Disappearing dealers, e-commerce factories

Image source @ Visual China

Text | Business Data School, authors | Zhang Yi and Huang Xiaoyi

"Sister, you think about it, I have given the lowest price. The profit is low, and if we give it away, we will lose money. ”

At a Western restaurant, Li Wen is engaged in a "tug-of-war" with the owner of the restaurant.

As a regional distributor of a catering and daily necessities factory, he has won many restaurant customers for many years by relying on the push model, but now he laments that "business is becoming more and more difficult to do, and customers are becoming more and more difficult to talk about."

"I heard before that the price you gave was 20 kilograms, but now I say that it is 20 kilograms, the weight is reduced by half, and there are not many paper towel patterns." The owner of the Western restaurant is very sensitive to the price, she said: "In comparison, I used to find a factory directly on the Internet to set a much higher cost performance." ”

This is Li Wen's problem: M2C, that is, Manufacturers to Consumer (manufacturer-to-consumer) model, the factory and the consumer side are directly connected, and under the tide of efficiency reform of the supply chain, the traditional dealers have begun to lose their jobs.

The three major e-commerce and two major short video platforms continue to increase the size of the sinking market, and M2C, as a sharp weapon to shorten the distance between the marginalized manufacturing light factories and consumers in the e-commerce era, has become another must-compete for the highland outside agriculture.

On March 23, Wang Hai, president of Taote, announced that Taote launched Taote 10 Yuan Store and Taote 100, and the products in the two channels came from the 1688 Super Factory and the Taote Cooperative Factory.

The competition of e-commerce in the factory side is becoming more and more fierce: Pinduoduo will play the mode of direct sales of small commodity manufacturers, and new e-commerce companies such as Douyin and Kuaishou also frequently appear in the phenomenon of factory live broadcasting with goods, and Taote is also adding code at the factory end.

"Pinduoduo wants to cut down the middleman, and in the end it is the biggest middleman." A dealer review.

"Many customers will go to Taobao to get goods, but in fact, Taobao is also mostly dealers, relatively speaking, the quality and supply are unstable." Compared with them, we can go to the store to display the products on the spot, or have a certain advantage. "For Levin, the bigger threat comes from factory direct sales." Now many customers also directly on the 1688 to find the factory to get goods, there are many online e-commerce channels, the factory also began to sell directly. ”

According to Li Wen, in general, in 1688 to find a factory direct wholesale, catering stores need to take the goods at one time, will occupy the terminal inventory. "But if the factory is gradually retailed, the inventory problem will also be solved, and more of our customer resources will be eaten." He was concerned about the issue.

Ideally, there is no middleman to earn the difference, direct sales have the opportunity to appropriately increase the profit margin of the factory itself, and consumers can also buy more cost-effective products to achieve a win-win situation at both ends of the supply.

According to the data, at the industrial end, Taote has attracted more than 2 million industrial belt merchants, 500,000 factories, and more than 300,000 foreign trade factories to settle in. Among them, 13 factories have annual sales of more than 1 billion, and Alibaba's Q2 financial report for fiscal 2022 shows that Taote's M2C orders from factories have increased by 400% year-on-year. The value of direct factory operation has been verified.

However, in the change of the times, as the core role, the factory is not smooth sailing in the change.

01 Factory revolution

"On the one hand, online sales from pictures to live broadcasts, shopping guides to game interaction, the process is complex and requires specialization; on the other hand, online sales, the amount of orders is unbalanced, the production organization ability can not keep up, it is easy to drag orders, if more production is easy to overstock inventory." If the order volume is large, the logistics delivery management cannot keep up, and it is easy to make mistakes and miss the issue late. A blogger shared in the video the difficulty of opening its own online store in the M2C model.

For factories, traditional distribution methods are much simpler.

"The factory itself invests a lot in opening an online store, manpower, energy, cost, etc., and there are more uncontrollable factors, and it is simpler to hand over to the dealer to do the operation mode." Lin Guo, the market leader of a tissue factory, told The Business Data Faction that although the factory has opened direct stores on major e-commerce platforms, at the beginning of the decision, everyone had a long period of concern.

"Just a few companies (customers) are enough for me to live for several years, and I know all about these e-commerce platforms, but we don't have any culture to do operations." A small factory owner of production line supplies also said that under the challenge of uncertainty, many small factories without operating conditions dare not "act rashly".

Live in peace in the original system, or jump out and face the consumer market to live a complex life? This problem may have plagued some factories.

However, the arrival of the epidemic has forced many factories to make choices.

For example, some oem production of foreign trade goods enterprises due to the epidemic orders plummeted, domestic foundry factories also encountered the same problem. Zhou Jie's Baoding Velvet Toy Factory also reduced oem orders due to the epidemic, "Three years ago, we did Pinduoduo, and last year we began to do Taote." ”

The life of the indisputable peach blossom source will also become radical under the problem of survival, and the factory has opened a "tide of thought".

"We have done it in all channels, such as Pinduoduo, Tmall, Handtao, Taote, 1688, etc. In fact, for factories, as long as the platform does not have an exclusive agreement, we will definitely consider multi-channel sales. "Wang Ming, head of Yiwu Gangyue Cosmetics Co., Ltd., revealed that the e-commerce platform is promoting the M2C model and has also given the factory a lot of opportunities." The original factory direct sales is about 10%, and now the proportion has reached 25% to 30%. ”

"On the M2C thing, we're going to go all in. The operation side will be more subdivided, and the traffic side will be centrally planned, and I think this year this year will definitely be better and better. Zhou Jie is optimistic about the prospect of direct factory sales, which may be a clear sign of growth in previous explorations.

On the one hand, new orders are needed, on the other hand, inventory needs to be cleared, and the demand for "e-commerce" in factories has been stimulated. But there are so many M2C platforms, how are each platform different for the factory? How does the platform leave behind this batch of factories that are good at production but lack of operation?

02 The real world in the platform snatch war

Grab the M2C battlefield, and the platforms will do their best.

Taote provides hosting services, which means that the factory is still at ease in managing production, and the marketing, sales, logistics and after-sales of goods can all be handled by Taote. According to the data estimates, compared with the Tmall platform, Taote's direct operation model reduces the operating costs of factory stores by 20%-30%. In fact, Amoy Factory and Taote 10 can be seen as a fully managed model.

"At the beginning, we shipped ourselves, and then the platform told us that we could cooperate with the cloud warehouse, the courier fee was lower, the delivery efficiency was higher, and we also joined this way." The cloud warehouse can be sent until 8 p.m. every day, and our factory still can't do it. Wang Ming said that it is very worry-free to cooperate with Taote to go to the cloud warehouse to deliver goods, and some goods can also be shipped by themselves, so that the efficiency of integration is higher.

However, there is only a word difference between factory self-operation and factory direct operation, and the feelings at the factory end are very different.

"I don't want to do retail anymore. We do production and wholesale to do retail, and we lose money when we do it. "Zhang Liang is the owner of a daily necessities factory and has a history of blood and tears in the direct sales store of the Tao Factory." The price of the product is decided by the platform, the platform has to take out eleven points of commission, this year's epidemic is so serious, many places have stopped issuing, which will be fined. In Zhang Liang's words, "a single earns five cents, and the platform fines five yuan."

For example, in taote 10 and 100, the most significant feature is that taote directly cooperates with manufacturers, and the standard of goods is set by taote. Huang Aizhu, general manager of Taote Operations, once said, "We must ensure that the quality of goods does not lose the brand, but the price is the factory price." ”

Therefore, although under the direct operation model, the factory can reduce the operational troubles of the self-operated route, and there is no additional operating service cost, but the whole is bound by the platform, and the end customer is not in their own hands.

"Our compatriots in the neighborhood are also doing Tao factories, selling inventory is OK, selling conventional goods are losing money." Zhang Liang still has lingering feelings about e-commerce retail.

"We don't do Taote because we can't do it. Others will not download the Taote APP to use, there is no traffic. Qin Wu, the founder of a factory, shared his personal judgment.

"Buy electronic products on Jingdong, buy small daily necessities and some farm fruits and vegetables on Pinduoduo, buy clothes on Taobao Tmall." A netizen summed up his "buying principle".

However, there is another sound.

In addition to traffic, Pinduoduo is also relying on "low cost" to win people's hearts.

In this regard, Lin Guo also agreed: "The cost of opening a store in Pinduoduo is lower than that of Taote. ”

Qin Wu's attempts at Taote and Pinduoduo failed, and finally turned to tao factory.

On the one hand, he believes that the Taobao factory relies on Taobao and has better traffic. "We spend commissions, rankings can be in front, and search weights can be increased." He feels that in terms of traffic cost and cost performance, Taote is not attractive. On the other hand, there is no better operational ability blessing on Pinduoduo, which has better traffic.

"Pinduoduo, we didn't do it, mainly because we didn't do a good job in operation." The main force still wants to be in the Tao factory, do cheap to do not last long, Tao system is still better in the long run, at least the profit is generated, not blindly fighting the price. Qin Wu explained.

03 Forced the digitalization of light industry

Stepping out of the comfort zone, light industry also needs a digital revolution.

E-commerce swept all corners of retail, turning the downstream end close to consumers upside down, and it is precisely because of the impact of e-commerce disruption that the retail end that is closer to consumers is earlier integrated into the digital tide, on the contrary, the production factories that have been in a stable zone are "outdated".

Now, the M2C model is not only a siege battle for e-commerce companies, but also can force the digital upgrading of traditional light industrial factories.

Unlike the more significant cost reduction and efficiency-increasing needs of large-scale manufacturing industries, most light industrial factories are relatively small in scale and relatively low in product prices, but the model is simple. After confronting consumers through e-commerce, the rapid upgrading of the consumer side can promote the production mode of the factory.

Previously, Upstream News reported a case: after Yaqin Biotechnology Co., Ltd. joined Taote, it no longer buried its head in car building, but produced on demand.

"In the past, we purely focused on low prices, but after joining Taote, we began to upgrade the product quality, characteristics, and cost performance." The head of the company's factory e-commerce business once said: "From the initial OEM, to now completely abandon OEM and build its own brand." Toute offered us a shortcut. ”

For the factory, after facing the consumer:

First, the manufacturing model of "knowing in mind" can be realized at the production end, improving production efficiency and reducing risks. Through the analysis and feedback of consumer big data, it is determined which goods are produced many times and which goods can be reduced, abandoning the traditional model of mass production and redistribution dealers, and reducing the pressure of inventory backlog.

Second, the digital operation ability has been improved, the traditional light factory is far from the consumer, the perception of the market is not real, and it relies heavily on middlemen. However, after going to the e-commerce platform, although there is a fully managed service, the factory must also establish a supporting human resources system. There are more than 300 workers in Yaqin Biological Factory, and there are more than 200 people who specialize in making products around e-commerce.

From both the production mode and the composition of the team, e-commerce can force the digital upgrading of the factory to a modern factory.

Made In China once made the Chinese economy, but there was no way out for OEM.

With the enhancement of the ability of the industrial chain and the awakening of brand awareness, gradually tearing off the label of "OEM", building a brand is a clearer future for light industry. If you want to build a brand, you need to change the previously closed production environment and let the factory face the consumer.

According to the national industrial and commercial registration information, there are 6.7 million manufacturing factories in the country, but the degree of digitalization of manufacturing factories is less than 20%, and the digital potential of factories is huge. This gap is also a must for the e-commerce platform, taote, pinduoduo are sparing no effort to bet.

Breaking the siege of development, e-commerce platforms and factories are actually two-way.

*All characters in this article are pseudonyms.