Is Vip.Com Likely To Recover Its Lost Territory?

According to the world clothing shoes and hats net, in early 2012,

The industry is widely criticized when it is difficult to make a profit.

When it was listed on Nasdaq, it was less than $300 million at the lowest market value, but in the next few years, he came out of an amazing big reversal market with a market value of nearly $20 billion.

The story of "bloody listing" has become a stock market myth of the Jedi counter attack for a while. It is very sad that vip.com has always been called the "monster stock".

Every time when vip.com shares hit a new high, there must be a considerable number of people asking questions, but at first vip.com made a beautiful comeback every time.

But in 2015, vip.com began to fall into the altar. It has not recovered to date, and its market value is only about 5000000000 dollars.

Recently, the market is also rumoured that vip.com is going to be

Buy.

The background of these events is that the Alibaba and Jingdong share prices in the same electricity supplier industry hit a new high.

In November 20th, vip.com released the three quarterly report this year. From three very critical figures, we can see clearly why it is no longer "sexy".

First, business revenue has fallen from less than 30% of its current growth rate to more than 100% a quarter of a few years ago, and it seems to be very difficult to maintain.

Compared with Alibaba's revenue growth of 61% and Jingdong 39%, the figure is far from good.

Secondly, the sluggish growth of revenue also means that the ceiling of traffic has been more obvious. The growth of vip.com's active customers is only 14.4% this quarter, and the number of active users is still more obvious than that of the two quarter.

Finally, we look at profitability.

A few years ago, in the big losses of the electricity supplier industry, vip.com had a handsome profit figure every quarter, which was an important reason for its rising share price.

But Jingdong, which has been criticized for its losses, has begun to make profits. This feature has become less distinctive in the industry.

At the same time, vip.com's profit figures dropped sharply due to its growth, and even negative in the current quarter.

Revenue growth and slow growth of active users are no longer the core indicators of their profits, so the continued decline in share prices is not difficult to understand.

But these are just numbers. What I would like to discuss here is what is the underlying reason behind this, and is it possible for vip.com to regain its lost territory?

{page_break}

Fundamental problem: the death of vertical electricity supplier mode

Vip.com is a model of vertical electricity supplier.

In the highly competitive e-commerce market, we can successfully break through from the focus of subdivision products and the innovation of special sale mode from the Alibaba, Jingdong's two major integrated e-commerce giants.

And other star vertical businesses, such as red children, Mcglaughlin, van guest, Wei cotton net, and so on, have either been killed or are undergoing difficult pformation.

In the past, vertical electricity providers were surrounded by many factors. The inherent defects of business models were the main reasons.

Vip.com relied on innovation to overcome this defect to some extent. But with the development of the industry, when the original dividend of innovation has disappeared, the problems inherent in the vertical electricity supplier mode have begun to affect the development of vip.com more and more.

Vertical electric business is compared to the comprehensive electricity supplier, compared with the latter's whole category coverage, most vertical e-commerce providers like vip.com focus on a certain subdivision category, and because of this, vertical electricity providers have some natural defects in the business mode, so that many people are discussing whether vertical electricity supplier is a "false proposition".

First of all, consumers have a natural demand for one-stop shopping, because only the most convenient way, coupled with various effective incentive measures on the comprehensive e-commerce platform, will stimulate consumers to buy all products on a platform.

When choosing goods, consumers are more inclined to face a variety of commodities, rather than a limited number of choices.

This is also the same online, so we see that business on the offline is increasingly concentrated on fixed business circles, but this is not the advantage of vertical electricity providers.

For vertical electric providers, they often face confusion in category management. Generally speaking, 20% of the best sellers occupy 80% of sales. If the remaining 80% of the products are cut down, the richness of the category will be greatly reduced, affecting the user experience.

If the remaining 80% of the category is added, it will lead to a substantial increase in inventory costs.

In conclusion, because of the above reasons, the comprehensive e-commerce platform has more and more scale effect, and the user stickiness is also increasing.

Secondly, for retailers to complete pactions, they need to have enough traffic. Whether they are online or offline, they are interlinked, but the online and offline traffic structure is completely different.

The most important thing under the line is "lots, lots and lots". In essence, it is a stream of people. If the location is chosen, there will be a lot of natural flow.

But online is completely different. Online traffic is more concentrated. In addition to relying on brand effect to gradually increase the proportion of natural traffic, it also needs to search engines, portals or buy large amounts of traffic through alliance.

At present, the overall traffic price of the Internet is very expensive, and the cost of acquiring new users is very high. If the traffic generated by the money does not form a relatively high pformation, or the user will lose it once it comes to the pformation, then the enterprise will always spend a lot of money on marketing.

Once the marketing cost is reduced, the flow and sales revenue will decrease sharply. This is the problem faced by many vertical electric providers.

Under such circumstances, for many enterprises, once the capital market stops blood pfusion, it is 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 were above 10%. Even when they were crazy, they could even reach 30% to 50%. Although vip.com was less, it was also around 5% in recent quarters.

Under the joint action of the above two factors, we see that the category covered by the cat and Jingdong platforms gradually penetrated into every aspect of people's daily life.

When the traditional brands began to embrace Jingdong, Tmall and other comprehensive electricity providers, the comprehensive e-commerce platform began to show the crowding out effect of vertical electric providers, and became stronger and stronger.

In the comprehensive e-commerce platform for a certain category expansion, often choose the best vertical electric business in this field as a target, and launch the most direct competition.

For them, the gross profit of a category can be sacrificed, because the overall profit level of the company can be maintained above a certain standard through the promotion of related categories, but it is a disaster for vertical electric providers.

Today, the clothing shoes and hats operated by the only products club are not only a strong category of Tmall, but also a category that Jingdong is developing.

Under the joint action of the two big business giants, the crowding out effect is emerging on vip.com.

In recent two years, the growth rate of vip.com's business income and number of active users has declined sharply, which is a key user shopping frequency. Especially, the shopping frequency of old customers is declining. This is the embodiment of this crowding out effect.

Business problems: loss of characteristics caused by expansion

I have been very respectful of vip.com, I admire this company's outstanding achievements in the undesirable situation, and admire its understanding of the essence of retail and the spirit of concentration.

But I think in recent years, what vip.com needs to think about is whether this focus has changed.

After gaining a firm foothold in the field of clothing and shoes, vip.com began to concentrate more on expanding its products so as to achieve rapid growth in the scale of enterprise revenue.

Since December 2013, vip.com has focused on the channels of beauty, parent-child paradise and home life. It has cut into several deep water areas such as cosmetics, mother and baby, home and 3C appliances, and gradually downplayed its brand positioning.

In the absence of vip.com's performance, the top management team said it would expand its category in the future.

In fact, not only is it expanding the category, but in recent two years, vip.com is investing more and more resources in the field of logistics and finance.

But vip.com has done too little in terms of its deep ploughing, especially in terms of its superior products.

In the past, vip.com depended on the professional buyer team and selected the goods presented to consumers by "brand + discount". This not only optimized the consumer's shopping process, won their word of mouth and trust, but also formed a clear partition with the large commercial and uneven quality brand image of the large e-commerce platform, such as Tmall and Jingdong.

In the middle of the consumer, a unique brand awareness has been established, which is the key to its breakthrough in the Alibaba and Jingdong.

In addition to product expansion, vip.com has more important things that can also lift the threshold of the industry, such as making clothing categories more in-depth, really helping every user choose the right products, and constantly creating surprises for users.

In my view, at this stage, this is more valuable and meaningful than mere category expansion.

Only by focusing can characteristics be made, and then will a continuous brand cognition be formed.

If it is just a general supply of goods, the comprehensive electricity supplier can replace you more efficiently.

But the focus of vip.com's recent focus has been on the expansion of the category, with a lot of products, but not very good.

Over the past two years, vip.com has been having a very important relationship with the crazed category expansion.

Of course, we are not saying that we can not expand the category, but everything is rooted in the real needs of users, rather than expansion for expansion.

It is reasonable to say that the expansion of category should result in an increase in the frequency of user shopping, especially for old users.

If the final result is not going up, it is going down, so we need to reflect on it.

Trend problem: the counterforce of consumption upgrading

Initially, vip.com started to buy luxury goods, but it quickly pformed into brand discount, aiming at those consumers who pursued the brand but were not so fastidious about fashion, weak in brand resolution and highly sensitive to price.

This group scattered in the three or four tier cities and the second tier cities of low income white-collar workers.

They are a huge group, but because they can not be effectively collected online, they can be organized through the radiation range and aggregation ability of the Internet.

This consumer group has the pursuit of brand, and also recognizes the value of the brand. However, their brand cognition is very stratified.

Some people feel good when they look at foreign brands. Some people think that Adidas and Nike are good brands. Some people feel that the brand of advertisements often seen on TV is definitely good. This is the most direct embodiment of the uneven development of regional economy and the widespread existence of two yuan structure in urban and rural areas.

Because of this, vip.com has made great choices in terms of supplier selection and source organization, avoiding the problem of strict licensing of luxury goods and no guarantee of supply.

Foreign flash buying websites such as Gilt, Rue La La and so on are faced with a relatively mature business environment and consumers who have a highly consistent cognition of brands, which makes them very limited in terms of suppliers and source selection. Therefore, we can see that they have a large number of stocks in the market before and after the financial crisis, but with the end of the financial crisis, their development began to stagnate.

But in recent years, an irresistible trend of society is consumption upgrading. Vip.com's core user groups have become more aware of brands and their brand awareness is developing.

In addition, this part of the user group's choice is also increasing, not only Tmall, Jingdong and other comprehensive e-commerce giant provides similar vip.com model, in clothing shoes and hats category continues to exert force.

With the development of Hai Tao and overseas purchasing, users also have access to more cost-effective products from overseas.

The general trend of consumption upgrading, external competition pressure, and the lack of concentration within vip.com gradually led to the user's going away, that is, the reduction of user shopping frequency mentioned above.

Conclusion: dedication and professionality are the key to vip.com's continued success.

In the future, if vip.com wants to get out of the decline and continue to succeed, concentration and professionality will be important.

The first is concentration.

Vip.com is located in Guangzhou, and many people haven't heard of it before listing. After a long time, it is still not optimistic, but it always focuses on its core user groups and core categories.

Through the development of focused and rhythmic development, the brand segmentation with other e-commerce enterprises has been established, and a certain trade barrier has been set up. The development process of "invisible, scorn, and no catch up" has been really deducted in the electricity supplier industry.

For a comprehensive electricity supplier, we must have a rhythmic expansion of categories, so that consumers can achieve one-stop shopping.

But for vertical electric providers, they must be cautious about the expansion of categories, and should always focus on their core user groups and core categories.

As for category expansion, enterprises may see opportunities for development, but I feel that this is probably the beginning of crisis.

There are domestic customers such a lesson, there are also many foreign Ideeli such blind expansion as a result of the failure of the case.

Retail is a game that wins in detail. It has characteristics in products, prices and services. It constantly creates surprises for users to win their attention and retain them for a long time.

Blind expansion may take a short time to scale, but this is not necessarily a healthy and healthy growth.

Followed by professional.

The major is to constantly improve the quality of service in the field of brand discount and improve the threshold of competition.

First of all, we should continue to do a good job of selecting products for consumers, and create a more unique brand temperament.

What needs to be done include continuing to deepen cooperation with suppliers, implementing exclusive or exclusive brands, including establishing a global sourcing network, purchasing globally quality products with brand positioning through a more professional buyer team, and shaping the unique brand temperament through the differentiation of procurement.

In this process, we should also enhance the brand positioning and brand image of "genuine and low price", and enhance brand awareness in the minds of consumers.

In addition, we must constantly optimize the user experience, which is an eternal proposition of enterprise management.

Whether in the process of purchasing goods or in the process of goods repurchase, vip.com still has some unsatisfactory places. Therefore, it is necessary to continue to improve its warehousing system construction, distribution services, and website optimization.

More interesting reports, please pay attention to the world clothing shoes and hats net.