Can Vip.Com Break Through The Growth Bottleneck Of Orter Under The Big Layout Line?

Recently, the domestic sale of electricity supplier vip.com announced that the 2 billion 900 million yuan acquisition of Shanshan commercial group, Oteri J under the big layout line. Previously, vip.com's self built offline discount stores have opened up one to five line cities nationwide and have achieved good market feedback. With the completion of the acquisition, vip.com is expected to quickly replicate its online sales advantage through two different models, thus creating a huge offline sale empire. However, compared with the characteristics of high growth and high margin of online sale, the low growth and low margin characteristics of the orter industry will challenge vip.com. Whether it can break through the bottleneck of growth through online and offline integration and supply chain collaboration is a topic that vip.com needs to face.

Offline layout quietly forming

In July 10th, vip.com announced that the company acquired 100% stake in Shanshan Commercial Group Co., Ltd. with 2 billion 900 million yuan in cash. For such a big investment line, vip.com said that through this acquisition, vip.com layout line under the ole business, and actively explore online and offline integration mode of sale, to achieve online, offline integration of all channels for sale and retail layout. Vip.com told the China Commercial Daily reporter that vip.com will try to integrate some of the outlets under the new line of Retailing Based on big data analysis, online and offline user membership system and other new retail initiatives. Shanshan Commercial Group Co., Ltd. is located in Ningbo, is a domestic market in the forefront of the outlets chain group. The company has opened and operated five outlets, located in Ningbo, Taiyuan, Harbin, Zhengzhou and Nanchang, and five other Oteri J squares are being planned and constructed. According to the open market data, in the top 20 list of domestic sales of orter last year, Shanshan Orai monopolized four seats.

"Vip.com's self built line stores have a layout in one to five line cities. The layout of the outlets of the Shanshan commercial group is in the two to three tier cities. Its excellent market performance and financial status, as well as the high level of fit with the vip.com brand sales industry, the distribution of main customers and business philosophy, are the important factors contributing to the acquisition." Vip.com responsible person told the China Commercial Daily reporter that vip.com from the fourth quarter of 2008 began active layout offline sale, in one to five lines of cities tested, operating well, widely welcomed by consumers.

After years of hard work on vip.com, the tentacles quietly extended to the line. Since the fourth quarter of last year, vip.com's offline outlets have been opened, but vip.com has not publicly disclosed the operation data of these stores.

In vip.com's first line sale shop, Beijing Rui Cheng store, the China Commercial Daily reporter saw that the sales shop located at the corner of two floor of the national Rui city was about 800 square meters, mainly in women's clothing and clothing products. There were relatively few men wearing clothing products, and the store brands mainly consisted of COACH, Mike KORS, GEOX, Adidas, Nike and other international two or three line luxury brands, and the discount rate of products was relatively large. The way of displaying goods inside the store is very similar to that of Messi discount Backstage store in the United States. All kinds of names are packed in the shelves simply and rudely. In this store, the China Commercial Daily reporter saw that there were three or two guests coming and going in and out, not many. However, due to the time of work, compared to other stores in the city of Ruicheng, vip.com has obviously become a popular shop. "There are more people on weekends, just as crowded in the vegetable market." The shop assistant told the China Commercial Daily reporter that many young people like to buy things.

As vip.com did not publish specific data, the Chinese Commercial Daily reporter could not understand the specific operation of Beijing Ruicheng store. A reference figure is that vip.com's largest offline store in Shenyang is also 800 square meters of business area. According to the China Commercial Daily reporter, the current sales volume of this store is 20 thousand yuan, which is above average in the local market. Generally speaking, the sales of famous discount stores in the first tier cities will be better.

At present, vip.com has not disclosed the number of special outlets under the line, but according to the China Commercial Daily reporter, the speed of opening shop under vip.com line seems to be accelerating. On the eve of vip.com's announcement of the acquisition of Shanshan commercial group, at the end of June, vip.com officially opened its business in Yizhuang's urban and rural Century Square in Beijing's fourth outlets. It was only eight or nine months away from its first store in Beijing. In fact, many shopping malls in the country are interested in the introduction of vip.com discount stores. "We want to introduce some similar formats." The head of a shopping mall in a second tier city told the China Commercial Daily that such a famous brand store attracts younger customers. They have tried to get in touch with vip.com and express their intention to open shop. According to the China Commercial Daily reporter, the insider knows that vip.com's initial plan is to open 500 outlets next year.

The vip.com hit heavily on the acquisition of Shanshan commercial group, so that its online layout further extended to a larger format of Oteri J.

"I think vip.com has seen the opportunity to sell on line." Cao Lei, director of the network economic research center, told the China Commercial Daily reporter that vip.com has been considered to be the online outlets, and the main business of Oteri J and vip.com's sale is highly coordinated. With the gradual decline of the Internet traffic dividends, the advantage of online traffic is gradually emerging. The sale under the layout line is a necessary and beneficial supplement to the vip.com sale mode. This acquisition action is also an important measure for its distribution of all channels. Vip.com is in line with the trend of the day to accelerate the integration of online, offline and retail channels, and to open up online and offline two-way drainage, to mobilize and supplement more traffic and consumption scenarios for its "brand sale", and to enhance its sales mode to cover the breadth and depth.

Can it return to rapid growth?

For vip.com, which has built up a deep supply chain for many years in the field of deep ploughing sale, the trend of online dividend decline is the result of success and logical choice. Moreover, the acquisition of vip.com Shanshan commercial group in the ole industry is in a leading position, and its customers are also highly compatible with vip.com's customers. However, on the evening of the acquisition, vip.com's stock price fell by 7.51%.

"It's hard to do things offline." In this regard, Lai Yang, President of Beijing Jing Shang Circulation Strategy Research Institute, explained that vip.com purchased Shanshan commercial group to increase the channel system under the layout line, but the operating cost under the line is very high. Moreover, the stores of Shanshan are mainly concentrated in two or three line cities, whereas ole basically develops only in the first tier cities, because the consumption level of the two or three tier and lower tier cities is not enough to support the high-end brand consumption. Even in Ott Leslie, these discount top brands are still very expensive for those who are not the first tier cities.

However, from the international point of view, a big name is not necessarily the standard of Ortles. In the United States, the China Business Daily reporter noted that many brands in Ortles are mainly two or three line luxury brands and popular brands. With the upgrading of China's consumption and the group of young consumers who become the main force of the market, consumers in the two or three or even four or five tier cities will further improve their brand awareness, and the demand and acceptance of OLE will continue to improve. This is already apparent in online consumption. At present, the customer group from the two or three tier cities is the main consumer of vip.com, and the growth of the four or five line is also obvious.

For vip.com, the main challenge facing the layout line may be how to increase the growth rate. "In my opinion, vip.com has always been a relatively stable enterprise. What we need to explore now is how to return to the track of rapid growth." Cao Lei said.

Although the industry is hot, it is a core issue for the market to give vip.com enough return. The amount of money invested by vip.com was 2 billion 900 million yuan, while vip.com's net profit after its deduction last year was 1 billion 500 million yuan. According to this level, the acquisition is almost equivalent to the total profit of vip.com for two years. Vip.com will face the pressure of capital market if it fails to achieve obvious revenue growth and profit growth after buying Shanshan.

Zheng Weiqing, founder and executive director of the Institute of business life in the blue walker, told the China Commercial Daily reporter that in recent years, the investment in OLE has been very hot, but the real situation is that this is not a very easy way to make money. "If it is not bundled with commercial real estate, it will be difficult to earn money solely by the operation of outlets." Zheng Weiqing said that under normal circumstances, Oteri J's gross margin is between 9% and 11%, which is relatively low gross margin. A lot of OLE in China seems to be very profitable, mainly because of the realization of the operation of commercial real estate, rather than relying on the ole itself.

According to the results of the Wangfujing group and Bailian stock, the gross profit margins of the two companies under the olai project last year were 10.82% and 12.57% respectively, while the gross profit margins of their stores were 17.47% and 18.85% respectively. Relatively speaking, the gross margin of vip.com online is mostly above 20%, which is more than double that of Olegau. According to vip.com's earnings report, last year's first quarter to four quarter, the gross profit margin of the company was 20.2%, 19.5%, 20.4% and 20.6% respectively. Under low gross margin, Oteri J's operation level is very important.

Zheng Weiqing told the China Commercial Daily reporter that compared with the online, offline entities are seeking intensive growth in a less developed field. But Internet companies are all learning tyrants. They are accustomed to solving problems arising from the development process by growing up. What is missing is concentric cultivation of a piece of farmland, and it is difficult to understand the mental process of the entity. "It depends on whether vip.com can break through the bottleneck of growth." He said that vip.com's strength is the supply chain and logistics part, which is a huge advantage for OLE. But from the personnel point of view, the Internet born vip.com and the Shanshan commercial group may have difficulty in the integration of ideas.

Although there are doubts about vip.com's involvement in the industry, vip.com is walking on a road that no one has ever seen before. There is no doubt that after the acquisition of Shanshan commercial group, the layout of vip.com online under the special sale strategy will also take shape. With the advantages of supply chain and Internet genes accumulated over the years, if vip.com can give full play to the advantages of online and offline integration and supply chain synergy, it is not impossible to recreate a huge online giant.