Internet Business Thinking

Chapter 29 Early Entry, Early Profit - Internet Awareness in Traditional Industries (5)
With 2 yuan of venture capital, Lin Zuoyi opened an online store on Taobao.In the early days of his business, Lin Zuoyi, who was seriously short of funds, chose the optimal cost route of OEM.All the furniture products obtained from major furniture factories are put on the shelves of Lin's Wood Shop in Taobao, and are labeled with the Lin's Wood brand for agency sales.In the early stage of e-commerce in the furniture industry, Lin's Wood Industry, which ate crabs first, easily enjoyed market dividends. At the end of 2008, the annual sales volume of Lin's Wood Industry exceeded 2000 million.After that, Lin's wood industry entered the Taobao Mall at that time and began to bind the big Taobao staking.And Lin Zuoyi soon discovered hidden dangers: Lin's Wood Industry is not the only one staking land, and there will be more and more competitors, but the OEM agency model is too easy to copy, and once the market dividend disappears, it is likely to be abandoned by the market.For this reason, improving the business model was put on the agenda. Lin's Wood Industry began to establish its own brand standards, build its own factories and warehouses, and master the industrial chain from production to sales.

In the second half of 2009, Lin's Wood Industry established a factory and warehouse with a total area of ​​more than 600 square meters and about 50 workers.What kind of products does the factory produce to sell well in the market?Lin Zuoyi's decision-making criteria is to use data analysis to determine market positioning and specific product sales.

After nearly two years of operation on the Taobao platform, Lin's Wood Industry has accumulated a large amount of sales data.By analyzing the product sales data of Lin's Wood Industry and comparing the hot-selling furniture items on the Taobao platform, Lin Zuoyi found that residential furniture is the mainstream, and the pastoral, modern, and country styles in the European-style and Korean-style furniture series are generally popular. Post-80s are popular among the mainstream online shoppers.For this reason, Lin's Wood Industry adjusted its product positioning in time, and edited the product styles from the most 3000 styles to 1000 styles that are currently popular in the market. Design team for product design.

By controlling the furniture production chain and re-determining product positioning, Lin's Wood Industry has stripped off its original "agent OEM" status and successfully obtained and increased the brand premium.In this way, Lin's Wood Industry will reduce the production and processing costs to 5% to 6% of the price, while under normal circumstances this proportion is 10% to 20%. In 2010, the sales of Lin's Wood Industry reached more than 8000 million, increased to 2011 million in 1.7, and doubled to 2012 million in 3.8.

Operations based on data

Throughout the more than five years of Lin's Wood's entrepreneurial history, data-based operations are the cornerstone of its rise, running through the entire process of its product marketing and business operations.

Since its inception, Lin's Wood has relied on the collection and analysis of data.As the enterprise grows, its dependence on data has deepened. In 2012, Lin's Wood Industry developed a personalized ERP system according to its own management rules and data collection requirements.

When the "Double Eleven" shopping festival in 2013 is approaching, Lin's Wood Industry has set the goal of "Tmall Lin's Wood Industry Flagship Store and its 7 sub-stores achieving a total sales of 2 million yuan".In order to achieve this sales target, Lin’s Wood Industry needs to analyze the data in the early stage of “Double Eleven”. “In the system, we can see the latest traffic trends, consultation volume, collection volume, and the volume of shopping carts. Good data Where, what is wrong, where there is a problem, etc., can basically be reflected, and we will adjust our strategy in time based on these." Lin Zuoyi said.

According to the direction of the system data, Lin's Wood Industry finally determined that more than 8 products in 600 major styles will be put on the shelves during the "Double Eleven" period, including American, European, Chinese, French, Korean and other subdivided styles.In stocking, upholstered furniture accounts for the highest proportion, followed by panel furniture. On the day of "Double Eleven", a total of 9 products sold in the flagship store of Tmall Lin's Wood Industry exceeded 3000, and one of the leather sofas sold more than [-] sets.

After the product category is determined, one of the more important things is pricing. "Product pricing is a top priority in operations, and it will involve preliminary prices, revised prices, normal prices, promotional prices, Double Eleven prices, etc." Lin Zuoyi said.

Whether it is normal or "Double Eleven", before all products of Lin's Wood Industry are initially put on the shelves, they will test the initial price and expected sales according to factors such as cost and market demand.After the product is put on sale, if the market response does not meet expectations, Lin's Wood will further analyze the problem based on the number of views, number of favorites, dwell time, bounce rate, and number of orders.If it is a price problem, the price will be revised until the product sales order volume meets expectations, and then the final revised price will be determined as the normal sales price.

According to the survey, the price of a hot-selling sofa in Lin's wood shop has been changed an average of 10 times during the product's life cycle, from the highest price of 2349 yuan at the beginning of the store to 1479 yuan when the product was cleared.These price fluctuations are the most timely price changes based on market sales data, so that Lin's Wood Industry can obtain a higher profit return.

According to the information provided by Lin’s Wood Industry to Manager, its system needs to process more than 10 orders before and after Double Eleven.With such a large order quantity, how can Lin's Wood Industry handle it quickly to ensure after-sales service?
For example, a customer bought a sofa at Lin's Wood Industry flagship store.After the order is placed, the order will be automatically downloaded to the ERP system of Lin's Wood Industry. The customer service will contact the customer for confirmation according to the order. After the customer confirms, the order will be transferred to the documentary department, and the documentary department will check whether there is stock. Immediately go to the warehouse for delivery, if there is no spot, go to the factory to place an order for production.

As for team management, Lin Zuoyi also pursues the principle of data-based decision-making.Since 2010, Lin's Wood Industry has started to use a self-developed enterprise management system internally.After the employee turns on the computer at work, the system will automatically pop up the events that should be done on the day. Every time the employee finishes processing an event, the result will be displayed in the supervisor's system.In this way, as the boss, Lin Zuoyi can clearly view the working status of all employees and the company's overall operating status every day, especially the completion of all business volumes. Provide objective evidence.

From a small Taobao store with only a few people at the beginning, it has grown to an enterprise with more than 300 employees, 3 furniture factories, 4 warehouses, and a total area of ​​10,000+ square meters.These are all closely related to its digital operation.

(Section [-]) Grasp the expansion of e-commerce like leveraging the real estate bubble
With the development of the Internet, the trend of traditional enterprise e-commerce is irreversible.As a traditional enterprise, Goliath entered the e-commerce field. The most fundamental change is not in the channel of the Internet, but because the Internet has transformed the organizational structure and processes of the entire enterprise: in traditional enterprise management, the structure of decision-making from the top of the company and execution at the bottom , changed to a low-level decision-making structure and a high-level support structure.

On September 9, Beijing ushered in the first autumn rain in 4.Sitting in a courtyard house, admiring Southern Song Dynasty poet Jiang Jie's "Poppy Listening to the Rain", sipping tea... It's hard to imagine that this is a formal interview about e-commerce.

Liu Shichao, General Manager of Gloria E-Commerce and Director of Gloria Internet Marketing, is a manager who likes Song Ci and "making tea is the best in the e-commerce circle".He does not have the strength of ordinary professional managers, does not advocate overtime work, does not participate in lunch meetings, and believes in the management idea of ​​"to achieve what you want to achieve": "I advocate happy management. My performance is realized on the basis of happy employees, and I don’t want to make everyone tired and sick for the sake of performance or goals.” As Drucker said: Management is human nature.

There is a well-known saying in organizational behavior: 60% of the performance of an organization is determined by the informal communication and informal relationship in the organization.Perhaps it is precisely because of this kind of management thinking that Gloria, a traditional women's clothing brand, ushered in an explosion in the new channel of e-commerce, with sales increasing at a rate of 50% per year.

Human efficiency bottleneck brought about by organizational structure

In 2008, as the founder of Goliath, Hu Qiming, who was not very good at surfing the Internet, set up a strategy for Goliath to enter the e-commerce field.Coincidentally, it was also in this year that Liu Shichao, who was still in the marketing department of P&G, also began to prepare for the P&G Taobao Mall project.

"From the incident of entering Taobao, we can see the difference between the two companies: Gloria entered as soon as she said she would enter, and sold 200 million yuan that year; and Procter & Gamble, from the time I proposed to enter Taobao stores in 2008 to everyone's argument, it has been a whole year. One year, and it was not until 2009 that a store was opened on Taobao Mall.” Liu Shichao said, “This is why many multinational companies are not suitable for developing in China—its decision-making process is too slow.”

Gloria women's fashion clothing brand was born in 1995. The company integrates women's clothing research and development, production, and monopoly sales. This local women's clothing brand with more than 2000 employees has already ranked among the first group.However, with the development of the Internet, the trend of traditional enterprises taking the road of e-commerce is irreversible.As a very successful women's clothing brand in offline business, Gloria must also follow this trend.

In the following years, Goliath’s e-commerce business was booming; and Liu Shichao created Procter & Gamble’s “Living Home” project (Life Home project is P&G’s first practice in Internet marketing and e-commerce projects), and got reward shares from P&G , After retiring, he sold brake discs on Taobao.

At this time, Gloria's e-commerce growth encountered a bottleneck.It coincided with Liu Shichao "after making his Taobao store No. 1 in the category, he suddenly realized that he still wanted to engage in an industry that changed people's way of life."So the two sides hit it off, and Gloria had an additional e-commerce general manager and Internet marketing director.

In 2012, when Liu Shichao first joined Goliath, Goliath’s e-commerce business was in a bottleneck period. Liu Shichao recalled: “At that time, Goliath had good products and brands, and there was no problem with the strategy of entering e-commerce early and selling exclusive funds. , the problem lies in the relatively weak adaptation to the characteristics of e-commerce.”

It took Goliath 4 years to grow e-commerce from zero to 7000-[-] million, which is already a very good achievement, but the main bottleneck restricting the development of Goliath's e-commerce lies in the unsound organizational structure.Liu Shichao said: "The fundamental competition in the retail industry is two points. Opening a store is more efficient than the average (benefit per square meter), while building an online brand is more efficient than people (benefit per capita). Among them, the organizational structure directly determines the efficiency of people."

The core of e-commerce is organizational restructuring

If "happy management" is the guiding ideology of Goliath's management, then organizational restructuring is the specific implementation level.

(End of this chapter)