The Competition Between Online Store and Retail Store Will Promote the Market Development
In the afternoon of January 31st 2015, a piece of news with hundreds of words exploded the financial section of numerous major websites. Owing to the disappointing performance and continuous confrontation between Alibaba and SAIC (State Administration for Industry & Commerce) as well as five American law firms’announcement of investigating Alibaba“fake”issue, Alibaba stocks dropped 4.36% on 28th and slumped 8.78% on 29th . Accordingly, Alibaba market value evaporated nearly $ 330 billion (about¥2,060 billion ) within two days. Based on the latest statistics of “Bloomberg Billionaires Index”, by US stocks closed on 29th January, Ma Yun’s net worth is $ 263 billion after sharply dropping $ 14 billion. Wang, Jianlin’s net worth is $ 267 billion, which is $ 4 billion more than Ma Yun’s. With the slight advantage, Wang, Jianlin returned to be the richest man in mainland of China.
This news not help but think of the bet between Wang Jianlin and Ma Yun about the market share of online shops V.S entity shops in a CCTV show 2013 with the topic as People of Economy Made Known Conference.
Someone commented that online stores’ success depend on the “屌丝(diäo sī) economy”,a buzzwords,which mean to put most of the focusing on developing the economy in Online Market. Express practitioners with low labor cost are regarded as the natural soil for the development of Chinese online shops. According to USA survey, Express industry actually is stagnant, so online shops are not very developed. Generally, American Express practitioners drive the motor vehicles to deliver goods. They made an appointment with the consignees about the time and place. If missing the appointment, the consignees have to wait for next delivery cycle. Therefore, the consumer’satisfaction is not very high.
High labor cost and transportation cost are being the reasons to restrict development of online store. In China, couriers without social security drive the electric motor cars to deliver goods. The lowest delivery cost promotes online shops’development. However, with the increasing economy, social development and average education in a high level, the natural environment will increase the transportation cost so as to lose the natural soil. It is an inevitable development rule as well as the natural shortcoming.
However, such kind of fragile cargos like wines, during the transportation, excessive package will raise the cost. Moreover, compared with the entity shops, online shops lack wines’taste experience on the spot. With the better of wines market and improvement of consumers’cognition, wines’consumption trends to be the FMCG (Fast Moving Consumer Goods). Currently, compared with multi sales channels of entity shops, online shops have got certain competitive advantage by selling goods at vertical low price to attract consumers’attention. However, High transportation cost and the shortcoming of no taste experience are naturally generated and will be inevitable enlarged step by step. The sales of entity shops is just limited by its business mode and store rent. It is believed that the mentioned two limits are changeable.
Haiwei Liquor Trading Market Limited Company, which headquarters is located in Shenzhen, has changed traditional business mode and adopts the management of membership system. Haiwei has established a platform for the direct transaction between domestic direct distributors and foreign supplier members (wineries). There is only one direct distributor in each county or district all over China. The consumers could enjoy or purchase wines on the spot. The wines are shipped from international wineries to the temperature controlled warehouse of Haiwei liquor Trading Market located in China free trade zone and then are distributed to direct distributors for promotion and marketing. Haiwei has discarded traditional multi agencies, deals with international business in the least circulation channels and ensures the wines available to consumers in the fastest way. The decreased channel cost directly caused the dropped price. With the competitive price increased, for most of the same products, their prices in entity shops have been less than them in the online shops.
The entity direct distributors are not required to possess stores but legal business place. Moreover, there is no other requirement, such as decoration, distribution volume and etc. In this way, direct distributors have got more possibilities and more freedom to put in lower cost. Consumers have enjoyed the great benefits and direct distributors have got profits. The food safety has been guaranteed. Wines would be developing in China market for a long-lasting time by establishing and maintaining the brands.
Haiwei Liquor Trading Market, the forgoer of liquors industry, will guide the development of whole market in the direction of innovative business mode. The problem of entity shops lies in the organization system, which could be solved. However, the logistics shortcoming of online shops and insufficient experience are naturally generated. When the advanced terminal is formed in China as well as multi sales channels, various admission fee & stacking fee gradually fade away from their history stages, traditional retails will not only make a further development but also bring in more profits and incomes for Retailers and practitioners. Some insider points out:“According to my prediction, online shops are absolutely impossible to excessively take place of entity shops. Online shops and entity shops will keep a sticky relationship for a long time. ”. Such kind of modern terminal as Wanda Commerce, its sales volume & value will absolutely like the net worth of Wang Jianlin and exceed the sales volume & value of online shop platform. .
Maybe the combination of online and retails is a completely innovative mode, and it is more satisfied the demands. There may be more affairs to be brink-in and explored, such as propaganda, experience, settlement, transportation, customer service and communication etc. How to handle well the relationship is a more complex question. No one could predict the future. Let’s wait for the market verification!