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E-commerce factory is a form of integration of Internet and manufacturing. With the overall retail downturn and the peak of e-commerce traffic, e-commerce platforms are expanding outward and focusing on the upstream of the industry chain. Under the education of the e-commerce platform, the business model that connects directly to the factory, eliminates intermediate links as much as possible, and brings benefits to consumers is being widely accepted, and even becomes another expression of "cost-effective.

However, the fault between the Internet platform and the manufacturing plant, also inevitably show up.

The first stage of the transformation of the factory is in trouble.

When talking about e-commerce factories, Netease's strict selection cannot be avoided. In 2016, Netease was strictly elected and was born, known as "the first ODM model e-commerce in China". It is directly connected with big-name manufacturers, eliminating brand premium and intermediate links. Due to the product style similar to Muji, Netease's strict selection has been controversial as soon as it goes online.

To a large extent, Netease's success in strict selection is due to the "protagonist halo" of value marketing and OEM. It brings the industry information of ODM OEM and big-name OEM to ordinary consumers for the first time. It uses the concept of big-name OEM to reduce the trust cost of consumers and also highlights its core competitiveness.

Following this, Ali and Jingdong launched Taobao Xinxin (May 2017) and Jingzao (January 2018) respectively, and let their own brands parasitize on the platform like Amazon.

Domestic production capacity oversupply, and the foundry through modular design and production, can fully meet the differentiation of different brands of products. In short, under the pressure of foreign trade obstruction, overcapacity and e-commerce platform, e-commerce factories rely on the domestic "strong manufacturing, weak brand" supply chain, as far as possible to eliminate intermediate links, to bring benefits to consumers a business model is widely accepted.

However, there are more and more similar e-commerce companies, and the problem of Netease's strict selection is gradually emerging. Netease's strict product design is simple, which makes it difficult for consumers to have the desire to buy repeatedly. The decline in the re-purchase rate and the slow growth of new users will inevitably generate a large amount of inventory. Although the product life cycle is long, it will hinder the development of new products. Last year, Netease Yan Xuan began to enter Tmall, Jingdong and even fight a lot, and due to vigorous promotion, but Netease e-commerce gross profit margin continued to decline.

The reason is that Netease's strict selection is too heavy, even heavier than the traditional enterprise model.

Judging from the information learned by Tiger Smell and Gao Cai Gao Shen, Netease's strict selection of department settings, product development process, and the formulation of contracts and account periods with suppliers have not exceeded the framework of the same model brand on the market. In terms of business model alone, Netease's strict selection of breakthroughs is limited. In order to cooperate with big-name factories and ensure quality, Netease strictly selects and signs three to seven years of strategic cooperation agreements with suppliers. However, it is precisely the core value of the buyer's ODM model to carry out rapid and flexible assembly of goods in response to market demand.

From "de-branding" to "brand building"

So Netease e-commerce came to the second stage: Netease koala factory store.

Netease Koala Factory Store was launched in September 2017. It is positioned as a brand incubator for high-quality manufacturing. It uses data to guide factory design and production, and provides nanny services and brand building for manufacturers. It has more than 200 cooperative factories worldwide, mainly covering 9 categories such as clothing, home, personal care and food.

Netease's strict selection and Netease's koala factory store are very similar to Netease's strict selection. They also choose 1-2 excellent factories in each category to cooperate. However, compared with Netease's strict selection, Netease's koala factory store has solved three problems:

1. Inventory issues. The right to the goods belongs to the factory and not to the platform.

2. The issue of consistency of interests. There is bound to be a trial and game between brands and factories, and layman's Internet companies may not be able to find production problems. After the factory is the main body of commodity sales, the interests of both parties are the same, and the factory is both the producer and the brand, reducing the intermediate circulation link.

3. Development space. Netease Koala provides the factory with platform resources such as warehousing and distribution, operation, customer service, IP design and content, thus avoiding the problems of Netease's strict selection of heavy asset operation and uneconomical scale.

The same choice also has Taobao heart selection. In December last year, Zhang Di, general manager of Taobao's heart election, said that Taobao's heart election would incubate manufacturing retail brands, and it would also open up its operating capacity and platform resources after testing water for self-management.

A "double brand" is in the factory. When Tiger Smell Gao Jie Gao Shen visited the factory where Netease koala cooperates, he communicated with the factory staff and learned that the factory, which makes cashmere clothing for luxury goods, has signed a long-term cooperation agreement with Netease. The self-owned brand launched on Netease koala will be exclusively for koala channels, but the factory has more than its own brand and operates other brands in other channels.

Another "dual brand" is reflected in the retail end. Factory brand awareness is low, and consumers' willingness to buy is largely from the endorsement of the platform brand. The design and price of factory brand goods are affected by the platform. Just like channel customized goods, these factory brands are more dependent on the e-commerce platform than "Tao brand.

Obviously, factories will not put eggs in one basket. Their core demand is lower cost, higher price difference and larger market. The fundamental reason for driving their cooperation is the orders brought by e-commerce platforms.

E-commerce giants accelerate the layout of factories

C2M, that is, consumers to the factory, the customer and the manufacturing side of the direct docking, as far as possible to cut off the intermediate links, fast, low-cost response to customer customization needs. E-commerce platforms hold big consumer data. If they get through with manufacturing data, can they realize C2M and solve the inventory that has been plaguing the retail industry?

"Spelling Factory" VS Special Sale Every Day

Inventories are created because of uncertainty in demand. Through the pre-sale and delayed delivery of goods, Pinduoduo will lock in a relatively certain commodity demand in a similar way to "set orders". The factory will then carry out large-scale production to reduce costs and deliver it to consumers in the shortest path and time, forming a new commodity circulation mode and trying to tend to zero inventory.

In December last year, pinduoduo released the "new brand plan", pinduoduo said it would give the factory in a certain range of tilt flow, recommended bit resources, in order to increase commodity exposure, support its brand construction. Pinduoduo also said that for the factories that join the "new brand plan", a visualization platform will be introduced, that is, the information flow between the production end and the demand end will be opened through live broadcast, and 100 "Pinduoduo factories" will be supported in 2019 ".

From the ToC side reverse integration factory, and complete sales, Ali's C2M project is similar to the fight, at present, more like a part of the defense system to build. In November last year, Taobao's daily special price announced that it would be upgraded to daily special price, and the IoT digital transformation of small and medium-sized factories was carried out. It said that by connecting the factory's capacity data with online stores, how much the front end sold and how much the back end produced, it could basically achieve zero inventory and reduce the storage cost to almost zero.

Both Pinduoduo and Ali emphasize the online visualization of factory capacity and real-time access to platform sales data. But the truth is clear, how to transform the factory is another matter.

Compared with Duoduo, Ali's transformation plan is more mature: to realize the transparency of factory production and digitalization of production capacity through visual identification. Ali provides the factory with supporting hardware such as cameras, switches, edge servers and gateways. Cameras equipped with various algorithms will continuously scan the production line. Video data will be calculated locally and on the cloud, and then structured core data will be uploaded to the cloud to further connect with the consumption platform in real time.

Tao Factory ToB, Jogging in Small Steps

Because of the platform sellers' demand for OEM and ODM, Ali contacted the foundry earlier. "Tao Factory" was born in 2013. It is a matching B2B platform set up by Ali 1688 Division between sellers and factories. It can quickly match sellers' orders and factory capacity, thus helping sellers to quickly respond to consumer needs. At present, the number of factories on the "Tao factory" is about 30000. Ali hopes to build the largest clothing supply chain service platform in China with the help of the natural advantages of the merchant ecology on the platform. And Ali's new manufacturing exploration also started from the high-quality cooperative factory on the "Amoy Factory.

The renovation project was jointly carried out by Aliyun and Tiantian Special Sale. Zheng Xu, head of Aliyun IoT Program, had previously worked in "the world's largest contract manufacturing enterprise" for more than 10 years. Zheng Xu told Tiger Smell Gao Jie Gao Shen that his team mainly focused on the transformation of textile and clothing, mechanical processing and other manufacturing industries. The goal is to provide low-cost, fast deployment and easy operation and maintenance of lightweight factory digital solutions, from 0 to 1 to establish a platform, with partners to serve 80% of China's small and medium-sized enterprises, to achieve more factory access.

Zheng Xu said, "There are a large number of small and medium-sized factories in China. Only when the number increases can the value of the platform be reflected. Of course, relatively small and medium-sized factories are more willing to access the platform and accept non-customized applications." He said, "The traditional way to do process traceability is usually to use bar codes or RFID. Camera transformation is a lightweight non-intrusive solution that allows factories to achieve a certain degree of digitalization of production capacity and to visualize and interact with real-time information."

"The hardware cost of transforming a factory with about 100 people is about 50000." Zheng Xu believes that this price can be accepted by most factories, and can also carry a variety of algorithms to expand. After the transformation, the factory scheduling efficiency increased by 6%. Due to transparent links and timely on-demand production and delivery, the inventory in the entire supply chain can be reduced by 10%.

At present, Zheng Xu's team has completed the deployment of 100 "Tao factories". He believes that the greatest value of the transformation is the improvement of management efficiency and cooperation value brought about by the transparency of factory production.

The "fault" behind the e-commerce factory"

Compared to manufacturing, Internet companies know more about how to trade/interact with consumers, and e-commerce factories are attempts to pull the manufacturing side from the consumer side. In other words, the e-commerce factory should be an e-commerce service factory and an Internet service manufacturing industry, but in each case, we have seen a natural "fault" between the Internet and the manufacturing industry ".

1. Supply chain fault

The cooperation between the e-commerce platform and the foundry is not as close as imagined. The core demands of the factory are orders and production profits (lower production costs, higher shipping prices), but under the pressure of survival, it is impossible for the foundry to give up large orders from the brand side, which is their main source of orders. Will prioritize the stability of this part of the order.

Unless the e-commerce platform can give enough orders to the foundry, the cooperation between the two sides is not guaranteed. This is also the current close cooperation with the e-commerce platform is mostly small and medium-sized factories, larger factories still choose the form of orders for cooperation, even if the transformation is to separate a production line to try.

2. Talent fault

There are too few talents who understand the Internet and the traditional manufacturing industry. For example, Ali, it is understood that although Ali has precipitated the China-Taiwan system from its own organization and management, there are very few talents who can understand the industry and business, and do business dismantling and China-Taiwan construction for enterprises. The Internet is so far away from the manufacturing industry that the "languages" of the two industries are different. Everyone talks about "products", but they do not refer to the same concept.

The addition of new factors of production will inevitably produce new production relations, which will involve the distribution of employees' salaries and changes in organizational management. At present, the establishment of new production lines and the running-in of factories and the Internet have had an impact on the ability and enthusiasm of employees. Adapting to the new production relationship requires a new organizational structure, which will be a huge challenge for family-owned private enterprises.

3. Industry attribute fault

In September last year, Ma Yun expounded the concept of "new manufacturing" at the Cloud Habitat Conference, which stirred up thousands of waves with one stone. However, a commentary by the Development Research Center of the State Council believes that Ma Yun's "new manufacturing" does not have much new content.

my country's new generation of information technology and information talents and resources are mainly concentrated in Internet companies such as BAT. In terms of the idea of promoting the industrial Internet, the Internet industry is completely different from the manufacturing industry.

Foxconn, red collar and Haier, which have made great achievements in intelligent manufacturing, can make breakthroughs in a certain field and extend their capabilities to the outside world only after they have sufficient industrial foundation and manufacturing experience. BAT, on the other hand, wants to look for 70% of the common problems in the industry and come up with common solutions for large-scale promotion.