【Case】: Where the customer brand

"There is no fear in the spring," this slogan shows the voice of every guest. When it was covered with billboards on the bus stops in the streets, it was the beginning of 2012 and the new year began.

In 2011, which was just past, it was not too calm for the old age and it was not too smooth. After several years of great leap forward, Vanke seems to usher in a bottleneck. This year, every guest broke out with multiple bad news. The retrenched staff caused by the turmoil of the punished staff has been criticized on the Internet, a number of executives have left the company, stockpiles have accumulated, IPOs have failed, rumors of capital chain breaks, advertisements are illegal, and so on. This makes the old age of bold speeches a lot of caution in the face of the media.

Chen Nian said, "You don't have to cut marketing expenses, you can also not lose money, because every guest grows." He even said "every guest should run faster." For the business logic of Vanke, you can find some clues in the two sentences that are transmitted from the media. In fact, in the second half of 2011, e-commerce ushered in the winter. Like most e-commerce companies, every guest is also faced with the dilemma of reducing costs, reducing growth rates, or continuing to expand large-scale expansion. Whereas passengers chose rhythmic contraction and adjustment.

Aging has been an operation on every customer, and its core is the change in management and organizational structure, with a view that the increasingly large organization of customers can adapt to market changes and improve operational efficiency. This change can be attributed to hierarchical management of products, restructuring of business units, and establishment of data centers.

From August to November 2011, Vanke carried out the largest structural adjustment since its establishment. The two major business divisions are divided into five business divisions by category. They are responsible for shoes, sports products, fashion men's wear, women's wear and accessories bags. These five divisions are responsible for a series of work from product design to sales planning and marketing planning. At the same time, the five business divisions correspond to the three major production centers and place orders with the three major production centers. The production centers are responsible for coordinating production with suppliers. The original promotion, branding, warehousing, logistics, and call center continue to be retained. As a result, where customers go from the original two departments into five business units, plus three production centers.

The reason for this change is because the organizational structure of Vanke was "a partition, doing product production, marketing as marketing, production as production. As a result, the rights and responsibilities are not clear, such as product marketing. The ministry said the photos were too ugly. The marketing department took pictures of the clothes while the product department said that the product was doing poorly." After the change, the corresponding relationship was streamlined. Starting from the product planning, the follow-up work was performed by the business department itself.

In fact, organizational structure changes correspond to product architecture adjustments. Due to rapid development, the category of passengers has long been not limited to the original costumes, but has grown rapidly. In order to make impulses, Vanke even adopted a similar plan economy, first set a development target, and then decomposed the task target into specific categories and then to specific SKUs. In the old age, if there is a certain amount of backlog of customers, this top-down planned economy approach, rather than the bottom-up market mechanism, is the main issue.

In the second half of 2011, the old age began to adjust the customer's category, no longer selling small appliances, small department stores, but focused on clothing and bags. Where customers began to try layered product architecture, its product structure is divided into three layers, "a layer is called the best-selling classic models, is a more standardized product, such as VT, shirts. There is an innovation called models, in the best-selling classic related The introduction of changes in style, such as jeans. The third level is a breakthrough category, such as cosmetics."

The decision data corresponding to each layer of products has corresponding sources and corresponding development strategies. For example, the first-selling classic can use the data of the previous year to evaluate and measure the growth rate of new users this year. The amount of second-level innovations is relatively smaller than that of the best-selling classics. Market innovation experiments are conducted, and then adjusted according to the data. The third breakthrough product, which is only the MOQ, is the minimum quantity allowed by the factory order and tests the market response with the MOQ.

In order to make scientific decisions, Vanke set up a data center in July 2011 to update the relatively crude data system, gradually linking the information scattered within the organization and making it more elaborate. The original simple sales, new user growth, and old user growth data were upgraded to more complex and comprehensive assessment indicators such as the number of new users, sales, gross margins, and inventory turnover. Vanke Data Center plays a role in controlling the overall situation. This is an inevitable move to increase management efficiency as customers continue to expand.

This kind of reform seems to be wonderfully designed. It has both a stable side and a radical side. It complies with the development strategy of “going steady and progressing” as announced by the elderly.

However, all the problems are solved because of the customer's change. Where are the customers still facing problems? Are these problems model problems or problems in the process of "tailoring" later? In the face of reality, if you want speed, you have to make a profit. Everyone must make a choice. What kind of results will be achieved by the measures that Vanke now takes? Is it in the right direction to allow Vanke to profit as soon as possible? How long does the market leave for customers?

In order to explore the development path and pattern of Vanke, we must first understand what kind of company a customer is.

Initially, Vanke positioned itself as an internet product brand. Like the PPG of that year, where customers do clothing, apart from the Internet platform, like the offline clothing brand, its light company operating model, a large number of advertising, Let vanke rise quickly. However, as the customer continues to expand, the product line is expanding, and in the end it has done almost anything. This makes it very easy to treat customers as a channel brand.

In fact, the industry generally divides e-commerce into three categories: platform, self-operated, and brand e-commerce. Every type of e-commerce has its own business logic and profit model, and as they continue to develop, they build a barrier to competition. For example, Taobao is a representative of platform-based e-commerce. It takes full advantage of the Internet and earns an annual fee and advertising fee for businesses to use the platform. With enough users and business bases, it becomes a monopoly in this area. Jingdong, Dangdang, Amazon, Suning, etc. are self-employed e-commerce representatives, the essence of which is the retail format, through the way of earning the difference between income and sales to achieve profitability. Every customer should be a representative of brand-name e-commerce. Its profit model should be through the previous brand investment. When the brand image is established and there is sufficient brand loyalty, it can realize its own commercial value by earning brand premium.

What is a pity is that passengers are less and less like guests in the process of development. In the hurricane sudden advancement, the guest gradually deviated from his original position. Now, what customers do is actually no different from Jingdong, but they only label their products on their own.

Vanke builds and mobilizes the supply chain in the name of the brand to integrate resources. Vanke owns only a brand and an online sales platform. Whether it is production, design, or even warehousing and logistics, it is not a matter of personal experience. It involves a long industrial chain. If customers cannot effectively obtain their own brand premium, relying solely on peripheral capital investment, or the improvement of internal management efficiency, the way to choose the quantity to take is ultimately not a long-term development approach. Because of this, all passengers are not only unable to satisfy their appetites, but also unable to satisfy the appetite of the benefit community on the supply chain.

In fact, as a popular fashion brand, the prices of T-shirts from customers have always been very low. The prices of 29 yuan, 69 yuan and 99 yuan have attracted a large number of users, but such a low price also brings a lot of it. Profit pressure. In the past four years since its establishment, Vanke has achieved a geometric growth in sales, and has cultivated a large number of loyal users. However, it has not yet ushered in the turning point of profit, but has lost money every year, and has been caught in the “make money and drink money”. situation. So, is there greater sales volume, where customers can profit? Actually not necessarily.

Moreover, such cost pressures also extend in the supply chain, because where customers do not step into manufacturing, their products are all foundries. Due to cost issues, customers have previously seen suppliers not producing or stealing materials as required. Cost reduction incidents.

In 2012, Vanke began to optimize its suppliers. Prior to this, Vanke's suppliers have dropped from two to three hundred to one or two hundred, and they have lost about half.

An e-commerce observer believes that although the Internet can create a commercial miracle, allowing some companies to jump out of the conventional development trajectory and achieve explosive growth, but the basic business rules will not change, such as the positioning of product brands must also be clear. The swing of customer positioning not only brings difficulty to management, but also makes it impossible to focus on itself. The brand effect brought by a large amount of advertising investment is diluted by a huge variety of commodity categories. This may become the future development process of all customers. The biggest flaw.

At present, although the passengers have undergone a certain degree of contraction and adjustment of the category structure, if they are still unable to clarify their position, in the future, all passengers may blur the commercial boundaries and eventually lose control. There is a time cost for the capital of marketing. Why should the customer choose the way of development in a hurry? The power behind the capital can not be ignored. And now, with the temporary closure of the IPO window, can the capital of nature be able to tolerate any loss of customers? Or is it a more popular argument to realize future profits with strategic losses. Can those VCs accept such a reality?

In the Internet industry, there is no lack of long-term money, but capital is still flocking, and willing to pay in the industry, such as online video industry. However, online video burning has a big market to make card positions effective, and other competitors are slowly being eliminated, and the turning point of profit comes. For example, there are hundreds of video sites when they are hot, and they are finally eliminated, leaving only Youku and Sohu.

As a brand-name e-commerce company, if you use strategic loss to achieve market share and ultimately achieve profitability, such a logic is a little unreasonable.

In the eyes of people in the industry, the core competitiveness of brand-name e-commerce lies in the construction of brand connotation, which is to promote brand loyalty by establishing a responsive and effective supply chain. At the beginning of its establishment, the establishment of its business model focused on brand building. Through a large number of online marketing and advertising campaigns, it raised high and raised brand awareness quickly. However, when the customer's advertising is covered with the Internet and offline, when the customer is also involved in the price war, where the customer has entered a circle.

Although brand e-commerce companies should achieve long-term and stable growth through brand premiums, where customers clearly fail to obtain sufficient brand premiums, their brand awareness and ads everywhere can only boost sales, but not prices.

“At the very beginning, it was positioned in the elite crowd, and later it was positioned in popular fashion. Such a change has caused the brand where customers have piled up huge amounts of money to have a flaw. It is easy to make brands from top to bottom, but from Bottom up to make the brand exquisite, can sell a good price, to obtain a higher profit rate is not easy.” Analysis of the industry said that whether it is requested Li Yuchun or Wang Hao Dan, Han Han, Huang Xiaoming, although their endorsements can make sales Soaring, but the price is still low, and expensive. In fact, in the competition, in order to fight competitors and attract passengers, Vanke also adopts price war measures. Although consumers will patronize their customers under the greed for cheap psychological control, it is difficult for them to have brand loyalty to their customers.

The SKU has reached an astonishing level since its initial positioning in the apparel category and subsequent expansion of the category. It is not hard to see the official website of Vanke. From T-shirts, canvas shoes, shirts to underwear, accessories, cosmetics, household items, bags, etc., it can be described as many. “Where the customer is a branded e-commerce company, not a platform-based or self-operated e-commerce company, such a wide and complex category, where the customer can hold the brand. One of the worst results may be It does not compete with vertical, brand managers of various categories. Where the customer eventually becomes a brand with neither its own characteristics, but also can not compete with the Jingdong in the amount of category." The industry insiders said, "Step by step It's easy to pull the egg when it's too big. Everyone wants to expand the category because of sales volume, user size, and stickiness. But it should be modest. Now is it too much?

"Speed ​​is the second animal nature of mankind." Where the customer continues to invest, continue to expand the category, expand the SKU, bringing about the increase in the size of the user and sales, but unfortunately this does not mean that profit. According to Guo Baowei, deputy general manager of logistics in South China, known as the first person in e-commerce logistics in South China, “Many e-commerce companies have made it easy to turn money into inventory, but it’s hard to turn inventory into money. The key is: Really The strength of the product planning is to use limited SKUs to achieve as much sales as possible. Without confidence, the product is often full-fledged and it is not known which ones are good for sale.

Expanding SKUs is not necessarily profitable, and reducing SKUs does not necessarily reduce scale. Business has the rules of commerce, even if e-commerce is no exception. Expanding SKUs brings with it the difficulty of management. How to find the best status, constantly adjust the SKU, keep track of key factors, and optimize the key indicators such as sales ratio and turnover days, is definitely a technical activity. Judging from the inventory crisis that occurred last year, it is obviously not a good thing for Vanke to do this.

According to a report released by the media, all passengers listed on the website showed that as of September 30, 2011, Vanke's total inventory was as high as 1.445 billion yuan ($228.6 million). At the end of June 2011 and the end of June 2010, this figure was 850 million yuan ($134.7 million) and 198 million yuan (31.261 million US dollars) respectively.

On the other hand, public information shows that in 2008, Vanke's sales cost was approximately 93 million yuan. In 2010, Vanke's marketing expenses reached 520 million yuan. In 2011, this figure increased to 1 billion yuan.

The generous promotion did bring popularity and orders to Vanke. According to media reports, because of the importance of advertising copy, the advertising creative of Vanke will eventually be clamored. The copy of the Vanke Spring Edition, which was described at the beginning of this article, was determined because of a sentence in a poem by the poet Haizi that was liked by the aged. Hai Zi wrote: "Spring is my quality."

However, "the advertisement is half wasted". IResearch's analysis of the conversion rate of B2C shopping websites (from visits to orders) in October 2011 found that Taobao (including Taobao Mall) had a 6.4% conversion rate to visits, ranking top, and Vanke Eslite The single conversion rate is only 2.5%.

Burning money is common for internet companies, but it's shocking to burn money like this. A person in charge of an e-commerce company who had a very good personal relationship with old age told reporters that wherever he was involved, he was face-lifted and brought tremendous management and control risks to the business. When the PPG business model was correct, it died. Big advertising on the wrong path.

Traditional companies also advertise, but most of them do so because brands are slowly building up. An industry observer pointed out that the Internet does indeed increase the commercial boundaries. However, this does not mean that there is no commercial border. When the direct promotion of advertising reaches the limit, every penny investment will bring about a diminishing marginal effect. Whereas advertising is right, it falls into the trap of over-marketing. "It's very simple. It's impossible for everyone to wear the clothes of every customer. Then the development of the customer's quantity will surely reach a bottleneck. At that time, the products will not be able to sell at a good price. The days of customers will be very sad."

Vanke Senior Vice President Wang Chunhuan said that in 2011, Vanke sold more than 10 million VTs, accounting for 20% of the total domestic T-shirt market. However, how much can this amount increase?

When growth slows, spending is saved and efficiency is improved, and a good profit rate can be achieved as well. Perhaps because of this idea, in 2011, the aging began to adopt change measures to adjust the organizational structure and product structure of Vanke in order to achieve better development.

It is not the purpose of losing money to set up a company. Temporary losses can be said to be for the market layout, for the future profitability, then for investors is still acceptable. If the loss is temporary or long-term, then the only way out is to do a large amount, smooth IPO, enter the capital market through the price-earnings ratio way to eat food, play a game of playing drums.

E-commerce encounters winter, many e-commerce companies lose money, but there are many different. For example, Jingdong can achieve profit in the short term by reducing investment, but this short-term profit has little significance for JD. For Jingdong, using capital advantages to achieve large-scale expansion, with simple and straightforward “low-cost” strategies and more sticky services to gather consumers and squeeze competitors, it is the effect it wants to achieve. Because of the large-scale operation, the market concentration will increase, Jingdong's bargaining power with suppliers will increase substantially, the gross profit margin will also increase, and with the increase of operating efficiency, profitability will not be difficult.

However, where the passengers have experienced rapid growth, they have lost money every year. Why? If we say that loss of customers is also the only way to achieve large-scale operations, then as an independent brand, its scale advantage is not enough to make up for other brands. “The reproducibility of customers is very strong, and their competitive barriers are brands and services. After the passengers were able to rise rapidly after PPG, and where the positioning and mode of customers and PPG are basically the same, it is evidence.” Observers said.

In the first half of 2012, Chennian stated on several public occasions that he hopes to achieve profitability during the year. If you want to come up with a good-looking financial report by the end of this year, what will the old age do?

As a matter of fact, when it comes to the management of a guest who is a volatile e-commerce company, aging has to be a balanced wooden master. Rapid expansion, the pursuit of speed, which brings the pressure of management, is also the pressure of profit. The high operating cost is one of the reasons why customers cannot make profits. No matter whether it is high advertising marketing costs or the industrial chain integration costs, labor costs, logistics and distribution service costs, reverse logistics costs, etc. brought about by expansion of the category, the profit rate is lower than the lower customer unit price. certain.

More importantly, in the expansion of categories, due to the "continuous trial and error" (annual language), all customers are faced with the problem of increased inventory and weekly changes. Although in June this year, when interviewed by the media, Chen Nian said that under optimized management, the turnover rate of customers increased by 2 to 3 times, but handling the huge inventory and newly-generated inventory still remains a problem. In order to handle inventory and promote sales, although the inventory will be restored to normal levels, but it will lower the profit rate, while regular promotions will cause great damage to the Vanke brand, as if a large clearance, reducing the customer's brand Feelings.

In fact, high inventory has always been a major problem for the apparel industry. It finally broke out in 2011. Metersbonwe, Haicang's House, Semir, and Sohu are all unfortunately “medium*.” Where the customer is just one of them . Moreover, because of the rapid expansion, the customer's inventory problem is even more serious. However, under the line of traditional clothing brands because the listing price is relatively high, it is easier to carry out promotional activities. Whereas, Vanke originally adopted a low-price strategy and tried to digest stocks through discount promotions, the difficulty was much greater. For the customer, the huge inventory is like a mine and I don't know when it will be detonated.

To be profitable, there are only two ways for customers to either slow down the pace of development, cut costs, or increase the brand's premium ability. However, these two roads are not good for everyone.

Aging once said that it is necessary to prove that the customer model is correct through profitability. But in the future, I don't know how aging can make Vanke profitable. If the customer continues to rush forward, the mode of operation is extensive, in today's competitive environment where the business model is homogenized, competition capital, competition low price, and more emphasis on refined operations, it will not follow the footsteps of PPG, fly away? Time will give the answer.

Vanke's response to changes in the customer We have made a lot of improvements in raw materials, processing technology, and quality inspections in and out of storage this year, which has also made our products gain more premium capacity during the sales process.

Through the restructuring of the organization, the division of divisions, the return to the nature of products, the optimization of the supply chain, and the development of leading cadres, the customer after the change is more like a clothing brand company.

Vanke gradually completed the optimization of the supply chain this year, improved storage efficiency by 50%, triple quality inspection and triple quality inspection, strengthened raw material control, designated raw material suppliers, supplier rating implementation, phase out, and quality inspection Quality control starts from the source.

The establishment of quality inspection center and data center, a product quality assurance, and a more organized plan to ensure overall operations. After five years of development, the customer gradually moves toward the standardization and institutionalization of large companies.

The invincible guest, after experiencing the crisis of last year, made painstaking efforts to return to the essence and strengthen the quality improvement.

I said in 2011 that I told me in 2011 what I can do, what I can't do, or what I can do for the time being and can't do anything. I should further deepen the mature brands that we are now doing, and do a better job in terms of quality and style, rather than eager to expand more categories.

In 2012, the principle of talking to the team was first of all quality. The first word we proposed was quality, and quality followed by growth. That is, we realize that many products can do better, but because the whole company in 2010 and 2011 tends to be refreshed, some products do not work well, for example, some parts may also get out of control. The first question is our quality, our growth, and how we control risk. Categories do not expand, so this growth is from the quality, not with the price, but because of the improvement of quality, allowing users to more recognition of customer Eslite, because of the improvement of quality, to reduce our return rate, because the quality improvement , allowing users to make more secondary purchases, and quality is the key when word of mouth spreads.

About the price war where passengers will not join the price war. For example, 6 18 price wars, in which the guest was completely out of touch during the entire incident, it just showed the uniqueness of the Vanke model, which allows everyone to clearly see the uniqueness of the Vanke model. Without this year, it was impossible to highlight the uniqueness of the guest. We do not participate in price wars. We will not be forced to participate in such fierce competition. We have no competitors. We are different from other companies. We are not just e-commerce, we have our own products, our own brands, we are brand companies. For example, a box of cigarettes, the traditional channel to sell 90 yuan, Jingdong may sell 85 yuan, so Dangdang want to sell 83 yuan, the following there is excellence, Suning Tesco. The transfer costs of e-commerce customers are too low, which will inevitably lead to a bad cycle of price wars. This is their dilemma. For customers, the pricing power of goods is here, which is the advantage of every customer. In addition, where customer gross profit is 40%, platform-level e-commerce gross margin is only about 5%. That is, they need at least 6 times the sales of Vanke to reach our gross profit level.

We are taking the people's fashion line and the price of civilians. We call it cost-effective. You are in the same price, the same quality, you offer the best price. For example, T-shirts, on the production line in Quzhou, Uniqlo here, and Addi over there, we sell 29 yuan for the production line, and canvas shoes sell for 59 yuan. You do look good, quality users can accept, I only see my secondary purchase is getting higher and higher, this is a very important thing.

In 2012, the top issues were quality, growth and how to control risks. After quality is growth, growth is from quality, not price. Because of the improvement of the quality, the user is more appreciative of Vanke Eslite, reducing the return and replacement ratio, allowing users to make more secondary purchases. Because word of mouth spreads, quality is the key. This year, Vanke will intensively cultivate and improve quality, continue to provide the highest cost-effective products.

About positioning Vancom is first and foremost a brand company, followed by a resource integration company, once again a service company, and finally an IT company.

About trial and error After 2010, traditional brands can not provide more references for Vanke, where passengers break the growth curve of all traditional brands, and the rest can only be the customer's own trial and error. For the cost of trial and error, Chen Nian said that controlling within 5% of the turnover is acceptable.

The first point of Vantage's advantage is unlimited fashion choices. For example, if you start from a shirt, it is impossible for traditional channels to produce so many designs in such a short period of time. This is also because of the Internet. We cooperate with many designers, which is a traditional brand. Can not do, so called unlimited fashion choices.

The second point, we call it cost-effective. You are in the same price, the same quality, you provide the best price.

The third point is the entire service system. IT systems, channel systems, and operating systems, such as Fengda, run outside. Their service attitude is the last embodiment of our internal system, such as speed and attitude. The embodiment of our internal system. All Internet companies that sell retail products only have customers' telephones that are hung in the most conspicuous places. Everyone hides their phones.

In addition, compared to the traditional clothing companies, they are all goods to the channel, the channel results, 6 months to know the data. They do two seasons a year, spring, summer, autumn and winter, and they only know the channel data after 6 months, and their inventory must be kept at a ratio of 1.4, that is, to guarantee that they don’t out of stock, buy a piece of clothing, to be 1.4. Inventory. However, these problems can be evaded through the Internet. You don't think I have 28 warehouses. My 28 warehouses are in a system. Every second I can refresh, and traditional garments are two warehouses or even one, but the goods are not in the warehouse. The biggest distress.