Orchid Pavilion potential business models in China (2): The marketing costs Why so high?Wen / Li Yancheng Connected to the article 'Orchid Pavilion potential business model articles (a): a unique supply chain management' from a supply chain perspective with the Orchid Pavilion potential high-margin, high inventory turnover secret herein, this will continue to tap this The company is by what means to bring traffic to the site, will be pushed to the overseas consumer goods, as well as electricity supplier committed to the pursuit of a high repeat Nike Heels Boots purchase rates, as foreign trade B2C Lanting's ability to achieve? First look at a set of data, 2010, 2011, 2012 Orchid Pavilion potential sales and marketing expenses (or marketing costs) were 22.6 million, 38.46 million, 53.41 million US dollars, accounting for the same period the Air Jordan 4 Retro proportion of net revenue was 38.5% 33.1% and 26.7%. Comparative do local electricity supplier based website, Amazon 2012 marketing expenses accounted for 3.9%, the only product of 4.7% of the Orchid Pavilion potential high marketing costs a little scary that way, no matter how high gross margin Lanting , as a whole is also 'not significantly higher' again! Nike Shoes This is also the reason Lanting outbreaks in recent years, the scale of growth in revenue, gross profit margin improved, but failed to achieve profitability. 2012, net loss attributable to shareholders of Orchid Pavilion potential of $ 4.2 million in the fourth quarter alone quarter losses, net profit of $ 1,110,000. Logic of e-commerce is to repeat purchase by new users and achieve large-scale operations to reduce variable costs in large-scale basis, generating sustained cash flow, support further investment, the formation of ecological circle. Amazon, for example, the reason why marketing costs accounted for only 3.9 per cent, because the Amazon through improved user experience, has received a large number of loyal users. Amazon in 1999, has achieved a 73% repeat purchase rate, at present, the domestic electricity supplier website only product also achieved more than 70% repeat purchase rate. Because among consumers has formed a good reputation, with relatively strong user stickiness, they do not need to get new traffic or order volume, matching the same proportion of marketing expenses. These companies do with the core of the local electricity supplier than, Orchid Pavilion potential in marketing is indeed different, on the one hand to spend money to do marketing 'generous', on the other hand user stickiness 'lackluster'! Orchid Pavilion potential marketing costs actually spent where? Orchid Pavilion potential major search engines, display advertising, advertising, email marketing, and social marketing approach to promote the league. It can be said, Orchid Pavilion potential explosive growth in recent years, mainly due Air Jordan 18 to the entire team specializes in Internet marketing. Search --CPC paid to the United States, the overall situation of the electricity supplier website, for example, traffic from search engines up to 40%, about half of them have come from SEO, namely natural search, the other half is paid marketing to bring traffic. Also, search engines are the first major Orchid Pavilion potential flow inlet, according to Hitwise statistics, in March 2013, www.linghtinthebox.com visit North America, among them, more than 45% of traffic comes from Google, followed by social networking site Facebook which brought about three percent of the flow, the other including eBay, Yahoo! Search, Bing, Ask, Yahoo! Mail, Amazon and other sites to bring traffic for about 2%. Search engine for delivery, according to CPC Lanting pay pay-per-click costs in accordance with, when users search for specific keywords in the search results, click the Orchid Pavilion potential ad, or click on a search when the user browse the Web When the engine matches the contextual advertising, Lanting will follow each click, paid to the search engine or affiliate sites fixed costs. According to the prospectus disclosure, currently, Lanting on Google and other search engines in 17 languages at least put millions of keywords. Alliance distribution - sales paid by Orchid Pavilion potential established affiliate marketing programs, and to attract partners to provide users access to content and tools, when users Lanting affiliate site access and the Orchid Pavilion potential purchase of goods, Orchid Pavilion potential you pay a sales commission to the affiliate site according to a certain ratio. Reference: LightInTheBox affiliate program introduce social marketing at the same time, Orchid Pavilion potential as well as specialized marketing team on Facebook and other social networking platform for social marketing, and enhance brand exposure. Facebook Lanting successfully brought no small flow of about 3% of the traffic comes from the US Facebook website. Lightinthebox.com on Facebook has 23 million 'praise', there are 3.5 million people participated in Air Jordan 3 Retro the discussion of the special page; MinInthebox there are 138,000 'like'; but it is only a fraction of the Amazon, amazon.com on the facebook 'like' more up to 18 million, there are 145,000 persons participate in the discussions. In addition, display advertising and major revenue means of e-mail marketing is Orchid Pavilion potential, Lanting has been put on a show ads on more than 100,000 media sites. 2010, 2011, 2012, Orchid Pavilion potential marketing expenses were 22.6 million, 38.46 million, $ 53.41 million; mainly spent on marketing programs in the same period, the proportion of net revenues were 31.9%, 24.6%, 22 %; expenses accounted marketing staff does not exceed 10% in 2012 down to 4.7%. In fact, high marketing costs, Orchid Pavilion potential not only one, the majority of China's foreign trade B2C website marketing expenses are high. Take 2006 foreign trade B2C website DealExtreme.com on-line, the company in 2010 to be 'EPRO (HK 08086)' The acquisition of the market, and is easy to treasure the current main source of revenue. EPRO company ended fiscal year 2012 revenue of HK $ 1.416 billion June 30, 2012, and (where electricity supplier business DealExtreme contribution 1,284,000,000) Gross profit was HK $ 613 million, gross margin was 43.3%; marketing expenses amounted to HK $ 379 million, proportion of total revenue was 26.7%; 2012 profit of HK $ 131 million, net profit margin of 9.3%. What trade electricity supplier website marketing reasons for the high cost is? Why is difficult to form user stickiness, achieve a high percentage of repeat purchase? With more and more advanced Internet technology, including search engines, social networks and other Internet marketing tools, more and more logistics more convenient, more secure and reliable online payment, the low-cost Chinese-made goods sold overseas C end consumer chain gradually reduced. When the Orchid Pavilion potential, DX, a large dragon net and Milan was first opened up this market, there are plenty of small foreign trade companies rise, and follow their marketing model, through the Google purchase keywords, search engine optimization, social marketing, email marketing and other means, to China's 'knockoff' sold the hands of foreigners. However, these very competitively priced 3C, clothing, accessories and other products, most are 'like products', 'knockoff', their low price, the lack of a real sense of brand, Nike Basketball product and service quality is difficult to guarantee. Orchid Pavilion potential, DX these target user foreign trade B2C, mostly not the mainstream power business user groups, but relative 'Cock wire' some, their high price sensitivity, brand, quality and service is not much requirement, where There are bargains on where they buy. Moreover, as more and more participants in foreign trade B2C, always someone can offer lower prices than you, it is difficult to make the user groups have a strong dependence on a website. Therefore, resulting in high Lanting foreign trade website marketing expenses, repeated consumption low The first reason is that they choose the market to determine the price of their user base generally highly sensitive, often 'cheap' and metastasis. The second, more participants, but the goods to overseas markets, generally using a search engine marketing this set, in the auction of more keyword prices naturally go up. Third, the main wedding, 3C, accessories, these categories themselves frequency of consumption is not high. Orchid Pavilion potential prospectus did not disclose its repurchase rate and orders data, only the total number of users, repeat purchase user contribution revenues, revenues of these new users purchase data, these data showed that repeat purchase revenue accounting the proportion of total revenue is gradually rising, 2010, 2011, 2012 were 14.91%, 17.97%, 24.69%, but overall, the proportion of repeat purchases is still relatively low. Second, users of our conservative assumptions consumer repeat purchase only twice a year, can be roughly inferred Orchid Pavilion potential customer price, 2010, 2011, 2012 were approximately $ 117.8, $ 111.6, $ 70.7, customer price dropped significantly Air Jordan 17 . Good sign that repeat purchase revenue accounted Lanting is rising, and marketing spending growth has been significantly lower than the revenue growth. The following figure, Orchid Pavilion potential from 2011 Q1 to 2012 Q4, marketing expenses as a percentage of revenue overall downward trend in Q4 2012 has been reduced to 24%. Orchid Pavilion potential reason why many foreign trade B2C website stand out, partly because it is relatively early discovery and tap this market, on the other hand with the founder of search engine marketing team proficient close. Lanting team attached considerable importance to the use of the Internet means mining commercial value, they are willing to spend money on the keyword, and have their own set of algorithms developed to detect and adjust keyword combinations, leading to the highest possible return on investment ROI. Their advantage in the SEO search engine optimization is the envy of others does not come. Orchid Pavilion potential marketing expenses accounted for the recent downward trend is quite obvious, is the increased proportion of repeat purchase revenue and marketing efficiency dual role, but this trend can continue to be maintained, there is much room to fall, is still a question. After all, this trade electricity supplier company's current market position and growing way, constitutes its user stickiness difficult to cultivate, the proportion of expenditures difficult marketing expenses dropped significantly. (Via i stocks) [Welcome to search on a micro letter 'txws_txws' Follow our official micro-channel, 6 a day to miss the wonderful article. ]