Gome and Suning Awakening

We first compare the latest financial reports of Jingdong, Gome (listing) and Suning, and analyze several key points in the following financial reports: revenue growth, net profit, online revenue growth, and mobile revenue.

Jingdong Mall’s second quarter 2014 financial report showed that Jingdong’s net income in the second quarter was RMB28.6 billion, a year-on-year increase of 64%, and net income in the first half of the year was RMB51.257 billion. The net loss for the second quarter was RMB 582.5 million, and the net loss for the same period of the previous year was RMB 28.3 million. The total loss for the first half of the year was RMB 4.377 billion. The volume of orders completed in the second quarter of 2014 was 163.7 million, which was a year-on-year increase of 126% compared to 72.6 million in the second quarter of 2013. In the second quarter of 2014, the volume of orders completed through mobile-end channels accounted for approximately 24% of the total completed orders.

The GOME (listed portion) earnings report for the second quarter of 2014 showed that total sales revenue for the second quarter was 15.77 billion, and total sales revenue for the first half of the year was 29.12 billion, an increase of 7.4% year-on-year. The profit attributable to owners of the parent company in the first half of the year was approximately RMB 690 million, representing an increase of 115.2% year-on-year. In the first half of 2014, the online transaction volume increased by 53.7% year-on-year, with the quarterly increase of 64.8% in the second quarter. After July, the development further accelerated. The sales volume for the month increased by more than 100% from the same period of last year, and the proportion of mobile transactions increased to 20%.

Suning Cloud's total revenue in the first half of 2014 was 51.66 billion yuan, a year-on-year decrease of 7.9%; revenue in the second quarter was 22.89 billion yuan. The main business income decreased by 8.19% from the same period of last year, and the net loss attributable to shareholders of the parent company was RMB 749 million, and the loss in the second quarter was RMB 31.53 million. Throughout the first half of the year, Suning’s online business revenue was 8.3 billion yuan, a decrease of 22% from the same period last year.

From the first half of 2014 and the second quarter, Jingdong and Suning have sustained losses, but Suning’s loss rate is declining. Gome continued its profit growth for the six quarters, and its online business grew rapidly in the second quarter. This shows that Gome Online’s continued low price strategy in the first half of the year has demonstrated its effectiveness, while JD.com and Suning have shown signs of fatigue in the price war. Participate in price wars.

Then analyze the e-commerce strategy of the three home appliance companies. Jingdong’s strategy is very obvious. It continues to accumulate users with the “light model” of Internet companies, and continues to increase its efforts in logistics, warehousing, distribution, and IT systems in accordance with Liu Qiang’s “cane theory”. More and more "heavy", so as to seize more links in the supply chain, in order to obtain profits in these aspects. In addition, JD.com is increasing investment in these categories of finance and apparel. The financial strategy is a typical Internet company strategy. After having a large number of users, it hopes to operate the users, and then obtain net profit through such businesses as wealth management, lending, and insurance to make up for losses. The higher gross profit rate of apparel category is also to increase profit margins.

In terms of traffic management, JD.com officials indicated that the users obtained through the WeChat and QQ portals were not expected to be high. This seems like it is not easy to pat users who want to use QQ to acquire pats. Therefore, Jingdong's method of obtaining traffic currently depends on traditional search, navigation, and other purchase traffic, and it also vigorously promotes its Jingdong mobile client.

Gome has been mentioning the "open omni-channel retailer" strategy recently and believes that online and offline is a game of chess. Mr. Huang Xiangping, Vice President of Gome Online Marketing, stated that Gome’s adoption of a refined and stable business strategy is not a great joy. First of all, to effectively flatten the organizational structure to increase efficiency, reduce communication costs, and adapt to e-commerce competition. At the same time, it will increase operating capacity, reduce overall fees, and increase profitability. While focusing on self-operated merchandise, we also handed over more categories to third-party businesses and positioned Gome Online as “Buyer Gome Online”, which is mainly for home appliances and 3C.

Gome believes that consumers still put prices first, which is certainly more than 50%. In the first half of 2014, the United States launched a price war in the first half of the year when rivals were already tired of the price war. Huang Xiangping said that the reason why Gome dared to initiate a price war, because Gome has been through its own property, a shopping guide is responsible for multiple commodities and other ways to reduce store costs. Secondly, it is fully optimized on the procurement platform, IT system, and logistics services to adapt to the online and offline omni-channel strategy. It also launched "Three Days on the Day, Accurate Delivery, Delivery Synchronization."

Suning Yun’s strategy was discussed more externally, because Suning adopted a more radical approach, including the same price online and offline, and acquired PPTV to grab the entrance. They put forward the “one body and two wings” Internet road map and positioned it as the main body of Internet retailing. O2O model and open platform for the two wings of the transformation path. Judging from the recent remarks made by Suning, Suning has realized that this radical problem is serious and began to consider shrinking the front line and giving up following Jingdong. Zhang Jindong also proposed the idea of ​​returning to the essence of retailing.

At the same time, Suning resolutely abandons excessive self-operated merchandise and focuses on the core personal majors, 3C, and maternal and child. This strategy is very similar to that of Gome, because the high cost of self-operated goods will seriously drag down the overall profits. Suning also emphasized the increase of investment in logistics, warehousing and distribution to make up for the lack of e-commerce experience.

From the above analysis, it can be seen that Jingdong and Suning, which continue to suffer losses, no longer offer a price war. Instead, Gome has frequently launched a price war in the first half of 2014. On the one hand, it sees that opponents have been severely overdrawn in the first two years of killing. The low-key stealth of the year also seems to have provoked the capital of the price war. This strategy is really intriguing. In addition, all three parties believe that the focus of future competition is service and experience battles. Suning, in particular, is clearly no longer as radical as the previous two years. It has returned to its original point in a circle, and has begun to adopt the same prudent strategy as Gome, while GOME and Suning’s The stock price also began to rise.

In fact, Gome spent more than three years ago and hoped to make a big move through the acquisition of Kobba. However, no one experienced the transformation of the traditional home appliance chain. Everyone was feeling the stones and crossing the river. When the industry returned to rationality in 2014, It will surely be a “squeeze year” and pure electricity providers may face challenges.

From a cost perspective, pure e-commerce has advantages in terms of overall costs, and it is still worth discussing. According to statistics, online logistics costs, labor costs, and traffic acquisition costs are all higher than offline. Taking large appliances as an example, JD's logistics costs are at 6%, while offline stores have only 1% of traffic due to centralized distribution. The acquisition cost of electricity supplier is 4%, and the chain company under the line is only 1.5%. The difference between small household appliances and 3C products is even greater, because these products are directly taken away by offline users and the logistics cost is zero.

In fact, it has long been said that the high cost of e-commerce, Le Tao net Bi Sheng has a famous saying "E-commerce is a scam," he e-commerce originator Amazon as an example, its main revenue from cloud computing, and sales Basically no money. He analyzed Letao's gross profit of 30%, but logistics costs accounted for 11%, gross margin remained at 19%, and operating costs accounted for 8% of gross profit. The return cost accounts for 2% and the packaging is 1%. The tax rate, the acquisition cost of flow, and the cost of personnel are added up and found to be losing money. Selling shoes loses money. Households with single-digit profit margins are definitely losing money.

If you only rely on B2C online sales, 100% will lose money, and may never be profitable; so Jingdong do not want to continue to provoke price wars, began to increase the introduction of third-party sellers, through e-commerce platform, payment, logistics to make money, similar days Cats; In addition, they are continuously increasing their financial services, hoping to make use of financial profits. However, JD.com has only 38 million active users, and relatively few users. It is certain that the traffic will continue to be tight. In addition, the revenue contributed by third-party sellers and the financial service revenue generated by these users will also be difficult to make up for the losses incurred by self-operated merchandise sales.

Therefore, if Gome and Suning radically abandon the main line under the line, they will suffer a big loss. After several years of groping the traditional home appliance chain, they have realized that it is not feasible to engage in radical online activities. , And we must give full play to the advantages of the line and embark on an e-commerce road different from Jingdong.

I have always thought that the defeat of Jingdong is definitely not another Jingdong. It is not like patting a truth to defeat Taobao. The victory over Google is by no means another Google. Therefore, for a long period of time, Gome and Suning have apparently deviated from the core of competition by becoming another JD.

Now Gome's "open omni-channel retailer" strategy and Suning's "one body and two wings" all no longer emphasize the separation of online and offline, but as a whole. This means that shops under the line should not become burdens in the e-commerce wars, and they must become advantages. Obviously, offline stores can become online shopping experience stores, self-elevation points, and maintenance points. They can also become O2O's open platforms, as well as warehousing and logistics centers, to improve the efficiency of distribution. And these are not available to pure electricity suppliers.

In conjunction with August 29, Wanda and Baidu Tencent established "Wanda E-Commerce" and we can see that the transformation of traditional shopping malls is definitely not creating a B2C online shop. People can never live on the Internet forever. They will always have the desire to go shopping and experience goods. However, today's shopping malls cannot satisfy the excellent shopping experience of users and need to be intelligently transformed. It is entirely possible to connect people in shopping malls through mobile phones. In fact, O2O is the final product and service. I think this is also the ultimate goal of the transformation of traditional malls such as Gome and Suning.

Imagine the user when visiting Gome, see a good bread machine, experience the operation of the bread machine in the mall, personally touch the bread machine work, and then through the country's free WIFI network after the mobile Internet, shooting on the goods QR code, log in to Gome Online, and you can immediately compare it with online stores such as Jingdong, and you can see the consumer evaluation of the purchase of the product. Through personal touch experience, online price comparison, and consumer evaluation, the final decision is whether to purchase this product.

The process of purchase can be paid online or offline. After payment, the order is directly transmitted to the logistics center. The logistics center directly delivers the product to the user-specified address. Through O2O, Gome's offline shopping malls can greatly reduce the number of shopping guides, reduce the area of ​​shops, and improve transaction efficiency, which means a significant reduction in costs, and provides users with a very good combination of online and offline shopping experience. This is definitely a service that JD.com cannot offer. This is precisely the difference in competitiveness of GOME Suning.

However, to achieve this goal means to carry out intelligent transformation of the IT shops under the current offline store, and also to carry out a series of transformations on the online shopping mall. This is a very large project and also requires waiting for the network and technology. And conditions such as user cognition are mature, and this requires time and patience. Therefore, the competition between the traditional home appliance chain and the pure B2C e-commerce can not only look at the eyes, but also look to the future. In today's era, technological innovation is taking a long time, and the existing modes that can be experienced are certainly not optimal. They must all be replaced by newer technologies and models. Therefore, the current pattern that cannot be felt yet represents the future.

In order to be able to participate in future competitions, the first thing a company should do is to survive. Therefore, Gome's robust strategy is worthy of respect. It leaves Qingshan not afraid of not having wood, and has enough funds to do the intelligent transformation on the offline line. Let the future of O2O come earlier. No one knows whether the next Internet companies such as Tencent and Baidu would like to cooperate with other traditional companies such as Gome and similar Wanda e-commerce companies again in order to get involved in traditional businesses. After all, only a few high-quality national chain retail assets are involved in the industry integration. Everything is possible in the era.

At present, Jingdong has achieved rapid development through the “light mode” of the Internet and seized the share of online transactions. This is only the first step to complete the competition, and how does Jingdong go next? Gome and Suning are giving up following JD’s strategy and instead have come up with a strategy that can change the advantages of offline and outsourcing. This is not good news for JD.

Ren Zhengfei once said: "In the face of Internet thinking, don't let impulsive this devil take the company astray. We think that the Internet hasn't changed the nature of things. Now cars must be cars first, and tofu must be tofu." So, in analyzing the Internet and When traditional enterprises compete, we cannot limit ourselves to observing the current or short period of time. We must look to the longer-term future. This is a protracted war. It may be more important to survive first.