Edge Deficit Edge Earn: Electricity Supplier Huge Profit To The Water Somewhat?

In June 12th, it was reported that the largest Internet Co Tencent in China had occupied the top five of the B2C website.

Reach the intention of cooperation.

The Tencent, which has a weak impact on the business field, will use Dangdang to operate new books and electronic sales websites for baby products.

With sunning, Gome, Jingdong, Alibaba and other electricity giants continue to overweight.

The pattern gradually shows the trend of centralization.

But the big business tycoons announced huge sums of money at the beginning of the price war, but their implementation is not clear enough.

Who is the ultimate buyer in this massive price war?

What is the essence of price war?

Dangdang, which has worked with Gome and Yi Tao, has found a new partner.

According to industry sources, Tencent, the main social networking and entertainment company, has reached the cooperation intention with the eligibility electricity supplier Dangdang net in books and baby products.

Cooperation intentions will be announced this week.

At this point, the competition of electronic business enterprises has officially entered the battle of seven powers in the Warring States period because of the high-profile Tencent business.

Lu Zhenwang, an e-commerce observer, said earlier in micro-blog that the market share of the top five B2C electricity providers accounted for more than 8. "The intensive trend of electricity providers is obvious and competition is fierce."

The electricity supplier has not stopped since April.

Several household appliance giants claim that the total amount invested to collect customers and reduce profits is nearly 7 billion yuan.

But in the industry's so-called "largest electricity price war in history" behind the real situation is that the various business enterprises announced the implementation of investment funds have not been announced.

Wang Ran, who has worked in a household appliance giant for three years, has revealed to reporters that these investments are mostly based on the names of profit making resources, rather than the investment of real gold and silver that the outside world wants.

He told reporters that these hundreds of millions of profits, mostly "beat their heads to think out, in order to sounded more than others."

Han Depeng, general manager of Gome online shopping mall, told reporters that the huge amount of profit in the price war is actually a gimmick.

At the same time, these huge amounts of profits do not mean that the electric business enterprises are selling at a loss.

Wang Ran said that commodity prices are indeed cheap, but that does not mean that the electricity providers do not earn money.

He gave an example to reporters, such as hoarding 10 billion of the goods, which can normally sell 15 billion.

Now he sells the price to 120 billion, that is to give up 3 billion.

"The most important thing is to speed up capital flow and save interest costs."

Guo Guo, who has resigned from the electricity supplier business, told reporters.

He disclosed that the so-called "letting profits" is not how much money they put in to invest, it is just a process to reduce profits, speed up capital flow and earn market share.

In fact, the electricity supplier collectively claims that the "whole network reserve price" does not have a clear measurement system.

Bundling small and medium manufacturers

Obviously, the electric business enterprise has put forward a huge amount.

But they are not the only buyers of price wars.

In this price war, in addition to the fight between the electricity supplier, there is also a game between the electricity supplier and the manufacturer.

Although many manufacturers who are responsible for the Dalian lock or e-commerce channel are very sensitive to the purchasing price of electricity suppliers, it is not easy to answer, but it is an indisputable fact that big businesses will shift some of their costs to manufacturers.

As the price war becomes more and more intense, the cost of shifting is higher and higher.

Guo told reporters that at present, the price of purchasing power is very low.

At present, the purchase price of household appliances 3C is at least three to five percentage points lower than the previous average.

According to the reporter, the gross margin of household appliances is only five to six percentage points.

In fact, the practice of bundling manufacturers has been reappearing in the electricity price war.

According to the reporter's understanding, at present, in the game between channel and appliance manufacturers, if the market share of the enterprises in the Gome and Suning chain accounts for more than 20%, the right to speak will be handed over to each other.

The manufacturers of first-line household appliances are more powerful because of the diversification of channels, so they can pay less or no price war.

And those SMEs who rely on e-commerce channels or have no self built channels are still bundled with price war chariots by electric business enterprises.

In the game with manufacturers,

It is the killer of electricity providers to implement low-cost strategy.

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Taking Jingdong as an example, Wang Ran disclosed that Jingdong's digital 3C products would be underwritten before the sale of Digital China's largest IT distributor, digital China, which could basically monopolize a certain model and purchase at least 5000 units per purchase.

After the Jingdong has grown up, it already has the right to speak directly with the manufacturing enterprises.

"Because they are underwritten, they are all packaged prices, so that manufacturers will not offend other physical stores, so there will be no conflict."

He said.

According to his disclosure, the products of many manufacturers underwritten by Jingdong are not seen elsewhere.

This also avoids the risk of big electricity supplier parity.

Suning Gome has made the most of its underwriting advantages. Han Depeng told reporters that Gome could make one hundred thousand orders.

At the same time, the cost shifting of electricity price war may also affect upstream parts and components enterprises.

Industry observer Hong Shibin expressed concern about the price war between the electricity suppliers.

He told reporters that the price war may eventually lead manufacturers squeezed by the channel to shift the cost pressure to the upstream, thereby "destroying the ecological balance of the industrial chain".

Losing money while losing money

Although every appliance manufacturer claims that they are not short of money, the day of the electricity supplier is really bad now. According to the announcement issued by various enterprises, the business enterprises generally suffer heavy losses.

In 2011, Gome online store lost nearly 400 million of its total losses with the company. Dangdang began a loss of 300 million yuan in 9 months since July last year. Suning appliances reported its first negative growth in the first quarter of 2012 and net profit decreased by 15.3% in the first quarter of 2012. According to the first Jingdong earnings report, its net profit fell 1 billion last year, and its profit forecast is far from 2015.

And the price war is heating up, resulting in the increasing cost of electricity providers.

Take Dangdang as an example, its proportion in the first quarter of this year is 85.8%, compared with 80.5% last year.

Guo fingers fingers at the cost of operating costs for journalists, advertising, manpower, commodities, high and low sales, warehousing, storage and logistics......

"We all need to burn money."

He said that in the current price war, various advertising and logistics providers were investing heavily, "no way, no investment."

When every business enterprise is losing money to scale, it probably thinks that it can last until the end.

But how to balance the contradiction between higher and higher operating costs and lower and lower commodity prices has become a life and death problem facing the electric business enterprises.

Wang Ran said that the development of 3C from home appliances with low gross profit margin to the category of general merchandise with high gross profit margin is one of the ways of the electricity supplier.

"The biggest root is still in logistics warehousing," he said. "Look at the four largest Asian warehouses that Jingdong is going to build, and each warehouse is two billion.

However, investors have not invested money in Jingdong, and his capital gap is huge.

With the warming of the price war, the future electricity supplier pattern will gradually develop from oligopoly to centralization.

"35 years later, the age of oligopoly."

Electricity supplier observers Li Chengdong said.

However, in the past 35 years, the business giants will face not only the harsh fighting in the electricity supplier circle.

Along with Shun Feng's honours ceremony and so on electricity supplier's on-line, their once cooperation partner logistics enterprise, must cross the boundary to divide a cup of soup.