Zhang Jindong: Internet brings new profit model

On September 12, Suning announced an open platform strategy named Suning Pantai. This is the third step of Suning's transition to an Internet retailer following the “go to electrical appliances”, online and offline same price. On September 15, Suning signed a strategic cooperation agreement with Lindex, an internationally renowned fast fashion brand born in Sweden, and became Lindex's distributor in the mainland. With the O2O integrated retail model, Lindex opened online and offline franchise stores.

In the new business logic, this open platform will take its own path and take a different profit path from other platforms.

"Technology promotes industrial progress," and the Internet is promoting new remanufacturing of various traditional industrial models. The impact of the Internet on the retail industry has been diverted from the early sales diversion and pricing power, and it has reshaped the entire industry chain and changed the profit model.

Zhang Jindong, who was in desperate years, is taking the lead in the transition of the giant ship Suning Yunyun. On the eve of Suning’s opening platform strategy, the “First Financial Daily” exclusive dialogue with Zhang Jindong, chairman of Suning Cloud Business.

Before talking to this reporter, he just saw a group of institutional investors. "I told them that Suning is not a traditional retail company, but an Internet retailer." Zhang Jindong's voice is a bit hoarse, but the tone is resolute, "We are an Internet company."

He works more than 10 hours a day. In the last year or two, he has also frequently contacted IT giants or investment giants such as: Li Zaijun, president of Samsung Electronics; Bill Gates, CEO of Microsoft; and Ballmer, CEO and chief investment officer, Buffett. And so on, they even went to Seattle's e-commerce giant Amazon for several visits.

"Next month, I will go to the United States to unveil the Sun Valley Cloud Computing Silicon Valley Laboratory." Zhang Jindong clearly sees that Silicon Valley has the most cutting-edge technologies and talents of global technology companies. To a certain extent, it represents the most of Internet companies. Cutting-edge business models and trends.

As the largest traditional retailer in China, how can the transformation of Suning Cloud Commerce explore a healthy and sustainable new model for the entire traditional industry, especially the traditional retail industry?

Transforming the Internet: Changing the First Financial Daily from the Inside: Why Suning is Transforming to Internet Retail Companies?

Zhang Jindong: The Internet is actually just a trigger for transformation; but if we do not integrate into the Internet, we will certainly be eliminated.

Previously, Suning's traditional profit model came from supply chain procurement; in the retail industry, marketing transformation and transformation was the earliest I proposed. Now under the impact of the Internet, it is actually wondering whether the profit model needs to be changed. The Internet helps us find new profit models.

Daily: The Internet can eliminate many information asymmetries. Before the wave of the Internet, many companies felt that the services they provided were very good, but after the Internet was driven by such scattered and powerful demand, it often revealed some problems - whether the company could provide the most in the entire system process. What is optimized? The greater the impact of the Internet on the company, the more it can motivate the company to improve its morale.

Zhang Jindong: Right. At different stages, Suning has also undergone several transitions. The scale of the company, the opportunities it faces, and its future development plans are all different. The first time in 1990 Suning started with air-conditioning franchise; the second venture was in 1999, Suning began the national chain; the third venture was Suning began to transform intelligent technology companies - Internet retailers. Despite being in a new transition period, Suning will stick to what he has already formed and insist on going in accordance with the direction of transformation.

Daily: Perhaps due to the start of the traditional retail industry, Suning's impression still persists in the past—power is concentrated, employees are executors, and execution is powerful. How to make Suning culture more open and transparent?

Zhang Jindong: (Opening up) is not a simple topic. It must be based on the fundamentals of the company and the breakthrough in corporate culture. The things to be changed are internal things. We will definitely be open, but this is a gradual process. We need to grasp this degree. We must change from the bones and embrace the Internet, not just chase some superficial things.

At different stages, different cultures need to be chosen. The traditional chain competition is the standardization of unity and rapid replication. Therefore, people pay more attention to the obedience and implementation of the people. Internet companies compete creatively and openly and collaboratively, and therefore pay more attention to human autonomy and equality.

Corporate culture can neither be fixed nor rest on its laurels, nor can it be completely negated and pushed back. Now, everyone's strength is actually a representation, such as: strong management, unified clothing. However, what we really are really transforming are bones, such as organizational system reforms, equity incentives, technology research and development, the introduction of Internet talent, creating an open platform, investing heavily in R&D centers in Silicon Valley, and so on. We are changing the tradition and embracing the most advanced Internet technologies and talents with an open mind. I think this is the core of the Internet culture.

Daily: However, why public awareness still stays in the previous stage?

Zhang Jindong: The Internet is a tool that has spawned many formats, information, instant messaging, entertainment and games. Even e-commerce has many models. The O2O model that we created is not only under the transformation line but also the transformation line, which enables online and offline integration. This is completely different from the existing e-commerce model, and the reference frame cannot be found at home and abroad. A characteristic model of peers, so the public's understanding and acceptance requires a process, which is like the popularity of online shopping has also been going through many years. In essence, we are not staying in the past, but walking more ahead.

The offline resource is the entrance daily report: In the new business logic of Internet retailers, what is Suning's new profit model?

Zhang Jindong: Suning's comprehensive Internetization essentially means to maximize the marketization and socialization of corporate resources according to an open platform, so as to gather the resources and wisdom of brand owners, retailers and service providers, and create a win-win platform. Provide consumers with the richest products and best experience.

I also think about where our strengths lie after full Internetization. For example: Tencent is QQ, Ali is Taobao, what is Suning? I don’t think we have changed in essence – retail service providers, but using Internet to provide services, supply chain logistics, Internet financial services, etc. will be Suning's future profit sources.

Daily: In fact, online e-commerce companies should be grateful to Suning and Gome. Many people must first go to Suning's chain stores to look for products and become familiar with the products online. Store operators actually help e-commerce companies complete consumer education awareness. From an open platform perspective, what advantages and disadvantages does Suning have, and how does it compete with existing open platforms?

Zhang Jindong: Suning has accumulated hundreds of millions of customer resources over the past 20 years, more than 1,600 stores across the country, access to more than 2,800 districts and counties of the country's logistics network resources, rich experience in retail operations and supply chain management experience, all of which are After the release of the open platform, it will be fully open to the outside world and it will truly become a shared resource for the entire society, leading the innovation and transformation of the entire industry.

In the past, the flow of the Internet may be our short board, but now it seems that it is an advantage, so that we will not be struggling to deal with the impact of traffic, and can use for some time to establish an advantage, can not be copied, that supply Chain logistics.

At present, more than half of Suning's "Logistic Cloud" project has been completed, and it has obtained national express delivery licenses and regional licenses for 34 provinces in China. According to the plan, Suning will transform its internal logistics into a third-party open logistics, and further accelerate the construction of logistics. By 2015, it will build 60 large-scale logistics bases, 12 small-size picking centers, and 5,000 self-elevation points. It is understood that Suning's open logistics does not simply provide warehousing and transportation services, but integrates intelligent inventory operation management and supply chain services provided by Big Data, Internet of Things, and information technology.

On Suning's open platform, Suning will transform internal corporate logistics into third-party open logistics, comprehensively accelerate the establishment of end-to-end financial solutions and value-added service capabilities from consumers to merchants, and open up big data capabilities to partners.

Daily: In this mode, Suning's huge offline store network will be given what mission?

Zhang Jindong: E-commerce and offline stores are complementary. We will not abandon offline stores. Under the line carries the unfamiliar product experience function, but also can provide display, promotion, after-sales and other services. This is what we call the "O2O online and offline services."

The core means of traditional retail development users is the channel, and the channel is the one to get the world; the first element of the competition in the Internet era is the entrance, and the importer has to be the world. Suning's comprehensive transformation of the Internet is to clearly contend for the strategic direction of the entrance and occupy the high ground of competition in the O2O era.

Before the end of this year, Suning will launch the first batch of 1.0 Internet stores in Tiguan Guangzhou, Shenzhen and other first-tier cities, and accelerate replication and promotion throughout the country. Such as the entire store opened free WIFI, the implementation of the entire product of the electronic price tag, the installation of multimedia electronic shelves. Previously, one of the major reasons why people did not shop online was that they couldn't compare—you couldn’t determine if the price under the line was the most reasonable and cost-effective; if you could compare in real time, some customers would choose offline real-time purchases.