OEM manufacturing, an important layer of the modern industrial system, but far from the ordinary consumer. Not long ago, the end of the "two sessions", manufacturing, industrial Internet has become a hot topic of discussion, the government policy release signal is also very clear: 2019, social and administrative resources will be tilted to the real economy.

E-commerce factory, is a form of integration of the Internet and manufacturing. Nowadays, consumers increasingly value the product itself, the expression of personality and quality, and the brand is no longer the first choice of consumers, more like a product quality of a kind of endorsement. In the education of the e-commerce platform, directly connected to the factory, as far as possible to eliminate intermediate links, for consumers to bring affordable business model is widely accepted, and even become "cost-effective" another expression.

The flow of the top, the mainstream standard competition is over, at present, Ali, NetEase, Pinduoduo, Jingdong and other e-commerce giants have varying degrees of access to the production of factories, the front end of the consumer data as a drive to reduce the uncertainty of production, the formation of a new model of commodity circulation. The genes and audiences of each platform are different, and the extension to the manufacturing industry also forms different forms.

Talking about e-commerce factories, it is impossible to bypass NetEase Yanxuan. 2016, NetEase Yanxuan was born, known as "the first domestic ODM mode e-commerce", and the big brand manufacturers are directly connected to the elimination of brand premiums and intermediate links. Because of the similarity of product style with Indy, NetEase Yanxuan has been controversial since its launch.

To a large extent, the success of NetEase Yanxuan is attributed to the values of marketing and foundry "protagonist aura", it will ODM labeling and big brand foundry industry information for the first time to the ordinary consumers in front of the eyes, taking advantage of the concept of big brand foundry to reduce the cost of consumer trust, but also highlights the core competitiveness of their own.

This was followed by Ali and Jingdong, which launched Taobao Xinxuan (May 2017) and Jingmade (January 2018), respectively, and like Amazon, allowed private brands to parasitize the platform.

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

But there are more and more similar products, and NetEase is starting to have a hard time. NetEase Yanxuan product design is simple, and therefore difficult for consumers to repeat the desire to buy, the re-purchase rate decline coupled with the slow growth of new users, inevitably generating a large amount of inventory, although the product life cycle is long, and will hinder the development of new products. Last year, NetEase Yanxuan began to stationed on Tmall, Jingdong and even Pinduoduo, and because of the vigorous promotion, but NetEase e-commerce gross margins continue to go down.

NetEase strictly selected to do too heavy, even more than traditional enterprises to do.

In the apparel industry with high Internet penetration, the buyer system + ODM mode of grouping goods has been very popular, especially in the consumer price-sensitive online channels, whether it is a listed company or a Netflix brand, basically through the ODM mode to save development costs and quickly respond to market demand.

From the information that Tiger Sniff-High Street High Senator understands, NetEase Yanxuan's departmental setup, product development process, and then the development of contracts and billing periods with suppliers have not exceeded the framework of the same mode of brands on the market. In terms of business model alone, NetEase Yanxuan's breakthrough is limited. In order to cooperate with big brand foundries and ensure the quality, NetEase Yanxuan and suppliers are directly signed three to seven years of strategic cooperation agreement, however, to respond to market demand for fast and flexible group goods, is precisely the buyer + DOM model of the most core value.

Ding Lei said that NetEase Yanxuan is the integration of the Internet and manufacturing, but NetEase Yanxuan is more like a product of the Internet people to learn the traditional industry, the essence of the traditional industry still have to comply with the logic and rules.

So NetEase came to the second stage of e-commerce: NetEase Kaola factory store.

NetEase Kaola factory store was launched in September 2017, positioning itself as a brand incubator for quality manufacturing, guiding factory design and production with data, providing nanny services for manufacturers as well as brand building, and its global cooperative factories have more than 200, mainly covering nine categories such as apparel, home furnishings, personal care, and food.

Netease Yanxuan and NetEase Koala factory store and Netease Yanxuan positioning is very similar, also in each category to choose 1-2 excellent factory cooperation, but compared to Netease Yanxuan, NetEase Koala factory store solves three problems:

1. Inventory problem. The right to goods belongs to the factory rather than the platform.

2. Benefit consistency problem. Between the brand and the factory is bound to have a trial and game, the layman's Internet company may not be able to find production problems. After the factory as the main body of the sale of goods, the interests of both parties are consistent, and the factory that is the producer is also the brand, reducing the intermediate circulation link.

3. Development space. NetEase Kaola provides factories with platform resources such as warehousing and distribution, operations, customer service, IP design and content, avoiding the problem of NetEase's asset-heavy operations and diseconomies of scale.

The same choice is Taobao Xinxuan. In December last year, Zhang Di, general manager of Taobao Xinxuan, said that Taobao Xinxuan is going to incubate manufacturing retail brands, also after testing the water self-management, the open realization of operational capabilities and platform resources.

According to the manufacturing industry from pure OEM (OEM), to design their own products to fight for orders (ODM), and then try to own brand (OBM) direct operation of the market transformation process, factories in order to improve the added value of production, will do the demand for private label. However, through observation, in this mode of cooperation often have to get around the two "dual-brand" problem.

A "dual brand" is in the factory. Tiger sniffing - high street high reference to go to netease koala cooperation factory visit with the factory personnel exchange to understand, this to luxury cashmere clothing factory and netease signed a long-term cooperation agreement, in netease koala on the launch of its own brand will be exclusively for the koala channel, but the factory's own brand is not only in other channels are also operating in other brands.

Another "dual brand" is reflected in the retail side. Factory brand awareness is low, the consumer's willingness to buy, to a large extent, is from the platform brand endorsement, factory brand merchandise design, price, etc. are affected by the platform, and the channel customized goods, these factory brands on the e-commerce platform dependence than the "Amoy brand" more.

Obviously, the factory will not put the eggs into a basket, their core demand is lower cost higher price differentials and a larger market, driven by the fundamental reason for their cooperation is the e-commerce platform to bring orders.

In addition, the factory is willing to take the risk of cooperation, but also in the possibility of betting on the future. NetEase Kaola factory store and Taobao Xinxuan may do more and more big, for example, NetEase Kaola to sell goods to foreign markets, Taobao Xinxuan a large number of stores to become the offline "new chain", if so that the brand can also be followed on a stage. However, when it comes to that, the factory will most likely consider going to the platform labeling, towards a larger market.

Now on the market can reach the manufacturing side of the e-commerce platform, there are three main: necessary, Jinduoduo and Ali, all three are talking about C2M story. Interestingly, under the guidance of the theory of production by sales, the birth of the necessary and Pinduoduo two cases of very different positioning.

Necessary

Necessary called "the world's first C2M e-commerce platform", four years ago, the founder of Necessary, Bisheng, began to cooperate with factories in the C2M model. The necessary approach is to establish cooperation through the selection of first-line manufacturers, and then the necessary background and factory production system through, equivalent to the user directly order to the factory, and then the factory on-demand production, to achieve zero inventory.

In order to balance the cost-effective and inventory, necessary mall in the receipt of consumer orders, often need 3-7 days of production time. And the necessary threshold is very high, Bison has publicly stated that manufacturers who want to do C2M, at least cost several years to invest tens of millions of dollars to transform the production line. This is doomed to be necessary only a small and beautiful platform, seeking stability rather than scale.

Pinduoduo

Like Bisheng, Huang Zheng also believes that the generation of inventory is due to the uncertainty of demand, and believes that the reduction of the circulation chain, with the certainty of the demand to reduce the production of inventory will be able to reduce the price of goods. However, unlike the necessary single pieces are to be produced on demand, Poundland is going to do bulk customized production - Poundland factory.

Through the group pre-sale delayed shipment, Poundland to a similar "set of single" way to lock a relatively certainty of the demand for goods, the factory and then scale production to reduce costs, to the shortest path and time to the hands of consumers, the formation of a new mode of commodity distribution, and tend to zero inventory.

In December last year, Pinduoduo released the "new brand plan", Pinduoduo said that it will give factories in a certain range of inclined flow, recommended position resources to increase the exposure of the goods to support the construction of its branding. Pinduoduo also said, for joining the "new brand plan" factory will also introduce visualization platform, that is, through the live streaming between the production side and the demand side of the information flow, so that the product design, production and manufacturing of the whole process of visualization.

Daily Sale

Ali's C2M program is similar to Pinduoduo, and looks like a defense against Pinduoduo. In November last year, Taobao's Daily Bargains announced that it had upgraded to Daily Bargains and carried out IoT digitalization of small and medium-sized factories, saying that it would open up factory capacity data to online stores, and that how much the front-end sells and how much the back-end produces could be basically zero inventory, and that warehousing costs had been reduced to almost zero.

However, but where the group and other marketing tools, basically low-priced goods to break through the low-line market, low prices, group can be a commodity quickly into a pop-up, quickly digest the factory capacity / inventory. From the positive side, Jinduoduo give nowhere to put the low-end supply chain a capacity release channel, negatively, low price is a dead end, these low-priced factories become the fuel of the platform.

The three e-commerce platforms of the C2M model emphasizes the factory capacity online visualization, and with the platform sales data in real time through, but although the theoretical direction has, but how to transform the factory is another matter.

First of all, necessary, necessary to do the earliest factory transformation, but according to a necessary cooperation factory, necessary to instill them with the concept of C2M, to the factory pointed out a way forward, but the necessary itself does not have the ability to carry out the factory transformation, the need for the factory according to their own needs to third-party software/hardware providers to purchase. This factory access to the necessary platform of an assembly line, is entrusted to Foxconn subsidiary transformation, and said that at present only the domestic Foxconn has a real production line transformation ability.

Poundland's current "transformation" approach is to put a cell phone on the factory's Poundland production line for live broadcast, and consumers can see the factory's production through live broadcast. Cell phone live and no technical content, but with such a low-cost way to establish trust between the factory and consumers, is also considered a successful factory transformation. After all, the factory needs to be an order, the transformation should be for the purpose of profitability to serve.

Compared to Jindo, Ali's transformation program is more mature: through visual recognition to achieve factory production transparency and capacity digitization. Ali provides the factory with cameras, switches, edge servers and gateways and other supporting hardware, equipped with a variety of algorithms, the camera will continue to scan the production line, the video data in the local and cloud co-computing, and then upload the structured core data to the cloud, and further with the consumer platform for real-time communication.

Here to insert a sentence, because the platform sellers of OEM, ODM foundry demand, Ali earlier contact with the foundry. "Amoy factory" was born in 2013, Ali 1688 Division in the sellers and factories to build between the summary type B2B platform. At present, the number of factories on the "Amoy factory" in about 30,000, Ali hopes to take advantage of the natural advantages of the ecology of merchants on the platform, to create China's largest apparel supply chain service platform. The new manufacturing exploration of Ali, it is also from the "Tao factory" on the quality of the cooperative factories to start.

The transformation project is a collaboration between AliCloud, Daily Sale, and Zheng Xu, the person in charge of AliCloud's IoT program, who previously worked at the "world's largest foundry" for more than a decade. Zheng Xu told HuffPost-High Street that his team is focusing on the transformation of the textile and garment, machining and other manufacturing industries. The goal is to provide low-cost, fast deployment and easy operation and maintenance of lightweight factory digitization 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 the number up, the value of the platform can be reflected, of course, relatively small and medium-sized factories are more willing to access the platform, and accept non-customized applications." Traditional practices to do process traceability, generally with barcodes or RFID, camera transformation is a lightweight non-intrusive solution that allows factories to achieve a certain degree of capacity digitization, real-time information visibility and interaction.

"The hardware cost of retrofitting a factory with about 100 people is around $50,000." Zheng Xu believes that this price can be accepted by most factories, and can also be equipped with a variety of algorithms to expand. After receiving the transformation, the factory scheduling efficiency increased by 6%, due to the transparency of the chain and on-demand production and timely delivery, the entire supply chain inventory can be reduced by 10%.

At present, Zheng Xu team has completed the deployment of 100 "Amoy factory", he believes that the transformation of the greatest value is the transparency of factory production to bring the management efficiency, the value of collaboration to improve.

Undoubtedly, compared to the manufacturing industry, Internet companies know how to trade/interact with consumers, and the e-commerce factory is an attempt to pull the manufacturing side from the consumer side. In other words, e-commerce factories should be e-commerce service factories, Internet service manufacturing industry, but in each case, we have seen that there is still a natural "fault" between the Internet and manufacturing industry.

1. Supply chain disconnect

The cooperation between e-commerce platforms and foundries is not as close as imagined. The core demand of the factory is the order and production profit (lower production cost, higher shipping price), but under the pressure of survival, the priority is the stability of the order. Therefore, it is impossible for OEM factories to give up large orders from brands, which is the main source of orders in the manufacturing industry. The current cooperation between e-commerce platforms and foundries is still at the experimental level.

Take the necessary as an example, in the three cases of transformation of the factory, the necessary is a deep-rooted type, the factory qualification requirements are the highest, but the foundry is only a production line to transform to cooperate with the necessary, and the necessary can not really go to intervene in the production of the factory. In the final analysis, the cooperation between the two sides or to fall on the order, e-commerce platform to bring more orders, the stronger the discourse on the factory. But on the whole, the factories receive large orders, the status quo of serving the mainstream brand market is difficult to change.

2. Talent Disconnect

That is to understand the Internet and understand the traditional manufacturing talent is too little. For example, Ali, although from their own organization and management precipitated in the middle of the system, but can go to the enterprise to do business dismantling to build the middle of the platform is only more than ten people. The Internet is farther away from the manufacturing industry, so that the two industries "language" are different, we all say "product", but not the same concept.

Industry exchanges will begin with the exchange of talent, such as the factory absorbed originally in the brand side of the designer group, from the OEM transition ODM, and the brand side of the form of cooperation has changed. The new factors of production will inevitably produce new production relations, which will involve the distribution of employee compensation, as well as changes in organizational management. As far as we can see, the establishment of new production lines, the factory and the Internet of the mill, has already brought about an impact on the ability of employees and the enthusiasm for production. Adapting to new production relationships requires new organizational structures, which will be a huge challenge for family-owned private companies.

3. Industry Attribute Disconnect

In September last year, Jack Ma elaborated on the concept of "New Manufacturing" at the Yunqi Conference, which has stirred up a thousand waves. However, a commentary by the Development Research Center of the State Council argues that there is not much new in the "new manufacturing" proposed by Ma.

In terms of the "integration of manufacturing and service industries": the process of manufacturing services has been going on for a long time, and information technology is accelerating the process; some large-scale manufacturing enterprises began the process of manufacturing services a long time ago. In terms of "on-demand customization, personalization and intelligence", in recent years, "scale customization" and "unmanned factories" have become more and more common in some advanced manufacturing enterprises. Haier company many years ago, the first "connected factory", explore the scale of customization. On the "use of the Internet, IoT, cloud computing, big data" point of view, in the industrial sector at home and abroad, intelligent manufacturing, industrial Internet of Things, industrial Internet, industrial big data and other related concepts have been hotly debated for many years, and in Beijing every month can even come across a number of forums or seminars related to the industrial Internet, these concepts have been speculated a little bit of The concepts have been a bit overloaded.

China's new generation of information technology and informatization talents and resources are mainly concentrated in BAT and other Internet companies, in promoting the idea of industrial Internet, the Internet industry and the manufacturing industry is very different.

Foxconn, Red Collar, Haier, these companies that are quite successful in intelligent manufacturing, are in their own enough industrial foundation and manufacturing experience before they can make a breakthrough in a certain field, and open up the ability to extend to the outside. The BAT, on the other hand, wants to find 70% of the industry's ****ty problems first, and wants to come up with industry-generalized solutions for large-scale promotion.

Haier COSMOPlat business panorama

Internationally, there is also a difference in who leads the change in manufacturing. The United States from the information side through big data analysis and other tools "top-down" remodeling of the manufacturing industry, Germany is from the manufacturing industry, the use of information technology and other means of transformation of the manufacturing industry, "bottom-up" idea.

E-commerce factory, is the Internet service manufacturing industry, "top-down" test water, at the moment, the Internet company does not need to get entangled in the industry's ability, China's manufacturing industry is characterized by "big but not strong", a large number of small and medium-sized enterprises, the need for the use of The first thing you need to do is to get up and really bring the benefits of the technology.

However, the industry **** outside of the 30%, is to determine whether the enterprise can stand out part. Therefore, Internet companies will inevitably encounter obstacles in the future in the industry knowledge, if you can not even understand the problem, let alone solve the problem, as well as let AI solve the problem. At that time, the Internet company will need to really do a manufacturing industry.

Note: Wen/Fan Xiangdong, public number: High Street Insider, this article is the author's independent views, does not represent the position of Yibang power network.