How Long Can "Small And Beautiful" Vip.Com Go On The Low Cost Road?

According to vip.com figures, more than 90% of vip.com orders are contributed by repeat customers.

"Why is vip.com able to make good profits at the same time of rapid growth in sales? It can be said that the profitability of all business partners is more than that of vip.com.

This does not need to spend a lot of advertising fees to pull new users, because the old customers are constantly returning to bring us huge sales revenue, so our cost rate is very low.

Vip.com CFO Yang Donghao explains.

In order to get new users, many e-commerce enterprises have taken turns in price war.

But all these need to be invested in real gold and silver.

Prior to a positive pformation of the Internet, the traditional business executives admitted that enterprises through low price promotion, although the scale of sales has been improved, but some users are not attracted to target customers.

In other words, many of the low price consumers are attracted by short-term users, and the rate of repeat purchase is low.

The user stickiness of vip.com has a lot to do with its time sale mode.

Vip.com regularly has new discount brands online every day, which is very suitable for women shopping.

Maybe there are no hard buying needs, but the novelty mentality will regularly look at the cheap stuff, and many times it is irrational buying.

The low cost of vip.com is not only reflected in the acquisition of users, but also in the expansion of logistics. Vip.com takes the small investment and quick response mode of holding, strategic cooperation, etc.

Yang Donghao introduced that in the limited time sale mode, the goods in vip.com warehouse will revolve every 5 days in theory.

Vip.com takes the form of warehousing, parcel delivery through the trunk line and landing match mode, that is, first order all orders from a region or a city to the local truck through third party trucks, and then deliver it to the local express delivery company.

The ratio of trunk line to floor ratio is low and the coverage is wide.

In the future, vip.com will gradually build its own distribution system through the participation, holding or self built mode of the landing company.

Yang Donghao said that at the beginning of the vip.com, there was no self built distribution system because the shortage of orders would result in idle personnel and equipment, resulting in losses. Now vip.com has a certain scale effect, so it is time to build logistics itself.

Obtain

Cost and other factors caused vip.com's operating cost to be lower than peers.

Vip.com reported that its cost in the second quarter was $623 million 600 thousand, an increase of 132% over the previous year, and the cost was $186 million 900 thousand, an increase of 141.7% compared with the same period last year, while the revenue of 829 million 400 thousand US dollars increased by 136.1% over the same period last year.

The cost of Jingdong in the two quarter was 25 billion 457 million yuan, and its revenue was 28 billion 600 million yuan.

Contrast can be seen that the cost of vip.com's revenue in the proportion of less than peers.

Never give up mergers and acquisitions

However, vip.com is not without worries.

Vip.com's operating profit in the two quarter was $23 million 700 thousand, down 21.5%, which is the first time that vip.com has been down for the first time after 7 consecutive quarters of earnings.

In this regard, Yang Donghao said that the decline in operating profits is mainly in February this year, the acquisition of Le bee network is still at a loss.

However, Shen Ya, chairman of vip.com, confirmed that in the teleconference, Le bee has brought active customers to the company as a whole. At the same time, vip.com will continue to conduct targeted acquisition cautiously.

It is reported that at present, vip.com has a special acquisition team, looking for objects to buy.

"We must have a strategic sense of acquisition strategy, which is different from financial investors."

Yang Donghao explained that vip.com acquisition is to help the main business, either one of the main categories, or to improve customer service.

The music bee belongs to the former, and the logistics company belongs to the latter.

In addition, vip.com is talking about software companies, especially those companies that can improve their software capabilities or system capabilities in logistics.