Today's Highlights: Ali + Jingdong Aims At New Retail Business

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During the period of rapid expansion,

With the unprecedented cold winter, with the dividend subsided and the market stable, the price gap between the two products has been narrowed, and the new retail which combines online, offline and logistics has become the recognized outlet of the industry.

Recently, Wei Shi holdings, a distributor of technology products, announced that it will rely on previous advantages in product distribution to test the new retail business.

From the publicly available financial data, we can see that the real situation of enterprises in the market changes is that in 2002, Weishi holdings listed only 1 billion 634 million HK dollars at that time. In 2012, the turnover of Weishi holdings soared to HK $37 billion 98 million, and then the turnover growth slowed down.

Li Jialin, chairman and chief executive officer of Weishi holding board, said that after 2012, the fastest growing Internet business and subversion of traditional industries, the company adjusted its business to adapt to market changes.

At that time, the main business of Weishi holdings, including consumer customers and enterprise customers, directly sold products in retail channels, and also OEM products for sale. In order to avoid the edge of e-commerce, the company withdrew from the products of the Internet business, and increased the growth of enterprise grade products. The enterprise class products became the fastest growing sector, and the revenue reached 30%-40%.

Take 3C products as an example. Before 2010, notebook has always been a steady source of profit for distributors. After 2012, Weishi holdings changed its plan to control the purchase of relevant products and strengthen inventory management in order to cope with the impact of electricity suppliers on notebook sales.

Li Jialin also pointed out that the development of large scale electricity providers has entered a stable period and has gone through the stage of chaotic competition. The large business operators who have a firm foothold have fixed costs and can no longer be willing to cut prices. It is difficult for new suppliers to find a new foothold in the established market structure. The price of electricity providers tends to be stable, and the price gap between online and offline products is narrowed.

According to the National Bureau of statistics, in the first half of 2015, the national online retail sales increased by 39.1% over the same period last year, but fell by nearly 10 percentage points over the same period in 2014. During the double eleven period of the year, the proportion of online retail sales in the whole year accounted for 3% of the total, which was only about 0.1 percentage points higher than that in 2014, and the development of online shopping has stabilized.

In October of this year,

Group chairman of the board of directors Ma Yun also said that the era of pure electricity will soon be over, the future is new retail, online, offline and logistics integration, in order to truly create new retail.

"We decided to pick up some of the products that had been withdrawn before re launching the retail business."

Li Jialin said that Weishi holdings will fully open the online and offline channels, and has opened two retail stores in Beijing, and plans to open more than 1500 stores in the next 3 years.

As for the idea that the entity store will increase the cost of the enterprise compared with the electricity supplier, Li Jialin believes that the circulation cost of the traditional channel is not higher than that of the electricity supplier. "The cost of the personnel of the electricity supplier is very high, the cost of the personnel of the electric power executives may be worth a store, and some new technology application products, such as VR, need to be passed through the store experience".

It is worth noting that there are still many large electricity providers targeting the new retail business.

In August 2015, Ali spent $4 billion 500 million on electronic products and the Su Ningyun dealer (002024, stock bar) group, a big retailer.

4 billion 300 million strategic stake in Yonghui supermarket (601933, stock bar) 10% stake.

The analysis found that the agent channel that is difficult to overcome is an important reason for the large electricity supplier bleeding.

Li Jialin believes that when the penetration of electricity providers reaches a certain level, the advantages of agents are gradually emerging. "Wei Shi holding advantage lies in the fact that many products are low and the price is low; the two is to have a logistics system under the line; the three is to have a number of partners in the world; and four is a profound understanding of business over the years".

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