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Author: Paper on Ice Cross-border E-commerce Product Manager
Since the development of traditional commerce, a large number of physical stores and supermarkets have closed down, various new e-commerce models have emerged, and the supply chain has undergone earth-shaking changes. This paper briefly analyzes the logical changes behind the supply chain through the changes of e-commerce model in recent years.
Traditional commercial times
First, let's look at the supply chain logic behind the traditional business model:
Traditional commercial times
Concept explanation:
Factory: the producer of goods, far away from consumers, is not sensitive to time. In order to avoid risks, it does not actively produce goods, but passively makes orders.
General distributor: On the one hand, commodity designers are familiar with the production process and cost, on the other hand, they are sensitive to consumers' preferences and popular styles through their subordinate distributors, so the general distributor is the core of the supply chain.
Powerful general distributors can also create well-known trademarks, become "brand distributors" and make high profits, such as Li Ning, Jack Jones and Nike. Those with weak ability can only make ordinary goods, even fake/imitation cards to obtain extremely low price difference income. There are thousands of dealers in Qian Qian. I just put one here to make the map easy to understand.
Regional distributors: Regional distributors are only responsible for their own one-acre three-point land. If the general distributor wants to spread the goods all over the country, he will take the goods to the regional distributors by train or ship. Then they send the goods to the terminal point of sale.
There is not necessarily only one regional distributor, and some goods will go through regional distributors to the provincial level and then to the city and county level. Here I simplify the dealers below the general distributor to "regional distributors".
Store/supermarket: supermarket = shopping mall+supermarket. In traditional commercial times, goods and consumers almost always meet in shops or supermarkets.
Consumers: Consumers in this era don't have much choice but to buy goods according to the arrangement of the general distributor and get feedback.
The above is a simplified diagram of the characteristics of the traditional supply chain in commercial times. Let's talk about the supply chain changes in the early C2C period.
Early C2C Era of E-commerce
Early C2C Era of E-commerce
In the C2C era of e-commerce, because the network has broken the geographical restrictions, it has brought two important changes to the traditional supply chain.
1. Stores/supermarkets are no longer the only sales terminals that can face consumers. Taobao shop (because the C2C era is almost ruled by Taobao, it is more alternative to treat Taobao shop as an online shop) has become another window for consumers.
Because the online store's opening and flow costs are much lower than those of stores/supermarkets, it has a great advantage in price, and during this period, the sales ability of stores/supermarkets began to be suppressed.
2. Because physical distance is no longer the bottleneck of business, Taobao shopkeepers can directly find the general distributor to purchase goods. There are two reasons why Taobao stores don't directly seek goods from manufacturers:
First, because the factory has a minimum order quantity for each style, Taobao shop can't afford the high cost even if there are only a few styles.
The second reason is that the factory customization cycle is long, and Taobao sellers are mostly inexperienced individuals or small teams, unable to control the fashion trend. If they make mistakes in decision-making, the goods will be unsalable, which is a dead end. However, due to enterprise operation, professional design team and international vision (mostly imitating/copying foreign popular styles), the designed styles have a high selling rate.
They have abundant funds and many cooperative factories, so the speed of new development is particularly fast. Taobao shopkeepers are also willing to cooperate with them. Often, this company takes several styles and that company takes several styles. Each style is wholesale in small batches, which is not enough for replenishment (some styles even support one generation and OEM, of course, the price will be higher), which not only controls the cost, but also sells enough styles.
The disadvantage is that most Taobao stores are supplied by the same general distributor, which leads to a particularly high homogenization of goods. (Note: According to statistics, the highest repeat delivery rate of goods on Taobao platform is 90%)
It is worth noting that there were not many brands that "touched the net" in that era, and even if there were, the price was not cheaper than offline, because the brand's goods (as mentioned above) must maintain a unified national retail price to safeguard the rights and interests of agents. Therefore, there was a very large market demand for online shopping in that period, which led to the proliferation of fake/imitation cards.
Even Ali's corporate culture failed to stop this phenomenon, but when the use value of these Fujian Amao (90% of the bases selling fake goods are in Fujian) disappeared, Taobao stabilized, and Ali's corporate culture began to develop and actively cooperated with the public security police to get rid of these "criminals".
These are some features of C2C e-commerce in its early days. Let's talk about the end of C2C e-commerce era.
End of C2C era of e-commerce
End of C2C era of e-commerce
C2C entered fierce competition, and the benefits of traffic began to be recovered by Taobao. Under the influence of Matthew effect, the profits of small sellers are getting lower and lower. The big seller has mastered the rules of the game (one of the rules of the game is to open a shop in Hangzhou to serve Xiao er, but unfortunately the good times don't last long. Later, Xiao er was fired and went to prison), and they not only started to build their own brands, but also sold more and more. At the end of C2C, those crown stores accounted for 80% of the sales of Taobao platform.
After accumulating enough experience and funds, the first thing these crown-level stores do is supply chain reform. They skipped the general distributor and started to contact the factory directly. Then set up their own marketing team, create exclusive brands and design exclusive styles.
Different from those traditional general distributors, their sales channels have always stayed online and have not developed offline, so they have been dubbed as online brands by consumers. At this time, dealers and stores/supermarkets in offline areas found that their goods could not be sold, so batch after batch of physical stores began to close their doors and clear their warehouses.
With the end of C2C era, the younger generation of consumers are almost used to online shopping. No matter which industry, as long as it reaches the goal of habit formation, it will begin to improve the user experience, so the next era: B2C.
E-commerce in the early B2C era
E-commerce in the early B2C era
Because there are too many chronic diseases in the C2C era, the goods are not in the right version, the goods are imitation, and the homogenization of goods is serious. In addition, JD.COM is eyeing everywhere, which has put a lot of pressure on Taobao. So Ali began to implement the Tmall plan, launched the Tmall B2C shopping platform, and tilted most C2C resources to Tmall, so Tmall and JD.COM started the B2C era of e-commerce. In this era, the supply chain has two important changes:
1, the general distributor realized that there were fewer and fewer lower-level distributors and Taobao shopkeepers looking for their own goods, and many shops began to bypass themselves and directly look for factories, otherwise they would be eliminated by the times, so they also transformed a large number of online merchants and, in turn, learned from those successful online brands to build a number of brand lines in Tmall and JD.COM.
The core value of brand owners (brand owners = general dealers with well-known trademarks, not shown in the figure for simplicity) lies in trademark intellectual property rights, so once counterfeit/imitation brands are eliminated, they don't have to worry that someone can bypass them to contact the factory, but that more and more online brands will have an impact on their brands, so they have no choice but to settle in Tmall/JD.COM, just to avoid impacting their offline sales channels. They usually pay the original price.
2. A large number of Crown stores began to transform to B2C, opening Tmall stores and JD.COM stores. The uncharacteristic Taobao store began to be abandoned by Ali, and most of the traffic was extracted to support Tmall stores.
Because this change destroyed the promise that Ma Yun had made, these abandoned Taobao shopkeepers even joined forces to go to Hangzhou to protest, but they were later dispersed by the police uncle. Finally, only a few high-rated crown stores and specialty stores in C2C can barely survive, as long as some powerful businesses have begun to transform into B stores.
Personally, I think this transformation of Taobao is a historical necessity. Even if Taobao doesn't switch to B2C, other companies will cut into the e-commerce market with B2C, and finally beat Taobao, just like Amazon beat ebay. In the end, "poor" Taobao sellers will still lose their jobs, but they can live for two more years. In short, Tmall and JD.COM joined hands to enter the golden age of B2C. What has changed in this golden age?
Our present era
Our present era
First, introduce two concepts.
Vipshop: refers to the vertical e-commerce that relies on other brands as the supply chain. In addition to Vipshop, which sells stocks, there are Red Kids, Letao.com, who sells shoes, and Brewmaster.com, who sells wine.
Ke Fan: It refers to a vertical e-commerce company that makes its own brand like Ke Fan and contacts factories (producers) to build a supply chain. In addition to the Eslite of Phoenix Nirvana, it also includes women's clothing brand, diamond brand, diamond bird, flower brand Roseonly, handicraft e-commerce wow net, egg net selling cotton-padded clothes and so on.
It should be noted that vertical e-commerce is not only a product of the mid-B2C. At the end of C2C, there was a B2C platform under construction, but the concentrated outbreak of vertical e-commerce was still in the B2C period. For the convenience of explanation, I put them all in one period.
In this era, except for some fast-moving consumer goods and food, only some big brand stores stand online, so I completely erased the traces of traditional supply chain in this picture. After years of development, e-commerce has long passed the era of "making money with dreams". Only the big sellers operated by the company can survive in this era.
A little more honest people will hold a big tree like Tmall/JD.COM. Enjoy the cool, but those who are dishonest will pull up the banner and do it themselves. Therefore, there are many vertical e-commerce companies in this era, and dozens of them are familiar to everyone, not to mention those who are not famous or have died.
As for many people who say that vertical e-commerce is a false proposition, I will not comment here for the time being, and I may post an analysis of this issue in the future. Next, I will discuss a new e-commerce model that is currently being verified, as the end of this article.
A New Mode of E-commerce: C2M Mode Supply Chain
C2M mode supply chain
The above picture shows a new e-commerce model developed in the last two years: C2M, that is, customers go to the factory and directly cut off all middlemen, so that the factory and consumers are zero distance away. C2M e-commerce platform, pre-sale e-commerce platform and crowdfunding e-commerce platform all belong to this model.
As I said at the beginning of C2C, there is a minimum quantity requirement for factories to make orders, so ordinary Taobao shops do not have the strength to directly connect with factories, not to mention consumers who only buy one product. But for platforms like Necessary Mall and JD.COM Crowdfunding, we can gather enough orders on the platform first, and then take them to the factory for production.
The period for users to wait for goods will be longer, but due to the elimination of middlemen, the price is much lower than the traditional B2C model, which is equivalent to users buying goods directly at ex-factory price. As for whether this model can be carried forward, it depends on how consumers look at it.
This article was originally published by PMCAFF product community (www.pmcaff.com), and it is forbidden to reprint without permission.
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