Foreign Internet giants that enter the Chinese market always seem to have a sword of Damocles hanging over their heads. How to connect their superior resources to the Chinese local market while maintaining their corporate culture? Amazon, which has been in China for 12 years , is a case in point that is being put into practice and has already yielded results. Since taking office as president of Amazon China, Zhang Wenyi has met with the media more and more frequently. Amazon China is relatively low-key among domestic e-commerce companies. This low profile can be attributed to the personal style of its founder, Jeff Bezos: confident and unwilling to follow others. Its values are built around Bezos' brain. Industry analysts explain that Amazon is a company that "looks at itself" and has always pursued long-term development and will not be swayed by competitors. Since entering the Chinese market by acquiring Joyo.com in 2004 until launching its international brand strategy, Amazon has been too silent in the chaotic competition of the domestic e-commerce industry. It firmly adheres to the concept and strategy of "looking at itself" in the world, does not advertise or do dazzling promotions, removes the Joyo elements, connects with the global Amazon market, integrates into the global system and gradually approaches the US Amazon. Amazon has always emphasized that it is a technology company, and its core competitiveness comes from technology. The head of the management team who participated in the changes throughout the early stage once shared that this was a natural result after the system and service docking, which would help the explosion of mobile Internet in the future. In the early stages of China's e-commerce industry, where price wars and marketing wars were the main arsenal, Amazon seemed a bit different and was gradually marginalized. In the first ten years, Amazon China's performance was not satisfactory. According to iResearch data, in 2008, Amazon's share of the B2C e-commerce market was 15.4%, and in 2015, the market share dropped to 2.1%. Compared with Tmall and JD.com , which have a market share of more than 20% in the first tier, Amazon China is languishing in the second tier of e-commerce companies, and its performance is not enough to be included in the financial statements alone. Before the first Black Friday overseas shopping festival was launched in 2014, when company executives were asked in public how to increase market share, they frequently mentioned the word "wait": wait for Chinese consumers to become mature and wait for the Chinese e-commerce market to become rational. While observers were discussing whether Amazon would withdraw from the Chinese market or re-emerge after further cultivation, Amazon, which seemed to be "not in a hurry", had already started to accelerate in 2014: it focused on cross-border e-commerce and proposed an overseas shopping strategy. Taobao successfully created the "Double Eleven" event that everyone participated in, and Amazon also hoped to introduce the overseas Black Friday shopping carnival to China and create a holiday unique to Amazon. Amazon's low-key attitude is gradually changing. With the layout of its cross-border strategy, it has found its own unique path in China and become more open to cater to an increasing number of target audiences. With the domestic consumption concept and the fast-growing overseas shopping market, Amazon continues to increase its investment in cross-border e-commerce. Amazon, which has been exploring its position in the Chinese market, has found its own unique position, and its global resource advantages make it difficult for other domestic competitors to replicate in the short term. After surviving the impetuous period of domestic e-commerce, can Amazon, which fell behind in the last round of e-commerce wars, achieve a turnaround? Black Friday vs. Double 11 As early as 2013, Amazon China's management saw a trend. When they were dealing with fast-moving consumer goods, they found very strong homogeneous competition and price wars. On the other hand, the footprint of domestic consumers' cross-border online shopping continued to expand to overseas sites such as the US, the UK and Asia. The management began to discuss whether they could abandon the red ocean market for middle-tier goods and go directly abroad to get the best quality or the most novel goods. In 2013, Amazon's main project was direct import procurement. When it reached a certain level, it was found that sales, profits, and consumer feedback were all very good. The project began to accelerate, from looking for brand owners to get goods to gradually opening up the global system and importing directly from Amazon's sites in other countries. At the policy level, the General Administration of Customs issued Document No. 56 in 2014, which clarified the forms of cross-border e-commerce trade from the perspectives of subject, channel and nature; according to data released by the Ministry of Commerce of China, the transaction volume of China's cross-border e-commerce reached US$71.8 billion in 2014, a year-on-year increase of 44%, and in a report released by Nielsen, it is expected that the number of domestic overseas shoppers will increase to 35.6 million by 2018, with annual consumption reaching RMB 1 trillion. Many industry insiders believe that import cross-border e-commerce is expected to replicate the explosive development path of B2C in 2011, and usher in great development driven by policy support and changes in consumer habits. In 2014, B2C e-commerce began to enter this field, and the entire industry was in a state of excitement. Having fallen behind in the e-commerce trend of the previous cycle, Amazon caught up with the cross-border e-commerce trend in 2014. After Amazon introduced Black Friday to China, more and more cross-border e-commerce platforms also began to promote Black Friday. The wind of the industry has started, and Amazon has changed its cautious and slow pace in previous years and gradually accelerated its pace: in 2015, Amazon's overseas shopping experience was upgraded, with unified accounts, unified shopping carts, and RMB payments; before Black Friday in 2016, the Prime membership service, the biggest highlight of Amazon's e-commerce business, was introduced to China. The Amazon Prime membership service launched is slightly different from that in the US market. According to Greg Greeley, global head of Amazon Prime, this is the first membership service in China and even in the world to provide unlimited free delivery of cross-border orders throughout the year. When Prime was launched, Amazon Overseas Shopping also realized direct shipping from the UK to Asia after Amazon. Many Prime member products in the UK and Asia direct shipping are even cheaper on Amazon Overseas Shopping than buying them locally in the UK, because the products purchased overseas from the UK and Asia do not include the UK local consumption VAT (about an average of 16%-17%). Compared with other cross-border e-commerce platforms in China, Amazon Global Shopping adopts a multi-channel layout, covering Amazon Global Shopping direct mail, import direct purchase and Hong Kong/bonded warehouse model, as well as general trade import. The common bonded warehouse model is to purchase products in a centralized manner and sell them in the free trade zone. Due to the low cost and short delivery time of the bonded stocking model, it is very suitable for standard products with large sales volume. It has obvious advantages in activities with huge shipments such as "Double Eleven". However, the pain point of this model is that the categories are limited and there are few long-tail categories. If the products cannot be sold and are piled up in the free trade zone, the storage cost will be too high. Amazon has observed that consumers are becoming more and more fragmented in their choice of products based on backend data from global sites, which is consistent with many consumer trends at home and abroad. In the past two or three years, the market share of most mainstream brands has been falling, while more and more niche brands have emerged. "People are very personalized, and consumers have more and more choices. Amazon Global Shopping has more than 70,000 international brands, including a large number of long-tail brands. I think there are actually a lot of fun things and interesting work to do among them." Niu Yinghua, vice president of Amazon China, told China Entrepreneur. Two years ago, Amazon just started to do overseas shopping, and the best-selling products were maternal and child products and some popular items. Since 2015, the Amazon China team has found that the products chosen by consumers have changed from the previous concentrated popular items to a more open variety of long-tail products. In 2016, outdoor sports equipment has a very strong upward trend. "By 2016, after Amazon Prime membership was launched, the purchasing power of home furnishings was released as a whole." Niu Yinghua said. When it comes to choosing between focusing on competitors or focusing on customers, Bezos' answer is always the latter. Amazon pays more attention to customers in its way of looking at things. "As for other competitors, I think they each have their own strategies, but no matter what, the value innovation generated from customers can last long," said Niu Yinghua. There is a red line within Amazon: no one can modify or delete the product reviews on the page. "Paying for reviews is absolutely not allowed, because we don't want any such behavior to affect the real evaluation of consumers, which is the most valuable," said Niu Yinghua. There is also a "powerful role" inside Amazon - the customer experience officer. They have a veto power. When launching any page product, they will go through the whole process after the project is completed. If they find any unreasonable aspects, they can stop the project. After the first overseas shopping store was launched in China, this business model was replicated in other countries such as Mexico and India. After achieving the first local innovation, Amazon China ranked all projects according to their importance and began to consider Prime membership services. Judging from the performance, Prime membership services are undoubtedly the biggest highlight of Amazon's e-commerce business. In fact, when Prime's predecessor, the Super Free Shipping Service, was launched, there were different opinions within Amazon, and many people were worried that it would cause problems with the balance sheet in the future. In the short term, this service will indeed increase the company's costs. This is a fresh, unproven (some people would even say reckless) concept. But Bezos still pushed forward with courage and experience. He believed that when shopping becomes easy, customers will increase their spending, prompting the flywheel effect to produce a virtuous cycle. Borrowing the flywheel effect and self-reinforcement content from "Good to Great", Bezos drew a blueprint for Amazon's online retail business: to attract more customers with lower prices. More customers means higher sales, which enables the company to earn more profits from fixed costs, and higher efficiency will further reduce prices. "Any flywheel that runs smoothly will accelerate the entire cycle." Zhang Wenyi and his team also insisted on launching the world's first Prime service that provides free cross-border shipping in China. This can be regarded as an innovative transformation of Prime in the Chinese market since its birth in the United States. While Prime was online, Zhang Wenyi and his team also promoted the progress of docking with the UK and Asia: following up on the connection between the European system and Amazon China, many tasks were carried out simultaneously. There is a lot of work to be integrated, especially at the technical and system levels. Starting point On the day Prime was launched, it took only three hours from the announcement to the launch of all products. It would have been difficult to launch millions of products in three hours without the support of backend technology. Amazon is regarded by the outside world as a technology company. In the past 18 months, Amazon's market value has more than doubled. The main growth point and profit come from AWS cloud business. Retail sales increased by 25% year-on-year, while AWS cloud business increased by 55% year-on-year. In addition to retail business and cloud computing business, Amazon has been investing in other areas to find its fourth pillar of growth. It recently launched the concept of future retail stores-Amazon Go, which only requires a smartphone to enter the door and scan the QR code to realize the grab-and-go shopping mode. It will take some time for this advanced artificial intelligence system to be truly realized, and the technology behind it is at least a huge impact on offline retail. In the decade of rapid growth of domestic e-commerce, Amazon did not participate in various wars, but continued the strategy of the headquarters and invested in infrastructure, including warehouse construction and logistics and distribution services. Niu Yinghua jumped from Procter & Gamble to Amazon in 2013. What she felt most deeply in the first few years was that in Amazon, in addition to thinking clearly about strategies and tactics, she also had to always keep the concept of technology in mind. "Doing business in e-commerce is like figure skating. No matter how beautiful the dance is, you must wear the skates well. If you don't know how to use them, you will definitely fall. The skates are technology. When you understand the technology and use the system to a certain extent, you will know what is the fastest way, what is the simplest way, and what is the most effective way." Niu Yinghua told China Entrepreneur. Amazon's cross-border strategy was initially based on direct imports, signing contracts with overseas suppliers and getting goods directly, but as the number of orders increased, the speed was still too slow. Later, the management began to wonder whether they could break down barriers between different teams and systems in various systems around the world, build cross-country links, and allow goods to come in directly. This was the starting point and idea of the cross-border strategy: to achieve the widest and most diversified product coverage in a simple way. Next, we started to communicate with the technical team and try to find ways to utilize the inventory of Amazon's global sites without creating a new system. Instead, we could directly present the inventory on the Amazon China page by cross-substituting the front-end products. In this process, we also had to solve various account, shopping cart and page problems. For the most popular product pages, Amazon used manual translation as soon as possible, but in the long run, it would use machine translation to ensure the speed of product listing. The page is not just a translation, but also features automatic price adjustments due to real-time changes in exchange rates and size conversions for different countries and regions. Take size as an example. Size charts are not uniform around the world, and the sizes of European products are particularly complex, including different sizes for pants, tops, and skirts. First, the brand's inch logo needs to be converted into centimeters and re-entered into the system using big data, so that consumers can first see the centimeter expression based on height, weight, chest circumference, and shoulder width; second, all sizes from different countries are aligned vertically for horizontal comparison. With the launch of Yingya, details such as size charts also need to be continuously optimized. In the early stage of its cross-border strategy, Amazon mainly launched some top brands, and then optimized a large number of products step by step. When Amazon Global Shopping was launched in 2014, there were 80,000 products. In the first half of 2016, the number of products on Amazon Global Shopping expanded to millions. Before Black Friday, Amazon Global Shopping was launched on the UK-Asia website. The first thing to choose was unique products. Instead of hot products or products that Amazon has already launched, Amazon Global Shopping focused on local British brands, continuously expanding the possibilities of selection. As the selection of products increased, the technical work became how to use big data analysis to make it easier for consumers to find the products they need. In the e-commerce industry, Amazon's personalized recommendations are a success story. According to a report by research firm EKN Research and Aptos Inc. (formerly Epicor Retail), 80% of e-commerce giants believe that Amazon's data analysis maturity far exceeds that of its peers: using the big data of its 2 billion user accounts, predicting and analyzing 1 billion GB of data on 1.4 million servers to ensure sales growth, tracking all user behaviors on e-commerce websites and apps, and collecting as much information as possible. By providing recommendations to users, Amazon has gained an additional profit of 10% to 30%. On the other hand, how to use price to serve consumers and generate competitiveness while achieving long-term business balance also requires a lot of data support. After the Amazon Prime service was launched, not all products were Prime member products, because the long-term sustainability of the entire project had to be considered: from the perspective of shipping costs, it was difficult to include all products in the membership system at the same time in the short term, and it needed to be achieved step by step. "So, we took both aspects into consideration, and almost all meetings before the launch of Amazon Prime membership revolved around how to add more products," said Niu Yinghua. When a consumer places an order on Amazon, the goods purchased may include local, American and British products. The different systems of the three countries cooperate with each other, which requires strong technical support. Amazon is a highly integrated system in Europe. The goods on British and Asian stores may be stored in Germany, Italy or other countries. Connecting British and Asian warehouses is not just about connecting countries, but more about connecting with the whole of Europe. "This task is more complicated and difficult than connecting with Amazon." Zhang Wenyi told China Entrepreneur that from the perspective of quantity, among the orders from overseas shopping users in the entire industry, relatively more orders are placed from the United States, which will lead to more suppliers and transporters in this region. As for how to increase the transportation speed in Europe while reducing the cost, it is necessary to coordinate with the partners involved in the entire cross-border shopping process in Europe to see which link can be saved, including discussing the priority of outbound delivery with airlines, scheduling air transportation, checking the closeness, and estimating and adjusting the landing time of delivery to China. Amazon Global Shopping's standard delivery time from Europe and the UK to China is 7 to 12 working days. After the launch of Prime membership service, the time for member products to arrive in China has been shortened to 5 to 9 working days. For the entire logistics process, compressing the delivery time by several days is a big challenge. "This requires a high level of follow-up and tracking capabilities of the system. If you want to do things smarter and faster in the e-commerce industry, you need to have a good understanding of technology." Niu Yinghua said that Amazon had already thought about how to build such a system from a technical perspective before starting to engage in cross-border e-commerce. Maximizing the use of headquarters resources After Amazon China implemented its cross-border strategy, the standard for the president of China region has become higher: not only must he agree with the corporate values, but more importantly, he must coordinate the relationship between the region and the headquarters. "In the process of selecting the president of China region, we not only value whether he shares the same values as us, but also know how to make flexible adjustments in the local market, have experience in coordinating the relationship between the region and the Seattle headquarters, and know how to seek technology and resources from the headquarters." Russell Grandinetti, head of Amazon's global retail business and global senior vice president, said in an interview. Russell Grandinetti is in charge of Amazon's overseas market of more than 30 billion US dollars outside the United States, and promoted Zhang Wenyi, the current president of Amazon China. Before joining Amazon, Zhang Wenyi worked at Intel for nearly 20 years. Industry insiders familiar with Zhang Wenyi told us that she has done almost all management work at Intel , including strategic affairs, market channels, and brand public relations. In May 2013, Russell Gao wanted to recruit Zhang Wenyi to Amazon. During the interview, Russell told her that there are two language markets in the world that must be well served, one is English and the other is Chinese, and Amazon now needs a team leader who understands the Chinese market and Chinese consumer needs, so as to better combine Amazon's global advantages with localization. Zhang Wenyi was told, "You are the person we are looking for." "One thing that really impressed me was knowing that the headquarters was very supportive of localizing global advantages." Zhang Wenyi decided to join Amazon as general manager of Kindle China. Amazon has established a fast-response warehousing and logistics transportation network around the world. Its 149 operation centers around the world are based on powerful intelligent systems and cloud technology. Through real-time sharing of global inventory, they can deliver to more than 180 countries and regions. Even with the support of the headquarters, how to combine Amazon's model with the particularity of the Chinese market and implement it through some innovative actions is also a test of the wisdom of the management. Amazon is strong, cautious and confident, which can be attributed to the personal style of its founder Bezos. In addition to the terrifying laughter, Bezos's extraordinary and infinite confidence in Amazon is also a signature feature. In the more than 20 years since its establishment, Amazon has experienced the Internet economic bubble in the early 2000s and the financial crisis in 2008. It has also had a series of problems such as failed investments, chaotic company management, talent loss, negative analyst reports and predictions, and accusations from unions. However, this entrepreneur with a bad temper has always been confident and firm in his beliefs - this is also one of the characteristics of "Jeffism" summarized by many American media. When Kindle was first launched in China, it did not receive much applause. People generally believed that Amazon basically brought its e-book business practices in the US market to China without doing much localization work. Because it was too superstitious about its own successful experience in Europe and the United States, it was not willing to make changes for China, and thus it was difficult to gain market recognition. This kind of work of persuading the headquarters to change often needs to be done step by step. Zhang Wenyi grew up in the United States and knows how to communicate with Westerners. At the same time, she has worked in China for many years. Her more than 20 years of work experience is mainly in communication with the headquarters as Asia or China, and she has never left the communication function with the headquarters. "I have accumulated many years of experience and know that communication with the headquarters must be combined with its resources and strategies, and then see what kind of needs China has, how these needs match the headquarters' strategy, and communicate in a very convincing way that they can understand." Zhang Wenyi told China Entrepreneur that it is easy to say, but it is still difficult to do, and it needs to be done step by step. When Zhang Wenyi first arrived at Amazon to take charge of the Kindle business, he knew that he needed to gradually build trust and could not expect the headquarters to make a huge investment all at once. When promoting a high-end product of Kindle, Zhang Wenyi and his team noticed the gift market in China, especially at the end of each year. Amazon made a gift package specifically for Kindle, which included Kindle accessories and some book coupons. This was something that had never been done before in other countries around the world. Later sales proved that this judgment was correct, and this comprehensive gift package sold very successfully. "Small innovations like this that don't require much investment will make the headquarters more confident in your future judgments, and it will become easier to gradually innovate with greater investment," said Zhang Wenyi. After the success of the gift package, Amazon launched the white Kindle in the Chinese market. The previous Kindle only had one color - black, and most Kindle users were male. But this did not match the gender ratio of book lovers, because women love reading more than men. Zhang Wenyi and his team judged that it might be related to the color, because women may have higher requirements for appearance. After that, the Kindle China team began to discuss the positioning and design of the product with the headquarters. After the launch of the white Kindle, sales increased greatly. Not only was it successful in China, but the white version of Kindle also became popular in other countries. The Kindle product team brings together global product teams every year to hold a global meeting in the United States. In 2016, the Kindle Global Product Meeting was held in China for the first time. "The advantage of holding a meeting in China is that we can take them to understand the local market and have more direct communication with consumers." Zhang Wenyi told China Entrepreneur. Secondly, because Kindle has become the largest market outside the United States, the headquarters is more motivated to understand the needs of the Chinese market. After meeting or even exceeding the headquarters' sales expectations for the Chinese market, trust was initially established. "Next time when a larger investment is proposed, which is more difficult for the headquarters to decide, the headquarters' decision-making and speed will become smoother and smoother, and there will be more local innovations. This is a gradual process." Zhang Wenyi said that as a multinational company, it is important to understand local needs and the advantages of the headquarters. Combining these two points can make the headquarters understand your needs better and more effectively understand which resources can be used first. Since taking office as President of China in April 2016, Zhang Wenyi and his team have continued to promote the implementation of the entire cross-border strategy. Amazon has also made some breakthroughs in marketing that are different from the past. Amazon, which never advertises, placed a huge Amazon delivery box in Sanlitun, Beijing before Black Friday in 2016 - the first offline "experience center" for Amazon overseas shopping. A month ago, Amazon China launched its first advertisement in five years, including online advertising, offline activities, outdoor displays, and social media such as WeChat. From the perspective of a financial reporter, the frequency of Amazon China's press conferences in the past one or two years has been unusually high. Of course, it is still a little behind the "king of press conferences" LeTV. "When we think our products are good enough, we need to make a voice and let consumers know our advantages." Zhang Wenyi said that only after the three aspects of product, channel and market are well coordinated can we demonstrate our own advantages. "Since I joined Kindle three years ago, I think Kindle has made good progress in China because of the good cooperation of these three aspects. So we will continue to expand the influence of Amazon Global Shopping in the future." Compared with the previous decade, Amazon has now found its unique position in China: the first is the cross-border strategy, the second is reading, and the other two include cloud services and logistics +. "We have reached 100% agreement with the headquarters on these four strategies, so the investment in resources will put many first innovations in China, such as the first overseas purchase and the first cross-border free shipping Prime membership service." Zhang Wenyi said that cross-border e-commerce and reading will be two important components of Amazon's future development in China. As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity. |
Article source: Internet Hotspot Introduction: Th...
In the mobile Internet, there is a saying that go...
The WeChat team issued an announcement stating th...
Since the beginning, I have always wanted to have...
All crops with the word "Hu" or "F...
Recently, a case of spies stealing hybrid rice pa...
According to data from the National Bureau of Sta...
Previously, the long-lasting fire in the Amazon r...
Recently, a design partner asked me what kind of ...
The home improvement industry is a typical large ...
Have you ever noticed this phenomenon: some peopl...
[[155011]] As project development progresses and ...
"The Underlying Logic of Growth" Kotler...
Recently, many investment banks have lowered thei...
Local promotion is an effective way for App to ac...