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Former children of the first brand of maternal and child products, who once created a brilliant record of 300% growth rate, can only exist in people's memories. The industry analysts analyze the reasons for their failure, saying that the mistakes of the expansion strategy are the most deadly.
Expansion of the market both frustrated
Open the official website of Red Kids, overwhelming promotional discount information oncoming. "September free month!", "50% mad rush!" and a series of slogans such as price reductions are as if you are in the end of the quarter clearance sale market.
“Our family’s children are just one year old this year. Milk powder and diapers are purchased on the Red Kid website. The first is that the price is cheaper than on the market, and the second is more convenient for home delivery. Although the recent discounts are many, they are I was uneasy. I didn't dare to buy like milk powder and I was worried about quality problems." Ms. Zhang, who lives in Chaoyang District, Beijing, said in an interview with a reporter from China Enterprise News on September 4.
As the largest mother-to-child B2C platform in China, Red Child has maintained a rapid development since its establishment in March 2004 and has created remarkable achievements in the industry. In 2008, the sales revenue of Red Children approached 1 billion yuan, and in 2010 it increased to 1.5 billion yuan. In 2011, ambitious Red Kids have prepared IPOs.
In order to expand its business scope and fill other business gaps, Red Kids began to expand its beauty and food business on its mother and baby website in 2009. In 2011, it launched its own brand new department store website, buliding.com.
FBG.com is a shopping website that integrates makeup, food, home, and kitchen for female netizens. It puts forward the slogan of “Colorful Buying and Enjoying Life†and tries to escape from the maternal and child business of red children and catch up with Jingdong and Dangdang. And other industry leaders.
However, things are counterproductive. The occurrence of events is often not shifted by the will of the operators. The Red Kid's plan to go public has also caused a crisis in the purchase of the Plan.
Bulu Shopping Network did not bring a turn for the red child's beauty makeup business. For most of the online shoppers, Propanus is not their best choice.
Studying at a certain university in Chengdu, Long classmate, is the leader of the current "net purchase Corps", talk about online shopping quite experience. Long students said that as a comprehensive website, there is no brand-name purchase of Taobao, popularity is obviously insufficient. Compared with professional websites, Bin Buy apparently does not have its own characteristics, and the preferential policies and delivery speed are not as good as those of Jumei Youpin and Le Bee.com.
Do not forget the main business at the intersection of strategic choices
Red children are not red, and binge shopping is not fun. Has this been the case and has the Red Child only sighed and left a regret?
In the interview, Shi Hongqi’s partner Ai Hongtu stated that the most important reason for the failure of the Red Kid’s failure lies in the expansion of the strategy. Red children face the challenges of Dangdang and Jingdong successively developing their mother and baby businesses. Red children have no advantage on the mother-infant platform; it is difficult for them to quickly open up the market and eventually fall into a dilemma.
Strategic expansion is a growth strategy for the company and a crucial step in the company's growth. In the process of strategic expansion of enterprises, according to the different internal and external environments, the strategic direction of enterprise selection is not the same. Just as Macro chose horizontal integration, Youngor chose vertical integration, Haier chose a diversification strategy, and Red Kids seemed to miss the car on the road to strategic expansion.
It is true that diversified expansion can expand the scope of operations and diversify operational risks. However, it cannot be overlooked that multiple expansion also spreads funds and weakens the advantages. Success also expands, and failure also expands.
“As the first mother-to-child website in China, Red Child has accumulated a lot of customer resources with years of sales experience. Faced with the transition, Red Kids are starting to get involved in beauty products for future mothers’ care and entering the department store. Biased.†Someone in the industry said.
The road to expansion was unexpected and was buried on the road to expansion. In the past, the blind expansion of the first brand of red maternal and child products was worth rethinking.
“Haier, Wahaha, and others all carried out strategic expansion on the premise of a relatively mature main business. Although they encountered certain difficulties, due to the accumulation of main business, they were still able to 'transmit blood for new businesses.' Fighting the business in the face of adversity, the business moves blindly to the beauty market, and the risks are enormous.†Mr. Ai expressed his views on the lessons learned from the brand expansion of the Red Kid.
In the face of fierce market competition, in the face of strong competitors, standing at the crossroads of strategic choices, where will companies go from here? Is it sticking to the main business, doing fine and strengthening, or is it working in the sideline and earning short-term profits? This is indeed a difficult problem for companies. Experts remind that companies need to focus on their main business if they want to develop in the long term.
The main reason for the failure of the expansion strategy to become a red child
Former children of the first brand of maternal and child products, who once created a brilliant record of 300% growth rate, can only exist in people's memories. The industry analysts analyze the reasons for their failure, saying that the mistakes of the expansion strategy are the most deadly.
On August 30th, Suning Tesco’s acquisition of Red Kid has entered the stage of financial audit. The transaction will be completed in the third quarter of this year. The huge loss of the red child was weak and was acquired as its fate.
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