Vipshop, which has been listed for three years: what efforts have been made in products and operations at each stage

Vipshop has developed rapidly. It was listed on the New York Stock Exchange in just over three years, becoming the third largest e-commerce platform after Alibaba and JD.com . The speed of Vipshop's product development is no less than that of the recently popular Pinduoduo.

1. Product Background Introduction

1.1 Product Introduction

Vipshop, a website specializing in special sales! They are all tsundere brands , and they only sell at cute prices! The products include fashionable women's clothing, children's clothing, beauty cosmetics, shoes, men's clothing, home furnishings, mother and baby products, accessories, leather goods, perfumes, etc. New products are added at 10 am and 8 pm every day, with a selection of global authentic authorized special sales, 100% authenticity guaranteed, limited quantity, support for cash on delivery, and 7 days unconditional returns.

1.2 Product positioning and user needs

Vipshop has undergone a positioning adjustment, upgrading from a discount sale website to a global selection and authentic discount sale website. Therefore, the core of Vipshop has not changed, and it has always been positioned as a special sale.

What does sale mean? It is a discounted sale of a brand's inventory of goods.

Product positioning: A discount website for genuine products.

User positioning: users in second- and third-tier cities who want to buy big brands but have nowhere to buy them or are afraid of buying fakes.

Scenario 1: A waitress, working in a third-tier city, wants to buy a pair of high-heeled shoes from a famous brand. First, I don’t know where to buy authentic products, and second, the big brands are too expensive and I can’t bear to buy them.

Scenario 2: A college student user is particularly fond of beauty. He likes to buy facial masks and other skin care products. He also likes to put on makeup when going out. However, he is worried that there are too many counterfeit goods on e-commerce platforms and has never dared to buy goods on e-commerce platforms. However, offline products are too expensive without discounts.

1.3 Vipshop’s Core Business Logic

This can be seen from Vipshop’s core logic. Vipshop's core competitiveness lies in brand + cost-effectiveness + inventory reduction. Vipshop is also vigorously building a logistics and supply chain system, which has made Vipshop more and more powerful and gradually established core barriers. The construction of logistics has also continuously improved Vipshop's user service experience.

1.4 Major Events in Product Development History

• 2008.8 Vipshop was established
• 2008.12 Vipshop website was launched
• 2012.3 Vipshop was listed on the New York Stock Exchange
• 2014.2 Vipshop made a strategic investment in Lefeng.com.
• 2014.9 Vipshop’s third quarter net revenue reached US$882.6 million, achieving profitability for eight consecutive quarters
• 2015.11 Vipshop’s market value evaporated by 2.5 billion US dollars, and Vipshop was also exposed to be involved in counterfeit goods
• 2015.12 Vipshop and Innocent Group plan to jointly establish MyBank
• 2015.12 Vipshop introduced the quality inspection agency SGS to focus on maternal and infant products
• 2016.1 Vipshop was suspected of selling fake Moutai and apologized
• 2016.3 Vipshop hired Jay Chou as CJ O and launched a new advertising slogan
• In August 2016, Vipshop signed Kunling as its spokesperson
• In October 2016, Vipshop’s CTO resigned. In the same month, Vipshop acquired Beifu and obtained a payment license, launching Vipshop Finance.
• In December 2017, JD.com and Tencent invested US$863 million in Vipshop.
• In June 2018, JD.com spent US$120 million to increase its stake in Vipshop by 6.8%.

From the above major events, we can see that Vipshop was making great strides and developing rapidly in the beginning, but later faced various problems. Recently, it was invested by Tencent and started social e-commerce. In summary, there was a tailwind in the early stage, slowing growth in the mid-term, and now transformation and resurgence.

2. Development History and Key Events

According to the development time of Vipshop, Vipshop can be divided into three stages.

Before listing: Vipshop’s period of rapid growth.

After listing 2012-2017.12: Continuous profitability, business obstruction, and slowing growth.

2018-Present: Investing in social e-commerce, hoping to start a new round of growth for Vipshop.

Phase 1: Pre-marketing

product

1. Vipshop saw the opportunity and targeted the field of brand discounts, which big players like Taobao and JD.com have not yet entered. Vipshop has not encountered any strong competitors in this field, and Vipshop is pragmatic and low-key, which has not attracted the attention of the bigwigs.

2. Market demand: At this time, China's supply seriously exceeded demand, and brands had large inventories and needed to sell goods. Vipshop could get the goods at extremely low prices and then sell them at extremely low profits, thus winning the favor of a large number of users.

3. Vipshop has built its own buyer team. By combining the experience of offline buyers with big data from the backend, Vipshop’s products fully take into account brand authenticity, consumer demand and fashion trends.

operations

1. Routine operations: Vipshop guarantees that new products will be released on time at 10 a.m. and 8 p.m. every day, giving users certainty from an operational perspective.

2. Vipshop has always been seen by the outside world as a "heavy company". Vipshop adopts a fully self-operated model, which includes not only self-operated goods but also self-operated warehousing and logistics layout, which makes Vipshop's offline operations extremely efficient.

3. Every product sold on the Vipshop platform is purchased from formal channels such as brands, agents, brand branches, international brand offices in China, etc., and a strategic genuine product procurement agreement is signed with them to ensure that all products sold are genuine. Provide users with quality assurance and gain their trust.

Stage summary:

During this stage, Vipshop created a new model for China's e-commerce , the model of "authentic sales + limited-time purchases + authentic guarantee". Vipshop's founder Shen Ya is a Wenzhou businessman. Vipshop has inherited the low-key and pragmatic characteristics of doing business in Guangzhou, which prevented it from establishing too much competition in the early days. The model of focusing on e-commerce has made Vipshop's barriers continue to rise.

Phase 2: Post-IPO

product

Vipshop grew rapidly during this period, but also encountered its own problems.

First of all, in terms of business model , since Vipshop adopts a model of cooperation with brands, the pricing power of the business model itself is still partially controlled by the brands.

Secondly, the logistics operation efficiency is not high enough, resulting in Vipshop's very small gross profit margin. After going public, Vipshop invested a large amount of funds raised from the listing into logistics construction to improve the service quality of its products.

operations

1. Vipshop created the 616 Vipshop Carnival Shopping Festival, imitating Tmall ’s Double 11 festival, and it became a regular event of Vipshop.

2. Vipshop Finance went online and played a role in 616. The launch of Vipshop Finance provides Vipshop users with funds for shopping, which will increase users' purchasing volume.

3. Vipshop has been deeply involved in logistics. Logistics is a very important part of e-commerce. Vipshop has built its own Pinjun Logistics and deployed its own warehouses in dozens of cities across the country. The efforts in logistics laid the foundation for Vipshop’s later barriers.

Pinjun Logistics Point Map

Stage summary

Vipshop achieved rapid growth during this period, but its rapid growth also laid hidden dangers for the company.

First of all, Vipshop lacks product innovation and relies more on the product mechanism it used when it first started its business , and has made innovations in operations.

Secondly, Vipshop failed to see the dividends of mobile Internet , especially the lower-end groups represented by WeChat , which led to Pinduoduo's consumption downgrade. From online live broadcast , online search, to signing celebrities.

The development of fan economy has driven the development of e-commerce. These short-term means can achieve the purpose of revenue generation, but the core long-term value is not maintained. The core of Vipshop's products is still authentic goods, which helps brands to sell goods and reduce inventory, and helps users to obtain cheaper and higher-quality brand products.

Vipshop should focus on this point and create more new and better products to help customers, rather than focusing on revenue.

Secondly, as the cost of building websites online decreases, more brands begin to build their own channels, and new channels emerge, beginning to split Vipshop's channels for selling goods.

Finally, the amount of inventory is limited after all, and Vipshop’s growth scale will definitely hit a ceiling.

Phase 3 (after 2018)

product

Vipshop’s market value has been declining throughout 2018.

In terms of product data, Vipshop's net profit in the second quarter of 2018 increased by 76.4%, and its revenue growth rate was 18.45, lower than 24.6% in the previous quarter.

This also means that Vipshop's profitability has been seriously questioned, and has caused investors to have strong concerns about its prospects.

During this stage, Vipshop began to accept investment from Tencent and refocused on product and service innovation. In order to reduce inventory, Vipshop launched a professional purchasing and wholesale model to help brands sell more goods and distribute goods using WeChat's social traffic .

operations

Vipshop’s growth at this stage benefited from the comprehensive establishment of a “special sale” product ecosystem.

As Vipshop focuses on good products and emphasizes special sales as the core of e-commerce, it has established a unique operating model centered on agents, from people looking for products to products looking for people, and launched Vipshop Warehouse and the Yunpin Warehouse mini program for agent sales.

In terms of traffic operations, we utilized the large user base of WeChat.

In terms of logistics, Vipshop has increased the application of artificial intelligence technology in logistics, strengthened its logistics support capabilities, and reduced logistics costs.

Stage summary

During this phase, Vipshop has found its core, focused on the brand's inventory, emphasized Vipshop's e-commerce capabilities centered on special sales, strengthened the path from good products to users, and used social media to push products to users.

It meets the fans' needs for social shopping by giving them really low prices while guaranteeing that the products are genuine and high-quality.

3. Summary and Suggestions

Vipshop’s current new strategy of “global selection, authentic specials”, coupled with support from JD.com’s flagship store and Tencent’s social traffic, enables Vipshop to create many innovative products.

The latest Vipshop warehouse is connected to the brand's inventory on one end and to professional purchasing agents and small and medium-sized wholesalers on the other. With the help of social platforms such as WeChat and QQ, goods can be quickly assembled and distributed. It combines the gameplay of "special sale + social + inventory reduction". I personally think this is Vipshop's most innovative product in recent years.

This innovative product will bring a new round of growth to Vipshop.

Vipshop once again returns to the business model itself - products and services.

Vipshop can return to the focus of commodity inventory and clearance sales and launch more business models that promote consumption downgrading in the name of consumption upgrading. For example, branded clothing can be reduced in price to target low-level consumers through group buying discounts and other methods.

E-commerce is inherently short of traffic. Vipshop’s cooperation with Tencent has provided access to traffic, but how to turn Tencent’s small idle traffic into e-commerce’s transaction traffic requires more gamification and content to attract users. For example, although Yunpincang’s mini program was exposed through friend groups, the gameplay was too boring, and more interesting gamification mechanisms needed to be added. For example, store owners can be given free logistics coupons from time to time.

Source: Feng Yiyun