Visual China
Can you still make a fortune doing e-commerce now?
In the field of public opinion, the discussion of "business is difficult to do" and "profits are too low" is becoming more and more noisy, but at the same time, the "Guide to Violent and High-Profit Product Selection for Novices to Open Stores" is still circulating on the Internet, harvesting batches of laymen who hope to find gold from e-commerce.
The stories of getting rich circulating in the industry are too exciting, such as Yu Wen, a young man from Jiangxi who was born in 98, relied on a no-source model for dropshipping, earning more than 2 million a day at the peak and achieving financial freedom in a year.
Under the halo of dazzling wealth stories of predecessors, few people can resist the temptation of low cost, low investment, and making a fortune, so e-commerce sellers have become a group of rapid growth in the past few years. According to public data, there are nearly 6 million e-commerce-related enterprises in mainland China, with an average growth rate of 32.1% in two years.
But when passion enters the pit, you will find that getting rich by e-commerce is not as simple as you imagined, from the artifact of making a fortune to the dislike of a part-time job, what has changed? Under the consensus that e-commerce is becoming more and more difficult to do, what kind of reality is there?
Fill in the information gap
How crazy was e-commerce?
In 2016, 18-year-old Yu Wen became an e-commerce seller, and at the age of 22, his company's annual net profit exceeded 20 million. Yu Wen's fortune artifact is "no source of one-piece dropshipping mode", no production, no purchase, as long as the product information is prepared, do a good job of the main picture, detail page, video, introduction details and other content, after the release of the product, the customer places an order, and the supplier completes the delivery. It's almost a profitable business.
The same piece of electric blanket, other people's stores sell 12 yuan 9, Yu Wen's store sells 58 yuan 9, although the price is high, but it is not worried about sales, plus high profits, but earn more. This seems a bit unbelievable, but it is actually because Yu Wen bumped into the personalized recommendation bonus of e-commerce.
The development of personalized recommendation technology enables the system to match the corresponding price range for users with different consumption power, and a user with 500 yuan of consumption power will not be willing to buy an electric blanket of 12.9 yuan. The system decided that these users would not see the 12.9 yuan electric blanket in the search results and recommendation information, and the users who were willing to pay for the quality were also trapped in the information cocoon.
Yu Wen seized the opportunity to ride the momentum, but his story is difficult to replicate because the rules of the game in the e-commerce industry have changed dramatically in the past two years.
The most significant change has come from consumers.
Consumers who have been besieged by the information cocoon of personalized recommendations are taking the initiative to get out of the invisible electronic fence. On social networks, the online shopping keyword strategy of replacing "home appliance shelf" with "angle steel shelf", and adding the origin of "Cao County" in front of the search term "Hanfu" is extremely popular. Consumers are exchanging ways to break through the information gap on the platform and the label of the crowd, just to buy more high-quality and inexpensive things.
Consumers have expressed their claims with practical actions: no longer pay for high premiums.
At the same time, the prosperity of various discount stores and affordable consumption places, as well as the rise of flat, domestic products and reverse consumption, all point to the same conclusion: rational consumption is replacing impulsive consumption of buying, buying and hoarding, and has become the new mainstream sentiment in the market.
The change in demand-side market sentiment is certainly related to the increasing downward pressure on the global economy, but the reflection of the new generation of consumers on overconsumption and vanity consumption is the internal driving force for the change.
Regardless of consumption upgrading or consumption downgrading, the core of rational consumption lies in the fact that consumers pay more attention to the quality of the goods themselves, as well as the matching degree between quality and price, and no longer pay for flashy marketing, hype and other add-ons, and spend money on the blade on the premise of ensuring quality.
For businesses that operate steadily, the underlying logic of doing business has not changed fundamentally, as long as they can get good things that match the quality and price, consumers will pay for them. And for merchants who are trying to make a fortune in the old way, this is definitely not a good thing - when consumers have the awareness of shopping around, or even pulling through the whole network for price comparison, it is difficult to sell the same thing to users at a higher price by playing poor information.
The shift in market sentiment has dismantled the basis of the game to make high profits from the information gap, but that's not all.
Welcome to the buyer's era
The reason why the change in consumer preferences can so profoundly affect the rules of the game of e-commerce is that the relationship between supply and demand has changed.
Affected by the phased shortage of supply and the phased outbreak of demand during the epidemic, production-oriented investment has increased in the past few years, and production capacity has been gradually released in the past two years.
When supply exceeds demand, the market enters the era of buyers, consumers grasp the initiative of the market, and the pricing power naturally shifts to the demand side.
The contradiction between supply and demand is more prominent in the e-commerce industry. In the past few years, affected by the epidemic, the loose monetary policy has prompted a short-term explosion of demand, coupled with the rapid development of the online economy, which has jointly brewed a promising state of the e-commerce industry, attracting a large number of people to join it in the nuggets.
According to Qichacha data, as of November 2021, there were more than 5.71 million "e-commerce" related enterprises in mainland China, with an average growth rate of 32.1% in two years. Among them, there are 393,000 "live broadcast" related enterprises, with more than 6,000 new ones in the first three quarters of 2019, 24,900 new ones in the first three quarters of 2020, and 264,000 new ones in the first three quarters of 2021, with an average two-year growth rate of 630.4%.
According to the National Bureau of Statistics, in the first three quarters of 2021, the country's online retail sales increased by 18.5% year-on-year; Among them, the online retail sales of physical goods increased by 15.2% year-on-year. From January to May 2024, mainland China's online retail sales reached 5.77 trillion yuan, a year-on-year increase of 12.4%. This figure is far lower than the growth rate of existing "e-commerce" enterprises, or even less than half.
The growth rate of people who try to share the cake is far greater than the speed of the cake bigger, which is destined to the end of the era of high profits for e-commerce sellers, and it is also destined to do e-commerce to pour things, make the difference, and get rich overnight. This is also the reason why many merchants are increasingly finding it difficult to do business, and at the end of the day, the market has changed.
If businesses want to make money and platforms want to develop, they must take the initiative to adapt to changes in supply and demand.
The new market environment requires a new competitive strategy. In the market environment of oversupply, the core competitiveness of e-commerce sellers must return to the goods and efficiency itself, and get cost-effective and high-quality things, so that consumers can pay, improve their supply chain efficiency and management efficiency, and retain their profit margins from the ultimate cost performance and do sustainable business.
Therefore, in the new competitive environment, it is difficult for businesses that do not have the core competitiveness of cost control such as production end and supply chain to survive, live for a long time and live well in the existing business environment. Once you have these capabilities, you can seize a new round of opportunities and complete take-off and transcendence.
Real kung fu and hard truth
The rotation of the main logic of business development is destined to make some people disappointed and some people proud.
Guo Hongkai, a post-90s Shandong guy, is the founder of Xiongjiashe, and in the Spring Festival of 2020, Guo Hongkai began to do Pinduoduo stores to sell children's handmade cotton clothes. Within a few months of the store's opening, orders for a belly circumference soared, from a daily sales of more than 1,000 orders, to a stable daily sales of more than 8,000 orders, and then to a daily sales of more than 200,000.
Xiongjiashe, which is mainly engaged in children's clothing products, has the highest price in the store and is only a little over 30 yuan. Xiongjiashe is located in Dezhou, Shandong, far away from the children's clothing industry belt, lack of raw material procurement advantages, and it is impossible to fight low prices head-on, which forces Xiongjiashe to find breakthroughs in terms of fabrics, colors, styles, functions, etc., to find incremental space in the market segment, find the blue ocean, dig out the differences, enlarge the long board, and form a comparative advantage in price under the premise of ensuring product quality. In Guo Hongkai's view, Xiongjiashe's core competitiveness is "better than the factory to know the operation, than the operation has a supply advantage".
The rise of Xiongjiashe stems from the fact that it echoes the market trend of rational consumption and oversupply. And the business that grasps the main theme of market competition at this stage and achieves leapfrog development is not an isolated case.
In the simple perception of the public, the sellers represented by Xiongjiashe have "rolled" the quality and price of goods to a new height, and in fact, the word "low price" is far from being as simple as it appears on the surface, its essence is the pursuit of quality and price on the demand side, the improvement of efficiency on the supply side, and so on The intricate changes that have occurred at the bottom of the market, but what is finally presented and strongly perceived by the public is concentrated on the word low price.
Low price seems to be a simple and crude evaluation index, but in fact, it reflects the changes in the market in essence, and as the most sensitive means of adjustment of the market economy, the price most truly presents the results of the game between demand and supply. The rules of the game formulated on the basis of the most fundamental market laws are not only the greatest fairness, but also the greatest opportunity.
For sellers who concentrate on products and efficiency, it is a false proposition that e-commerce is not easy to make money, because as long as you work hard and work hard, you can always get the most delicious cake.
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