All the secrets of “low price explosion” are in the factory that sells billions of dollars in this year.

2018-07-13

Two factories, from Jiangxi, sold more than 261 million packets of paper towels in only two years, called a legend of Jiangxi’s manufacturing industry.

The “paper towel” explosion and the factories behind them become the epitome of speeding up the development of many “low price explosion” models. This mode has also made this speeding Growth Company controversial.

Can cheap really have good goods? Does the cost of “9.9 seconds kill” really cost nothing?

With the problem, the titanium media visited Ruichang, Jiangxi, where the two factories are located. Ruichang is a county-level city in Jiujiang, and one of the satellite cities of Jiujiang’s economic development. One of them was the old brand factory (Ke Xinrou) with the industrial background of nearly 20s, and the other was a newly built brand of new brand, living in the same industrial park.

It is understood that the two factories in the two years completed a total of about 9320000 orders, the peak period even “one day to sell 200 thousand”, once exploded the local express logistics; in order to adapt to the rising single quantity, two factories even built up the logistics system, to make up for the shortage of third party logistics.

Accompanied by more than two years to achieve explosive growth, many “brand” also enjoyed the same dividend. “9.9 seconds to kill” the low price collage mode, let the collage in a very short period of time to harvest 300 million users, and also let some of the surplus capacity of the large army to achieve a gorgeous turn, with their own brand and considerable profits.

Why do two factories become “paper towels and double heroes” on many platforms?

One bag makes 3 cents, and the cost structure behind “explosion”.

The two brands of plant protection and Ke Xin Rou have many spells together with “fortune”. They are doing business with a paper towel in a park, but they have completely different backgrounds.

Ke Xin Rou is an old generation factory of more than 20 years. It has been a foundry product for many years, such as Auchan and big RFA. Plant protection is a pure online young brand, founded by five college roommates. It has only been 4 years since its establishment.

Both factories went into a lot of competition in 2016, and quickly grew up to become TOP sellers with lots of price and word of mouth advantages. Titanium media, according to the sales records of many APP, before the press release, Kexin’s single product “bamboo quality” has sold 1 million 660 thousand copies.

On the day of March 31st, in the Kexi factory, the paper towel, priced at 29.9 yuan, was packed into the next door Logistics Workshop through a pipeline.

3 layers, 100 pumps, 300 packages per pack, according to 28 package specifications, the average price per package is 1.067 yuan. The titanium media also looked at the price of similar products. The price of the “Silk enjoy” series in Tmall supermarket was 57.9 yuan, with an average price of 2.41 yuan per package at Tmall supermarket. That is to say, only 20 more per package and more than double the price.

What is the low price that can be achieved?

Wu Li Ying, the responsible person of the ecommerce, introduces to the titanium media that the cost of each package of paper towels is 0.125 yuan per package, the cost of production is 0.91 yuan / package, and the net profit is only 3.2 cents a package. That is to say, the specification of 29.9 yuan and 28 bags is only less than 9 cents per profit. From the user evaluation, most consumers give the “good quality” praise.

Under the premise of quality and first-line brand, the key to low cost is customized products and compressed supply chain. Wu Li Ying told the titanium media in this way.

Through sales volume and data, Wu Li Ying also found that many users were more concerned about the cost performance, and felt “wasteful of paper towels”. To this end, the factory specially launched the 180mmX122mm small size bamboo pulp original color drawing paper, and moved the production line to the raw material supplier Science Group’s Park. The transportation cost fell from 300 yuan / ton to " 8 yuan ".

The “Li Wen group” mentioned by Wu Li Ying is a raw material papermaking group. It was founded in 1994 and was listed on the stock exchange of Hongkong in 2003. The industrial park, located on the Yangtze River, covers an area of 1 million 600 thousand square meters. Besides the factory buildings, the park has also set up supporting industries such as logistics and electricity supplier parks.

At the dock not far from the park, a ten thousand ton freighter, which has just landed, is loaded with Eucalyptus board imported from Canada, Chile and other countries, as well as bamboo pulp from Sichuan and other places at home (above). The lifting arm of the dock is continuously hoisted, and the raw material is sent to the Li Wen group workshop 1 kilometers away.

In the full automation line of Li Wen, the pulp of raw material has completed the process of beating, drying, paper making and quality inspection. It has become a “large paper towel” of 2.5 meters, length, 2.8 meters, and the minimum weight of more than 2 tons.

Subsequently, these “large size towel” will be shipped to the two factories of the plant and Kexin, processed from raw paper into paper towel products. In the factory, dozens of production lines are all horsepower, paper napkins are quickly cut into small packages of paper towels, 8 packages are arranged in a row, push into the automatic plastic sealing machine, package seal. The whole process takes only 10 seconds, and tens of thousands of times a day.

Up to now, the two factories have sold a total of about 9320000 units in a lot of competition, and they can sell 200 thousand orders in two days or even one day. If the uniform is calculated according to the specifications of 28 bales / sheets, the two companies are equivalent to selling 261 million packages of tissues.

The mutual accomplishments of collage and factory

In recent years, with the “Made in China” all over the world, China’s cost of labor and the cost of raw materials have also increased along the way, which is the direct cause of the reduction of foreign trade orders. Finally, many factories have fallen into a vicious cycle of continuous reduction of orders, inadequate use of machines and higher production costs.

The rise in production costs has resulted in more and more intensive industries, that is, a small number of large factories monopolize a large number of foreign trade orders, and those small factories that can not get the foreign trade list can only turn to domestic sales.

The problem is that the domestic market is not a good way to go.

On the one hand, the cost of production is increasing, on the other hand, the domestic line is very long, from the front to the low line city, the cost of the circulation of the whole channel is very high.

Take the factory of Xin Rou as an example, the factory was built in 2001. It used to be a substitute for oan and Da Yun hair for 20 years. In 2010, this generation factory began to build its own brand. After that, it began a difficult exploration of offline retailing.

At the end of 2014, the online hard encounter began to contact the online business platform. However, a traditional enterprise transformation to do e-commerce is also not easy, on the line of different types of playing, the positioning of goods, flow and other problems are in front of the ridge.

By the end of 2016, Kexin found many spells through the introduction of “neighbor”. At that time, many industries in the major industrial zones were moving together, and they were also looking for factories with large capacity and brand building capability.

At that time, a lot of teams gave Kexin’s suggestion to reduce the product line, the main explosive products and reduce the operation cost.

After opening the cooperation, we have tried the specifications of many kinds of paper towels, and finally set the “28 packages, 29.9 yuan” specifications as the main brand. Such pricing, on the one hand, has a profit for the brand, and on the other hand, it can quickly detonate the market. In terms of traffic volume, a lot of it has also been given to the recommended position of Kexin’s home page, which made the product achieve 3 million sales on the day of the online sale.

Over the course of the two years of development, nearly a thousand “collage factories” have been hatched in the process of development, and the quantity of orders has been increased by several times and even dozens of times.

How did the “mutual achievement” between the brand of the factory and the spelling of many products come true? There are three aspects of the co-founder dada.

  • Take the commodity as the granularity.

In the combination of more, more goods are presented in the form of a single product rather than the brand. In the past, with the multi SKU model of the brand as the granularity, the production capacity of the brand is very high and the cost is very high.

And in a lot of exploding mode, focus on the depth rather than the width of SKU. Brands can concentrate their capacity on 2~3 core products. On the one hand, we can reduce the product line, compress the middle link, improve the scale to reduce the cost. On the other hand, it also stabilizes the supply chain, making the factory more resistant to the volatility risk of raw material and artificial cost, and less SKU model stock.

  • Save intermediate costs through the C2M mode.

C2M that is, consumer demand directly to the factory, according to Dada, a lot of businesses do not charge any entry fees to merchants, nor do they receive commission. For the brand, saving the cost of the channel can give consumers lower prices of goods, thus creating a burst of money. For the platform, it also gains a lot of traffic.

  • Small costs are branded.

The competitive e-commerce market, “thousand people thousand face” type of commodity recommendation has become an e-commerce platform, but most consumers still use the past search and shopping model. In this mode, businesses spend a lot of money to buy advertising sites, keywords, and convert traffic into transaction volume.

Collage has achieved some degree of “de centralization”, cut down the link of traffic purchase, and the early commodity of the multi platform is mainly transmitted through the share of consumers – it is almost zero cost conversion to the brand for the brand.

However, such a low price explosion mode has also been criticized for many times, and has been called the “consumer relegation giant” by the outside world.

Dada said it was misunderstood. In essence, the problem of trying to solve is the asymmetry of resources. “Through the form of bursting, the original excess capacity is transported to those who pay more attention to the price ratio.”

A factory brand – like a paper factory – a spelling factory like a paper towel factory – is not in fact a high premium; but the “spelling factory” wants to give consumers a “good enough”.

“What we are thinking now is not to be a big international player. What we want to do is to meet the needs of most people, that is, enough use is enough to return to demand itself.” Dada said. (this article starts with titanium media, interview, author / Xie Kangyu)

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