GOME revamps e-biz platform, eyeing 2nd-tier markets
Last Updated:2013-01-30 16:38 |
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By Zhou Lei

Since 2012, with increasing downwards pressure in the consumer electronics market, rapid growth of ecommerce channels, and more rational consumer buying behaviors, commercial franchise enterprises, including GOME, have confronted severe challenges. Structural change is happening in the market, forcing retailing enterprises like GOME to seek targeted changes and innovations.

Recently, GOME officially published its 2013-2015 Enterprises Strategy Plan. Wang Junzhou, president of GOME, said that in order to adapt the complex and changing market environment, the enterprise will be guided by the needs of consumers and customers and promote its core strategy of online offline synergy development in a multi-win manner.


200 new stores in second-tier markets

The home appliance market has entered the phase of adjustment, with growth in the first-tier markets slowing down and demands in the second-tier and third-tier markets increasing at a pace apparently faster than the first-tier market. In 2012, the volume of the domestic home appliance market was approximately RMB 870 billion Yuan, with first-tier markets accounting for RMB 360 billion Yuan and second- and third-tier markets accounting for about 510 billion Yuan.

According to the new strategy plan, GOME will expand its second-tier markets network while it consolidates its position in the first-tier markets, aiming to rapid increase its market share. As one of the earliest large-scale chain store enterprises, GOME has basically completed its market deployment in first-tier markets. Its next step is to promote the optimization and upgrading of its large franchises, building them into directive and guiding marketplaces and upgrading shopping experience on all levels.

"In 2013, GOME plans to open 200 new stores in second-tier markets". According to Wang Junzhou, as the government is vigorously promoting urbanization, second-tier markets will become a new growth engine for the retail industry. GOME considers second-tier markets as the key of its market network development in 2013. It will connect the supply chain between first-tier markets and second-tier markets, accelerate the construction of logistics centers and after-sales service center that provide support to second-tier markets, promote the rapid growth of second-tier markets through a model in which large stores help drive the development of their surrounding smaller stores, greatly enrich commodities of the stores, and establish competitiveness.  

Integrating the two online in order to make profit as soon as possible

In 2012, the increasing popularity of the online market has posed increasingly noticeable impact on sales of brick-and-mortar stores., GOME and SUNING waged price wars in online and offline markets, attracting wide attention. Wang Junzhou said frankly that the rapid growth of ecommerce had formed some pressure on the growth of brick-and-mortar stores, and this was particularly noticeable in first-tire cities.

"'B2C + brick-and-mortar stores' represents the profit model in the next 5 to 10 years". According to Wang Junzhou, 9 out of the top 10 retailers in America, with the exception of Amazon, follow the growth model of online and offline synergy; the operation effectiveness of this profit model has been proven; ecommerce can feed the development of brick-and-mortar stores, while the offline purchase of brick-and-mortar stores can support the development of ecommerce business; online and offline operations each forms their own profit structure, producing a win-win outcome.

It is told that the two major online retailers, GOME's subsidiary online shopping mall and the, have been fully integrated at the end of 2012, with the purpose of expanding the market and reducing cost. After the integration, GOME's online shopping mall will be renamed GOME Online, aiming to build a cross-category comprehensive B2C site. 

"We are committed to building an ecommerce model that differs from the current non-profiting model, reducing overlapping investment, and building an online retailer whose development is sustainable and healthy". According to Han Depeng, CEO of GOME Online, the two platforms have achieved sharing of information, logistics, sales, purchasing, and member data; an integrated technology platform will also be established to further improve the company's operation and management ability over the online platform and achieve the maximized yield of invested resources.

In order to support online and offline synergized development, GOME incorporates the online purchase business of its ecommerce business into its current business system, making full use of the competition advantages of online offline synergy; besides, GOME also makes greater efforts to innovate its business model, expand commodity supply channels, and improve the online and offline supply ability of differentiated products. 

"In half a year, or one year at most, GOME's online retailer will make profit. An enterprise is valuable only when it is making profit", said Mou Guixian, vice president of GOME. His words reveal the company's confidence in accelerating reform and foretell the intensification of competition in the online market.

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