New Egg China may lose money in recent years

On March 11th, it was reported that after the acquisition of the baby and children's e-commerce website Red Children in September last year, Suning Tesco will acquire 3C digital e-commerce site New Egg China.

Regarding this, relevant personages of Suning Tesco told the reporter of “Daily Economic News” that the major investment transactions need to be disclosed by the listed company and have not been informed of this news. When Zhou Zhaowu, president of New Egg China, was interviewed by the reporter of “Daily Economic News”, it was very clear that the acquisition rumors were not true and the company would maintain independent development within two or three years, and would not consider financing or mergers and acquisitions.

This year sales are expected to reach 3 billion

In 2001, the United States New Egg Network was formally established. In the same year, its Chinese website was formally launched. It can be said that New Egg China is a pioneer of China's 3C digital B2C website, but it is currently caught up in the status of “early morning and late one night”.

Jingdong Mall was launched in 2004. Since then, while Jingdong Mall, Yi Xun, and other follow-up competitor performance continues to grow at the same time, New Egg China is struggling, increasingly trapped in the quagmire of marginalization.

According to a research report issued by iResearch, in 2011, when major B2C websites drastically “snipped”, New Egg China’s transaction amount did not retreat, and its year-on-year growth rate was - 16.7%, and it is the only B2C website with a negative growth in transaction volume in the Top30 list of China's B2C online retailers.

IResearch recently released the "2012 China's self-selling-based B2C shopping site market share," the list, the top ten spots have long disappeared from the sight of the new egg network. And Jingdong Mall, Suning Tesco, Amazon China, Dangdang.com and Yi Xun.com and other newcomers in China have occupied the top five positions in the industry.

Zhou Zhaowu does not care much about this. He said: "We are actually different from other e-commerce models in the country. Like Amazon, it is one of the models to lose money after 7 years of profit. Our goal from the beginning is to make profits. The United States is still the major global market, the Chinese market. Both logistics and logistics facilities are not mature enough, and the larger the scale, the greater the losses. The momentary market size does not mean anything. For instance, I lost money to sell the goods to seize the market. The scale naturally goes up, but does this make sense?

Zhou Zhaowu’s idea appears to be somewhat different in the area of ​​China’s e-commerce that is popular for buying the market. The reporter noted that New Egg China’s 2011 loss accounted for 2.5% of sales, and related data showed that in 2011 China’s B2C e-commerce sector, the burned money market became a rule, causing the industry’s average loss to account for sales. The proportion of about 7%. In comparison, New Egg China's share of this data is only 1/3 of the industry average.

Zhou Zhaowu estimated that New Egg China’s sales this year are expected to reach 3 billion yuan, which may turn a profit.

Rejected "acquired" within two or three years

In fact, New Egg China has begun to scale down and reduce costs. The company currently has approximately 1800 employees. In the second half of this year, the office area will also be moved from Jing'an District to Jiading District. Zhou Zhaowu repeatedly stated that "we will not consider mergers and acquisitions or financing within at least two to three years, and we will maintain independent development."

Lu Zhenwang, an analyst in the e-commerce industry, said in an interview with the reporter of “Daily Economic News” that the growth trend of 3C industry has slowed down. Tmall, Jingdong Mall, Dangdang, and Tesco are all robbing this market and will inevitably make the competition even more competitive. fierce. "Within two or three years, no one can expect to sell 3C digital to make money. The e-commerce industry is still focused on service capabilities and economies of scale. From this point of view, New Egg Network has fallen far behind. The current situation is not good for it. ”

In order to cope with the predicament, since 2012, Xin Eggnet has pushed for an "open platform" strategy, hoping to attract more businesses to new eggs. Zhou Zhaowu also had to admit that the gross profit rate of department store products was relatively high, which greatly contributed to profitability. "The price of 3C products has become increasingly transparent and it is difficult to achieve high gross margins."

However, the industry response to this is rather cool, and believes that the acquisition may be the best choice for New Egg China.

Lu Zhenwang believes that at present, New Egg China still has certain value. It is very focused on the 3C category, and it can have more than 2 billion yuan in sales each year. In addition, its technology system is also very advanced, which are all missing from Suning. “3C is a very large category with 50-60,000 items, and Suning’s is probably only a few thousand, and rebuilding an independent procurement system requires a great deal of cost and may complement the new egg.”