Wind Rises 2005

Chapter 679 Supply Chain Revolution

“Teacher Ma, once you build your own platform, you will face new challenges.

No promotion, no traffic.

Promote it vigorously. The product variety of our own brands is not wide enough, so it is difficult to achieve a high purchase conversion rate.

By then, the return on investment (ROI) data will definitely be ugly..."

Although Meng Fei was not specifically responsible for online business, he still understood the basic principles and raised his concerns immediately.

This is what Ma Liang was worried about at first. If the platform products are not rich enough at the beginning, it will inevitably lose a large part of the traffic.

This means that the platform will need to spend a lot of money to maintain it in the early stages.

In the minds of novice entrepreneurs, isn’t it just about building a platform, putting the products on the shelves, promoting and attracting traffic, and selling them directly, making a fortune in minutes?

But in actual operation, you have to consider the question of whether the chicken or the egg came first.

Whether it is putting products on the shelves or promoting traffic, it takes time to achieve. It is impossible for you to have endless products to meet consumer needs as soon as your website goes online.

How many products to put on the market, how much traffic to attract, and how much inventory to prepare are all very important and should not be done carelessly.

It doesn’t mean that you can succeed if you have money to burn.

If one fails to handle it properly, it will end up like Vancl, with an inventory backlog of over ten billion, and eventually the capital chain breaks and the supply chain collapses.

PPG, Vancl, Vipshop, Jumei, and other e-commerce platforms have all experienced similar situations, and serious cases have even put the companies on the brink of bankruptcy.

Therefore, Meng Fei's concerns were also the concerns of all the executives present, otherwise there would have been no need to argue there just now.

Ma Liang thought about it and immediately replied: “Product problems cannot be solved overnight.

But even if we don’t build our own platform, with the development of major e-commerce websites, in a few years, as their size grows, Jinshi’s online business will still face the same problems.”

He is not exaggerating. In a few years, there will be many cases of collapse of leading merchants in Tmall's clothing category.

You should know that the annual sales of many large online stores are over 10 billion.

But once a serious inventory backlog occurs, the capital chain will not be able to turn around. You may still be profitable on the financial books, but there is not much cash flow, and eventually it will collapse overnight.

"But...but..." Meng Fei was speechless.

It's not just him. Even Xiao Wenbin, the new vice president in charge of e-commerce business, cannot guarantee that the same situation will not occur in Jinshi in two years.

Ma Liang did not laugh at them, but thought further about the deeper issues.

This problem seems to have no solution. As long as the business scale is large, it cannot be avoided. We can only find ways to manage and operate it and try to keep the problem within a controllable range.

This is because e-commerce platforms are unable to provide trial services for highly experiential products such as clothing.

Offline physical stores are much better in this regard.

Just provide a few trial samples and you can serve dozens or even hundreds of customers.

But if the same thing is applied to e-commerce channels, the price to pay is that every customer needs to be provided with trial samples.

Because express delivery takes time, the fastest turnover of a commodity takes about a week, which inherently slows down the product turnover rate and forces you to increase the number of stocks in stock.

This is why inventory backlogs in e-commerce channels are more serious than in physical stores, and it is also an unsolvable problem.

To overcome this difficulty, we need to bypass the problem and find another way.

But Ma Liang thought for a long time but couldn't come up with a good solution. He fell into deep thought for a while, and the whole conference room was silent because of him.

Only Yan Bing looked at him confidently, not in a hurry at all.

She had an inexplicable confidence in her young lover, as if no matter how difficult the problem was, it could be easily solved in Ma Liang's hands.

This is why she specifically called her lover to attend the executive meeting today.

Ma Liang didn't notice at all that the Ice Beauty Sister was looking at him lovingly, but this scene was quickly captured by the executives present.

The new workplace elites finally realized that their boss was having an affair with this young rich man who was famous throughout China.

No wonder Vice President Meng, this lackey, rushed down to greet us earlier!

At this moment, all the senior executives became extremely alert and looked at Ma Liang with even more respect.

Ma Liang had no time to notice these things. He was racking his brains to recall the business cases he had seen in his previous life.

Suddenly, he had an idea, which might not work, but was worth a try.

So he glanced at the Ice Beauty Sister, responded with a confident smile, and slowly began to talk: "Everyone, our previous online business has laid a very good foundation.

This also makes it much easier for the group to build its own e-commerce platform than for other companies.

The business model I want to talk about next is different from the platform models such as Taobao and JD.com, and also different from the self-operated models such as Vancl and PPG.

Instead, we combine the Amoeba model we have accumulated previously and use platform empowerment to create a new ecological model.

I call this model [M+ Ecology].

In essence, we focus on our own brands and use third-party brands as a supplement. We use our very mature [Amoeba Model] to incubate those third-party brands.

And through this in-depth cooperation, an extremely flexible production supply chain has been developed.

If possible, I hope to shorten the product cycle from design to product delivery to less than seven days. "

As a result, Ma Liang's words instantly caused shock in the conference room.

"What? That's impossible!"

"Seven days, how is that possible?"

A group of executives exclaimed that it was impossible because there was no such precedent.

But Ma Liang didn't care. As a reborn boss, he knew very well that the domestic clothing industry would successfully achieve this in the future.

The delivery time of traditional clothing manufacturing is usually 3-6 months, but ZARA, relying on its strong production supply chain, has shortened the time from design to product delivery to 21-33 days.

This was once boasted by countless media and peers.

However, SHEIN, China's clothing e-commerce platform in the past, has once again created a miracle, with its product cycle taking only 7-14 days.

This is not the result of SHEIN's efforts alone, but the result of the joint efforts of the entire apparel industry.

In order to achieve this goal, SHEIN was once criticized and accused by countless people of taking advantage of others, squeezing suppliers, and squeezing the brands that settled in the company.

SHEIN's business model is essentially no different from Taobao and PDD.

They simply exploited their partners endlessly and seized the European and American markets with extremely low prices. Although the revenue increased, the merchants who settled in the company were making a loss in order to gain publicity, and many of them suffered huge losses.

Ma Liang naturally didn't want his ice-beautiful sister to take this bloody route. He suddenly had an idea and remembered Lei Bush's [Mi Family] model.

This model can be said to have pioneered China's business model and is a leading innovation in the world.

It even triggered an upgrade revolution in China's manufacturing industry, benefiting countless manufacturers and brands.

From small items like power strips to large items like household appliances, in just a few years the production quality and design level of domestic products have been improved by more than one level, and most importantly, the prices have been brought down.

For ordinary people, being able to enjoy higher quality products with less money is a great merit.

It’s a pity that such a great model is not understood by the public.

However, professionals in the venture capital and capital circles highly respect Lei Jun, and believe that the Mijia model is truly beneficial to the country and the people.

This model was later adopted by other large companies.

Therefore, Ma Liang also plans to follow suit and apply this approach to the clothing field, letting Jinshi take the lead and empowering production suppliers through ecological cooperation, ultimately achieving improvement in the entire industry.

Once it can be realized, it will inevitably lead to a huge change in the entire production supply chain.

(End of this chapter)