Why Do Entities Shop To Embrace E-Commerce Platforms?

Two recent news have aroused my concern.

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The other is Huarun's strategic investment in the new US.

Coupled with previous investment by Jingdong, Yonghui and Ali to join hands with Suning, we found that the entity retailers and online giants had no longer fought and killed each other, and even began to talk about marriage.

It really makes the onlookers have some reactions.

The reason why Jingdong is willing to buy 100 shop for 1 stores is actually that it is not for liquor.

There are 433 stores under the line, and the 1 shop itself is only a servant girl.

Why do the retail enterprises represented by WAL-MART and the electronic business platform represented by Jingdong come together? And listen to the author's analysis.

The predicament and breakthrough of physical retailing

No matter whether the parties admit that they do not recognize, the survival of the entity retail business is difficult. Even the engines of star enterprises such as Yonghui and big RFA in the past few years have begun to cool down.

The reasons for the deterioration of physical retail industry are as follows:

1, the rent rise after the lease expires: the real retail collective horse enclosure began in 2000, while the general commercial project lease for 15-20 years, so now faced with a dilemma.

2, the increase in labor costs: the increase in labor cost of a retail enterprise by 2 hundred million a year, and the relative reduction of disposable income of residents (the side effect of high housing prices).

3, the entry of new competitors: shoppingmall has hit department stores and community chain stores (such as Bai Guo Yuan, Mei Yi Jia), which has blocked the inherent passenger flow of the hypermarket; the electricity giant has been directly in the market.

4, the real disposable income of residents is reduced: the rigid expenses such as housing prices and education have reduced household consumption.

This may differ from the figures of the State Statistics Department.

Let's look at our abnormal housing prices. How can you make a house slave free to spend as you used to? It also promotes user price sensitivity and increases the proportion of online consumption.

In addition to the above points, the author thinks that one of the most easily overlooked and fatal aspects is the fault of the retail user group. The young people are not fully attracted, resulting in the whole user group's age increasing and the user scale decreasing.

This does not require a very rigorous research report, and it can be clearly perceived in the physical shops that retail businesses will find their customers' volume in the analysis.

Many physical retailers do not feel this way, because 99% of retail businesses do not have the concept of user operation. They do not know the number of customers per day, nor do they know the turnover rate, nor do they know whether they are good or bad after they buy it.

From the perspective of population birth, the ten years from 80 to 90 years are the peak of Chinese population. This age group has both consumption intention and consumption ability. It should be the most important consumer group in the retail industry.

But this group of people has been sold away by the electronic commerce platform.

According to the figures released by Alibaba, users under the age of 40 account for 88% of their users. The main force is 80-90.

Many retailers have been trying to break through in the past three years, and regard O2O as the best business mode against the online giants.

They believe that they have the inherent advantage of doing O2O, that is, a large number of offline stores' resource advantages.

That's why WAL-MART bought 1 stores, WAL-MART's fast purchase, Huarun's E million, big run's flying cattle net, wumi's multi dots, rainbow rainbow scarves, etc.

But three years later, the situation has reversed.

Judging from the actual operation results of many enterprise O2O platforms, I think almost none of them is successful.

This has led many retailers to be frustrated that O2O is a false proposition. It can only be regarded as a value-added service to users, and has little value to enterprises.

If O2O is regarded as a closed loop, then many retailers' O2O game can only be regarded as a small cycle of self. This kind of small cycle is actually a huge pits that retailers have trampled on: the incremental market can not be done, only a big move to the stock business is equivalent to putting the left pocket money in the right pocket.

From the author's observation, the reasons for the failure are as follows:

1, the cost is too big: the basic investment is few tens of millions, and tens of millions of tens of millions, often is to play a drift; and part of the enterprise online platform because of lack of development experience, system construction sometimes to push down the heavy, how many shareholders continue to tolerate trial and error?

2, do not control the flow of entry: online platform development is more beautiful, function is perfect again, no flow is equivalent to a physical store in the mountains and forests.

Many enterprises tend to flow from entity stores to self built platforms. Registered users grow very fast, but the actual operation fails. The problem is that they do not control traffic flow.

In the future, there are only two or three APP users on the phone. Will you be one of them?

You pay a lot of money to let users install your APP is often easily deleted by users, or even if the user has not deleted, it has been lost to the brain.

3, the problem of team building: the operators of the entity retail business often turn from the line, and it is a long time to be familiar with the online playing method. The business tycoons are more willing to give money and do not let the elite outflow easily; the electricity sector and the retail sector lack integration to form two skins.

The new normal of online platform

There is no doubt that over the past 10 years, the online platform has been developing at an amazing rate, forming several online retail giants, most of which are Ali and Jingdong.

Besides their excellent team, their success path is more important than that they have grasped the draught of Internet development:

On the one hand, the Internet consumption crowd collectively goes online. Many people start to start the Internet from Taobao. As mentioned earlier, this is the largest and the best consumer group.

On the other hand, it is the counterattack of young entrepreneurs. Many sellers in the early days were playing with tickets to earn some pocket money, but suddenly they were able to dig into the gold mines, which encouraged countless young people to join the entrepreneurial force.

The last is the collective "betrayal" of suppliers of physical retailers. For a long time, suppliers have relied on retail businesses to survive on their snorkel, and online platforms have made these suppliers suddenly find that the capital they can compete with in retail business can control their fate and have the feeling of turning their serfs.

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Now the problem is coming: the users who have come are almost the same, and most of the stationed businesses are stationed. Therefore, it is almost impossible for the online platform to get high growth according to the past methods.

If we can not continue to expand by expanding the user scale, the next step must be to upgrade user experience: dig deeper into more consumer scenarios, occupy more user time and enhance user stickiness.

In this process, there are trades in some industries that you can't get around.

On the one hand, it is a huge cake. On the other hand, it is difficult to solve the problem simply by online, and the typical one is fresh, home decoration and service industries.

Chinese people can't live without pork, but if you distribute them to the user in two or three days, the meat will be smelly, even if the day is too great.

It's very important for Chinese people to buy a house, so the customers of the home decoration class are very high, so users will be more cautious in purchasing decisions. So he will not simply cling to photos and text descriptions. He will often take a look at things in the shop next time before making decisions again and again.

After all, the physical retail industry has accumulated for many years, and there are also a large number of loyal users.

And if the online platform really wants to break through this kind of business, it's very difficult to do it alone.

For fresh, you may invest in the main line cold chain, but the cold chain logistics at the capillary level can hardly be imagined. It is astronomical investment.

Massive storage and inventory management are also stepping stones.

So to today's main line, fresh fruit still can not exceed 1% share.

Therefore, the online platform will extend the olive branch to the physical retail industry, and it is also based on the needs of reality.

Why else would Jingdong vote for Yonghui?

Big cycle: drama group and drama Garden

Let's summarize the above analysis: physical retail is facing the problem of cost growth, traffic decline and user aging, but has strong brand advantage, commodity operation capability and many physical outlets. Online platforms often have abundant user traffic, and also need to upgrade user experience and enhance liquidity.

Therefore, I think the strategic retail and online platforms are complementary to each other, and the two sides have a strong foundation for cooperation.

Now is the era of substantial integration between physical retailing and online retailing, so as to truly build a big online and offline cycle.

From the recent cooperation between some fresh retail enterprises and online platforms, the performance of the retail enterprises has been improved by about 20%.

For the physical retail industry, this cycle has several advantages:

1, low cost import of high quality user groups: the lowest way to get users is probably from the online platform, whether you are offline promotion, media promotion, advertising conversion rate is very low, so the cost is very high.

2, make up your missed consumption scenario: physical retail requires users to go to the store to buy, but as the pace of life accelerates to shop consumption becomes a burden, because additional time costs and traffic costs are needed, so users often choose online channels.

In addition, even the loyal users have at least 30% of the consumption scene is missing, such as bad weather, such as overtime, no time, such as traffic jam, for example, I want to pick up children, such as dead house, lazy and so on.

3, "aircraft carrier effect": if we cooperate with the online platform to make the flow of a single store in the retail enterprise get a larger supplement, which can cover more user groups, then we can shut down the increasingly depleted branches and thus get rid of the burden.

Business has not been reduced, but the cost of operation may be reduced.

4, the air force and the army's three-dimensional approach: the retail industry is often good at entering the store users to grasp the paction rate, not good at the user wide operation.

When you have done retail business, you will find that sometimes you make a very low discount or even lower than the online price, but the actual sales result is not ideal.

The reason is that you do not have the "air force", you can not accurately and timely information to reach the target users and interact, and online precision strike can be achieved.

5, precise location: 50% of physical stores are operated by 50%.

On the basis of big data, the online platform is very clear about the user's geographical distribution, consumption habits and consumption ability. These are very valuable information for the entity retail enterprises.

6, optimize the commodity supply chain: from the commodity mix, the online platform is covered by the line.

Physical retailing is often faced with the shortage of supply resources and the lag of product renewal.

Online sales of big data can help physical retail precise selection.

I have a classmate who specializes in purchasing various kinds of shoes from Taobao, and then putting them in retail outlets. The business is booming.

Although the two sides need each other strategically, such a big cycle will indeed enhance the operation level of the retail industry, but it is not so easy for the two sides to really join hands.

The most important thing is that the two sides have to sit down and talk.

In the past business war, the physical retail industry had a strong sense of deprivation. Now I think it will take time for them to lay down their guard.

How does the retail industry view the online platform?

I think the online platform as landlord just fine.

Originally, retail location is based on geographical location, traffic location and so on, and now the platform is also designed to get traffic. There is no essential difference.

When the days are bad, what traffic will have to go on.

From the perspective of the two sides' role, the entity retail enterprise is just like the drama group and the online platform just like the opera garden.

The theatrical troupe is wonderful, and the garden has to bow to you.

Of course, if the cooperation fails, the opera house may also support other groups themselves.

Which platforms are most suitable for entry?

Many physical retail enterprises often do not know exactly how to choose when they choose the cooperative platform.

Next, I will discuss which platform the retail enterprises should enter.

The current mainstream platforms can be broadly classified into three categories:

1, the retail platform is represented by Ali and Jingdong.

2, the catering takeaway platform is represented by hungry, American group and Baidu takeaway.

3, other platforms.

First, there are few opportunities for other small platforms to come out. The monopoly degree of online platforms is much higher than that of offline ones. The absorption of large platforms is like a black hole.

It is suggested that these enterprises abandon platform thinking and do well in vertical operation of commodities.

Secondly, the catering takeaway platform is worth watching. At present, the operation is good, but there is great uncertainty.

The three platforms are still in the stage of large quantities of money to get the traffic volume (tens of billions of per annum). The difference between them and the fallen start-ups is that they are larger and have the backing of the gold masters, but they are far from the safe side. Besides, the brand positioning of the takeaway is too narrow and too deep, which is difficult to change and is not suitable for retail sale.

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Finally, Ali and Jingdong.

These two enterprises are representatives of online retailing, and deserve cooperation.

If there is cooperation, the author first of all, Ali.

From the perspective of the scale of traffic, Ali is far more successful than Jingdong. From the perspective of platform development, Ali has a better commercial layout capability, and the future traffic volume and channels are more astonishing, while Jingdong has relatively unique means. From the perspective of business philosophy, Ali is platform thinking, and businesses are doing their own business. They only make platforms, but they can invest in excellent businesses, but they do not go to sea; and Jingdong has a vertical self running gene. From its operation and operation methods, Jingdong emphasizes more control power and often gives others the first impression of cooperation.

"No permanent friends, no permanent enemies, only permanent interests". Retailers and online platforms continue to hurt each other instead of sitting down to talk about love.