E-commerce lose money also earn money

Since Wang Juntao founded 8848 in 1999, e-commerce has gradually entered the spring and gradually changed people's production and lifestyle. In 2008, Groupon directed its attention to group buying. Two years later, the domestic Internet has seen hundreds of group buying websites mimicking its model overnight, and even later staged a "1000-strong group battle."

In 2011, when the group-buying website raced down, the financing environment of the entire e-commerce business turned from bad to bad, followed by what was said in the winter. According to the Beijing News article, nowadays, major e-commerce companies are advising the outside world to provide sufficient food, and cut down on categories and layoffs to make careful calculations. They use their promotions once and for all to try to squeeze the market, increase sales, and move toward the IPO. Before the fight was won, the money had to continue.

Burning Money: Crazy Investment Brings Business Risk

Traditional retailers sell a product and get a profit model. E-commerce does not like it. They think about how to seize market share, accumulate traffic and users, how to kill their opponents, and quickly come to the fore. The funds they need don't come from corporate profits. They are all burning investors' money.

Because the speed of financing is not keeping up with the speed of money-burning, many e-commerce websites have broken funding chains in recent years, and even news of layoffs have been reported. Among them, luxury electricity providers bear the brunt. Although the gross profit is higher than that of the general category, luxury e-commerce companies also bear more business risks. For example, the short repayment period, cash flow pressure, high advertising costs, high employee compensation and so on.

At the beginning of this year, luxury goods supplier Shangpin.com made large-scale layoffs for middle and low-level employees. The main reason was that the money was burned too quickly.

Shangpin.com A round and B round of financing were obtained before 2011, and in July 2011, it announced another round of 50 million US dollars in Series C financing. However, this failed to enter the deadline. Another example is other luxury e-commerce providers. In December 2011, Lian Tingkai, the founder of Huha.com, owed the company employees insurance, housing accumulation funds, and wages, and was eventually forced to leave the company.

In January this year, Netease's "Netease Shangpin" also announced the closure of the capital chain and closed.

The mode of burning money has caused several domestic listed e-commerce companies to hand over losses in succession. This year's second quarter report showed that Dangdang lost 196 million U.S. dollars and Mecoxlane lost 4.9 million U.S. dollars. Jingdong, which is still staking its position before listing, has also been losing money. However, Liu Qiangdong said that this year it will burn 3.6 billion yuan in logistics.

Listing: Successful circling of money must be profitable

E-commerce companies, which are heavily burned, have adopted listing as a necessary means of making money. However, at present, this approach has also been questioned by the capital market.

When China's mobile game went to the US to open up the stock market, the company still submitted a prospectus. The online e-commerce sites of Jingdong Mall and Vanke, which had long been expected by IPO, have not been moved recently.

October 26, 2010, China's first B2C McCaw Lin listed on Nasdaq, opened the curtain of e-commerce companies listed. Shortly thereafter, on December 8, 2010, Dangdang.com also landed on Nasdaq. The stock price rose by 87% on that day, attracting the attention of global investors. The last e-commerce provider of IPO was Vipshop. In March of this year, it chose to “bleed to market” under poor market conditions.

The year 2012 is almost over. There are many home appliance companies getting together and waiting for the listing. The window to the US market launch is attracting attention. As China's stocks have been short-selling in the United States, and the stability of stock prices and the room for growth have been tested, companies are now more inclined to “earn profits first and then list.”

After failing to achieve the listing plan at the end of 2011, Vanke has made an internal adjustment in the past six months to reduce costs by cutting staff, factories to migrate to Southeast Asia, and reducing advertisement delivery. The advent of e-commerce winters has prompted companies to accelerate IPOs. pace.

Jingdong Mall launched a price war in the home appliance sector in August this year and was considered to be preparing for the listing and rushed to increase sales. Before, Jingdong disclosed financial figures to investment banks, but the valuation was not satisfactory.

Price war: lose money and earn money

Price wars have always existed in traditional fields, and e-commerce companies have used it crazy here. In 2009, Taobao for the first time set a 50% off promotion theme on the 11th 11th Singles Festival. After four years, more e-commerce companies participated in the sales promotion campaign. In accordance with the wishes of businesses, this day has become an artificial "shopping festival."

This year's "Double 11" is approaching again. In addition to Ali's Taobao, Tmall, and Juhuai, Suning, Tesco's Yi Xun, Dangdang, and Gome's Kuba etc. Announced joining the war in various forms.

According to experience, the price war will not only bring about increase in sales, website traffic, but also brand marketing. According to NetEase's statistics on “8·15”, Jingdong and Suning’s e-commerce traffic increased significantly, and Suning’s Tesco’s traffic rose an astonishing 706%.

In 2012, due to the severe situation, price wars between e-commerce companies are also extremely frequent. Starting from May, domestic large-scale e-commerce companies have launched a so-called “strongest e-commerce price war in history”. By June 18th, the eighth anniversary of Jingdong Mall reached its peak. Two months later, Liu Qiangdong issued a "Zero Maori" microblogging initiative to invite warfare. On August 15th, he once again staged a "melee" of e-commerce.

However, the user’s initial desire to consume the price war has been reduced, and there are not many comparable products, goods out of stock, and price soaring, which further hit consumers’ enthusiasm and increased the “hype” of businesses.

The impact of traditional stores: offline business active battle

If it is placed today, the "72-hour survival trial" of the 8848 at the beginning of this century will no longer be a problem. Taobao, Jingdong, Dangdang, No. 1 and other e-commerce sites have already covered life requirements in everything from general merchandise, 3C products, audio and video books, and fresh fruits and vegetables.

The advantages of online shopping are very obvious. First of all, offline prices are not competitive, and secondly, all goods are available. It is more suitable for today's urban people to go to work and pick up goods from work. Under the impact of Dangdang and other e-commerce providers, traditional physical bookstores have fallen.

Although the prospects of online shopping are unknown, the impact of this wave of tide, the traditional stores have put aside, highlighting the shopping experience and after-sales service. In order to prove the necessity of existence, even cut the gross profit, join the price scramble between electricity suppliers. No matter whether it is time or geographical convenience, it attracts consumers and makes the offline store afraid. Therefore, the transformation line has become a required course for Gome and Suning.

Although traditional businesses are reluctant to personally admit their own decline, it is clear that they have already seen e-commerce in the future, and home appliance stores such as Gome and Suning have proved to be on-line. In fact, Suning takes the transition to online as an important corporate strategy, and believes that future retail online and offline integration will be standard, and whoever does not, who will be left behind. Not long ago it also acquired the mother-infant vertical B2C red child.

Guomei's Kuba and Suning Tesco have all actively joined the e-commerce price war. At the same time, offline stores are still under pressure from prices. In the "1·15" price war this year, in the face of the challenges of Jingdong, both of them shouted slogans of "than lower" and "online and offline same price." Compared with lower-cost e-commerce providers, Gome and Suning lines have to pay a higher cost, and gross profit is lowered by several points. Moreover, regardless of offline, online, related businesses involved in price warfare require the blood supply of listed companies, will affect the overall performance.