On April 19, China Innovation Payment Group exchanged 5.516 billion shares for a 51 percent stake in Youzan, and officially changed its name to “China Youzan” on May 4. At this point, mobile retail service provider Youzan obtained the Internet payment license held by China Innovation Pay, and successfully backdoor listing.

Although Youzan has experienced several crises, and finally strong to come over. From the small team before, to now thousands of people listed in Hong Kong. According to the news, as of May 17, youzan’s share price has risen 35% since April 19, with a market value of HK $9.8 billion. Youzan, who dares to break into a dream, is now transformed into “the first unit of wechat ecology”, which is menacing and thought-provoking.

In view of the similar business model of Youzan and Taobao, there will be such voices in the industry: can Youzan become the second Taobao?

There is praise of the initial profit, sustained profitability is difficult to maintain

At present, praise is still in the early stage of profit, the foundation is still thin. It is reported that Youzan was in a loss state for several years after its establishment and did not turn a profit until 2017. Data show: In 2014, Youzan had a revenue of 397,000 yuan and a loss of 218 million yuan; In 2015, the revenue was 9.779 million yuan, with a loss of 707 million yuan. Revenue grew 24.6 percent over the two years, but losses also increased 324 percent year on year. At the beginning of 2018, after Youzan opened the charging mode to users, Youzan founder and CEO White Crow announced that Youzan achieved break-even in Q2 2017, achieved scale profit in Q3, and maintained profit in Q4.

Although youzan has been profitable since the start of the subscription model, things seem to be picking up. But whether Youzan can remain profitable in the long term is questionable. The charging model is still in the exploratory stage, and it remains to be seen whether it can support Youzan to continue to make profits in the immature wechat e-commerce ecosystem.

First, in the charge exploration stage, we should do step by step, if You Zan decides to charge the scheme, it may cause dissatisfaction of merchants. Second, after the implementation of the charging model, merchants will have higher requirements on the platform services, so it will take time for Youzan to perfectly meet the needs of users.

Wechat ecology is not mature and e-commerce giants suppress, yizan’s living environment is difficult

There are two ways to look at this not very optimistic environment.

First, compared with Taobao, wechat e-commerce ecological development on which Youzan relies is not yet mature. Wechat ecosystem has not yet formed a true e-commerce trading platform, many people understand the “wechat business” is only those who complete trading transactions through their moments of friends. First, the development of wechat e-commerce ecology is in the initial stage, and it takes time to make up for the shortcomings in various technologies and experience. Secondly, although Tencent intends to establish an e-commerce territory to compete with Ali, due to its lack of e-commerce experience, Tencent cannot provide a clear development direction for wechat e-commerce, which also makes the development of wechat e-commerce in an immature state.

In such an immature wechat e-commerce ecosystem to establish their own e-commerce kingdom, Youzan and other e-commerce service providers are bound to make efforts to improve wechat e-commerce infrastructure service facilities. Youzan did, but it learned the hard way that the cost of providing its free service over the years led to long-term losses. It was not until May 2017 that Youzan began to charge new merchants for basic services, and then gradually changed to charging all merchants for basic services on an annual basis, that youzan was able to stop bleeding.

Second, the likes of Tencent may be sniped by Ali. As early as November 22, 2013, Taobao began to block wechat. Although this move did not limit the rapid growth of wechat traffic, but did make wechat e-commerce business suffered a great setback. Thus, Alipay launched the “no new signing, no renewal, no cooperation” regulations, close all wechat merchants payment interface applications, for the merchants have passed the application will be cleared one by one. Since then, incidents of “hatred” on wechat on Taobao have become common.

As the two sides of the conflict, Ali and Tencent are like fire and water, and the fight between the two sides will become more and more intense over time. As an e-commerce platform developed based on wechat ecology, Youzan is bound to face ali in the future. Ali is, after all, the boss of the current e-commerce circle, such as Praise and it is not easy to fight, a careless may be in trouble.

From Taobao’s attitude towards wechat, it can be imagined that other traditional e-commerce will not be happy to see the rise of wechat e-commerce ecology, and the giants are bound to take certain measures to strangle wechat e-commerce ecology in the cradle. As the situation becomes more and more intense, the two sides are bound to fight, relying on wechat Uzan will choose to take sides?

Throughout the trend of praise, fear difficult to become the second fight duo duo

Can you have enough confidence to become the second Pinduoduo and challenge Ali? It is just a guess for Youzan in the industry. From the perspective of youzan’s development strategy, Youzan seems to have no such intention.

I’m just offering a solution

Uzan initially positioned itself as a SaaS business, which provides mobile e-commerce solutions for both online merchants and offline physical stores. At first, youzan wanted to solve the problem of traffic. The background of these problems is that traditional e-commerce companies need to acquire orders and increase sales through large and frequent purchase traffic. However, traffic is becoming more and more expensive now, and not every merchant can afford it. As a result, “micro e-commerce” was born to solve merchant traffic, and Youzan joined the ranks of serving micro e-commerce.

Because it is established by relying on wechat traffic, it has the characteristics of “micro e-commerce” if it has praise. These traits are:

First, unlike traditional e-commerce, it is not overly dependent on platforms, but on the channel customers owned by merchants. Second, micro e-commerce requires merchants to pay more attention to long-term management and cultivation of customers, but also to pay more attention to brand construction; Third, in terms of market operation strategy, it is no longer platform-centered, but directly contact customers through communication channels such as Weibo and wechat to bring sales volume. Fourthly, merchants pay more attention to word of mouth among buyers and form extensive secondary communication in buyers’ social circles to attract more customers. In general, The main development direction of Youzan is to break away from large platforms, maintain long-term relationship with customers with merchants, and seek for higher re-purchase rate and brand loyalty.

Taobao itself is an e-commerce platform, which attracts merchants by virtue of its huge online user flow advantage. Taobao operates similar to e-commerce platforms such as ebay. Specifically, the user traffic flowing into the platform department is first occupied by the whole platform, and finally distributed to each store or advertisement according to the indicators formulated by the platform. This index may include the number of search times for product related words, product sales, product shelf time, etc., but the weights vary. As a result, you’ll find that products that hit the shelves are at the top of user search results for a short period of time, but the ones that stay at the top for a long time are the ones that sell well because the platform can charge more for them.

To sum up, there are obvious differences between the two in development direction. Taobao is to “give” traffic to merchants, and Youzan is to help merchants “manage” traffic.

I have many types of service

In addition to Youzan Micro mall, Youzan also owns Youzan retail, Youzan industry, Youzan mini program, Youzan catering, Youzan cashier, Youzan wholesale and other products for merchants, as well as Youzan cloud services for developers. Every category, every category, you name it. In addition, Youzan is also committed to developing a buyer’s version APP, in which buyers share their purchasing experience on the APP for other buyers to refer to, and merchants can also learn from buyers’ needs, thus providing better services to buyers. On January 29, 2016, some app-buying apps were launched, covering food, beauty makeup, men’s wear, women’s wear, accessories, mother and baby, home, digital, outdoor and other categories.

Of course, it is not that taobao’s service form is not good. However, the technology industry has specialized, Taobao is more focused on expanding the scale of the platform, did not increase the service category efforts. Since its establishment in 2003, Taobao has changed from a single C2C online marketplace into a comprehensive retail business circle including C2C, group purchase, distribution, auction and other e-commerce modes. All of these declare that Taobao’s goal is always to become a bigger and stronger e-commerce platform. On March 29, 2016, Alibaba Group CEO Daniel Zhang also said that community, content and local life are the three strategic directions of Taobao in the future.

I want to do service business

In the past, Youzan mainly engaged in platform business, providing free services for merchants. In the second half of 2014 to the first half of 2015, youzan did large-scale promotion, resulting in a lack of revenue and a shortage of funds. In 2015, Youzan was falsely shot by investors and hastily organized a round of financing, which almost lost its luster. This makes the great founder white crow see clearly in despair, if you want to stick to the company, the core lies in finding the right business path.

So, what is a good business path? After the failure of trying to be an e-commerce platform, Youzan gradually saw the direction clearly. Ultimately, Youzan believes that service business is the future. Therefore, Uzan also found a target company – Shopify. Shopify, a U.S. -listed company with a market cap of $14.25 billion, essentially helps merchants diversify their stores. It makes money in two main ways: first, it provides subscription solutions to merchants and charges them a monthly fee; The second is to provide commercial solutions for merchants, that is, merchants need to spend more money to optimize sales. In general, Shopify makes money for both merchants and platforms. Shopify, for example, offers solutions to merchants and makes them money; Provide opening tools for ebay, Amazon and other platforms to earn money from the platform.

If Youzan tries to copy Shopify’s business model, it is bound to follow a different path from Taobao’s. In other words, Youzan does not intend to focus on the construction of the buying and selling platform, but is developing towards serving wechat e-commerce ecology and serving wechat merchants. From youzan just entered the profit stage, the future is uncertain, wechat ecological development is not mature and there are giants on the development road to block, these factors are restricting Youzan to become the second Taobao. Most importantly, after experiencing the failure, Youzan saw its direction clearly, no longer comparing with the existing large e-commerce platform development, but more suitable for its own development of Shopify business model.

In general, the difficulties in the initial stage of development, the suffering of being suppressed by the giants in the immature ecology, youzan’s journey is not easy indeed. Although various factors show that Youzan is unlikely to become the second Taobao, but youzan with dreams may be able to lay down their own piece of the world.

Article/Liu Kuang public account, ID: Liukuang110