China's "best" business model, instead suffocated by its biggest advantage
The life and death of the "best business model"
In 2007, Han Jitao, the founder of Yibai Shopping, also served as the senior director of the PPT division at Digital China. But at Digital China, he had the opportunity to come across an independent project.
The bank wanted to set up a shopping mall system for credit card users, but without their own experience, they found China Digital. Digital China sets up the shopping system construction and operation management. When the bank sends bills to credit card users every month, it will also send a DM bill with various products on it. Users can call customer service or log in to the website to shop online according to their needs, and the bank provides installment services.
Within one year, this project contributed 700 million yuan in revenue to Digital China. This allowed Han Jitao and his team in charge of the project to see an opportunity.
Han Jitao and his team left Digital China, set up Yibai Shopping, and received 10 million yuan in financing. At the beginning, it experienced some difficulties. For example, the establishment of an online mall requires investment, and the cooperation with the bank also needs to be re-run because it is separated from Digital China.
Nonetheless, Yibai Shopping achieved 80 million sales in 2008, and Yibai Shopping claimed that its sales in 2009 were 150 million yuan, 2010 was 320 million yuan, and 2011 was 450 million yuan. Always stay at 20%.
"21st Century Business Review" commented on Yibai Shopping:
"Yibai Shopping is no different from other e-commerce business models, except that its services focus on consumers who are mainly credit card users."
This means that Yibai does not need to obtain traffic on its own, relying on the cooperation of 20 banks to directly lock 150 million credit card users. This is the advantage of resources. Relying on the powerful resources of banks, Yibai Shopping has grown rapidly in a short period of time.
However, the expansion of scale brings a sharp rise in costs.
At the beginning of Yibai Shopping, there were only more than 20 people. It developed to the later stage and expanded to more than 500 people at most. Employee compensation alone is as high as 4 million yuan per month.
The gross profit margin of Yibai Shopping has been maintained at about 20%. This is already a very high level for e-commerce platforms, but it still cannot support huge costs.
If calculated according to the annual sales of 450 million in 2011 and a gross profit margin of 20%, more than half of its annual gross profit must be paid to employees.
Since 2012, the domestic e-commerce industry has entered an overall cold winter. Many of the more well-known vertical e-commerce companies at the time had fallen. When the entire e-commerce industry was in trouble, Yibai Shopping was not spared. At the end of 2012, some suppliers started to report arrears of payment for Yibai Shopping, not less than 30 million.
When the crisis started, founder Han Jitao also admitted that even if he couldn't continue his business, he would deal with it through legal means. The implication is that although I am still working hard, I am about to die.
Finally, in June 2013, this e-commerce platform, once rated as the "Best Business Model in China", officially withdrew from the stage, also proving that the so-called "best" is just a false proposition.
Who was killed by Yibai Shopping?
Backed by 150 million credit card users from 20 banks, Yibai Shopping succeeded. But no one thought that it ultimately failed because of the bank.
Because the user resources of credit cards are always firmly in the hands of the bank, it has nothing to do with Yibai Shopping.
Every time the bank sends a DM order, after the customer places an order by phone or online mall, Yibai Shopping cannot use the customer information for the second marketing, otherwise the security deposit will be deducted.
In this process, Yibai Shopping only acts as an outsourcing service provider for the shopping system. In other words, Yibai's shopping service is targeted at banks, not credit card users. But is the customer of Yibai Shopping a bank? Obviously not, because the bank did not pay for the service.
Yibai Shopping's revenue comes from the sales generated by credit card users' orders. The bank provides users with interest-free installment payment services, and deducts 3% to 8% of the price from the rebate of the sales of goods. The rest of the revenue is distributed by Yibai Shopping and suppliers.
For example, you opened a shop and a big brother brought you customers. The customer bought 100 yuan of goods in your store, the big brother gave you 92 yuan, and then the customer paid the big brother 100 yuan in installments, and the big brother made 8 yuan. Then you hold 92 yuan and divide 80 yuan to the commodity supplier, and you make 12 yuan yourself.
Big Brother knows a lot of people, the more customers you bring, the more money you make. But these customers brought by Big Brother have nothing to do with you. If Big Brother does not bring them, they will not come. Until one day, my elder brother learned how to open a shop and opened his own. At this time, customers will never go to your store again.
Depending on your big brother to bring you customers, you make money. But now that Big Brother doesn't care about you, you can only wait to lose money because you have no other source of customers.
Yibai shopping is like this. After the banks had the experience of operating online malls, most banks started to build their own malls, and the rise of integrated e-commerce, Yibai Shopping lost its existing value.
So on the surface, Yibai Shopping was once a scene of endless beauty, but in fact, it was always in a very awkward position.
Resources can sometimes be a pit for entrepreneurship
Aiming at the business model of Yibai Shopping, Long Zhen, a senior entrepreneurial research scholar, has given such a comment.
"Yibai Shopping is a residential business model, and this model is very dangerous. This business model is actually a temporary model based on the existing form in the dynamic changes of the industrial chain and value chain, which has a very strong Timeliness."
It means that the elder brother has a group of old irons, so he wants to open a shop and let the old irons come to their own shops to buy things. But the elder brother has no experience, so I found you and asked you to drive first. The elder brother brought you to the store. You think this is a good thing, because as long as you open a business, you make money. But when your elder brother learns how to open a store, nothing will happen to you.
Starting a business requires resources, but it must be in your hands. Just like Meituan Takeaway, merchant resources, user resources, and rider resources are all in the hands of the platform, but this is because the platform has the ability to aggregate resources.
For entrepreneurship, resource advantages can be a very good aid, but if there are only resources, they will be kidnapped by resources.