How to determine whether the traditional industry is suitable for Internet transformation

First, the trend of supply exceeds demand intensified industry

In the process of productivity improvement, the supply and demand relationship between the two sides of the transaction is a continuous change, generally from the supply exceeds demand to supply exceeds demand conversion. In my opinion, industries where supply exceeds demand are more prone to Internet transformation, and the wider the gap between supply and demand, the more suitable for Internetization.

Why? This is determined by the advantageous characteristics of the Internet. When supply exceeds demand, reflecting the production capacity has been optimized to improve at this time, at the same time, the channel capacity will gradually replace the production capacity to become an important driving force in the operation, at this time the Internet in solving the asymmetry of information, strong connectivity, etc., there is a place to use, the two sides of the information to do docking to facilitate the transaction. In turn, when supply exceeds demand, the test is the production capacity of the supply side, at this time the contribution of the Internet is not as strong as in the previous scenario. After all, the core advantage of the Internet is the ability to deliver information quickly and at low cost.

On the other hand, traditional industry bosses are more inclined to try to transform their businesses in the case of industries where supply exceeds demand. In the case of good business operations, many bosses do not have strong pressure to try new models, and only in the case of resistance to the development of the beginning of forced to try new things in the hope of opening up new horizons - poor people think of change. In the past year, many industries are facing the problem of overcapacity, resulting in business operations in general encountered obstacles to profitability has become more difficult to promote a lot of traditional enterprises to carry out the exploration of new modes, and the Internet has just become the ideal road in the minds of business operators.

For example, the B2B trading platform for bulk items often occurs in industries where supply exceeds demand, in which price fluctuations become an important feature of the platform, and price is an indicator that can be quantified, which is very suitable for the implementation of the Internet to display. In this way, the demand side concerned about the price and the supply side concerned about the sales volume directly linked together, to a certain extent to remove the intermediate links, to establish a good business model.

Two, the transaction cycle is shorter industry

The definition of the transaction cycle, is defined here, is from the demand side of the user has the need to complete the transaction until the length of time to get the user experience, including the user's decision-making, order, access to products and services, the formation of the final user experience. Why is it easier for industries with short transaction cycles to undergo Internet transformation?

In the Internet era, user experience and word-of-mouth have become extremely important because the low-cost and rapid spread of the Internet makes it very easy to spread user experience. The result of word-of-mouth spreading of user experience is both the end of this transaction cycle and the beginning of the next transaction cycle. Within a certain period of time, the shorter the transaction cycle, the more word-of-mouth dissemination of user experience, the Internet's propagation characteristics can amplify the impact of user experience on product sales to a greater extent. For the user experience of good product marketing, the Internet way to increase the number of dissemination, may bring geometric development; and for the user experience is poor, the increase in the number of dissemination is rather a disaster. In other words, the Internet for marketing speed and scope of the amplification of the ability to operate in this type of industry will make a big difference in the operation, and thus the short transaction cycle of the industry is more suitable for the transformation of the Internet (provided that the user experience formed by the product to be confident enough).

It's easy to think that if you're in this kind of short-transaction-cycle industry, then you should focus on utilizing the Internet's word-of-mouth communication capabilities for marketing to improve the turnover efficiency of your goods within a fixed period of time. After you're sure that users have had a good experience with your product, you should be thinking about how you can guide them to use the Internet to easily spread that good experience to other potential users, rather than waiting for them to spread your good name by "word of mouth".

Adding a point, the transaction cycle here, in fact, should be weighted by the transaction amount, corrected to the transaction cycle relative to the transaction amount, because the transaction cycle and the amount of a single transaction is often a certain correlation. After the amendment can be more suitable to examine the feasibility of the Internet of an industry.

Three, the industry with a high degree of product standardization

Product (or service, the same below) standardization, including the product's ability to display data, the standardization of the product itself and other aspects.

The data-based presentation capability of a product refers to the extent to which the parameters or performance of a product can be presented in the form of data. The Internet transmits information, and data is an important form of display of information, for the high degree of standardization of product parameters of the industry, it is easier to quantitatively express the product through the data, matching the Internet's data transmission capabilities. In this way, a variety of quantifiable indicators and prices of products are directly displayed, and product comparisons before purchase decisions are easy to make.

For example, national standards exist for many industries, and these standards are the result of data-enabled product parameters. When a product meets a standard, it means that its parameter performance has been rigorously quantified. Industries as large as steel and oil, and as small as lenses and decorative accessories, can have their products standardized in a data-driven format. Financial products such as stocks are also naturally data-driven, so they are also the first industries to be transformed by the Internet.

The taxi service also belongs to this category. The product essence of a taxi service, which is to transport passengers from one location to another, can be quantified in terms of distance to its product parameters. Of course, unlike a physical product, a taxi as a service has other non-quantifiable product parameters, such as the attitude of the driver, the cleanliness of the vehicle, and so on. However, considering that the core value of a taxi is to transport passengers, the impact of other product parameters on the user experience is relatively small (except in extreme cases), so the product as a whole can be viewed as a standardized product - this is because the vehicle as a standardized tool brings standardized characteristics to this service. However, when we look at other services that do not require tools and rely primarily on people, the situation becomes different: standardization of product content becomes difficult, which in turn affects pricing and makes user decisions more difficult.

Not all products can be data-driven, and many do not have easily quantifiable parameters (e.g., cosmetics and wine), but the standardization of the product itself, brought about by industrial production capacity, makes these industries equally suited to Internet transformation. Unlike the products that are displayed by data, the degree of product standardization in these industries depends more on the strength of the brand than on whether the products are recognized by the users. Therefore, improving the brand's influence is very crucial for the Internetization of these industries - this is somewhat similar to the chain fast food industry: the stability of the product is more important than whether it tastes good or not, otherwise the brand can not be successfully established.