With JD.com’s blessing, Shangpin’s home delivery strategy is on track to achieve success

Author | Duan Chuanmin (Strategic Marketing Observer)

To be honest, even though I wrote the book "Why Shangpin Home Delivery" and have been observing Shangpin Home Delivery, I have no idea about it. To me, it remains a mystery.

It is alternative and unconventional; it is lonely and exists in the industry. Although on the surface it is a custom home, it sells furniture. But it is more like a data company, a new technology company with digital capabilities—not just Internet capabilities.

Moreover, in terms of business form, it is like a Transformer, which seems to have a high degree of plasticity and is in constant fission and growth. So far, it can no longer be covered by a simple custom home. There is a highly vertical decoration system, a decoration cloud that empowers the home decoration industry, and the most influential MCN organization in the industry...

Even in terms of organizational structure and operation, there is still Pinzhaipei is also different.

The original Shangpin Home Delivery is divided into two major customized home furnishing brands (Shangpin Home Delivery and Weiyi Customization) and the online Xinju.com. Weishang Group is its smart manufacturing production base and has been responsible for the past two years. R&D Yuanfang began to rush to the front, launching HOMKOO clothing cloud, Shangpin Zhaipei launched Christmas bird clothing, and Xinju.com launched the Ku brand for workwear channels, and also had its own MCN (Internet celebrity)... so much so that At last year's Guangzhou Construction Expo, five business teams of Shangpin Home Delivery were active at the same time (perhaps it can be expanded to seven).

Unlike the divisional structure of most companies, the division of Shangpin Home Delivery’s business divisions is also very strange: there are not only brand separations, but also channel separations, and even professional separations. On the basis of separation, there are also Emphasis on integration - online and offline integration, brand and career integration, professional and business integration. This kind of complex link cannot be used in ordinary enterprises, but it seems to be unimpeded in Shangpin Home Delivery, which is quite strange.

Actually, I know the reasons: First, because of its information-based thinking and capabilities, it has used information technology (now called digitalization) to open up the company, that is to say, its organization, business and operations It is completely built on this foundation, so it can be played wherever you want, and no matter how complicated it is, it can be simplified through the system; secondly, because of its "competition, execution, and family culture", it emphasizes the overall view, team view, and execution ability. And family-like mutual help, mutual love, and mutual encouragement. No matter how complicated it is, it must be completed efficiently.

For example, four years ago, Shangpin Home Delivery began to lay out and develop the complete assembly business. Other companies put publicity first and business first, whichever is easier comes first. Shangpin Home Delivery puts informatization first and supply chain logistics first, and whichever is difficult comes first.

Let’s not talk about informatization here - this is its expertise and expertise. Let’s just talk about the supply chain. Because the whole process has just begun, it will definitely not be easy to integrate the supply chain. After all, your volume is small. Other companies may do this: try to find some suppliers and let them sell there. It is best to have delivery and maintenance done by other manufacturers. It is best not to occupy funds, warehouses or energy. Shangpin adopts the most painful and stupid approach: purchasing the goods from cooperative suppliers, transporting them to its own separate warehouse, and then using its own logistics to send them to customers together with customized furniture, with its own supervisor responsible for the on-site The overall construction...these four steps, each revealing a daunting complexity.

I calculated that from 2017, when the assembly business was launched, to 2020, in the four years, the contribution rate and sales ratio of the assembly business were 2.28 million (0.04) and 192 million respectively. (2.92), 430 million (593), 539 million (829), it can be said that the business has grown rapidly, and the current proportion is close to one-tenth.

This typical case shows that Shangpin Home Delivery is not only a "scientist" in the customized home furnishing industry, but also a "doer" in the general home furnishing industry.

Although it is of great significance to open up the whole link of technology and process, Shangpin Home Delivery did not stay in the laboratory, but used it on the battlefield and achieved staged victory.

This is its power. In my opinion, Shangpin Home Delivery does have an outstanding ability to dare to face complexity and systematize it, thereby becoming fundamentally simple. To put it simply, it means first making seemingly simple things complicated - digitizing everything, and then simplifying complex things - the system commands everything.

Even so, for a long time, people still couldn’t see clearly the true face of Shangpin Home Delivery, because all commercial references in reality failed for it.

Or, the inner monologue of Shangpin Home Delivery is this: "I am me, different fireworks." I firmly follow my own path, why should I be like others? This sentence is what Chairman Li Lianzhu said: "Only companies that truly continue to create value for customers can withstand the test of history."

This sentence from Li Lianzhu was addressed to shareholders in April 2021. Said in a letter from them. It is estimated that shareholders (including industry observers) were confused when they heard this sentence at the time: Doesn't "value" need performance support? How long is "history"? Isn't two years long enough? Unexpectedly, two months later, the emergence of JD.com would materialize the two indicators.

In the context of the alliance with JD.com, Shangpin Home Delivery’s originally seemingly complicated and chaotic business segments suddenly pieced together a magnificent picture.

The integration of software and hardware brings more lengthy processes and more complex links. Although Shangpin Home Delivery has solved many problems such as digitalization and execution, what is lacking is strong market momentum to quickly promote this set of modules to optimize costs and efficiency. The strategic alliance with JD.com not only brings lower costs in the supply chain and efficiency in warehousing and logistics, but also brings strong traffic and financial support to its platform. This may mean that the battle for decoration will quickly intensify, and Shangpin has set a very high threshold and will take the lead in the industry.

You may think this is an exaggeration. Let's analyze the so-called refitting.

The general background of decoration is the change of consumer demand. Many users have tended to solve the problem of hard decoration and soft decoration in one stop. For the customized home furnishing industry, the predecessor of complete decoration is large home furnishing, that is, customized home furnishing and soft furnishing packages that do not involve hard decoration. The market for large home furnishings is clear, and customized home furnishings have network advantages. It is said that the “market” should be like a bamboo. In fact, before 2018, basically all big home furnishing strategies were in a state of deadlock. Only Shangpin Home Delivery exceeded 10% in terms of supporting sales proportion, and the proportion in the past three years has been between 14-17%. I calculated the ratio of another leading customization company that promotes large home furnishings. In 2019, the ratio was only 5.87.

In other words, the idea of ??a large home is very beautiful, but the reality is extremely skinny. Now that he has changed his vest and changed into a full outfit, will the situation change substantially? Absolutely not, it will only make the feeling stronger.

The reason lies in the "matching". Many home furnishing companies only sell them as "auxiliary products", with at most a little more promotion effort, without the support of their operating systems.

Li Lianzhu said: "The real integration should be 'supply chain' integration, not simple 'supplier' integration." He talked about the core of integration, which is the operational level and the backbone of strength. end. I think another thing should be added, which is digital integration, which is both infrastructure and marketing front-end. Digitalization of "supply chain" is a trend and a capability.

Equipment without a digital foundation is lame and cannot run fast or far. At present, it may take 5-8 years for third-party software companies that serve customized homes to reach a similar level, because it requires not only the research and development of information technology, but also effective connection with business organizations and processes. Related companies It is also necessary to become proficient in the process of training and promotion.

The research and development of Shangpin Home Delivery only took three or four years, because it has the genes of the software industry, and because it is directly integrated with its own business team, integrated with the market, and dismantled in the business logic. Solution, optimization in practice, and continuous iteration. For this reason, it even gave up the opportunity to catch up with the second place in performance. Originally, I thought Shangpin Home Delivery could achieve this goal in 2019. As a result, it has focused a lot of energy on the development and verification of package strategies.

Under the deconstruction of Shangpin Home Delivery, the general concept of decoration is simplified into three core issues: digital capabilities, supply chain integration and construction standardization. The first of these three is the foundation, the second is the difficulty, and the third is the focus of customer experience. The first two items alone are enough to block most customized home furnishing companies from the competitive battlefield. The result may be the same as that of most companies. Most companies make money, fish in troubled waters, and then flock to the next upgrade concept.

What is interesting is that whether the integrated model can be successful cannot be limited to Shangpin Home Delivery. It also requires two conditions: whether Shangpin Home Delivery can quickly expand this model into a performance-oriented one. Unprecedented advantage; Is there any way for industry companies to possess these three core capabilities? The former needs to continue to expand its victory as a revolutionary and pioneer Shangpin Home Delivery, while the latter needs to find solutions to empower the industry. In the past, Yuanfang Software was inhibited by Shangpin in supporting the customized home industry. In the future, it has Isn't it possible to find a winning solution?

The emergence of JD.com, the white knight, has provided a historic opportunity to resolve these two points: on the one hand, JD.com’s brand, traffic, supply chain and funds will promote the rapid expansion of Shangpin Home Delivery; on the other hand, JD.com’s brand, traffic, supply chain and funds will promote the rapid expansion of Shangpin Home Delivery; On the other hand, the latter can reversely support JD.com’s strategic advancement in the pan-home furnishing industry. In other words, with the full support of Shangpin Home Delivery, JD.com may become a huge promoter of the overall strategy of the pan-home furnishing industry.

Realizing this scenario will not only be a win for Shangpin Home Furnishings Co., Ltd., but also a win for JD.com’s pan-home furnishing strategy. It may also become the ultimate win for the strategic upgrading of the home furnishing industry.

I think this is probably the reason why JD.com values ??Shangpin Home Delivery and is willing to issue additional shares on the basis of acquiring Dachen shares. The home furnishing industry has a market size of trillions and has been coveted by first-line Internet giants and real estate giants such as JD.com, Alibaba, and Xiaomi. Even Beike has recently joined the fray. However, the home furnishing industry is very different from the original 3C and consumer products. It is more non-standard, emphasizes offline services, and increasingly emphasizes user personalization and overall one-stop solutions. Therefore, compared with 3C and consumer products, It appears more complex and requires more strong offline support.

In recent years, JD.com has been strengthening its home furnishing business. If it wants to build such a system and vertical and deep business capabilities within the industry’s window period, it will need far more than the 12 people who have invested in Shangpin Home Delivery. With a capital of 100 million yuan, there are still at least 3-5 years of precious time.

In this regard, the Internet home decoration platform that fell into silence after becoming popular in the past few years has become a lesson learned from the past.

The custom home furnishing industry does not seem to be a big one, but why did many previously well-capitalized bosses fail to do so? The reason is: just having capital and resources is not enough, and only having the digital capabilities of the Internet is not enough. It also requires highly vertical, online and offline digital capabilities; supply capabilities alone are far from enough, but also integrated integration capabilities; It is not enough to have online traffic and efficiency advantages, but also to have the last-meter (not one-kilometer) management capabilities offline (especially at home decoration sites). This is not an ordinary manufacturing industry, but a service industry that emphasizes experience and has complex processes. It is also a deeply digitalized technology industry. This is why customized furniture not only beats finished furniture, but also becomes the core of the entire pan-home customization trend.

JD.com is right to choose this method of capital entry and strategic cooperation. Trading capital for time and marriage for space. The key to this kind of capital thinking is to maximize efficiency and make long-term benefits.

To cultivate the home furnishing industry into a performance growth pole, JD.com needs three key points in addition to its own supply chain (including logistics) capabilities and strong sales platform: vertical and deep digital capabilities, An integrated offline and online service network and numerous home decoration players. The former Shangpin Home Delivery possesses these three points, while the latter can "empower" the entire industry through Yuanfang's BIM assembly technology.

In this strategic cooperation with JD.com, Shangpin Home Delivery has shown an unprecedented openness and positive attitude in empowering the home furnishing industry with its own Yuanfang BIM and Xinju MCN. In other words, these two core capabilities will mainly be oriented to JD.com to support its expansion of influence in the home furnishing industry and market penetration.

Therefore, although JD.com has a scale of one trillion and Shangpin Home Delivery currently has less than 10 billion, the strategic cooperation between these two partners with different sizes in the home furnishing field is mutually equal and is a two-way empowering relationship. . JD.com provides funds, traffic, supply chain and financial support, and Shangpin Home Delivery provides core technical resources such as vertical digital technology, channels and MCN in return. The two are actively developing innovative business forms at the same time: cooperating to open stores and exploring efficient collaborative transaction scenarios; jointly promoting the industry's overall strategy.

Of course, JD.com’s growing fashion and home furnishing business group will definitely have more than just Shangpin Home Delivery as a strategic partner in the future. Its priority is still to leverage the platform's e-commerce advantages and warehousing and logistics advantages to continue to expand sales in the home furnishing industry. However, if it can give full play to the vertical digital advantages of Shangpin Home Delivery and build a vertical industrial Internet with it, the performance contribution it will bring will be attractive enough.

"Silver snakes dance in the mountains, and wax figures originally appeared." This is a rare scene of snakes and elephants dancing. The direction of the dance is the pan-home furnishing industry with a market size of up to 4 trillion yuan. Will today's small step in cooperation between JD.com and Shangpin home delivery become a big step for the pan-home furnishing industry, "Want to compete with God"? It seems too early to say now, but the music has started and the two are slowly entering the dance floor. Maybe soon, exciting news will come one after another.

Coaching Consultant - The Way to Multiply Performance

Duan Chuanmin, a strategic marketing expert, is a researcher across the three fields of enterprise, profession and media. He is known as "the research school in practice. "A Practical Person in Research", and has long served as a strategic marketing and development consultant for many companies.

Advocate "coaching consultant - the way to double performance", and focus on the three steps of "orientation, execution and integration" through the five steps of "setting the direction, building a team, finding a path, allocating resources and grasping the implementation". The large module is results-oriented and helps companies achieve high-speed growth goals.