From Netease Koala Renamed Koala Sea To Buy, See The Second Half Of Cross-Border Electricity Supplier

In the increasingly tight market, cross-border competition in the field of electricity providers has become increasingly brutal and intense. Facing the competition of the head enterprise on the traffic track, it is bound to move towards the Matthew effect.

In September 6th, Alibaba and NetEase jointly announced a strategic cooperation. Alibaba Group acquired a 2 billion billion dollar acquisition of the koala's cross-border e-commerce platform koala. After more than a month of tug of war, the biggest change in the cross-border electricity supplier industry is finally settled.

At that time, NetEase koala will merge with Tmall international. Liu Peng, general manager of Tmall import and export business group, will also serve as koala CEO. The original koala CEO Zhang Lei will be a consultant for Tmall import and export business. Koala brand will continue to operate independently.

The track of cross-border electricity suppliers suddenly changed. As a leader in cross-border e-commerce in China, why does NetEase koala choose to sell itself? After the acquisition, cross-border electric business will appear "a dominance" situation, what kind of impact on the industry and consumers?

Point one: NetEase business bottlenecks highlight, sell or become helpless

The koala, a NetEase founded in 2015, has been given the deepest hope.

Recall Ding Lei's bold words at the second world Internet Conference: "I hope that in the next three to five years, NetEase koala purchase can reach 50 billion to 100 billion scale, and create a NetEase in the battlefield of e-commerce."

But this dream was shattered.

NetEase released the second quarter 2019 earnings report, Q2 NetEase e-commerce business revenue of 5 billion 250 million yuan, an increase of 20.2%, accounting for nearly 28% of the company's total revenue, has become the second largest business after the game.

Looking at the development of NetEase koala in recent years, the electricity supplier business has become the second largest revenue engine for NetEase revenue, and has maintained a good growth rate. NetEase seems to have no reason to sell.

But behind the seemingly beautiful results, it is the NetEase's miserable gross margins, and the high operating costs and potential risks.

In recent years, through the NetEase, koala and NetEase strictly selected double line layout, e-commerce business has gradually become one of NetEase's core businesses, but since NetEase entered the electricity business track, its overall profit margin has decreased year by year. Data show that from the 2017 Q4 to the 7 quarter of 2019 Q2, the average gross profit margin of NetEase Games was 63%, advertising was 62%, while the electricity supplier was only 9%. Among them, the electricity supplier in 2018 Q4 set the lowest quarterly value, gross profit margin is only 4.5%. And this is only the gross profit margin. If the operating expenses and distribution costs are deducted, the gross profit margin of the electricity supplier business will drag the gross profit margin of NetEase as a whole. NetEase electricity providers basically have no money to make.

In addition, NetEase koala is still investing heavily, expanding its offline store mode and increasing its operating costs, as well as the heavy asset layout of cross-border warehousing. Under the background of contemporary consumers' "new consumption", although offline stores have effectively supplemented the problem of online shop experience loss, the NetEase koala line stores "experience" instead of product sales, which seriously leads to excessive cost of human resources, shops and so on, which further increases the loss situation of enterprises.

In order to expand the scale and reduce losses, the NetEase koala, which originally launched its own business in 2018, launched third party businesses, but also pulled competition from the vertical electricity supplier to the comprehensive e-commerce level. Look at the domestic market, Ali's leading edge can not be shaken, Jingdong, many spells, and vip.com have their own advantages. In the new stage of the electricity supplier dividends, the players will have to pay a new profit to the cost. How much does NetEase koala need to invest and how long it will take and how to make profits is the core of NetEase's NetEase koala.

The "next NetEase" that once gave high hopes has obviously become an impossible task. It is probably a good choice to send a koala into Ali's arms compared to hard work.

Point two: why is the strategic layout of Ali attacking and selling well?

The acquisition of $2 billion in the amount of mergers and acquisitions, for Ali already has a top player Tmall international, why should it spend too much money to buy seemingly duplicated cross-border e-commerce business? After occupying more than half of the market share of cross-border electricity providers, what is the next ambition of Ali?

In fact, Ali has always been a company that buys traffic. The core purpose of all the companies it buys is to provide traffic for itself. If such a big sea can be bought by Ali, its whole plate will burst quickly and form a bigger advantage.

Ali also has the need to make up for the category defects of Hai Tao business. The core category of NetEase koala is maternal and infant products. The latest batch of signing brands are still mainly maternal and infant. The most powerful category of Tmall international is beauty makeup. Tmall has also said that this is the fastest growing category. After the acquisition of koala, Ali can introduce koala's supply chain capability on mother and infant category. Mother and baby themselves are also the most sticky and highly demanding categories in the business of Hai Tao business, with great potential for development.

In addition, the possible investment is more based on strategic considerations.

More importantly, in order to prevent Jingdong, competitors and other competitors from getting bigger development space at sea, the Alibaba also needs to take the initiative to defend well. The so-called "Xiang Zhuang dance sword", intended to be Pei Gong.

Hearsay is not groundless, and as a leader of many A rounds, Ding Lei and Huang Zheng are deeply rooted in the two sources. In the beginning of the year, many of the top two companies launched the cross-border e-commerce project "many international" quietly. At the same time, they held investment promotion meetings in various bonded areas. In addition, a direct mail merchant investment conference was held in Hongkong. Recently, with the Xi'an international port area cooperation, the two sides will jointly set up many international cross-border bonded warehouses.

From another perspective, if this successful acquisition of NetEase koala is not Ali, but a lot of spells, what will happen? There is no doubt that many spells will have the power to challenge Ali in the cross-border electricity business. At the same time, it will also greatly help to change its image in the public's low end, and become the real second generation from the overall electricity business.

Since the acquisition of Koala transactions, a lot of failed to win over the layout of Ali, then, in the short term, a lot more will still take the flow sharing, plus price advantage to digest the domestic surplus capacity of the electricity supplier mode, that is to say, its flagship will also be the sinking Market, rather than cross-border electricity supplier. Therefore, too many spells have lost a chance to transform and upgrade the backdoor and possibly change its public image.

Take this acquisition to comb the domestic electricity supplier pattern again, it is easy to find that the competition between Ali and lots of competition has already entered the stage of white hot this year. The traditional Jingdong has failed and disappeared because of its founder's deep litigation.

For the acquisition, if the Ali economy can give full play to the ecological effect, koala will have the chance to become a "better koala". From the integration of the industrial chain to improve koala's ability in supply chain and logistics, Ali can also input more traffic support for koala. Once the koala is backed by Ali, there is hope for further development in terms of flow acquisition and utilization rate and category development. Under the strategic goal of the globalization of "Ali, which serves the global 2 billion consumers and the 10 million profitable SMEs", koala development will have the opportunity to enter the faster lane.

　　 View three: head enterprise strong alliance, industry competition pattern lock?

At the industry level, the electricity business law promulgated at the beginning of this year provides a standardized development environment for cross-border electricity providers. According to the "Research Report on China's cross border electricity market in the first half of 2019" released by AI media consulting (hereinafter referred to as the "report"), the overall market scale of cross-border e-commerce in 2018 was around 9 trillion and 100 billion yuan, and in 2019, it is expected to enter ten trillion market, and it is expected to reach 12 trillion and 700 billion yuan in 2020. Meanwhile, in 2018, the number of users in the China Sea was over 100 million, and it is expected to reach 211 million in 2020.

At present, the domestic cross-border electricity supplier market presents a "two super strong" pattern. The report shows that in the first half of 2019, the market share of NetEase koala and Tmall international ranked the top two in the industry, which were 27.7% and 25.1% respectively. The platform of the sea hoarding world (Beijing East China Sea outsourcing), vip.com international and Xiaohong Book followed closely, and the market share was 13.3%, 9.9% and 6.1% respectively.

According to this estimate, after the NetEase koala incorporated into the Ali camp, Ali will occupy half of the cross-border electricity supplier industry, the market share will be close to 53%, with an absolute leading edge. The industry generally believes that after the completion of this transaction, the domestic cross-border electricity supplier market will change from "two super strong" to "one super strong".

After the completion of this transaction, Tmall international is the main force to do the standard, strengthen its own operation, Taobao global purchase and Xiaohong book focus on hatching new brands, and Taobao direct broadcasting helps. Ali will be in the leading position in the import cross-border field, and this position is difficult to shake in the short term. It is certain that in the future, the proportion of Tmall international will increase greatly, and the competition for Jingdong will be more intense.

Jingdong and its Tencent as the main competitors of the Ali department will undoubtedly be affected when the industry pattern changes. According to Morgan channel, if Tencent or Jingdong departments want to catch up with the superpower, they will not have no chance. From the overall plate of imports across the border, the total transaction volume of the Ali department is still far below that of the large purchasing micro business group. The Tencent is using the social e-commerce to centralize the electricity supplier. It uses the small number of non-standard vertical shelves of electronic business standard products, and uses the supply chain service to embody small B.

As for other players in this field, the new forces of non Tmall Jingdong will have great potential in the track of "content + community + sticky goods" in diversified categories such as minority vertical categories and personalization categories.

Concluding remarks:

In the post traffic era, for cross-border e-commerce players, whether to provide users with a diversified consumption experience is the key to success or failure. Tmall international, NetEase koala "fit" will have a great impact on its business development. How to fine operation and form a unique core competitiveness will be the key to compete for the trillion sea market.