live well only by advertising and marketing.