Opportunity or trap? Steam Distribution Development Analysis

Recently, the steam power distributors competed with each other. First, Zhong Chi Che Fook, which intends to “reshape the automotive aftermarket supply chain,” signed strategic cooperation agreements with international auto parts giants such as Bosch , Philips, Gates, and TRW, and authorized Zhong Chi Chefu. It provides supply chain services and end-customer services for the company's entire line of products. Afterwards, dealers of traditional auto aftermarket parts dealers, “Kangzhong Auto Parts and Chains,” obtained a round of financing of RMB 200 million. In addition, steam power distribution outlets, Zhuge repair vehicles and other steam power distribution companies have come to obtain good news of rapid development such as access to financing, landing new three board.

Steam distributors' opportunities and traps

For a time, this segment of the market with a market potential of over RMB 100 billion has become the focus of attention in the automotive industry.

The author believes that the auto parts industry is both optimistic and pessimistic. Speaking of optimism, steam power distributors are likely to become a very lucrative product category; when it comes to pessimism, although steam power distributors are a good industry, they are likely to be a trap for the majority of e-commerce entrepreneurs. The industry's threshold is too high. High, there is a high probability that it will be monopolized by a small number of oligopolists. Most people will only lose money and lose everything. Somewhat better, they will also be left alone.

Vertical B2C VS Platform and Integrated B2C

For a long time, the vertical B2C has been very difficult to survive in China. In recent years, a large number of vertical B2Cs have fallen. There are no exceptions for auto parts here.

Of course, some people may ask why there are many successful steam distribution companies in Europe and the United States, but they will not be able to come to China. There are several reasons, in fact, not only for steam distribution companies, but also for the entire vertical B2C:

1. First, the credit and payment environment is not perfect, and it is difficult for small and medium-sized websites to obtain user trust;

2. The status of search engine shopping entrance is challenged by Taobao, Jingdong, etc. Consumers have not trusted Baidu and other search engines as European and American consumers do.

3. The third-party logistics market is immature, and the powerful enterprises are self-built logistics, making the small and medium-sized B2C platforms less competitive in the logistics competition.

Specific to the auto parts industry, the difference between this industry and other industries lies in the fact that this industry has a higher threshold and there will be no opportunities for minors. From a purely financial point of view, many vertical B2Cs have no advantage at all.

In fact, the biggest competitors often do not come from the industry, but often come from cross-industry coverage. To take an extreme example, if JD.com or Yi Xun adopts a cross-subsidy method, the auto parts will be positioned directly as an unprofitable category, attract customers through this category, and then make money through other categories. At this time, How to do?

If you really want to do a great job in this industry, then you have to think clearly, how to build your own moat, how to differentiate with these giants?

Vertical E-commerce Possible Opportunities

Overall, there are not many opportunities left for vertical distribution companies, but it is not without them. The market for auto parts is a trillion-dollar market that is far from being comparable to other categories. There will certainly be many more subdivided but large enough opportunities. The following are some of the opportunities that I personally think may exist:

1. Focus on B2B business

The biggest market may be some B2B opportunities, providing services directly to auto parts factories and auto repair factories. It wants to replace the role of the original Auto Parts City. It is envisaged that the future auto repair factory (roadside repair shop) will gradually change the existing way of getting goods from Auto Parts City and distributors, gradually shifting from Some professional B2B platforms take delivery of goods.

In the B2B field, there are actually some good things to do in other categories. For example, Zhencheng Pharmaceutical in the pharmaceutical industry, steel nets in the steel industry, etc.

2. Some O2O Projects with Higher Professional Thresholds

O2O integrates automotive aftermarket resources such as auto repair shops, beauty shops, parts suppliers, and gas stations, and serves the owners. Such projects may have some opportunities, such as "car brothers" and so on.

3, basic service providers

In Europe and the United States, there are a number of professional basic service providers, such as Epicor, TecDoc, WHI, etc. that specialize in providing data services. In China, there should also be some similar service organizations, such as the provision of basic data services, the provision of professional customer management systems, and so on. The “timing” is working hard in this direction.

Do not underestimate these areas. In fact, if you do focus, then this market can be done quite large. For example, Solera Holding, a service provider in Europe and America that provides automotive insurance damage data, earned $790 million in fiscal 2012 revenue, including approximately $360 million for insurance company customers and approximately $258 million for vehicle repair shops. Recycling agencies and other customers amounted to approximately US$98 million, and other approximately US$74 million. In 2012, the company’s net income was US$107 million.

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