Dissecting Wanda e-commerce: How did it create O2O by spending 5 billion RMB and hundreds of millions of credit cards?

The bet between Wang Jianlin and Jack Ma has come to nothing. Perhaps it is to prevent Jack Ma's Alibaba from becoming too arrogant, or perhaps it is a test of the Internet. Every move made by Wang Jianlin is unexpected.

Recently, Wang Jianlin released the Wanda Group's semi-annual report. The most noteworthy part of the report is that Wanda announced that it will continue to fully develop e-commerce, and loudly declared that the initial investment will be 5 billion yuan, and it will join forces with several of China's largest e-commerce companies, with the goal of finding a profitable model in about three years.

But in addition to the bold words, Wanda e-commerce has also encountered the resignation of former Wanda e-commerce COO Ma Haiping, former Wanda e-commerce COO Liu Sijun, and former Wanda e-commerce CEO Gong Yitao. After leaving, relevant personnel also complained about the rigid management and reporting and auditing system of the real estate company. The Internet industry also complained that Wanda e-commerce and Wanda O2O would not succeed. With mixed reviews, where is the future of Wanda e-commerce and O2O, or is there really no way to go? This article aims to explain from the perspectives of business, real estate, the Internet, and the media, trying to unravel Wang Jianlin's e-commerce complex:

What does 5 billion mean to Wanda?

For the Internet, 5 billion means an astronomical figure, but for Wang Jianlin, 5 billion is just an investment figure for Wanda Plaza.

For a project investment in second- and third-tier cities, the return from an investment of 5 billion is far higher than this figure: First, the model of Wanda Plaza is basically to acquire land and build in new urban areas or low-priced areas through government investment attraction and negotiation. From project planning, positioning, construction, sales, investment attraction, property management, etc., Wanda has achieved modular and standardized replication. Perhaps we pay attention to the popularity of Wanda Plaza cinemas and catering industries, but we also have to see the embarrassing scene of the deserted Wanda Golden Street in many cities.

The biggest success of Wanda Plaza, which appears to be successful, lies in the business district aggregation effect of the commercial complex, which has brought "stimulants" to the real estate market in various regions, and has been a strong impetus and sales rhetoric for rising housing prices. For Wanda, the real profit comes from the sales of various shops, office buildings and residential buildings other than the plaza.

Wanda has numerous projects across the country in which it has invested over 10 billion yuan. 5 billion is not a particularly large budget in the Wanda system, but it has been magnified by the excessive focus in the Internet industry.

Why does Wang Jianlin insist on doing e-commerce?

The reason is simple. Wanda's main business is real estate, especially commercial real estate, which is the key to Wanda's success. The operation and maintenance of commercial real estate is more complicated than residential development, especially the early site selection, investment promotion, and subsequent services. Good business is particularly critical to the service of its own merchants, otherwise the subsequent income will be difficult to sustain. The problems faced by Wanda are also the problems faced by all commercial real estate and shopping malls: more and more shopping malls have become physical fitting rooms, the cost is constantly rising, and the expectations and satisfaction of merchants are difficult to meet. The same is true for the conflicts between many commercial entities and tenants.

The impact of Internet e-commerce, especially for Wanda Commercial's model which relies on extremely high demand for super traffic, has affected the conversion of transactions. However, the core purpose of Wanda e-commerce is to serve its own merchants. As for ordinary consumers, they are merely a source of traffic. At least from Wang Jianlin's many speeches to the public, it has fully demonstrated his confidence in his own traffic.

Due to the huge scale of Wanda Plaza and its distribution all over the country, it is very easy to form a business network, which is in line with Internet thinking. The final Wanda e-commerce also has a platform trend, but it is a platform that serves Wanda's own system, rather than an e-commerce platform in the traditional sense.

According to the report, by 2020, Wanda will have formed five major business segments: real estate, cultural tourism, finance, retail, and e-commerce. Obviously, Wanda e-commerce is a platform e-commerce exclusively for Wanda's commercial real estate.

The logic behind choosing the O2O model: issuing 100 million cards?

From the report, we can see that Wang Jianlin intends to join hands with other domestic e-commerce giants to establish Wanda E-commerce, rather than going it alone. From this perspective, Wang Jianlin also realizes that there will be more opportunities if we join forces, which is a good supplement.

But in fact, e-commerce is a product that consumes traffic, and the real effect of the traffic diversion function of other e-commerce platforms remains to be seen. From another perspective, Wanda e-commerce, which cooperates with other platforms, can become a secondary channel for these large e-commerce platforms.

With more than 100 Wanda Plazas in China, billions of visitors every year, and Wanda's brand effect, this cooperation model will be more direct and simple, and it cannot be easily copied. Of course, this is just my inference and guess. Even if it is realized, it is only one of the cooperation items including traffic and Wanda e-commerce zone.

In the report, Wang Jianlin mentioned:

When Wanda is big enough, or we invest in a bank, we can have this bank and us issue cards together. I have a request for e-commerce companies. Now we should think about innovating a more convenient, faster and more useful "all-in-one card". What does useful mean? It means it has more benefits than other cards. This card can be used for consumption and house purchase in Wanda Plazas, hotels, resorts and other places across the country. There are also discounts, points, lucky draws, value-added services, etc. This is a big business in itself. In a few years, Wanda will have nearly 200 Wanda Plazas, more than 100 hotels, and 8 to 10 resorts in operation, with billions of passengers every year. These consumers are our customers, and we can issue hundreds of millions of cards. This is a huge resource and advantage.

Different from e-commerce in the traditional sense of the Internet, O2O and e-commerce based on the O2O model, in addition to goods, emphasize services more. For Internet companies, the disadvantage of large-scale O2O platforms lies in the offline service capabilities. Because in addition to providing a platform to solve B2C or C2C exchanges, services based on the B2C process are more critical. O2O e-commerce provides not only cold express delivery, but also truly integrates the socialization that the Internet has always advocated into the offline.

As for Wang Jianlin's plan to issue hundreds of millions of cards, I think it is not difficult: anyone who registers for a card can activate it through consumption, such as providing coupons, discount cards, and lucky draws for Wanda's main stores and cinemas. As long as the card is used for consumption, it can be activated. This method will hardly cost too much. As an ordinary consumer, why not do it? Wanda not only has resources in this regard, but also physical stores and staff throughout the process, which can be merged into normal operating costs. Compared with the Internet's burning money to attract users, conversion, activation, and loss, it is really good. Or think about the various consumption cards in your wallet. Are there really zero balances in them?

The advantage of the card is that it can unify and standardize Wanda’s current settlement system and form a fund deposit. One card can form a fund deposit of 10 yuan. For Wanda, 100 million cards means 1 billion yuan of funds. What about the distribution of other consumption profits generated based on this card?

Based on Wanda Plaza’s own advantages and resources, O2O is indeed the best choice for Wanda e-commerce.

Wanda e-commerce feasibility

Despite the departure of senior executives, Wanda E-commerce is also facing the situation of having to move. The key to its success lies in the following points:

1. Wanda e-commerce is essentially different from traditional e-commerce

1. Wanda e-commerce serves its own merchants and consumers

2. Wanda Commercial Complex is actually a service industry, while Wanda e-commerce also has service attributes and is based on localization.

3. Wanda e-commerce is based on the national layout of Wanda Plaza

4. Wanda e-commerce provides products and services on the O2O platform

5. Wanda e-commerce requires more precise regional traffic conversion rather than the large traffic conversion of traditional e-commerce.

2. The essence of Wanda e-commerce lies in big data marketing

1. Don’t look down on the card. It is a good medium and a data carrier.

2. The complex itself is the source of data accumulation, including the radiation circle living around this business district.

3. More reliance on offline data accumulation

4. The analysis and conversion of big data of consumer groups should be accurate to each merchant in different categories

5. Teach merchants to conduct their own database marketing and the ant army strategy.

6. Companies like Wanda can complete big data research.

7. Advertising sales based on big data are part of the revenue, but the proportion is limited.

8. Wanda’s own business is complex and its user groups are complex, so big data can help with screening.

3. Analysis of Wanda e-commerce model

1. The O2O model must be developed in depth, but the current situation is that it is difficult for people who are familiar with the traditional e-commerce sales model to switch to a service-oriented e-commerce model with obvious regional attributes.

2. The closed-loop structure of Wanda e-commerce's O2O model tends to be traditional, with obvious characteristics of refined, localized and service-oriented products.

3. The method of relying on product and traffic conversion is not suitable for the regional characteristics of Wanda e-commerce, so it can only be created and explored by ourselves.

4. The goal of Wanda e-commerce is to make consumers remember Wanda’s O2O attributes. The realization of this depends on the merchant’s Internet marketing level, but this is different from traditional e-commerce.

5. Regional attributes determine the advantages and disadvantages of Wanda e-commerce. The advantage is that it is easy to implement, while the disadvantage is that the O2O model has higher service requirements, which is more demanding for practitioners and merchants. (When I saw the news reported by Economic Half Hour that farmers in their 50s in a certain place could open online stores to communicate, I felt that there was still hope).

6. This is the challenge Wanda faces in the face of the high efficiency emphasized by e-commerce.

7. Wanda e-commerce’s localized promotion should not be a problem, as the marketing and promotion level of commercial entities and real estate developers is sufficient.

8. O2O, especially localized O2O, involves rather menial tasks, which the industry considers to be “hard, dirty and tiring”. Whether it can persist in being a true O2O is questionable.

9. For Wanda’s One Card, there will be no problem with activation and user activity during the card issuance stage. In the long run, this is the biggest problem. It is very important to maintain users in the region and generate conversions from online to offline.

10. Based on the application of mobile Internet, establish the Internet life model of Wanda Plaza, form a seamless connection of multiple screens, and make the B2C process Internet-based.

4. Profit exploration

1. Fund accumulation based on the one-card system.

2. The merchant’s share of the network conversion results.

3. Integrate community O2O to solve the O2O problem of the residential part of Wanda Plaza.

4. All kinds of promotional activities of Wanda Commercial are networked, combining online and offline activities

5. Wanda E-Commerce and Wanda Plaza provide online advertising, activities, promotions, and online and offline integrated marketing services for merchants or social enterprises.

6. Wanda E-commerce will become a part of the "Wanda Bank" that may be established in the future, and will also serve as part of the Internet finance strategy.

7. Real estate e-commerce sales based on Wanda Plaza, especially new projects and surrounding areas

8. Customized group purchase of e-commerce products for Wanda e-commerce

9. Fees for use of the Internet platform by all merchants in Wanda Plaza

10. Capital value and listing.

5. The biggest challenges and threats facing Wanda

1. The e-commerce model and various products are constantly iterating, making it difficult to form a fixed model, and they have the modular advantage genes of Wanda Plaza.

2. The cost of maintaining users is high. Wanda Plazas in various places need to set up separate e-commerce operation and maintenance departments. Traditional operation and maintenance departments need to transform and break the existing institutional structure. Breaking the rules means changing the rules of interests, which will cause great resistance.

3. The architecture of Internet products based on hundreds of millions of users is not yet clear.

4. Local maintenance of hundreds of millions of users requires high operating costs, a lot of trivial work and low returns.

5. Wanda has too much real estate genes, and it is difficult for the e-commerce department to integrate and be respected, after all, it accounts for too small a proportion.

6. Being too optimistic about the payback period, setting too high short-term goals for e-commerce, and weak feasibility.

7. The e-commerce department has weak authority, and those with decision-making power have a weak understanding of the Internet.

8. Wanda Commercial operates fewer product categories, has a larger selection space on the Internet, has a lower price-performance ratio, and lacks the price competitiveness of e-commerce.

9. The online and offline structure of O2O may affect the future product planning and positioning of commercial real estate. Old commercial products cannot be used to carry Internet thinking.

10. For O2O with strong regional attributes, there is a serious shortage of relevant talents in various places, and the growth rate is slow, which will affect the progress of the project.

In summary, Wanda e-commerce still faces high challenges in the short term, but it is not impossible. It is difficult to turn a big ship around. Due to the stable model, it is difficult for traditional enterprises to see long-term benefits and the determination to break the existing interest chain. For Wanda e-commerce, I think it needs to be given a longer incubation time and have a truly down-to-earth team. E-commerce cannot be done for the sake of e-commerce. The Internet transformation of traditional industries has been discussed for many years, and the strength of entities should not be underestimated. I hope Wang Jianlin will use 5 billion to buy back some successful experience for everyone. No matter what the final result is, Wanda's courage is commendable, but the steps should not be taken too fast.

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.