Yiwu's major e-commerce sellers actively invest in supply chain development
Backed by the Yiwu small commodities distribution center, a dense network of online shops spreads all around, and the recently concluded Double 11 also gave Yiwu's domestic e-commerce a good deal of prominence. According to statistics, during "Double 11" Yiwu's total express delivery volume exceeded 3.7 million parcels, of which the number of parcels sent reached 3.5 million, up 105% year on year. Apart from the Taobao and Tmall stores working on the front lines, in fact many of Yiwu's major e-commerce sellers today can sell so much goods not by relying on C2C (consumer-to-consumer), but rather through a sales relationship between a Taobao supplier and online shops and individuals.
Recently, the reporter learned that the well-known Yiwu e-commerce enterprise "Wenbo Daily Necessities" is advancing into upstream factories in the industrial chain, and will form a closed-loop layout of the entire industrial chain from factory to warehousing, wholesale, and then after-sales. "It is getting harder and harder to do business with a Taobao store now, and profits are not high. We need to advance into higher-profit areas, directly move the factory's low-priced products onto the website platform by taking equity stakes or through cooperation, and then distribute them to Taobao online shops." A veteran Taobao supply chain merchant told the reporter that at present Yiwu's pure Taobao e-commerce advantages are nearly exhausted, and controlling the supply chain has become the new way of life for traditional large sellers.
Turning from goods sellers into factory owners
The Taobao supply chain closed loop gradually takes shape
"In fact, since the beginning of this year, we have not made promoting Double 11 our main focus. The store's Double 11 activities are more used to clear part of the previous inventory, so that later we can focus on product production. Supplying goods to 'sellers' is one of the key tasks we will do next." Song Guanghui, chairman of Yiwu Wenbo Daily Necessities, who is currently focusing on transformation, described the company's future development direction in this way. Wenbo Daily Necessities is a "2012 Global Top Ten Online Goods Brand" and is called the "king of compression bags" by the industry.
Coincidentally, traditional online goods supply chain platforms such as Huiqisi, Qianyou and Haiyang have quietly taken shape, and are no longer online stores in the traditional sense, but instead combine the multiple identities of factory and distribution platform service provider. In the past, when a batch of Yiwu sellers' online brands fell, another batch would immediately appear. Because they lacked the strong back end of traditional enterprises and long-accumulated channels as support, online brands appeared especially fragile. Coupled with the rapid development of online business, a mentality of seeking quick success and instant benefits also planted hidden dangers for e-commerce in the supply chain.
During the interviews, it was learned that from first venturing online, to winning with a single product and creating a hit, to running and promoting a brand with multiple products and multiple stores, and now to building supply chain services and e-commerce parks, today's Wenbo Daily Necessities has completed its transformation from an online brand to a physical entity. "We set up our own factory very early. Besides the Taobao and Tmall stores we operate, we currently lean more toward the role of supplier. This is also a strategic shift for Wenbo Daily Necessities." Song Guanghui said that there are countless small and medium-sized sellers on Tmall and Taobao. Although they have good e-commerce operation capabilities, they may not all be able to obtain good goods and sources of supply, and this transformation of Wenbo Daily Necessities also hopes to provide quality branded goods to small and medium-sized sellers in the future.
"More than 90% of Yiwu online store merchants with annual sales of over 10 million are platform merchants. They are both platform distributors and shareholders of factories, and some with strong capabilities directly set up factories." said Liu Wengao, vice president of the Zhejiang Online Merchants Association and executive president of the Yiwu Jiangdong E-commerce Association.
Leaning toward the back end of the supply chain to find a new way of life
Taobao suppliers focus on "practicing internal skills"
"In the past we would order from manufacturers and then distribute to small Taobao online shops, with a profit margin of no more than 5%. Once there was unsold stock or inventory, the money earned would be tied up in the goods, and with the slightest carelessness we would lose money." Manager Li, head of a certain Taobao online goods distribution platform, told the reporter that a transformation in the e-commerce field like that of Wenbo Daily Necessities is a choice forced by industrial profits and also a new way of surviving.
This statement was confirmed by Shanghai Ximu Apparel Co., Ltd. This enterprise, which has just moved into a certain e-commerce park in Yiwu not long ago, mainly deals in three categories: clothing, shoes and cross-stitch, and its sales volume in the single item of leggings are especially impressive. "The annual sales volume of leggings on Taobao is about 6 million pairs, and our order volume is about 1.6 million pairs. After promotion through the distribution platform, the order proportion will increase substantially." Shan Shilong, chairman of Shanghai Ximu Apparel Co., Ltd., spoke bluntly about the sales data and believed that Ximu Apparel's e-commerce strategy in Yiwu is to come for factories. In his view, Yiwu e-commerce should focus on doing what it is good at. In the early stage of building a distribution platform, it can develop some categories, and after making the products refined, then expand to more goods. This is somewhat similar to Amazon and Dangdang: transforming from an online bookstore into a comprehensive website. It is understood that at present Shanghai Ximu Apparel Co., Ltd.'s distribution platform has more than 600 categories online and more than 3,700 distributors, and is expected to increase to 10,000 distributors by the end of this year. After moving into Yiwu, controlling supply sources and sharing the favorable environment for e-commerce entrepreneurship, Ximu Apparel has also become smoother and smoother, and bigger and bigger.
Fu Jianxin, deputy general manager of Zhenai Online Merchants Smart Park, believes that the transformation of enterprises means that the focus of e-commerce attention shifts from the front end of sales to the back-end supply chain. Whether they are traditional enterprises or online brand merchants, online wholesale and channel distribution have become new powerful tools for e-commerce development. He told the reporter that Zhenai Online Merchants started out doing supply chain services. The experience he has drawn is that while enterprises lay out toward the upstream of the industrial chain, they must also practice internal skills well on Yiwu's large platform, develop a reasonable distribution system, control the rhythm of order-based production of products well, highlight the advantages of their own distribution system, and by all means avoid blindly following trends in investment.
In Yiwu, where China's largest small commodities market is located, the e-commerce transaction volume in 2013 reached 85.6 billion yuan. Data released by the Yiwu Administration for Industry and Commerce show that in 2013 the transaction volume of China Small Commodity City reached 68.302 billion yuan, and Yiwu's online transactions outpaced physical transactions in numerical terms for the first time.
Just 3 months ago, a group of people from Alibaba's "Living Water Plan" visited Yiwu for exchanges, and researched online merchants, e-commerce service providers, e-commerce parks, the Yiwu E-commerce Office, Qingyanliu Taobao Village and so on. Wang Jinjie, lecturer and PhD at the Institute of Economics of the School of Economics at Nankai University and a collaborating scholar of Alibaba's "Living Water Plan", believed during a wonderful sharing session that Yiwu has become the leader of county-level e-commerce not only because Yiwu "went electric" relatively early, but in fact more because of Yiwu e-commerce's continuous innovation, transformation and upgrading. He said that the gradual transformation of enterprise e-commerce from traditional e-commerce to "e-commerce + service provider" may become a new driving force for e-commerce development.