Author | Liu Chunxiong Source | Teacher Liu's Forum (ID: liuchunxiong1964) Because there is great controversy over Jack Ma in WeChat groups, I shared my views, purely from a marketer's perspective. In the past, I was greatly influenced by Jack Ma in business, but fortunately I've now figured things out. It's also my fault for being too slow to adapt—serves me right! Unexpectedly, someone recently took interest in my views and posted them online, so I might as well supplement them to be more comprehensive. Here are a few viewpoints: Alibaba contributes to incremental growth If Alibaba contributes to incremental growth, then it contributes to economic development. The industry generally agrees that B2C brings incremental growth, while B2B does not. Let me talk about my own family's consumption experience on Alibaba.

  1. Many infrequently used items are not available nearby, and they aren't necessarily essential. If they can't be bought offline, we simply do without. But Taobao and Tmall can provide them. So consumption increases.
  2. Because shopping on Taobao and Tmall is very convenient, the frequency of consumption has increased invisibly.
  3. In my household, my wife does offline shopping, and my daughter does online shopping. My daughter's online purchases are clearly of higher quality, so our household consumption has upgraded. From my family's online spending, Taobao and Tmall do contribute to economic development. E-commerce is a new platform for mainstream shifting People often criticize Taobao and Tmall for low prices and counterfeits, but I've observed another phenomenon. In recent years, most companies' attempts to upgrade products offline have failed, while online product upgrades are accepted relatively quickly. Traditional channels are becoming a resistance to product upgrades. E-commerce channels, because they directly face demanding consumers, are actually accepted faster by consumers. I know a distributor who looks for new products directly from e-commerce; whichever new product sells well online, he introduces offline. While others' sales decline, his sales are rising, and he's a new distributor who has only been in the business for two years. In the past, new products were launched offline first, then online, with online used for clearance sales. Now it's almost reversed. Today's Alibaba is no longer the platform that only discounts and clears inventory. We should pay more attention to Alibaba's changes. "Price killer" is a convention of retail innovation Retail theory has a "wheel of retailing" hypothesis. Most retail innovations adopt a "three lows" strategy: low cost, low gross margin, and low price. When it succeeds, it inevitably attracts imitators. As a result, intense competition forces them to adopt non-price competitive strategies, such as adding services, improving store environments, etc., which inevitably increases expenses, turning them into high-cost, high-price, high-margin retail organizations. Meanwhile, new innovators with low cost, low margin, and low price characteristics emerge, and the wheel turns again. Supermarkets, discount stores, and warehouse clubs all developed along this pattern. When Walmart first started, its ordinary goods were 20% cheaper than competitors, and brand-name goods were 50% cheaper, completely changing the retail ecology of American towns and satellite cities, where most Americans live. So, the price killer is a convention of retail innovation; it benefits consumers and drives industry progress. In fact, e-commerce has now become "three highs" and may be the next target of revolution. Retail is too overbearing; new formats are needed I'm in business, and I know which industries have retail markups of 10 times or even 20 times. These are also the industries most affected by e-commerce. This includes the industry of a certain entrepreneur who recently proposed a motion at the National People's Congress; the retail in that industry is too exploitative. Without e-commerce's low prices, consumers wouldn't realize how much their "interests" have been damaged. Who is cursing Jack Ma? One group is those whose business is affected, or those who need an excuse even if not affected by e-commerce. The most affected is retail, but there aren't many criticizing Ma; rather, upstream manufacturers criticize him more. If B2C contributes incrementally, manufacturers should be happy. But now, coinciding with mainstream shifting and product upgrades, offline upgrades are difficult, so e-commerce becomes the culprit, and Jack Ma the ringleader. In fact, those who curse Ma the most are in industries where e-commerce's share is low, and sales decline has little to do with e-commerce. I think cursing Ma in such cases is shirking responsibility. Another group is those who use the internet to curse the internet. Because some people have resentment toward e-commerce, and cursing the internet is popular, it becomes "politically correct" to curse it. Some even curse e-commerce on stage while secretly forming strategic partnerships. The third group is some experts. They dislike Ma's various concepts, his "playing God," and his Ma-style chicken soup. In short, Ma is not rigorous but is still sought after. Counterfeits and shoddy goods: Ma suffers for others Subjectively, I don't believe Jack Ma wants to sell fakes, but it's a fact that they exist on the platform. I can only say, online is a reflection of offline. If online is worse than offline, Ma's sin is deep; if online is better than offline, Ma still has merit. Regarding counterfeits, I don't believe anyone has a solution now. Previously, people blamed the government; now they shift to Jack Ma. Offline, it's hidden, and complaints have no outlet; online, it's visible, and complaints have a target. If manufacturers don't open stores, it doesn't mean distributors don't. For counterfeits, Ma suffers for others. Furthermore, Ma hasn't solved the counterfeit problem, but he has basically solved the shoddy goods problem. Because of 7-day no-reason returns, selling shoddy goods is not cost-effective for merchants. One year during "Double 11," a famous brand used inventory for promotions, and the return rate exceeded 60%. That's the price. Of course, there are exceptions. Jack Ma's new concepts Jack Ma is a very sensitive person, also very emotional, and has strong conceptual abilities. Many of the new concepts he proposes are actually good, but not very rigorous, with unclear connotations and denotations. Scholars don't like this approach. When scholars discuss, they like to say, "Let's define terms first." In the internet era, China seems to have entered a "no-man's land." Who can easily define things? Everything is changing rapidly. Alibaba CEO Daniel Zhang said that experts' summaries have nothing to do with Alibaba; Alibaba is fought out. Conceptual ability is a very important ability, the highest-level ability. Ma has it, and we all benefit from it. There's no need to demand he be as rigorous as a scholar. Who will e-commerce kill? E-commerce can't kill anyone. The characteristic of retail innovation is symbiosis, not revolution. Revolution means I kill you; symbiosis means forming a new ecosystem together. The most traditional grocery stores still exist and will continue to exist. E-commerce won't be the only ecosystem. But it's possible for all formats to use the internet as a tool, and it's possible for the share of various retail formats to rebalance. Don't take the bet between Jack Ma and Wang Jianlin too seriously; it's just a media gimmick.

Many of us verbally advocate innovation, but adopt a "zero tolerance" attitude toward its flaws, being overly critical. This is not true encouragement of innovation; encouraging innovation requires tolerating flaws.

A newborn baby is immature. If it matured in the womb before birth, it couldn't be born. Zhao Bo's comments:

  1. Taobao is essentially an online wholesale market, and online matchmaking makes business competition more brutal.
  2. The commercial value of Taobao's matchmaking model is that at a certain stage it enriched products, increased consumer convenience, and reduced costs.
  3. Taobao's rules dictate that merchants must use lower costs and higher channel promotion expenses to acquire customers, rather than meeting users' personalized needs. Hence, fakes and low-price, low-quality products are rampant, which is widely criticized.
  4. When users begin to upgrade consumption and reach a certain level, they will inevitably leave Taobao, or leave matchmaking-based trading platforms.
  5. Consumption upgrading is a broad concept. Simply put, quality, scarcity, emotion, scenario, brand, story, performance, experience, and belief may all be core factors for future product premium. Qiu Pu, VP of Public Affairs at Eternal Asia, comments: E-commerce reducing transaction links is progress; but e-commerce stimulates fierce competition at the value end, making the self-repair period for traditional manufacturing enterprises difficult. The difficulties and problems facing manufacturing development stem from multiple aspects: both enterprises' own business decisions and the inevitable pains of industry transformation and upgrading; both the impact of macro-environment changes under the new normal and imperfect policy environments and non-standard competition order. There are also enterprise-internal reasons. First, insufficient R&D capability and thin profit margins—this is an inevitable pain of industrial transformation. Second, structural contradictions in industry remain prominent. Third, investment pressure during the transition period is increasingly prominent. Operating costs rise rapidly, and market demand remains weak. International investment, trade, and consumer demand remain sluggish; domestically, entering the "new normal" stage, the release of incremental market demand is long-term and slow, and short-term market growth remains weak. Manufacturing should focus on enhancing its own core capabilities. Using "justice" in the title is meaningless. Business pursues profit; that's why Jack Ma became Jack Ma. Teacher Liu Chunxiong's supplement: Alibaba's biggest problem is not what Zhao Bo said. An e-commerce expert's remark woke me up. Alibaba is a closed search system, and its limited attention resources (positions) conflict with the huge number of merchants: unless you bring your own traffic, you must pay to buy traffic (positions). As long as the best positions can still make money, someone will pay higher traffic fees. Thus, the sum of profits of all merchants in the system is zero—a zero-sum game. This conclusion can be proven mathematically, and it's what Alibaba fears most. So Alibaba proposed the concept of empowerment to alleviate this problem. In Alibaba's system, profitability depends mainly on two factors: first, whether you bring your own traffic; some merchants and products have strong stickiness, like Jiang Xiaobai, which brings its own traffic and does well; second, whether Alibaba supports you as a strategic unit. A large number of merchants don't make money on Alibaba; some say 95%, but no one knows the real number. Why do they still operate? It's like when KA (key accounts) entered mainland China 20 years ago: they subsidized KA with channel profits until now, only to find KA is also struggling. Merchants operating both online and offline treat Alibaba the same way they treated KA before. This determines that Zhao Bo's scenario won't occur. Alibaba now has two contradictory phenomena: first, as a clearance platform, it indeed discounts heavily and is criticized; second, it's also a testing ground for new products, as it directly meets consumers, making it very effective compared to the "layer-by-layer veto" in channels. So Alibaba also sees faster new product upgrades than traditional channels. The current channel situation is particularly unsuitable for launching new products. On the 6th, I discussed this at a distributor meeting. The meeting had 20 big distributors with annual sales from 10 million to over 100 million yuan. Using traditional distribution and promotion methods for upgraded products is very difficult. Actually, a better method for upgraded products should be targeted distribution and fan-driven sell-through, but they don't know how. -END-