Analysis Of WAL-MART Electric Business'S "Lost Track"

When Raymond Bracy, WAL-MART's senior vice president of corporate affairs in China, talked about this year's "98 China Fair", China will surely become the biggest market for WAL-MART in addition to the largest market outside the United States, and may rival the United States. WAL-MART is facing huge challenges from Alibaba, Jingdong and other Chinese local electricity providers.

Data from the second quarter of 2014 show that Alibaba controls more than half of China's B2C market, compared with 1 of WAL-MART's two year old e-commerce platform, which accounted for 1.4% of the market share. At the same time, due to the strong attack from suning.com and Gome online, by the end of this year, the ranking of the 1 online trading share is likely to continue to change.

All of these are putting great pressure on the world's largest offline retailer. WAL-MART can't find the effective way to control costs and gain profits in the era of e-commerce. In addition to Amazon in the US market, in the Chinese market, WAL-MART's acquisition of e-commerce platform is also facing all kinds of adverse rumors.

A typical problem is that although WAL-MART has held 1 shop, what is the relationship between WAL-MART and shop 1? Is it only a strategic investment level, or will it take advantage of its supply chain advantages and global bargaining power to continuously share resources with shop No. 1, and ultimately achieve synergetic value? For WAL-MART, 1 shop is more likely to reach the Internet through the Internet. Chinese consumers' Pathfinder or experimenter are still a real part of their future O2O strategy? Will WAL-MART launch its own War-mart.com e-commerce platform in China? Everything seems to have many variables.

　　 Difficulty in coordination

According to Bo Rui's disclosure, WAL-MART currently holds 51% of the 1 store. However, the extent to which this holding status can make WAL-MART and No. 1 store sharing on the supply chain is still a problem.

In September 19th, the "China business newspaper" reporter obtained from the No. 1 store, "at present, more cooperation with WAL-MART in commodity procurement and logistics. On the one hand, shop No. 1 has begun to use WAL-MART's direct picking products. At present, the imported goods directly from shop 1 already have nearly 400 SKU, and one part is directly picked up by WAL-MART, such as WAL-MART exclusive ASDA and 1 shop cooperation, selling its brand products in shop 1.

"On the other hand, shop No. 1 also sells products of WAL-MART's own brand, such as WAL-MART's own brand, now sold in shop No. 1, including Mainstays/ Ming Ting, Great Value/ Hui Yi, Select Edition AI Yi, and selected more than 400 SKU of three major categories."

However, compared with the millions of SKU sold by WAL-MART, hundreds of SKU cooperation is too little. From WAL-MART internal staff also told reporters, "at present WAL-MART and shop No. 1, in the supply chain has synergy, but very small part."

What is the reason behind the difficulty of supply chain collaboration? Is the running in between online and offline of the two sides not in place, or is the difference between the two in the positioning of consumers triggering different layouts on the SKU? Or are there still reservations between the two sides?

Earlier this year (6. 18), when the reporter interviewed Cheng Junyi, vice president of shop 1, he told reporters, "1 shop is launching a strategy of three years, namely, for" hot mom "," beauty "most needed products for category layout, such as beauty will cover eating, drinking, beauty, beauty care, popular department stores, fashion electronics and so on to improve the quality of life, spicy mother side. It will cover maternity and baby products, home furnishings, and small household appliances. First of all, we should do all kinds of products in these areas. Secondly, we should highlight the quality of these products.

Cheng Junyi told reporters at the same time, the 1 shop in the overall layout of the category for the "hot Ma", "beauty", and its important background can not be ignored, that is, "1 shops are mainly female customers, female customers account for more than 2/3, while in some traditional 3C electricity providers, female customers generally do not exceed 40%, emphasizing that the layout of female products is more than their inherent consumption. Crowd related. "

At the same time, these key consumer groups are mainly concentrated in key cities, with high and middle income white-collar workers. They have better consumption power and higher demand for commodity quality.

In contrast, WAL-MART's consumer positioning is not simply the female consumers such as "hot mother" and "beauty". Most of the people who visit WAL-MART are high-income men. As a retailer with the most complete line, WAL-MART's online ambition is certainly not limited to selling the products of "spicy mother" and "beauty". Perhaps because of this, there are differences in positioning between the two.

Let's take a look at the location of shops. Data show that as of January 2012, WAL-MART has opened 381 stores in China, of which 80% are in the 2~4 line city. At present, WAL-MART has more than 400 stores in China, but the distribution pattern of this city has not changed much. Obviously, there are differences between the 2~4 line cities and the female consumption groups in the big city of No. 1.

The above differences make it difficult to fully realize the close loop between WAL-MART and shop 1 on O2O. Therefore, Mr Bo said in public, "our electricity supplier in the United States is also very strong, called WAL-MART.Com. Many people think that it is the biggest electric brand besides Amazon. Now WAL-MART.Com has not opened online shop in China, but we will consider it in the future. In the future, online and offline integration is a very advantageous means. "

For shop No. 1, Bo Rui's attitude is, "No. 1 shop has 51% of our shares, we are a major shareholder. In addition, there are other online retailers who are our partners. I believe this kind of partners can connect the business of shop No. 1, which will help WAL-MART's diversified development mode. I believe there are good business opportunities here. We will be very careful to develop.

　　 China Challenge

Obviously, No. 1 shop is hard to fully realize WAL-MART's ideal in China, but WAL-MART wants to lay its own e-commerce platform in China alone, but it also faces enormous challenges.

For a long time, WAL-MART's biggest strength in the retail market lies in its global sourcing capability and fine supply chain management system. Strong supply chain management advantages and global procurement bargaining power make WAL-MART competitive enough in product category and price. Of course, this is once the general lack of capability of domestic e-commerce enterprises.

However, with the gradual maturity of Gome and Suning in the supply chain, Jingdong's strong supply chain in the process of listing, WAL-MART's supply chain advantage in China is gradually weakening. At the same time, the expansion of WAL-MART stores which are not strong enough, and the national distribution system that has not yet been established in China is becoming the weakness of WAL-MART.

For example, Suning and Gome currently have about 1600 stores, both of which are accelerating the layout of the two or three tier cities, while WAL-MART currently has only four hundred or five hundred stores in China. At the same time, corresponding to the layout of China's urban development, Gome and Suning's store adjustment plan has been completed or almost come to an end, while the layout of WAL-MART's stores has just begun to readjust.

Data show that only in 3 and April this year, WAL-MART closed 7 stores. WAL-MART announced last year that it would close 25 stores in China by the end of 2015. At the same time, WAL-MART plans to invest 600 million yuan in China to build the first shopping center, the proposed shopping center has 3~4. Obviously, this is the layout adjustment of WAL-MART under the offline store.

It is worth noting that O2O In the era, the layout of offline stores plays a vital role. The typical role is the experience of stores, especially stores can play an important role in inventory and distribution in the supply chain system.

And China 2/3 of the population in the United States lives in the range of 5 miles (8 kilometers) around WAL-MART stores. Trucks are transported across the country every day to replenish their stores. This mode will greatly reduce the cost of distribution. The staff will push the shopping cart directly, remove the goods from the shelves of WAL-MART chain stores, and then send them to millions of Americans.

However, in China, the long-span geographical distance and its four hundred or five hundred stores are hard to imagine that WAL-MART can realize its layout in the US. Although WAL-MART China currently supports store delivery, people who have experienced it know that this delivery is not only troublesome, but also consumers have to pay for themselves, which is far from the service effectiveness of Chinese competitors' free delivery, one day Sanda.

　　 Wal-Mart Whether we can work hard on the key investment of China's e-commerce platform is worth paying attention to. As we all know, in terms of e-commerce platform, IT system and logistics system investment is huge, but in the past two years, WAL-MART's investment in this field is not significant, and no more investment plan for shop No. 1 has been seen.

Us open data show that WAL-MART's investment in e-commerce in 2013 was $430 million if the budget was not too early in 2013, but how much of the apportionment to China's huge market is unknown. However, Mr Bo said, "we used to underinvest in logistics and supply chain, and now we are investing in this area."

Information from shop No. 1 also shows that "WAL-MART is the largest strategic partner of the 1 store. The 1 shop is the core solution of WAL-MART in China's e-commerce. WAL-MART and 1 stores are developing future plans. The two sides will cooperate in more areas, such as supplier resources, supply chain, e-commerce technology, O2O and so on."