講座培訓課件 Seizing the Future Mail Order Market Potential in ChinaPPT

1、Seizing the Future: Mail Order Market Potential in ChinaSeizing the Future: Mail Order Market Potential in ChinaBusiness Development Strategy for Quelle ShanghaiShanghai 1st. June 2000Presentation for Mr. KoepPresident & CEO of Quelle AGSeizing the Future: Mail Order Market Potential in China2Conten

2、tA. Development of Chinese Retail Market B. Mail Order Market Analysis in ChinaC. Quelle Shanghai SWOT AnalysisD. Action Plan and Sales ForecastE. ConclusionSeizing the Future: Mail Order Market Potential in China3With the development of Chinese economy, disposable income has been significantly incr

3、eased, as well as the Chinese retail market0 0200200400400600600800800100010001985年1985年1988年1988年1992年1992年1995年1995年1999年1999年GDP LevelPer Capital Annual Disposible Income of Urban HouseholdsTotal Retail Sales of Consumer GoodsSince the recession period is almost over, there will be a more favorab

4、le climate for consumption.1985=100 1985=100 1985=100IndexSeizing the Future: Mail Order Market Potential in China4With the improvement of peoples purchasing power and the variety of commodity categories, what and how they consume have changed greatlyFor majority of Chinese ,consumption of housing a

5、nd automobile havent been taken into account so far. So the consumption structure of average Chinese looks much different from that in developed countries. (Yuan)010020030040050060019851990199519971998Per Capita Annual Living Expenditure forPer Capita Annual Living Expenditure forConsumption in Urba

6、n AreasConsumption in Urban AreasClothingHousehold Appliances and ServiceRcreation Education& Culture ServiceMiscellaneous Commodities and ServiceSeizing the Future: Mail Order Market Potential in China5Shopping MallTraditional Department StoreConvenient Store, Mail Order Company etc.From the early

7、1990s, the retail landscape in China has changed greatly:Traditional Department Store has passed prosperity timeNew retail forms, especially supermarket, has become the most attractive place for citizen going shopping.All giants like Carriefour,Wal-mart, Price-mart, Metro, Amway, Avon are present. S

8、everal new forms emerged almost at the same time, so the DM forms has been competing to obtain peoples attention hardly.The deregulation of Chinese retail market since 90s has given opportunities to the new retail forms, developed mainly by foreign companiessalestimeSeizing the Future: Mail Order Ma

9、rket Potential in China6Positive factors for development of the retail market are in overweightvFurther deregulation of retail marketvEfforts to join WTOvSpeed up of urbanizationvConsumption loan Policyvprolong of holidays and weekendvTime pressure feelingv Deflation of Chinese economy for more than

10、 two yearsvImperfection of the social security systemvCautious consumptionvBehavior and attitude vSlowly increase of farmers incomeSeizing the Future: Mail Order Market Potential in China7ContentA. Development of Chinese Retail Market B. Mail Order Market Analysis in ChinaC. Quelle Shanghai SWOT Ana

11、lysisD. Action Plan and Sales ForecastE. ConclusionSeizing the Future: Mail Order Market Potential in China8The direct marketing industry in China, including telemarketing, direct mail, catalog mail, and even the internet marketing, is in the infancyOpportunitiesRapidly expansion of middle income cl

12、ass with preference for quality productsStrong experiment interest in trying all kinds of shoppingReasonable parcel portage price for huge distancePhone penetration rate over 40 percentTV set ownership more than 100 percent, more than 100 million TV set on cable nowGovernments heavy investments in t

13、elecommunication and information high way / networkDistinct BarriersPoor postal and logistic serviceLack of credit cardLimited lists (womans magazine, banks, telephone companies)Poor transportation infrastructureLimited trust in transaction modeExpensive communication costSeizing the Future: Mail Or

14、der Market Potential in China9Mail order can satisfy some demands what traditional retailing can not doSource: customer workshopBy Chinese CustomersAcceptance of convenient concept of shopping at homeNovel product choice / special productsGeographical availabilityTime savingPrice By German Customers

15、Comfortable and convenient purchasingGreat variety of productStable priceFavorable terms of paymentService and technical advice by phone and round the clockRanking of Motivation FactorsSeizing the Future: Mail Order Market Potential in China10Rediscovering of mail order industry in China1930 - 50196

16、0 -701980-901990 - Small scale mail order companies established for selling books and medicineVery famous book club “Sanlian” has become chain staveClosing down all mail order companiesForbidden all kinds of marketing and advertisingReturn of small scale mail order business with random subscriptionD

17、irect mail service only for informational purposeXiao Kang established as first modern mail order company in South ChinaEntering of professional mail order companiesMecox Lane,1996Bertelsman, 1996Quelle and Otto,1997 3-Suisses, 1997Seizing the Future: Mail Order Market Potential in China11The actual

18、 mail-order sales in 1999 has been estimated as 300 millions RMB, which accounts only 0.02% of total retail sales in Urban ChinaTrust ProblemLong waiting periodPrice concernPoor postal serviceHigh Communication Expense by phonePotential DemandRealized DemandSeizing the Future: Mail Order Market Pote

19、ntial in China12The top ten provinces ranked by mail-order sales volume in 1999Source: http:/According to this finding,the less developed and somehow remote provinces are the most active area for mail order. Hunan (63)Jiangxi (54)Guizhou (36)Menggu (35)Jilin (20)Shanxi (16)Hainan (15)Liaoning (14)Hu

20、bei (11)Xinjiang ( 9)In:Mio.RMBSeizing the Future: Mail Order Market Potential in China13The consumers with middle income between 600-2000 RMB per capital are mail-order companies first targetsDisposable Income in Month (RMB)*Purchasing PowerCost of Developing250-600600-10001000-2000Above 2000WeakMe

21、diumStrongVery StrongHighLowLowHigh*per personSeizing the Future: Mail Order Market Potential in China14Comparison with that in West Germany data implies that Quelle Shanghai may need more resource to develop the small and medium citiesChina 1999West Germany 1992Over 2,000,0001,000,000-2,000,000500,

22、000-1,000,000200,000-500,000Under 200000122847204377Class of CitiesNumber of CitiesDistribution Total Urban Population15.6%18.1%15.3%26.5%24.5%Distribution of Quelle CustomerUnder 5,0005,000-20,00020,000-100,000100,000-500,000Over 500,000Class of cities12%16%13%16%43%Distribution of Mail Order Custo

23、mer15%18%13%17%37%Distribution Total Urban Population58%2%15%15%10%Seizing the Future: Mail Order Market Potential in China15West Germany 1992Over 4500 DM3500-4500 DM2500-3500 DMUnder 2500 DMDistribution of PopulationDistribution of Mail Order Customer27%21%26%27%23%24%28%25%Household Income Level25

24、%45%20%10%lowmiddlehighvery highHousehold Income LevelDistribution of PopulationDistribution of Quelle Customer24%41%23%12%China 1999Statistics from Germany shows that the middle income class are more likely become the mail order customer, in case of Quelle(China), this trend is not significant so f

25、ar Seizing the Future: Mail Order Market Potential in China1613%13%66%66%16%16%3%3%2%2%Under 20Under 2020-2920-2930-3930-3940-4940-4950 50 andandoveroverChina 19996.0%6.0%19.0%19.0%20.0%20.0%18.0%18.0%37.0%37.0%Under 20Under 2020-2920-2930-3930-3940-4940-49over 50over 50Germany (West) 1992) In China

26、, the young women in 20-29 years are more easily attracted to catalog shoppingSeizing the Future: Mail Order Market Potential in China17Development of value customer usually have three phasesAny unsatisfying event during the try and accept phase will bring serious result - Customer handling is essen

27、tial.Encounter for the first timeBe stimulated again Try with small ordersOrder for more valueBe incline to trustPurchase more Persuade others to buytry and testacceptloyalty growTimeOrder ValueSeizing the Future: Mail Order Market Potential in China18Speedy development of related and supporting and

28、 related industries contributes to the shaping of mail order marketSeparation of China Post from telecom force the re-thinking in term of service qualityEmergence of e-Commerce shift attention to solve the logistics problemJoining of WTO lead to more liberal import policy and make more product avail

29、ableDeregulation of media and use of internet will decrease the cost of direct marketing and lead to more accurate target customerMore companies and institution are willing to cooperate by providing existing listsSeizing the Future: Mail Order Market Potential in China19The products in chart mainly

30、refer to clothes 3-Suisses: clothes direct imported from France,relatively high price and fashionable Quelle:Similar product positioning with Mecox LaneOtto: High fashion high price individualitylowhighhighpriceOTTOMecox Lane3-SuissesQuellePROFITABLEFIELDThe positioning of Quelle and its major compe

31、titorsFocus on high individuality and price often has low response rate but satisfying profit margin. Position on low individuality and price often gains profit through large scale sales.Seizing the Future: Mail Order Market Potential in China20Key Information of the Main Players (I)Mecox LaneEstabl

32、ished by US venture capital company in 1996Accumulated investment: 50 million US$, employees: 200Target customer: female with middle income living in small citiesProduct: casual female dressingDevelopment of customer: large scale advertising (DM: 2 million pieces for one batch)Sales volume in 1999:

33、40 million RMBOperational problem: high return rate, low satisfaction rate of customer, waiting too long for getting money back Management problem: change of top management, frequent fluctuation of middle managers, loss of mail order expertiseFuture perspective: still optimistic, heavily investment

34、in exploration of internet, further injection of venture capital expected Seizing the Future: Mail Order Market Potential in China21Key Information of the Main Players (II)Otto CheerEstablished in 1997Investment: 12 million US$; employees: 100Target customer: female with relatively high income livin

35、g in big citiesProduct: fashionable, casual dressingDevelopment of customer: advertising, renting listsSale volume: 12 Mio. RMBProblem: high operational cost / product quality does not match the money valueFuture perspective: prepare for seizing big market share, heavy investment in e-commerceSucces

36、sful track record in Asia: Japan, Korea, TaiwanSeizing the Future: Mail Order Market Potential in China22Key Information of the Main Players (III)Bertelsmann book clubEstablished in 1995Investment: over 15 million US$, employees in Shanghai: 280 Club Member developed : 1.2 millionPromotion: Advertis

37、ing, DM, Show room, Agent, direct sellerSales volume: 200 Mio. RMBBreak even expected in 2000Future perspective: optimistic, but regional coverage limited by political concernSeizing the Future: Mail Order Market Potential in China23Key Information of the Main Player(IV)XiaoKang-Paul /”comfortable H

38、ome” Established in 1987, investment and manager from US, conservative injection of moneyTarget customer: young generation / undergraduateOrder value in average: 40 RMB, quite lowProduct: gift / souvenir ware / novel small hard wareCustomer base: over 1.2 Mio., concentrated in South (40%)Problem: fl

39、uctuation in customer baseManagement style: family control, tough cost controlSale volume: 18 Mio. RMB, break even already in 1997Future perspective: started with toll-free 800 service, emphasis put on customer relationship management, list broker, engage in e-commerce Seizing the Future: Mail Order

40、 Market Potential in China24Japanese retail group will be expected The local company is catching up with the foreign competitors with solid basis of capital and customer relationship The mail-order companies in existence are adjusting their investmentThe mail-order market will face fierce competitio

41、n in near futureBenchmarking：The mail-order sales accounts for about 5% of the total retail sales in U.S.A,while only 0.02% in Chinese urban area.While the Chinese mail-order market is expanding, the competition is getting hotSeizing the Future: Mail Order Market Potential in China25 Intranet （back

42、office）Strengthen management of customer relationship and internal operation system Multi-dimension data mining analysis as decision-making foundationStrengthen supplier management, establish more effective supply chain, short handling cycleReal-time tracking system making customer know the processi

43、ng status of the product he bought Internet（front office）More product information on timeShorten time for decision making variety of payment modesFeedback from customer and authoritative opinion on product, interactive communication opportunity with customerReduce advertising costExploit new custome

44、r dataSpeed up the product design processOpportunities from internet technology can be utilizedSeizing the Future: Mail Order Market Potential in China26010020030040050060070080090010001997.101998.71999.11999.72000.12000.12Internet usersInternet users forecasted in December,1998 The number of Chines

45、e computer connected increases from 0.3Mio. in Oct,1997 to 3.5Mio. in Jan,2000.Total bandwidth of leased international connection: 351M. By the end of 2000, 1500M. Domestic internet interface bandwidth: 100M. 85 percent of internet users express that they will go shopping on line when the interface

46、condition becomes mature. (10000 persons)The speedy development of internet in ChinaSource:CNNICSeizing the Future: Mail Order Market Potential in China27ContentA. Development of Chinese Retail Market B. Mail Order Market Analysis in ChinaC. Quelle Shanghai SWOT AnalysisD. Action Plan and Sales Fore

47、castE. ConclusionSeizing the Future: Mail Order Market Potential in China28qAt the end of May 2000, Quelle Shanghai has generated a list with more than 500,000 target customers, of which 84,000 are active consumers. qThe response rate of average customer is 6.8% on the first quarter of 2000, and the

48、 average order value is 187.5 RMB. Corresponding figures for the active customers reached 14.7% and 200 RMB respectively. qThe net sales volume was 6.24 million in 1999, and the gross demand was as high as 10.12 million. Due to the still small customer base, Quelle Shanghai suffers from loss.qQuelle

49、 Shanghai has trained and built up professional management team.The highlights of Quelle Shanghai 1997-2000Seizing the Future: Mail Order Market Potential in China29Based on both the strong industry experiences of Germany Quelle, and its three-year operation in Chinese market, the company has reache

50、d deep understanding of Chinese mail order market.The customer appreciate the products and service of Quelle Shanghai very much. Quelle has already built up to some extent brand name among potential customers.The company holds a superior supplier relationship. The high reputation of Quelle to suppli

51、er was confirmed by our talk with them. Such as the strictly on-time payment for goods and the strict quality requirement for supplier help Quelle to serve its customers with quality products.The core management has built high cohesive team force.SWOTStrength of QuelleSeizing the Future: Mail Order

52、Market Potential in China30Since Quelle does not provide delivery service by itself can not control the whole logistics process effectively, some customers are not satisfied with the delivery service quality today. The lack of investment has the result that customer service and transaction system ca

53、n not satisfy the demand.Without large sales volume in China，it is hard for Quelle to get better price from or to form strategic alliance with large suppliers.Limited marketing budget puts Quelle Shanghai in a weak position in battle for winning target customerSWOTWeakness of QuelleSeizing the Futur

54、e: Mail Order Market Potential in China31Emergence of middle class is not only in coastal cities, also in small and medium cities in hinterland.The separation of post and communication will lead to better post service quality, which will get rid of some barriers for mail-order companies.Shanghai is

55、very famous for setting fashionable trend, which could be used for localization of fashion.China will join the WTO in the near future, which will result in lower tariff and greater import volume of foreign consumer products.The development of internet open both cost-saving and revenue generating pos

56、sibilities for mail-order companies.SWOT Opportunity of QuelleSeizing the Future: Mail Order Market Potential in China32Existing overseas competitors are strengthening their position, while others are considering entering Chinese market.The growing-up of private enterprises will attack Quelle from a

57、nother angel.The development of e-business may spur other enterprises into this industry.SWOT Threat of QuelleSeizing the Future: Mail Order Market Potential in China33The major reason of the present loss is the brand building and marketing cost for customer database.QuelleMecox LaneOttoInvest (1000

58、US$)5,00050,00012,000Database(1000)3001,200500Annual Sale(1000RMB)10,00040,00012,000Efficiency Index I16.6741.6724.00Efficiency Index II20.81Other factors not considered, Quelle Shanghai has managed a relatively higher investment efficiency in terms of unit cost for database and annual sale.Seizing

59、the Future: Mail Order Market Potential in China34Resources of intellectual capital in Quelle Shanghai:Customer Database: more than 500,000 useful name list had been collected. (in worth of 7,500,000 US$)Human Resource: more than 70% staff ,part of whom have been trained abroad ,having 2-5 years exp

60、erience in Chinese Mail Order market. Marketing Experience: good experience on Chinese mail order market, knowledge about customer segmentation.Organization: A primary architecture and operational infrastructure has been built up.Loss on financial report does not mean loss on real asset - perspectiv