Why do e-commerce giants have to enter the offline stores that have closed down?

According to the World Apparel and Footwear Network, recently, Mary Meeker, a Wall Street securities analyst known as the “Queen of the Internet”, mentioned in the “2017 Internet Queen’s Report” that the number of offline retail stores has broken. In the past 20 years, the number of e-commerce giants such as Amazon has set up offline stores, and the number is increasing.

The situation in China is the same, although the current penetration rate of Chinese e-commerce in the world's major markets is the fastest, accounting for 15% of the total retail sales of social goods in the country, but including e-commerce giants such as Alibaba, Jingdong and Xiaomi in the retail business. The craze has laid out offline retail stores.

The e-commerce giants on the fun line have turned their eyes to the offline so that many people can't understand it. Isn't the offline rent expensive, poor service, and low profit? What are they looking at?

After drying down the bookstore, Amazon also does physical stores.

Recently, an article on Wall Street mentioned that after a period of trial operation, Amazon officially opened two physical grocery stores in Seattle, USA, while Amazon opened a new physical bookstore in New York. At present, Amazon has 7 physical bookstores, and plans to open another 6 in the future.

Although not very successful in China, Amazon is the originator of e-commerce in the world. Last year, Amazon's sales reached $136 billion, according to research firm Slice Intelligence, which accounted for 43% of 2016 US online sales. Thanks to continued positive performance, in April this year, Amazon's share price once broke the $900 mark and set a new record, making Amazon CEO Jeff Bezos the second richest person in the world.

In the case that the retail industry has turned to the line, Amazon has begun to plough down the line. What is the reason?

An important piece of data is that offline retailing seems to be pressing online, but in terms of the ratio, it is another situation. According to eMarketer data, global retail sales last year were $22 trillion, while e-commerce Retail sales accounted for only $1.9 trillion, less than 10%. Only a country with a highly developed e-commerce sector like China accounted for 15%. It can be seen that offline retail still has huge business opportunities.

Jingdong's “Million Convenience Store Program”

In the case of online competition, the Internet demographic dividend is gradually diluted, Jingdong also put its eyes on the line, and even zoomed in.

On April 10, Jingdong Group CEO Liu Qiangdong announced that the “Millions Jingdong Convenience Store Program” was officially released. In the next five years, Jingdong will open more than 1 million convenience stores nationwide. Half of them are in rural areas and in every village. This is the third offline cooperation project that Jingdong plans to launch after 10,000 Jingdong home appliance stores and 5,000 “mother and baby experience stores”.

Jingdong's offline layout is also well understood from the current situation of China's Internet development. Wang Xing, CEO of the US Mission, said: "China's Internet users have accounted for more than half of the total population, and then relying on the increase in the number of Internet users to drive the market. Reality.” The competition in the second half of the Internet has shifted from the demographic dividend to the user value drive. In the future, it will be more popular to provide users with more personalized and self-service. This is also the logic of Jingdong. The community convenience store has a small granularity and is a service terminal closer to the user's life. Using a community convenience store to manage user relationships and sticking users with services will become the key to improving the competitiveness of the enterprise and the transformation of the Internet. This will be the big trend.

What should be seen is that community convenience stores, specialty stores and experience stores also have the effect of online and offline linkage, such as consumers shopping in community convenience stores, can enjoy the preferential prices of online marketing activities, direct purchase and pickup, such as satisfying In the radiation range of 1 kilometer in the convenience store, it is also possible to place orders on the platform, and the goods are purchased by the convenience store.

Future retail competition, whether online or offline, will be a competition for services.

Xiaomi's "Great Leap Forward": 1,000 stores in 3 years

Xiaomi is another example. As the most successful Internet brand in online marketing, Xiaomi's expansion from online to offline can be used to observe the retail approach of e-commerce companies from another dimension.

On April 19th, Xiaomi held a new product launch conference. Lei Jun announced at the press conference that the target of opening 1,000 Xiaomi homes within five years was invalidated. It was changed to: 1,000 physical stores opened online within 3 years! Xiaomi, why is it so confident? Under the tide of physical closure, why does Xiaomi want to open a retail store?

Xiaomi’s self-confidence is not without roots. At the Yabuli Forum in February this year, Xiaomi Chairman Lei Jun said, “I think Xiaomi’s business model should not be e-commerce, it should be new retail.” Lei Jun’s new retail, starting from the layout upgrade offline retail store, from 2016 Since February, Xiaomi has begun to speed up the distribution of offline retail business, and all of them are self-operated by Xiaomi. By the end of 2016, 51 have been opened. Among these self-operated stores, there are already seven or eight stores with a monthly turnover of more than 10 million. Xiaomi's home is already the world's second-highest “e-commerce e-commerce” (the first is Apple). .

The reason for Xiaomi's choice of line is also simple. Xiaomi has indeed created a brand-new business model, using the fast and low-cost marketing of the Internet, and has won a lot of fans. However, the threshold of Internet marketing was low, and it was quickly copied by friends. After two or three years, everyone will be there. There is no sense of freshness. The traditional channels and offline retail stores are not so easy at this time. Lei Jun said, "An indisputable fact is that even if it accounts for 50% of the mobile phone market, it only accounts for 4% of the entire market. Today, traditional retail and traditional channels are still 80% of the market, which is the biggest encounter with Xiaomi. The problem is how to break through the barriers of business models."

Ma Yun's new retail

In 2016, Ma Yun proposed five new trends in the future at the Yunqi Conference in Hangzhou: new retail, new manufacturing, new finance, new technologies and new energy, and said that these five new developments in the future will profoundly affect China and the world. And everyone in the future. Regarding the new retail in the first place, Ma Yun’s point of view is that the era of pure e-commerce has passed, and there is no such thing as e-commerce in the next ten or twenty years. Only the new retail is said, that is, online and offline. Logistics must be combined to create a true new retail.

The new retail concept has just come out, and has been ridiculed by many manufacturing giants, but a careful analysis of China's current retail environment and business status, you will find that several trends are already very obvious, one is online and offline tend to unify Specialization; second, large-scale retail entities may face integration and restructuring; third, experiential consumption and personalized services are integrated into consumer life; fourth, enterprises are more intelligent and technological.

And if you care about the development of Alibaba, you should notice that Ma Yun said so, and even more.