The 3.0 era
The 2.0 era
The 1.0 era
AuTomoTive e-CommerCe3.0:
A GreAT erA for oems
1
2
3
The BiG
3
By 2016, the amount of China’s
automotive e-commerce will approach
225 billion CnY at an annual growth
rate of 30-40%.
p. 4
While there are still three major issues remained for China’s automotive
e-commerce dashing into the 2.0 era, the pioneering pathfinders, who have
stepped into the 3.0 era, have made two prominent innovations.
p. 12
roland Berger believes that building an ecosystem is critical for activating the base users of the aftermarket and oems will have the first-mover advantage.
p. 4
The competition is increasingly
intense
Automotive e-Commerce
the 2013 double eleven shopping festival has made "automotive
e-commerce", which is accompanied by a turnover of 24.3 billion Cny,
an eye-catcher overnight.
now "automotive e-commerce" has become the most popular
buzzword for this industry, where not only the vertical media, oeMs and
general online dealers have taken the leading position and even the
dealership groups are actively joining this rapidly spreading battle for a
slice of the cake. What’s more exaggerated is that it seems only a short
period of 3 - 4 years from the emerging of the automotive e-commerce
to its prevailing and the centuries-old traditional automotive industry to
be shaken while major online dealers can’t seem to wait to get involved
in it before considering the business model and future strategy.
roland Berger means to put forward a clear business model and
development direction for this industry by analyzing this industry and
the major online dealers thereof and further exploring the development
direction and trend of the automotive e-commerce platforms and the
home advantage of oeMs.
1. China’s automotive e-commerce
has begun to take shape
in the 2013 double eleven shopping festival, automotive e-commerce – involving more than 1,730 dealers for more than 80 automobile brands, more than 200 car models and 91 car series, was undoubtedly the biggest winner at tmall, which became an unprecedented focus of attention due to the participation of the vertical websites, portals and general online dealers and has the orders for a turnover of 24.3 billion Cny as well setting a new record of automotive e-commerce.
it is estimated that China’s o2o automotive e-commerce will have the sales booming at an annual growth rate of 30 - 40%, which are expected to approach 225 billion Cny in 2016 (source: orient securities, roland Berger). Meanwhile, the sales of automotive e-commerce has gradually increased – in the first half of 2014, China's passenger car outputs are 9,708,500 and sales 9,633,800 (source: statistics by China association of automobile Manufacturers) of which approximately 20%, namely 1.93 million, are made on or via the e-commerce platforms. A
2. The major platforms are joining
the battle for a slice of the cake
1) in this year some major online dealers have been launched on the vertical platforms, mainly aiming at the o2o aftermarket. on the evening of december 11, 2013, autohome, one of China’s vertical automotive websites, was successfully launched on the new york stock exchange. in 2014, it enters the o2o market while maintaining its existing competitiveness (i.e. online diversion).
2) Bitauto, another major vertical automotive website has as well made considerably great moves this year. first, Huimaiche was launched in april, and the C2B
Part A. market observation
1
A
2013 douBle eleven: tHe proportion of tHe turnover
1 the sales amount of China’s o2o automotive e-commerce [2012-2016e, billion Cny]
source: orient securities; desk research; roland Berger’s analysis
2 the proportion of the sales of e-commerce [January to June, 2014, %]
the turnover was 24.3 billion. the turnover was
24.3 billion. the turnover was
24.3 billion.
243
Bitauto auto.sohu Car.tmal autohome 48.1% 117billion 37.8% 92billion 3.3% 8billion 10.9% 26billion ~430 ~750 ~1,230 ~1,600 ~2,2502012 2013 2014e 2015e 2016e
20.0%
e-commerce sales
to dip a toe in the water.
the rise of e-commerce has made the demands for online car purchasing soar. about 45% of users accepting the survey have considered online car purchasing. the data of roland Berger’s automotive industry center shows that in China, when buying a passenger car of any brand, a user gets the information via the internet mainly and occasionally new media and mobile apps, in which there is still great room for improvement. C
4. Policies are favorable for
e-commerce development
recently the government's moves such as anti-monopoly, cancelling of the filing of the dealers and alike have caused quite a surge in the industry. although the parties have different interpretations of premarket retroaction model is used, featuring low
price and transparent transaction. next, Bitautomall was launched as a typical o2o platform. taoche was then launched in the C2B used-car transaction model. 3) Cheyian was clearly aware of their strengths and weaknesses, and instead of directly competing with the online vertical dealers of premarket, it competed with other platforms in the B2C model via the broad aftermarket. B
3. The major platforms are joining
the battle for a slice of the cake
We can see that changes in the market demand and consumer attitude contribute to the rapid development of China’s automotive e-commerce and to that, the major platforms spend large investments
B
CHeyian
Huangpu
- Mass market specialty hospitals such as Mylike and asian Hearts and general hospitals like fosun 2000 service providers - 503 service providers have established online Cheyian stores - 54 blocks of 12 major districts (except Chongming) of shanghai are covered at a ratio of one user every 2 - 3 km
- High-grade car service has been provided for 10,000 car owners with membership
- the aftermarket B2C Model
- B-side service providers are developed first, and then the C-side automobile owners are developed
- online parts stores are developed at the same time
- 720 virtual parts supply chain members, including 23 auto Malls in the city and the main-stream parts suppliers in Jiangsu and Zhejiang, provide a richer resource for the automotive service providers to procure automotive parts
Business model Partnership dealers regional users Parts procurement
Chongming pudong fengxian yangpu Hongkou Changning Changning Qingpu songjiang Jinshan Zhabei Jingan Jiading Baoshan putuo
the policy trends, there is no doubt that streamlining the organizations and decentralizing the authorities as well as enhancing the discursive power of the service providers will be the foregone conclusions. along with these trends, the fair competition, transparent information and open channels of the dealers will bring tremendous opportunities for the growth of the online automotive dealers, who can even compete directly with oeMs in the future.
it is sure that in just 3-4 years, the automotive e-commerce has been already launched, and in the future, with the rise of major platforms, the further improvement of policies as well as the maturing of consumers, will have its business models further evolved and clearer. now let's review the stages that the automotive e-commerce has experienced throughout these 3 - 4 years. D
vertical portals vertical portals
the channels via which the information of the
automobiles of joint venture brands can be accessed [%]
the channels via which the information of the
automobiles of independently-developed brands can be accessed [%] 41 26 13 30 24 19 the official websites of the brands the official websites of the brands new Media and
apps search engines
C
users Have CHanGed ideas aBout Car purCHases
source: the White paper of new observation on automotive products and innovative Marketing; roland Berger’s project experience; roland Berger’s analysis
D
open poliCies are favoraBle for tHe developMent of autoMotive e-CoMMerCe platforMs
Cancelling of the filing
of the dealers Anti-monopoly open parts channels
- different parties have different interpretations of this policy
- roland Berger believes that general dealers operating in the one-support-n model may appear in the future - different parties have different interpretations of this policy
- While the auxiliary platforms for oeM manufacturers’ online marketing will be turned into the direct sales platform, the online dealers may have their role radically changed and compete directly with the manufacturers
- the prices of the cars and aftermarket parts and the services thereof are more transparent and are deter-mined by the market and users rather than the oeMs. the transparent pricing and service is just one of the Ksf deciding the e-commerce platforms as a newly emerging power
- Cross-region marketing may launch and the competition in the same region may be more intense. as a result, and the online dealers, as an efficient resource integrator, will have their advantages further highlighted
- if the parts source channels are completely unlimited, the dealers will have the same competitiveness as the independent aftermarket (iaM)
- in the future, users’ loyalty to the oeM brands will be gradually turned to the service providers (dealers and the independent aftermarket) - e-commerce platforms will further exert their same-side and cross-side network effects and rapidly develop various users with equal relationships, to enhance users’ online probability and loyalty.
Part B. Automotive e-commerce
platforms on yesterday and today
A
revieW of tHe developMent History of autoMotive e-CoMMerCe platforMs
A B Autohome Tmall Automall Bitauto The 2.0 era The closed O2O loop model
The 1.0 era Extensive online
marketing
- developed in around 2005 - 2010
- Consumers' purchase habits are changed - car purchases and exchanges of automobiles are more dependent on the internet
- vertical websites take the lead to seize the opportunity to build partnerships with dealers and carry out online diversion
- online marketing; car purchases are completed offline
- rapidly developed in the past three years - online dealers have realized the importance of the connection between the online and offline user data
- the major platforms with a huge customer population start to take their own advantages to participate in transactions
- seasonal promotions are the main driving force while the clue conversion rate still cannot be radically improved
extensive online marketing
The closed o2o loop model
as the description with the conventional terms of it industry going, automotive e-commerce has already passed the 1.0 era and now is marching in the 2.0 era. A
1. The 1.0 era: extensive online
marketing
in the 1.0 era of extensive marketing, vertical e-commerce websites were the major players, and e-commerce platforms, as their representatives, had developed steady partnerships with dealers.in the 1.0 era, with more direct and simpler business models and relationships with other parties, the e-commerce platforms merely played a role of online marketing and were more likely regarded as "online marketing" by oeMs and dealers. the e-commerce platforms merely played such a supporting role, which was at most a percentage reflecting the monthly sales of the dealers, that they could never get involved in offline transactions even though some conversion effects had been obtained via online marketing. this is the direct reason why Bitauto launched Huimaiche and autohome turned to o2o, even though it has entered the stock market. B
However, although autohome could use this model to enter the stock market, the major platforms, apparently not content with staying in the 1.0 era and enjoying the first pot of gold - the primitive accumulation, are seeking transformations. not participating in offline transactions means failing to obtain the complete user data and this will directly lead to the platforms’ being helpless with the high-value information of the car owners. However, they are unwilling to hand over the information of the potential owners to oeMs, 4s shops and service providers, and therefore, the 1.0 era only lasted for 1 - 2 years before the 2.0 era in which o2o is the main business model came.
2. The 2.0 era: The closed o2o loop
emerges
as previously mentioned, the major platforms successively participate in offline marketing and try to make the online and offline marketing connected with each other, and thus is “online-2-offline (o2o)” named. since the online dealers have started offline transactions, the marketing conversion rate means more significance for them. then, the major platforms begin to create several types of business models, and thus the automotive e-commerce 2.0 officially starts.
in this battle, the major platforms try their best to take their own advantages and use seasonal promotions to increase the online marketing success rate. for example, tmall fully takes advantage of its base user data and taobao finance and other highly-featured products, to achieve precision marketing for different users and use financial products to attract buyers. Moreover, the use of the alipay pos machines at the dealer side can be regarded as a milestone marking tmall’s involvement in offline transactions. users can buy cars from the dealers by swiping their bankcards, and an upgraded alipay pos
machine can even automatically divide the amount to oeMs and dealers respectively so that the conflict of interest can be reduced. C
in the 2.0 era, the online dealers begin to focus on online marketing and “Make online marketing as routine” as the ultimate goal, and thus a series of business models are created.
While the major platforms have the customer resources that they have accumulated in the 1.0 era fully utilized to get involved in offline marketing so as to make the online and offline marketing connected with each other, users’ comments as well serve as a forceful endorsement for brands and platforms. this endorsement continues to be used for completing the new round of online and offline marketing. in this way, the online and offline marketing are fully connected with each other to form a closed loop. in some sense, the domestic automotive e-commerce currently is still 2.0. e
However, if the promotions in the annual automobile festival and the double eleven shopping festival are not counted, the daily sales of automotive e-commerce are not so optimistic. as a durable consumer product (more likely a luxury product), an automobile still cannot be
B
analysis of tHe features of tHe 1.0 era source: roland Berger’s analysis
Business model main advantages main disadvantages
E-commerce platforms
Choose a car Have a trial drive Make a deal Use a car Sell a car
> Mainly use the vertical online dealers’ online marketing to diverge the offline marketing - the vertical online dealers profit from the dealers’ or oeMs’ online ads
> partnerships are established between dealers and vertical online dealers
- vertical online dealers use professional evaluations to attract user traffic
- dealers diverge the marketing to offline marketing via online ads
> oeMs and online dealers mainly provide one-way online ads
> the platforms cannot trace merely by online diversions any informa-tion of the customers diverged to the offline stores
- all the negotiations, bargaining and transactions occur offline so that the vertical online dealers cannot participate in them
> Keep up with the trend that users are turning to buy cars online to ensure the user base
> expand the expertise to attract users’ more attention and improve the online-to-offline marketing conversion rate User traffic Dealers’ ads relationship between the parties
C
analysis of tHe features of tHe 2.0 era source: roland Berger’s analysis
D
tHe Business Models in tHe 2.0 era source: roland Berger’s analysis
Dealers’ advertising Model 1: Offline marketing is dominant Orientation of online dealers Online dependence Model 2: Online and offline marketing are provided simultaneously
The user data of the closed loop User traffic / Financial
service of the payment system resource flows online offline 1 3 6 5 2 4 7 Model 3: Online marketing is dominant E-commerce platforms
Choose a car Have a trial drive Make a deal Use a car Sell a car
Business model relationship between main advantages main disadvantages
the parties
> participate in the offline transactions, open the closed o2o loop and use multiple sub-models simutane-ously
- the special online supply and special car supply model / the special modified-car supply model - the same models + offline bargaining + online subsidies model / the same-price-for-same model
- the C2B premarket retroaction model
> oeMs thoroughly cooperate with the online dealers to develop products special for online marketing and other models
> dealers share transactions with online dealers. for example, alipay pos machines are used in 4s stores.
> oeMs and dealers may face troubles in pricing, accounting and alike
> the online and offline marketing are connected with each other to form the complete user data. > Multiple models can be used. this is favorable for the oeMs to deal with the unsalable car models or the car models special for online marketing
> the major platforms use their advantageous financial service products to promote the conversion of marketing clues. for example, tmall provides financeprod
> the online and offline marketing are connected with each other to form the complete user data. > Multiple models can be used. this is favorable for the oeMs to deal with the unsalable car models or the car models special for online marketing
> the major platforms use their advantageous financial service products to promote the conversion of marketing clues. for example, tmall provides financeprod Model 1: Offline marketing is dominant Model 2:
Online and offline marketing are provided simultaneously
Model 3:
Online marketing is dominant
Stocks are transferred Sales are increased
online stocks are cleared /discounted cars
same online and offline models
are provided at same prices C2B custom
supply for modified-car models special online supply and special car supply same models + online
subsidies + offline bargaining online show / diversion
priced and sold online as an fMCG.
We can see that seasonal discounts, special subsidies and other promotions are used in all business models and the non-financial leasing type financial products are as well essentially for discounts. in other words, the 2.0 era is
essentially still optimized online marketing, in which the issues, such as lower actual transaction conversion rate and that online marketing cannot proceed as routine, cannot be solved at all. Moreover, there is still a virgin space for tremendous reservations and the aftermarket. e
Closed o2o loop
source: roland Berger’s analysis
f
tHe reMaininG issues for tHe 1.0 and 2.0 eras
Integration
of online
and offline
marketing
Offline services Online servicesMarketing of offline goods
Pushing Endorsement Complementariness Guiding Diverged users Diverged users Diverged users Diverged users Marketing of online
> Essentially, the automotive e-commerce 1.0 and 2.0 more likely play the roles of online marketing and online-to-offline diversion
> The automotive e-commerce 1.0 and 2.0 have not made any substantial break through in enhancing the user’s experience throughout the whole service period, and there are still three major issues for them to solve:
1 The tremendous potential and resources of the aftermarket are still not integrated and used
2 A tremendous number of base users are not revitalized 3 The online marketing cannot proceed as routine and the clue conversion rate cannot be elevated
Three major issues for automotive e-commerce platforms
?
2
Part C. The 3.0 era is coming and
oems will have the first-mover
advantage
B
tHe total revenue of CHina's autoMotive industry CHain in 2013/2020
[one billion Cny]
1) Including car wash and beauty, fast repair and maintenance, parts and overhaul 2) Automotive retail finance
2013 2020 Automobile marketing / manufacturing Automotive finance2) Automotive insurance Rental of used cars After-sales service1) 9,420 40% 58% 4,296 23% 14% 16% 19% 19% 23% 6% 19%
The total revenue of the automotive industry
The CAGR in 2013 - 2020
along with the three remaining issues, a concept for the more open and inclusive 3.0 era has been incubated in the 2.0 era - the integration of the online and offline marketing. roland Berger believes that with the continued impact of the internet on the automotive industry, as well as the changes in consumer demand, the roles of the parties will be further transformed, and the business models will be clearer. the 3.0 era which aims at the aftermarket to mainly build an ecosystem will come. and in this round of innovations, oeMs will have the first-mover advantage.
1. Conditions are gradually maturing
1) automotive industry chains will continue to be impacted by the online dealers in the future, while the automobile consumption ecosystem has been changed
radically.affected by the e-commerce platforms, the original linear information exchange and transaction mechanism are turned into the complex multilateral market. for example, oeMs will directly confront consumers and directly guide the platforms to participate in transactions and the aftermarket. the dealers’ services, such as transaction, maintenance and repair, will be more prominent; and in the future, building the automotive ecosystem is the major development trend of e-commerce platforms, so a cross-industry alliance should be built to guide customers and enhance customers’ adherence to platforms.
2) the maturing scale of the aftermarket and the changing consumer demand are as well demand guarantee and important driving force for the coming 3.0 era. in the comparison with the mature market, we
A
Source: Roland Berger
’
s analysis
Orientation of the traditional roles Orientation of the future roles
Dealers are directly managed
E-commerce platforms are accessed directly Consumers are contacted directly
Have a trial drive
After-sales services and derivative services Diversion of marketing clues Offline transactions Integration of aftermarket resources
> The traditional dominant position
> Not sensitive to the consumer demand
> Whole-process services for new car transactions > A provider for after-sales
services and derivative services
> Consumers are contacted directly > Consumers are
inculcated
> The development of the e-commerce platforms is guided
> Functions are disabled before the transaction
> Focus on transactions while providing after-sales and derivative services
> Starts to participate in offline transactions to complete the closed O2O loop
> Integrates the aftermarket resources > Merely online marketing
> Profited from marketing clues
Dealers are
directly managed OEM
Choose a car model Have a trial drive Complete the transaction and take the car After-sales services and derivative services Diversion of marketing clues Complete the transaction and take the car
Alteration of the orientation of the
roles of the parties
Dealers
E-commerce platforms
B
Contrast of tHe distriBution of tHe profits 1) of CHina's autoMotive industry source: roland Berger’s analysis
C
ConsuMers’ deMands for Car purCHase tHrouGHout tHe WHole serviCe period source: roland Berger’s analysis
Distribution of the profits 1) of China's automotive industry 2013 100% 100% Gross profits Gross profits Manufacturing of new automobiles Manufacturing of new automobiles Marketing of new automobiles Marketing of new automobiles Automotive finance Automotive finance Automotive insurance Automotive insurance After-sales service After-sales service Car rental Car rental Used cars Marketing of used cars 41% 21% 6% 12% 19% 22% 5% 15% 26% 4% 10% 12% 1% 6% Distribution of the profits of the automotive industry in developed countries 2013 1) Net profit
Car life ecosystem
Praise spreading APP recommendation Community life Financial service Bargaining Online subsidies E-commerce platforms
Praise spreading bargain supporting Exchange with other car club members
Cross-industry community Car upgrades Recommended car
dealers Maintenance tips
Car rental Recommended parts
Attention
Another purchase Transaction of used cars Maintenance Car use Interested Visiting Purchase
Choose parts Online promotions Have a trial drive
The new car marketing ecosystem
The aftermarket ecosystem
D
Source: Roland Berger
’
s analysis
> Developed in around 2005 - 2010
> Consumers’ purchase habits are changed – choice and exchange of automobiles are more dependent on the Internet.
> Vertical websites take the lead to seize the opportunity to build partnerships with dealers and carry out online diversion
> Online marketing; car purchases are completed offline
The 1.0 era extensive online marketing
> Rapidly developed in the past three years
> Online dealers have realized the importance of the connection between the online and offline user data
> The major platforms with a huge customer population start to take their own advantages to participate in transactions
> Seasonal promotions are the main driving force, while the clue conversion rate still cannot be radically improved
The 2.0 era The closed o2o loop model
> In the 1.0 and 2.0 eras, the conversion rate cannot be improved radically, and the potential of the aftermarket has not been excavated yet > The OEM-oriented platforms begin to take their own major advantages to integrate the resources of offline users and dealers
> Users are guided to be online via multiple channels. The automotive ecosystem is built. Customers’ adherence to platforms is enhanced > Retroactively make the online marketing of new cars as routine
The 3.0 era The aftermarket o2o ecosystem
The 1.0 era Extensive online
marketing
The 2.0 era The closed O2O
loop model
The 3.0 era The aftermarket O2O ecosystem
Autohome
Tmall
Automall Chexiang
Bitauto
e
tHe features of tHe 3.0 era source: roland Berger’s analysis
Choose a car User traffic / F inancial ser vice Ecosystem Marketing of new automobiles Dealers ’ ad ver tising Ha ve a trial driv e Mak e a deal
Use a car and sell a car
Payment system Mobile ter minals The user data of the closed loop Customers’ adherence to platforms E-commerce platforms
find that in the mature market, the profits of automobile manufacture and sales of new automobiles account less than 30%, and the profit of China's automotive industry is still mainly concentrated at the front end of the industrial chain and will be gradually bias to the aftermarket and derivatives business in the future. therefore, there are important opportunities for the development of automotive e-commerce, such as used cars, automotive finance, insurance and after-sales service, etc.
Meanwhile, the consumer demand for cars has turned into the demand for service throughout the whole period, and this as well becomes the main driving force of e-commerce 3.0.
future car users increasingly want to get care and experience throughout the whole period. for example, the marketing of new cars can be more efficient and transparent, and the products can be learned from the transparent information and via the general social communities, so that the purchase can be carried out on a credible basis; or a car can be used in more social and convenient ways. after having bought cars, users hope to continue to get care, such as maintenance reminders and activities for car owners. they also hope to join the general automotive communities to communicate with other car club members in such as outdoor sports, public welfare activities, sports events and alike, including used car trading, car modification interest groups and other relevant car communities.
1. The 3.0 era has taken shape
When we are still discussing the prerequisites and Ksf for the 3.0 era, it has taken shape. the rapidly-transformed Chexiang and the newly-launched Cheyian, Chemayi and other independent aftermarket platforms, all use the general offline-to -online business models aiming at offline aftermarket users to build an automotive ecosystem and enhance customers’ adherence to platforms. D
Compared to the 1.0 and 2.0 eras, in some sense, the 3.0 era has two creations. first, the "use a car and sell a car" C
G
tHe total revenue of CHina's autoMotive industry CHain in 2013/2020
[one billion Cny]
OEMs 1 Dealers / Service providers Loyalty B2B service Par tnership Partnership Alliance Benefit-sharing Alliance Dominant Subsidies Partnership Users Advertising companies Cross-industry alliance 3 E-commerce platforms 1 5 6 2 3 4
and other aftermarket services are launched, and the platforms guide users to get online via a variety of channels and thus gain the users’ loyalty. second, an ecosystem is built as a means to realize “Make the online marketing of new cars as routine” from another innovative perspective. e
- Business models, overall, a variety of business models will appear in the 3.0 era. roland Berger believes that two of them will be more in line with the market demand – the aftermarket offline-to-online Model and the aftermarket B2C/C2B Model, which have their own advantages and disadvantages, and are being actively explored in their respective fields.
- The relationship between the parties, in the 3.0 era, the multilateral relationship should be "win-win". oeMs and dealers in the 2.0 era have got rid of the conflict of interests on pricing, accounting and alike. oeMs have been dominant in platform operation and highly integrated their exclusive resources of dealers’ customers, and the platforms have been launched at a higher level. service providers benefit from the standardized certification services and user information provided by the platforms. the platforms benefit from the growth of the B-side users, which promotes the C-side development. users benefit from subsidies and personalized communities. and the
platforms obtain valuable online user data and gain users’ adherence to platforms. Cross-industry alliance may become a source of the profits of the aftermarket o2o platforms. other industries can obtain the consumer demand information as an ecosystem player. a partnership (mainly for the user data and precision marketing) is as well formed between advertising companies and online dealers. G
- main advantages, With regard to the three major
remaining issues for the 1.0 and 2.0 eras, in the 3.0 era, the first two major issues have been solved to some extent when the aftermarket is excavated and the base users are revitalized via mobile terminals, the in-car internet and the membership system. However, with regard to the major issue “making online marketing as routine", currently, it seems that "finding another road to rome" should be applied to the 3.0 era – the aftermarket ecosystem will be used to affect users' demand for personalized cross-industry communities and retroactively promote the daily sales of the premarket. Before the commodity attribute of automobiles has not been fundamentally changed, it is difficult to find a good approach to directly and significantly improve the daily online marketing conversion rate, so perhaps this approach is worth a try. h
h
analysis of tHe Main advantaGes of tHe 3.0 era [one billion Cny]
> Mobile APPs and the membership system are used to enrich the channels for users to get online
> The OEM-dominated platforms can directly use the dealer resources, OBD and in-car Internet to revitalize the base users
> The membership system and cross-industry alliance are used to build an automobile ecosystem and enhance users’ praise and adherence to platforms
> Maintain the independence of the online marketing and use users' praise for the
aftermarket and the ecosystem of the aftermarket to improve the conversion rate of new car marketing and make it as routine
√
Issues for the 1.0 and 2.0 eras Advantages of the 3.0 era Solutions for the 3.0 era
The tremendous potential and resources of the aftermarket are still not integrated and used
Excavate the great potential of the aftermarket to achieve a win-win
> The O2O model is started from offline, users’ car purchase as the starting point
> The interests of all parties are balanced by standardized and transparent subsidy policies so that a win-win is achieved
√
Multiple channels are covered to enhance the online user rate and revitalize the base users√
Build an ecosystem to retroactively make the online marketing of new cars as routine?
A tremendous number of base users are not revitalized
?
The online marketing cannot proceed as routine and the clue conversion rate cannot be elevated
?
- The key factors for success, age because 3.0 has great advantages and potential, and is now presented to us just as a prototype. in a closed loop, every node in the aftermarket ecosystem loop has become the key factor for success, which jointly affects the development of e-commerce platforms. i
2. soems will take the advantage as
a first-mover
What is different from the history is that neither the vertical websites nor general online dealers, but the oeM-dominated platforms are the winners in the 3.0 era. Compared with other business models in the 3.0 era, the oeM-dominated e-commerce platforms have the following three advantages:
- The resources of basic offline users and dealers
are rapidly revitalized so that the threshold can be quickly broken through and a win can be achieved at
the starting line., tan e-commerce platform will
generally go through three stages of development – the building of the platform, the booming of the number of users and the maturation of the platform. How to quickly go through the stage of the building of the platform and the stage of the booming of the number of users is the key factor for the development of the platform. J
an oeM-dominated platform will aim at and focus on offline marketing. since it has tremendous resources of dealers and tremendous data of groups / brands and users, if the data is properly used, the existing users of a large number of the groups / brands will be revitalized so that the time spent on excavating the users can be saved and the costs on the platform can be saved as well. k
- oeMs have diverse channels for their users to get online and have the advantages that other platforms do not have, such as the in-car system and the CrM system.
f
Model features
The Aftermarket O2O Model
The Aftermarket B2C/C2B Model
The offline aftermarket /Online usersOnline / Build an ecosystem
Users on one side are developed first / Platforms are developed / Users on another side are developed
The subsidized parties
. Users . Dealers
. Taxi software and alike
. Currently: Not dependent on platforms
. Future: Not clear yet; may depending on the profits of the cross-industry alliance (Such as Ctrip) in the ecosystem
. Use the aftermarket with great potential as the start point . Users on both sides are subsidized
parties so that the threshold can be more easily broken through and the platform can grow faster
. Use the ecosystem, membership system and mobile APPs to enhance customers’ adherence to platforms . A large investment is required for
building the ecosystem and executing the subsidy policies
. Future profit models are not clear . Expand the channels for online
customers to increase the online probability
. Via cross-industry cooperation, an automobile consumption ecosystem is formed, customers’ adherence to platforms is enhanced, and the marketing of new cars via praise is promoted
. Users
. Foreign OpenBay and alike
. Currently: Dealers’ service commission . Future: Not clear yet
. Use the aftermarket with great potential as the start point . Developed from service providers
(the B-side) or users (the C-side) while standardized access, parts certification, transparent pricing, expert advice and other services are provided
. The user base and the service provider base are too low to enable any party breaks through the threshold . There is a risk that a user may carry
out a transaction via a contact or by directly visiting a store instead of via a platform
. Standardized service, transparent pricing system and parts certification . Either of the B or C-side parties must
first break through the threshold Typical examples of the platform Source of profit Advantages Disadvantages Model analysis KSF The KSF Model
Chexiang Cheyian Chemayi
Comparison of the business
J
tHe GroWtH route of a t ypiCal e-CoMMerCe platforM
i
analysis of tHe Main Ksf of tHe 3.0 era
Actual users of the platform
User entrance criteria
Building of a platform
Explosion of the number of users
Maturity of the platform
A A B C B C
The ideal number of users = The actual number of users
At this point, the business model, profit model, subsidizing party, paying party and other multilateral relationships should be preliminarily defined
At the same time, which side of the users will be developed should be determined so that point B can be quickly reached
When the number of users reaches the threshold, the same-side and cross-same-side network effects should occur, and then the platform grows rapidly
B and C are the best periods for developing high-value users and enhancing users’ adherence to platforms
The platform enters a stable period of development. When multilateral interests hardly fluctuate, the business model should be adjusted properly to enable the explosion of another round of network effects
At the same time, the coverage of the ecosystem can be considered when the profits are decentralized to avoid future risks
The closed O2O loop model Main KSF Future trends
How to make the user base of either side of the platform grow rapidly?
OEM-dominated automotive
e-commerce platforms will rise rapidly to quickly win a large number of base users
Actively inculcating the users becomes one of the KSF in the short term Mobile APPs and the membership system will become the mainstream channels. OBD, in-car Internet and CRM will become OEMs’ channels with unique advantages
Parts certification, process standardization and experts’ online service will become the weight for expanding the expertise of a platform The building of the ecosystem becomes the major point requiring an investment, such as cross-industry alliance, the standardization of the independent aftermarket, etc. Cross-industry cooperation will probably become a major profit point How to guide the base users
get online from offline?
How to expand the expertise and enhance customers’
online probability? How to build an ecosystem and enhance users’
adherence to platforms? How to build a future profit model? 1 2 3 4 5 User base Users to get online Connect the B side Users’ adherence to platforms
k
sourCe of tHe Materials for CoMparinG tHe foCuses of tHe online and offline MarKetinG of tHe platforMs: internal intervieWs of CHexianG[one billion Cny]
online offline Autohome / Bitauto Tmall Chexiang Che yian Business model Analysis of model features
Online diversion Online O2O
Via offline marketing, the user and dealer resources of SAIC Group to quickly activate both sides and break through the threshold
The later ecosystem system is used to promote the marketing of new cars and improve the clue conversion rate Aftermarket O2O
There is a tremendous potential in the aftermarket However, the B and C-side user bases are too small to reach the threshold
B2C/C2B Aftermarket B2C/ C2B
The online clue diversion is used so that offline base users cannot be controlled
Offline transactions are used so that the user data is obtained and the precision marketing can proceed
Tremendous resources of the aftermarket have not been integrated
Autohome / Bitauto Tmall Chexiang Cheyian
users can get online with more security, and therefore have the time spent online significantly increased. L
- third, the oeM-dominated e-commerce platform can use the membership system, build a cultural ecosystem for the general cross-industry communities and enhance the multilateral network effects, to eventually implement the closed loop model and enforce its competitive advantage. for example, the membership system can be fully utilized as a basis for building the automotive ecosystem, which integrates the information of car purchase, car use, communication, and the customization, credits, membership development of car sharing members. in the future, the cross-industry alliances can be attracted to participate and the general communities can be built as well, involving such as outdoor
equipment, hotels, self-driving tours, etc. finally, the same-side and cross-side effects can be used to enhance users’ adherence to platforms, praise and loyalty as well as their cross-platform perching costs, so that the role of online marketing can be restored via “personalized community" and thereby the online marketing of new cars can be promoted.
3. The future route to build an
automotive e-commerce platform
- roland Berger’s advices
Just after a few years, China’s automotive e-commerce platforms will enter the 3.0 era rapidly. facing the complex market demand, the frequently-varied relationship between the parties and the diverse
L
CoMparison of tHe CHannels for users to Get online
k
sourCe of tHe Materials for CoMparinG tHe foCuses of tHe online and offline MarKetinG of tHe platforMs: internal intervieWs of CHexianG[one billion Cny]
Typical examples of the platform User
development C-side users B-side users OEM-dominated Non OEM-dominated
Stage 1 Stage 2 Stage 3 Development of potential users Development of potential users Online potential
users Online potential users
More interfaces, such as the in-car system system and the CRM system
Installation is completed by dealers compulsorily
The resources of dealer and car owner information are used so that this stage can be skipped
• OEM-dominated e-commerce platforms fully use the offline user / dealer resources to quickly revitalize the B and C-side users, and thus the costs and time for platform growth are saved
Merely via PC terminals and mobile APPs
The resources of users on either side are searched with efforts, so that it is easy to fall into the "chicken and egg" dilemma
Standardized service An ecosystem is built
Standardized service An ecosystem is built Conversion of
loyal users Conversion of loyal users
Diverse channels for users to get online are provided
Users’ online
probability (B-side or C-side)
• Mobile APPs • PC terminals
• The CRM system of OEMs / dealers
• OBD
• The in-car Internet and the in-car system system
The guiding relationship between OEMs and dealers is fully used to encourage / force the dealers to get online and recommend them to users The online probability of the C-side users related to the in-car system system is nearly 100% (One can get online as long as he or she can drive a car)
• Mobile APPs • PC terminals
Users need to be inculcated to change their consumption habits and cultivate the trust in the platforms
In the independent aftermarket, a user may carry out a transaction via a contact or by directly visiting a store instead of via a platform, so there is possibly a risk of loss of the C-side users
The loss and improper diversion of the C-side users will lead to the lower enthusiasm and online probability of the B-side users or even
OEM-dominated e-commerce platforms Non OEM-dominated e-commerce platforms
C-side
users B-side users
business models, how we quickly get Ksf, gain the competitive advantage and maintain the sustainable development, roland Berger gives the following advices in brief:
- short-term, increase the online time of users.
for an oeM’s platform or an independent platform, no matter if it is B2C or C2B, getting users online is a critical basis for the o2o aftermarket. the advantages of products can be used to improve the diversification of the channels for users to get online and increase the interfaces for users to get online.
- intermediate-term: Build an ecosystem. use a membership system to build the user communities involving car purchase, car use, maintenance, used cars, finance and other business. attract the participation of the cross-industry alliances, involving
travel, hotels, outdoor activities, etc., to eventually build a cross-industry ecosystem.
- Long-term: make online marketing as routine.
Completely connect the online and offline marketing, as well as the marketing of new car and the aftermarket service, to make the online marketing of new cars as routine.
after having been stably in a competitive position in the ecosystem, the same-side / cross-side network effect can be further used on an e-commerce platform to increase users’ cross-platform perching costs and improve their adherence to the platforms so that Win-ner-take-all can be achieved. the platform can eventu-ally extend its service to the relevant cross-industry platforms, share the profits and firm its competitive position. m
m
e-CoMMerCe platforM CoMpetition poliCy
Model adjustment Winner-Take-All Ecosystem coverage
Model adjustment Profit party E-commerce platforms
A
C
B
Properly adjust the business modelUse the user data to analyze the multilateral demands, adjust the subsidized party and the profit party and update the profit model
Prevent the potential competition in advance. Initiatively extend or passively follow the value chain. Build diverse ecospheres. Decentralize the profits
Use the subsidy policy, precision marketing and socilization to enhance users’
adherecnce to platforms
Enhance the discursive power of the platform and promote multilateral interdependence Make different profit models and subsidy policies to improve users’ costs for their moving to other platforms
1 1 2 5 3 4 Enhance the same-side effect 2 Enhance the cross-side effect 3 Increase the cross-platform perching costs 4 Platform ecosystem coverage 5
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roland Berger strategy Consultants, founded in 1967, is the only leading global consultancy with German heritage and of european origin. With 2,400 employees working in 36 countries, we have successful operations in all major international markets. our 49 offices are located in the key global business hubs. roland Berger advises major international industry and service companies as well as public institutions. our services cover the entire range of management consulting from strategic advice to successful implementation: e.g. new leadership and business models; innovative processes and services; M&a, private equity and restructuring; and management support on large infrastructure projects.
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WWW.Think-ACT.Com LiGhT fooTPrinT mAnAGemenT: Leadership in the innovative era (Chinese version) Business environment has become more turbulent, uncertain, complex and fuzzy, and traditional management methods are no longer applicable for it. in this book, Charles-edouard Bouée suggests that from the new ideas of the updated military education as well as China's emerging business management models, enterprises can learn to survive and develop rapidly in the new environment.
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implementation of the policies is very difficult and the effect is not so clear. nevertheless, environmental protection enterprises are likely to become a bridge between the government and the enterprises and play an important role of controlling the air pollution in the largest campaign in the world, ushering in a new round of explosive growth.
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