Footwear Electricity Supplier Losses, The Use Of Its Own Resources To Create A Brand Out Of Trouble

In the first half of this year, Dangdang, which is located in book sales, officially named its own brand, which has been launched in succession, as "Dangdang superior products". Jingdong mall also set up its own brand department. Suning.com also revealed that it will launch its own brand clothing products.

Imitate the traditional retail giants to set foot in their own brands, can the electric business enterprises get out of the loss puzzle?

Is the road of private brand rational regression or blindly following the trend?

Raising the overall profit margin

Moderator: more and more e-commerce platforms have targeted their own brands. How do you view this phenomenon?

Du Zhanghui: it is the main reason why electric providers have launched their own brands by launching their own brands to enhance the product premium capability and thereby improving the overall profit margin.

Some e-commerce platforms or generation operators have accumulated experience and popularity in long-term network operation, but they lack profits. They can build their own brands with their own resources, improve their profits, and avoid dressing for others.

In particular, some generation of operation enterprises often face the situation that the brand is reclaimed by the brand when they grow on the Internet. After a year of hard work, they are "helping others to raise children", and cultivating their own brands is conducive to the continuity of the business operation.

Dong Xinda: after price war and other irrational market competition, the cost of electricity supplier operation remains high, and generally the low profit margin is trapped. Most of the electricity providers are losing money.

And the operation of independent brands, the platform has pricing power, relatively high gross profit margin, this innovative business mode of electric business is worth trying.

But new product development and brand building still need a lot of capital investment. Besides, the platform also has to bear operational risks, which are a test to the electricity supplier's capital chain and retail capacity.

Quality risk is difficult to control.

Moderator: most of the e-commerce platform self built brand is using the "OEM" processing mode. Under this mode, what risks can self build brand face? How to control the production process well?

Wang Dongzhu: unlike the B2C platform, which focuses on "selling", the independent brand emphasizes the operation capability of "product side".

To build a private brand requires not only a lot of manpower and material resources, but also links to the design, production, packaging and marketing of the upstream and downstream.

"OEM" production, due to the limited involvement of the electricity supplier in the production process, it is difficult to control the product style, product category, design and quality.

First of all, from the design point of view, the lack of a strong design team in e-commerce enterprises, products are often difficult to achieve differentiation; secondly, because the initial production is small, and the bargaining power of the manufacturers and upstream suppliers is not as good as some traditional brands; thirdly, the management of the supply chain is more difficult, which will exacerbate the inventory risk of the platform.

In addition, although the establishment of its own brand, brand recognition is difficult to form in the short term, from brand to "brand" still has a gap.

Dong Xinda: because online consumers are more concerned about quality and shopping experience, the brand of e-commerce should focus on the quality control of the entire production process.

Although the mode of OEM is used, the electronic business platform still needs a special team to dock with the OEM enterprises, deepen their understanding of the product's control cognition, and strengthen the specific details in every link.

In product design, we should formulate relevant design principles and start from the needs of consumers. We also need to do well in the production monitoring and inspection, emphasize the meticulous management of the production process, and at the same time, do well in tracking and feedback measures to ensure the quality of the products.

"Cooperation" instead of "self built"

Moderator: in the long run, e-commerce platform self built brand, due to lack of professional talents in the supply chain, quality control, and so on, how can we reduce this risk as much as possible?

Wang Dongzhu: the platform self built brand is to avoid price war, realize differentiation, and then enhance profits.

In fact, in order to achieve these goals, it is not necessary to build brands by ourselves, cooperate with existing brands, and jointly launch differentiated products, and also realize the pformation from "price war" to "value war".

For example, last year, Tao shoe net tried to work together with XTEP to develop network dedicated contributions.

A month's sales exceeded 4 million yuan, and the network sales price reached 379 yuan a pair, which once exceeded the price of new products under XTEP online, and became an innovative cooperation mode between e-commerce platform and brand business.

Du Zhanghui: how to locate the market, whether consumers can be recognized and how to guarantee the capital chain will become the problem that the electricity supplier enterprises are facing.

From the present point of view, in addition to finding OEM manufacturers and building brand by OEM, e-commerce enterprises can also try some "labor-saving" ways, such as acquiring two or three line brands with a certain reputation, or developing joint brands by way of cooperation with traditional enterprises.

In this way, while reducing risks, we can also realize the complementary and win-win relationship between the traditional enterprises' ability to grasp the supply chain and the marketing and communication capabilities of the electricity suppliers.

Fight a protracted war

Relevant data show that the electricity supplier has its own

The gross profit margin can reach 30% - 60%, and the gross margin of its own shoe brands also has 55% - 60%, while last year Dangdang net gross profit margin is 13.8%, and Jingdong mall has only 5% gross margin.

By contrast, the profits of private brands can even reach 10 times the profits of the agent brand.

However, behind the seemingly beautiful figures, there are hidden risks.

In addition to a large amount of capital investment, product design, quality control and supply chain management will become the problems faced by private brands.

In the first half of this year, Dangdang launched its own brand "Dangdang superior products" and was caught in the "plagiarizing door".

The establishment of a brand to the recognition of consumers requires a long-term precipitation process.

There is indeed a strategic need to build a brand by an electric business enterprise. However, we must make long-term plans, prepare for a protracted war, and rush into the market just for the sake of immediate high profits.