Internet Business Thinking

Chapter 26 Early Entry, Early Profit - Internet Awareness in Traditional Industries (2)
Different from Lenovo's old-timers, the essence of LeTV's ecological agriculture is an industrial cluster based on a variety of high value-added industries in agriculture.Realize agricultural branding with full traceability system and customized services, and then ensure long-term and sustainable profit growth through brand premium and additional formats.On this basis, through a reasonable land cooperation model and a diversified product system to achieve large-scale operations, and finally with the C2B sales model as the core, it outlines its own Internet agriculture map.

There is no doubt that China's agriculture faces various problems.In recent years, the reason why organic agriculture is the most well-known to the public is because the biggest industry dilemma in agriculture is the issue of food safety.

Eggs are ripened, duck eggs are made of Sudan Red, fruits and vegetables are sprayed with pesticides, and flour is mixed with other things... With various media exposures, food safety issues have never been more concerned by the public than they are now.In the final analysis, various incidents such as Sudan Red and melamine occurred in the past few years. In the final analysis, they are all companies that trample on the bottom line of law and morality in order to reduce costs, increase sales, and pursue profits.

Is it true that agricultural enterprises can only make profits by cheating?A director of a domestic flour mill who did not want to be named said: "After I buy wheat, if I follow the normal processing method and then sell it outside, I will definitely lose money. So I must add something to it, or use other methods to fake it. To reduce costs, it is possible to survive."

There is nothing wrong with companies chasing profits, and there is nothing wrong with the public demanding food safety.So what is it that makes food safety and corporate profits seem to be at odds?
The reason is that China's traditional agriculture has no brand.Li Rui said: "If you don't have your own brand, the price of the product will be fixed. For example, eggs, the price of most eggs in Beijing is fixed at 4 yuan per catty. If any company's eggs are higher than this The price cannot be sold. On the other hand, when we look at the mobile phone industry, why are Apple’s mobile phones sold for more than 5000 yuan, but why are some domestic mobile phones sold for only a few hundred yuan, but no one cares about them? This is the value of the brand.” When the price is fixed, the only way for enterprises to obtain profits is to reduce costs to ensure production and operation.Obviously, counterfeiting is the most common way to reduce costs.

Therefore, to solve this problem, it is the most direct way for agricultural enterprises to have their own brands.Li Rui also believes: "The future agricultural industry will surely enter the brand era."

Now, some traditional agricultural enterprises have begun to build their own brands and have seen results.Taking the No. [-] local pig in Guangdong as an example, the prices of traditional pork products are all fixed. Therefore, companies use various methods to make live pigs mature as soon as possible, produce meat as soon as possible, and sell them as soon as possible to reduce feed costs.However, No. [-] soil pig has created its own brand with the unique selling point of "no feed, no additives, so that black pigs have enough growth period". Even though the price of its pork is twice as expensive as that of ordinary pork, it still makes a lot of money.

Compared with No. [-] Tuzhu, which took several years to build word-of-mouth, Internet companies including LeTV are obviously more handy in building brands.The key word for LeEco to build a food safety brand is "full traceability".

Through the whole process traceability system, whether it is vegetables or fruits, each LeEco’s agricultural products have a QR code, so that consumers can use Internet video to conduct intuitive and clear visual monitoring of agricultural products at any time, from a seedling to Full understanding of planting, packaging, distribution, and dining table.As Li Rui said: "The production and sales processes of agricultural products were completely separated before. When users bought this product, they had no idea how it was produced. Some people say that their agricultural products are not sprayed, but how can users believe you? ?The agricultural products produced by LeTV Agriculture can be tracked and traced through the Internet of Things technology in every link, and there are videos 24 hours a day, so users can watch them all the time.”

"The whole process can be traced" is easy to say, but it is not easy to do - to achieve full traceability of each batch of products, the amount of data generated is undoubtedly massive; users watch these videos through the website, so The generated bandwidth traffic will lead to a surge in business costs.Therefore, compared with Lenovo, JD.com and other companies, LeTV, which is a video website, has an obvious advantage: Now, LeTV has nearly 3000 million user visits per day, and more than 200 CDN nodes across the country.

However, branding alone is not enough for Internet agriculture.The next step after building a brand is to achieve scale.As Li Rui said: "No. [-] native pig is a successful case of the traditional breeding industry taking the road of branding, but a single breed and a small scale make it difficult to scale up the product."

With LeEco's status in the arena, since it wants to enter the agricultural market with great fanfare, it is obvious that it will not be satisfied with becoming the second "No. [-] local pig".However, in order to scale up its own ecological agriculture, LeTV needs to have enough land and diversified products.

overcoming land woes
After careful observation, it is not difficult to find that LeEco's ecological agriculture industrial park mainly uses basal cultivation and soilless cultivation of various organic crops, and few products are actually grown in the soil.The reason why LeEco does this is not only to avoid pollution in the soil, but also because greenhouses are not subject to seasonal restrictions. The more important reason is that it is too difficult to obtain agricultural land in China.

Ma Wenfeng, a special economic analyst at Xinhua News Agency, said: "The reason why Lenovo entered agriculture with fruit products is because fruit cultivation only requires mountainous land. The current situation in China is that the property rights of cultivated land are clear and are scattered in the hands of farmers, making it difficult to scale up. ; and the property rights of mountainous areas are relatively vague, as long as the government is settled, they can be obtained relatively easily."

The 2007 mu of land that Li Rui contracted in Shanxi in 3000 was also mountainous, which shows how difficult it is to obtain cultivated land.Now, the 3000 mu of land in the hands of LeTV Agriculture, except for the 10 square meters of facility agriculture that has been built, the rest is agricultural land transferred back from farmers by the government. It has nothing to do with farmers, and LeTV acquired it from the government. .

Even so, finding ways to obtain large-scale agricultural land from farmers is still an unavoidable problem for every enterprise interested in agriculture.

The 3000 mu of land contracted by LeEco in Linfen, Shanxi was transferred through the government. This is only the first phase of LeEco's ecological agriculture project.Li Rui said: "Now, next to the ecological agriculture industrial park, there are still 2000 mu of land that have not been transferred back. The 2000 mu of land is the problem we will solve next."

LeTV's plan is to revitalize the land in the hands of farmers, make it linked with LeTV, and eventually form industrialization.LeTV Agriculture is very cautious about the more commonly used leasing forms at present. Li Rui said: "The cost of land leasing has been rising year by year, by 10% every year. Now, the national average land leasing price has reached 1200 yuan per mu, which is too high. , and unstable."

According to Li Rui, LeTV Agriculture is acquiring land through leases, purchases, or equity discounts for agricultural production and housing construction.At present, there are two main ways of cooperation between LeEco and farmers. "The first is the trusteeship model, that is, LeEco provides technology and seedlings for farmers. After farmers are trained, they cultivate according to standardized procedures. After passing the certification of the authoritative system, they will Enter LeTV's Internet ecological agriculture sales channel; the second is the employment model, that is, LeTV hires farmers, making farmers become industrial workers and enjoying wages and insurance."

Diversified Product Strategy
Different from traditional agriculture, the Internet is a product-oriented industry.Therefore, for Internet agriculture, after obtaining land, the most important thing is product strategy.

The agricultural field is a huge traditional industry, which spans three industries.That is, the primary industry including planting, breeding, and forestry, the secondary industry including food processing, seeds, and pesticides, and the tertiary industry including retail and services.Even with the implementation of product diversification, it is impossible to cover all agricultural related products.

But even so, LeTV Agriculture does not intend to focus on only one or two series of varieties like Lenovo did.Li Rui believes: "If we simply make a variety series, the investment is too large, and the risk is too large." Therefore, LeTV's product strategy is to establish multiple ecological agricultural bases across the country and produce different agricultural products in different regions according to their characteristics. , Each agricultural base focuses on the development of two types of products, one is high value-added products that are resistant to storage and transportation, and suitable for nationwide promotion; the other is products that are suitable for the local market.

At the same time, LeTV Agriculture is also looking for the introduction of foreign excellent varieties to enrich its own product categories.For example, countries with high-quality agricultural products such as Switzerland, the Czech Republic and Canada are potential partners for LeEco.

On the morning of the reporter's interview, Li Rui had just discussed cooperation matters with the investment commissioner of the Asian region of the British Columbia Trade Commission in Canada.He told the reporter: "LeEco has already had plans to acquire foreign agricultural projects, and has reached preliminary cooperation intentions with modern agricultural bases in the United States, Canada, the Czech Republic and other countries, and has been preparing for several months. Blueberries, cherries, and mineral water are all included in the acquisition plan."

In order to enrich product categories, LeTV Agriculture will combine local leading products in some provinces of my country in the future to optimize the product structure of LeTV Agriculture, allow regional parks and farmers to join, and enter LeTV's Internet ecological agriculture sales channels.Li Rui revealed: "LeEco Ecological Agriculture Industrial Park Linfen Base in Shanxi Province adopts the model of joining bases. All bases in Shanxi Province that produce agricultural products will join LeEco Ecological Agriculture, including Shanxi Small Miscellaneous Grains. For example, Qinshui’s millet and other agricultural products that already have a strong brand appeal.”

If Lenovo's agricultural products are mainly kiwis and blueberries, which are aimed at high-end consumers, then LeTV's product line covers high-end, low-end and mid-end users.

Internet channel with C2B model as the core

If the realization of branding and scale is the basic condition for LeEco to develop Internet agriculture, then the online C2B model is the core of its entire agricultural strategy.

Unlike Lenovo's offline sales channels, LeTV Agriculture has chosen e-commerce channels.Li Rui does not admire offline channels: "If you develop offline channels, you will go back to the old way. The first-tier dealers, second-tier dealers, and third-tier dealers are exploited layer by layer, and the price cannot really be minimized. .”

It is true that the price can be kept as low as possible only by reducing costs through a flat sales system. However, although e-commerce avoids the price increase caused by multi-layer dealers, it has to face huge logistics and storage costs.Especially the freshness preservation of agricultural products requires the support of cold chain logistics.

This is another heavy burden for the agricultural investment that already requires a huge amount of money.Fortunately, the actual logistics cost is not as much as LeEco imagined.

LeTV Group is undoubtedly the most well-known video business, but the most easily overlooked is its real estate projects.According to statistics, LeEco has real estate business coverage in 80 cities across the country, and these real estate projects can be used as storage projects.The only thing LeTV Agriculture needs to do is to upgrade the cold chain distribution function.Li Rui told reporters: "Under the same conditions, our logistics and storage costs will be much lower, and can even be ignored to a certain extent."

Another reason why LeTV Agriculture insists on online channels is that only online channels can realize its C2B pre-sale plus customization model, that is, let users participate in all aspects of product production, and at the same time formulate sales plans according to user needs, and use This applies to both production and procurement.Li Rui introduced: "For example, if a user wants to buy strawberries, after placing an order, he can see the situation inside the greenhouse through video. The user chooses to place an order online, and the strawberries will be picked immediately in the greenhouse, packaged and shipped on site."

The C2B model can be regarded as the most proud new business model for all Internet users. The biggest advantage of this pre-sale plus customization model is to improve production efficiency, optimize the industrial structure, and truly achieve zero inventory.

For the retail industry including agricultural products, inventory is always the most troublesome problem for merchants: there are fewer products produced, and users cannot buy them. It is a trivial matter to make less money. Terrible; if there are too many products produced, there will be a backlog of inventory, resulting in overcapacity. If it is small, it will affect the turnover of the company's own funds. If it is large, it will cause market fluctuations and price imbalances.

In addition, the agricultural product retail industry has to face fresh-keeping problems that other retail industries do not have to face.Li Rui said: "Agricultural products are different from other products. Many things have a very short shelf life. For example, strawberries start to rot three days after being picked. It is impossible to wait to sell them online after picking them."

Therefore, Internet people came up with the C2B model—a model that allows users to participate in the product development, production and design process, and users place orders first, and merchants then organize production and delivery.

This C2B model has been used by Xiaomi mobile phones, and another LeTV product, LeTV Super TV, has achieved great success.As of the date of press release, the online sales of LeTV TVs have been in short supply, and users have to wait in line for about 10 weeks to buy one.

Obviously, LeTV is well versed in the way of C2B.Li Rui told reporters that on the basis of the C2B model, LeTV Agriculture is trying to make more customized purchases. "For example, users can buy out promising products. If there are 10 strawberry seedlings in the greenhouse, and a user buys them out. Then, all the strawberries produced by these 10 strawberry seedlings within a growth cycle belong to the It is owned by the user, and the user can follow the status of his strawberry seedlings through video at any time."

When talking about whether the Internet will subvert agriculture in the same way as other industries in the future, Li Rui said: "Now I dare not say that the Internet will subvert agriculture. Because China is a big agricultural country, it is related to the food problem of 14 billion people. So, subverting agriculture is a big deal. I dare not say 'subversion', I can only say 'upgrade'." But in any case, different from Lenovo Joyvio's LeTV strategy, let us see another The idea of ​​Internet agriculture.In other words, LeTV Agriculture's use of the Internet to "upgrade" traditional and backward agriculture has shown us the hope of my country's agricultural industry.

(Section [-]) The speed of fresh food is the speed of life and death

Liangshi.com, a localized fresh food e-commerce company in Shenzhen, chooses to use Internet thinking to do fresh food business in the e-commerce circle that strives for traffic and marketing, and insists on taking care of its own one-acre three-point land.It is this approach that allowed Liangshi.com to survive in the first year of China’s fresh food e-commerce in 2012, when players were defeated. However, it is still facing the cost problem of fresh food e-commerce under its rapid growth.

Tang Zhong, CEO of Liangshi.com, is not a player in vertical fresh food e-commerce, because he does not adopt the method of "burning money to buy traffic in exchange for users".In 2012, the first year of China's fresh food e-commerce industry with many players, the industry is bustling with entrants, exits, high-profile players, low-key buyers... people from all walks of life gather.Tang Zhong, who lives in a corner of Shenzhen, does not show his face in a high-profile way like other colleagues, but concentrates on taking care of his "one-acre-three-point land".

Neither has the wealth and wealth of platform giants such as JD.com, nor the gimmick-filled online marketing of e-commerce peers such as Benlife.com. Liangshi.com seems to be working hard to fight for "freshness" by shortening the supply chain and controlling the freshness of the goods. With cost design, let's run a "speed of life and death" of fresh food e-commerce.

shorten the supply chain

As an Internet "old man" with 15 years of experience in the industry, Tang Zhong served as the vice president of A8 Music Group and later founded the lottery website Aicai.com. In 2010, after quitting the company, Tang Zhong found in his communication with his friends that many of them were troubled by not being able to find healthy and safe fresh food.Where there are complaints, there is a market. An entrepreneurial opportunity triggered by the issue of "food safety" is in front of Tang Zhong.

In 2011, Tang Zhong founded Liangshi.com in Shenzhen. Similar to many fresh food e-commerce companies, Liangshi.com is positioned as a high-quality, safe and healthy food operation platform.The core requirement of this positioning is to change the traditional mode of operation of the agricultural industry and solve the problem of excessively long supply chains in the agricultural sector.With many years of experience in the Internet industry, Tang Zhong believes that with the help of the fresh food e-commerce platform, the idea of ​​"food produced from the field and directly supplied to the dining table" is completely achievable—the supply chain of fresh food can greatly shortened.

The greatest challenge in shortening supply chains comes from the plethora of intermediaries.Therefore, Liangshi.com has adopted a different approach from other e-commerce peers at this stage, that is, it does not use the channel of the ground business circle.In this regard, Tang Zhong explained: "We did not choose the ground channel at this stage, because it is not the most effective way at this stage. The core business district and retail circle of the ground store cannot effectively cover the purchase of ecological and organic products. It will also cause consumption of food freshness and increase circulation and operating costs.”

Liangshi.com, which only uses online channels, naturally chose the delivery method of home delivery.The home delivery method allows Liangshi.com, which has its own production base and production employees, to truly realize "from the field directly to the dining table", successfully shortening the fresh food supply chain.

(End of this chapter)