Difficulties of vertical e-commerce

Purchase Frequency and Life Cycle Difficulties

For certain categories, such as maternal and child supplies, building materials and furniture, the user life cycle is very short, i.e., mainly one-time customers, which means that vertical B2C's marketing costs are very high, because each time it is to develop new users. And comprehensive B2C development to a certain stage, it focuses on the old customer marketing, low investment.

From the point of view of commodity durability, like cell phones, digital, furniture, etc. are durable goods, the user purchase frequency is low. For the purchase of low-frequency vertical electric goods category, the user is generally a new user, buy once to choose a merchant, to let the user think of you when you buy, but also from competitors to take the user, you have to keep promoting, increase marketing efforts. At the same time, this kind of goods is generally a large amount of rational purchase, the user tends to compare prices, vertical e-commerce because of the scale of the supply chain limitations, it is difficult to have a comprehensive e-commerce low-cost advantage of price competitiveness.

In addition, from the customer's point of view, he tends to go to his familiar shopping site first (trust + habit of convenience), which increases the difficulty of vertical e-commerce to develop new users.

For an in-depth analysis of this topic, please refer to my previous blog post: e-commerce purchase frequency and customer life cycle

Business on the Internet, the most basic one is competition-driven. In the field of homogeneous competition, there is only the first three, not the fourth. For pure Internet economies, such as instant messaging, microblogging and video, there is often not even a top three, only a first and a second.

The current stage of the e-commerce industry's full loss, competition is also the most fundamental reason. Competition is the competition of capital, the future competition must be the supply chain and operational capabilities of the competition.

Traditional retailers are generally regionalized, and once they enter online retailing, the market seems to expand, but at the same time they are facing national rivals. If they want to survive, I think it's best to focus locally and capitalize on their local brands and warehousing and distribution strengths. Besides, regionalization is much cheaper to promote than the whole network.

The future of e-commerce, there will be a few dominant, these integrated B2C is also an e-commerce platform (B2B2C), the current several major e-commerce companies have begun to go in, such as Jingdong, Amazon and No. 1 store, which also means that the market will be the emergence of several Tmall.

For brands, this is good. This is because they don't need additional IT investment to enter online retail, and even marketing can be saved: rent a storefront online, and business comes pouring in (the traditional department store business model). So they can focus on brand building and product design, which is easier to form a differentiated advantage, split the homogenization of vicious competition.

Then again, Internet users gradually formed a habit: shopping on shopping sites, search engines are generally used to understand the commodity information, directly from the search engine shopping users less and less. For brands there is no need to build independent B2C, at most a brand image site. In this way, into the e-commerce platform is a best choice.

Traditional retailers, such as the flagship store of Suning in Chengdu, is only 4 floors, it will not expand to 10 floors to operate a department store, if you want to operate, but also real estate model, such as Suning Plaza.

On the Internet, for a comprehensive department store, the expansion of the business premises from the 4th floor to the 20th floor, and did not add much cost, but also to take advantage of the existing flow of people, then, vertical e-commerce competitive advantage?

For vertical e-commerce platform investment, compared to the integrated e-commerce is much more difficult, because of the limitations of the flow of people, it is difficult for you to start to bring considerable revenue to others; in addition, you let others operate, are generally complementary categories, the sales of these commodities can be imagined. From a competitive point of view, choose a vertical platform stationed, compared to the comprehensive platform, the quality of foot traffic to be higher? The operating costs are lower?

There seems to be no successful precedent for starting with a vertical platform. Platforms, generally rely on a massive user channel, it is not difficult to understand Baidu have ah, Lekutian, Pinjun net a platform business down.

The emergence of vertical e-commerce, may be based on such considerations: 1, the traditional retail origin, that based on the existing procurement, warehousing and industry experience, the retail channel can be smoothly expanded to the line; 2, that specialization of the business, there will be a better quality of service and operational efficiency, as well as to bring consumers a more complete range of categories and lower prices.

There is also another way of thinking about vertical e-commerce marketing: operating users. For example, the wine retail website, its large-scale marketing investment may be to find a specific user group: successful people with good taste, only to cut through the red wine. When these successful people in the formation of brand and reputation, and then provide other value-added services, such as golf annual card, China Merchants Bank gold sunflower card, the organization to meet high-end contacts offline club.