Foreword
Home e-commerce impacts traditional stores
"China's three industries, including furniture, building materials and decoration, add up to more than 3 trillion in output value." On January 10, in a coffee shop in Beijing's East Third Ring Road, CEO of Melody Home Network described the home e-commerce to reporters. The market "Qian Jing".
At present, there are three main retail channels in the home industry: one is a hypermarket or furniture city represented by Red Star Macalline and Real Home; the second is a brand factory with its own channel; and another retail channel is electricity. Business.
Home e-commerce weakens the traditional authority "rights"
Gao Yang said that China's home e-commerce market share accounts for about 4% of the home industry, while the mature market in the United States accounts for 20%.
When it was founded 6 years ago, it was only the online store that sells furniture on Taobao, to the establishment of an independent e-commerce website, and then to the O2O platform of “online mall + offline storeâ€, Melaleuca has been exploring the development of home e-commerce. the way.
Gao Yang said that the business model of “online sales + offline stores†brings the cost of production and sales terminals to be low. Excluding the traditional channel fees such as dealers at all levels and high store rents, Melaleuca products can achieve an average of 51% of offline products.
"Mile Lele started relatively early, has a first-mover advantage, and on the other hand is also taking the lead in exploring the road. There is no ready-made experience to learn from." Gao Yang said.
Now, Melody plans to “open†the home appliance platform and open it to other brands. This behavior is undoubtedly a cake that has further moved the traditional home market. “Furniture looks like a profiteering industry, but the channel dealers have earned all the money, and producers and dealers want to see new channels come in,†Gao Yang said.
Traditional stores "block" and build their own e-commerce
For the threat of home e-commerce, traditional stores have responded, on the one hand, "blocking" third-party e-commerce, on the one hand, self-built e-commerce.
During the "Double Eleven" period last year, 19 stores including Red Star Macalline and Real Home, collectively issued a notice to all of their stores to boycott Tmall.
At the same time, Red Star Macalline and Real Home are currently trying to do e-commerce.
However, in Gao Yang’s view, there is a natural contradiction between the traditional home sales channels represented by hypermarkets and the operating mode of e-commerce, facing the dilemma of the left hand and the right hand.
"Different channels and models will compete for a long time. This is a good thing for consumers. If there is competition, there will be a choice, and the profit will be put down." Gao Yang said.
Walked through a lot of detours
Reporter: What are the experiences and lessons of doing home e-commerce in recent years?
Gao Yang: To do home e-commerce needs to solve two problems, the first is the user experience in the purchase process, because the furniture really needs to touch, sit and smell. The second is how to solve the delivery, installation and after-sales links after placing an order.
We started in Guangdong and are headquartered in Chengdu. Our products are oriented to the whole country. If there is any damage during transportation, we started to try the shop model. In April 2011, we started the first store. So far, the offline experience store has opened 271, covering 185 cities.
During this period, I took a lot of detours. At that time, the first store was opened in Chengdu. We didn't have a retail background. How to do retail is really starting from scratch. Our second store is located in Shilihe, Beijing, next to the home of the hotel, but there is no customer diverted from the store. The consumers are mainly guided from the Internet.
Therefore, the second batch of site selection standards has changed. Now we are focusing on the bottom line, which is relatively cheap and easy to find. Guests first promoted to our website through Internet marketing, see the product cost-effective style, communicate with us, guide to the store, and then go to the store to see the material.
Cost is lower than big stores
Reporter: Where is the advantage of this O2O model?
Gao Yang: Cost-effective. Our products are not necessarily the cheapest, but they must be the most cost-effective. Compared with the traditional offline sales channels, we are a new supply chain from marketing to transportation to production. The cost of each link is much less than the existing hypermarket model.
Traditional offline sales, from the ex-factory price to the retail price through the dealer, the price gap is four to five times, of which the channel cost accounts for 40%-50% of the product price, plus freight, labor, dealers can not earn much .
In fact, in terms of offline comparison, we mainly look at two indicators, one is the level of efficiency (the efficiency of one square meter of retail terminal stores), and the other is the cost of rent. Our offline experience store averages 12,000 to 14,000 yuan, but the big store like Red Star Macalline is 4,000 yuan, but my rental cost is only one-third of the hypermarket. This makes a lot of savings in the middle, more to the benefit of consumers, and we can also make the price cheap and profitable.
Compared with pure e-commerce, the O2O model not only provides products, but also provides offline services, which is also in line with the experience of home products. From the perspective of e-commerce, I think that this category of home needs O2O (combining online marketing and offline operations).
Reporter: In addition to the terminal price excluding the channel cost, will the production side also bring about cost changes?
Gao Yang: This is the case. These two models are not just different marketing costs, but now they have slowly affected the production side. This is something that many people have not seen.
On the production side, the Internet and traditional retail are focusing on two different processes: the Internet is to concentrate the needs of customers across the country on certain styles, each of which is large in quantity, and the large-scale production makes raw material control and production processes The warehouse and other links are more efficient.
One of the drawbacks of the hypermarket model is that dozens of products are robbed of customers, and the needs of customers are dispersed to many manufacturers.
Not worried about competition
Reporter: The offline giants are also trying to do online. For example, Red Star Macalline and Real Home are also trying to do e-commerce. How does Melaleuca compete with it?
Gao Yang: Actually, we are not too worried.
Red Star, the home of the family want to do online, including many stores before, want to do online. The primary problem or threshold they face is the issue of talent and culture. This is not just a problem that can be solved by saving money. There are problems with commercial genes, and they can change quickly without thinking about change. Melaleuca is more like an Internet company, and it is relatively early in the field of home e-commerce. It has a first-mover advantage and has already taken the lead in terms of traffic.
In addition, one of the most deadly problems in the traditional channels of doing e-commerce is that e-commerce is doing well, and the dealers who pay the rent offline will have a negative impact. This is the situation in which the left hand is right-handed.
Therefore, traditional channels to do e-commerce, there is essentially no motivation. At least for now, it seems that the entire industry, from the traditional channel to the Internet channel, has not been a particularly successful example.
Reporter: What kind of difficulties will it face in order to do omni-channel marketing from online to offline?
Gao Yang: In fact, whether it is offline or online or offline, these two are very difficult, and they are lack of experience. For online, traditional retail industry management is actually not doing very well, or is constantly improving. But relatively speaking, it is easier to find the talents for offline retailing. It is more difficult to find online marketing talents online.
From the perspective of rational analysis, I believe that emerging channels will not eliminate traditional channels and will coexist for a long time, but emerging channels will certainly seize more shares. There is no doubt about this.
Reporter: Then are you worried about more Melody?
Gao Yang: The market for this market is too big. You can eat 5% and it is already very powerful, so I don't think one can eat it all. Any format is competitive to make the market cake bigger, and now the home market competition is rarely good.
Open channels to vendors
Reporter: What is the next strategy of Melody?
Gao Yang: Our next strategy is to be an open O2O platform, open to other brands, whether it is an online platform or an offline experience store. Next, a series of vendors will be signed and will be introduced to the market in the future. Under the offline experience store, we will expand the area from an average of 600 square meters, expanding ten times to 6,000 square meters.
The reason why the platform is open is because we want to copy the model of Melaleuca to these manufacturers. In this way, some brand companies in the industry will form alliances and develop together to make the cake bigger.
Reporter: This is also to counter the traditional hypermarket.
Gao Yang: This is a game of the market. If there is only one retail channel, that is, the channel is king. The entire producer and dealer are working for the channel. Although the furniture seems to be a profiteering industry, the channel dealers have earned all the money, so producers and distributors are eager to see new channels coming in.
Melaleuca has the ambition to be a disruptor in the industry and strive to end the profitability of the home industry, but it is only the beginning.
Reporter: After the platform is opened, how does Merlot and the brand share share?
Gao Yang: It seems that we are doing an online store, but we are a model of zero rent, which is based on the volume.
Will seek listing in the future
Reporter: Melaleuca has had two rounds of financing before, will it continue to seek financing in the next step?
Gao Yang: At the end of 2010, Melody won the first round of financing. In May 2012, Melody received the largest financing from the home appliance business, amounting to $40 million.
It is certain that the future will continue to seek a new round of financing, but it is still watching.
In the longer-term future, Melaleuca will seek listing, we are confident to be the first share of home e-commerce, but not to pursue this goal, this is a matter of course. At present, we are going to do a good job in our business system and supply chain, so that consumers and suppliers can get more benefits, and we must first make our own ecosystem.
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