Steel e-commerce has been blindfolded for years: steel self-employment has caused huge losses

Abstract After the Spring Festival of 2015, Huang Jian moved from Beijing to Shanghai. Previously, he was the deputy general manager of China Railway Materials Beijing Co., Ltd. After graduating from university in 2001, Huang Jian, who studied finance, joined the steel trade enterprise and was promoted from ordinary accounting to public...
After the Spring Festival of 2015, Huang Jian moved from Beijing to Shanghai.
Previously, he was the deputy general manager of China Railway Materials Beijing Co., Ltd. After graduating from college in 2001, Huang Jian, who studied finance, joined the steel trade company and was promoted from general accounting to company management.
In March of the previous year, Huang Jian officially left the central enterprise that had worked for more than ten years and joined Shanghai Steel and Silver E-Commerce Co., Ltd. (hereinafter referred to as Steel and Silver) as the vice president of the steel e-commerce platform.
In the first two years of making a job change decision, Huang Jian was often in an anxious state. Affected by overcapacity, domestic steel producers suffered losses at the time, and his steel trading industry also fell into recession. "I have been working for so many years, thirty-five years and six years old, I feel confused and have no direction." Huang Jian recalled.
Therefore, he intends to take a look at the steel e-commerce company that represents "advanced productivity." Since 2014, steel e-commerce has suddenly become a hot topic in the steel industry. Throughout the country, various types of steel e-commerce have sprung up, with a total number of no fewer than 300, and the capital of each channel is also favored by them.
In February 2015, Steel Gang, one of the leading companies in the iron and steel industry, announced that it had received a $100 million (about 624 million yuan) round of financing, which was only three years old. In the same month, Baosteel Group, the world's top 500, also established Ouye Yunshang, with a registered capital of 2 billion yuan, intending to integrate its existing steel e-commerce business.
What Huang Jian has joined is also a force that cannot be underestimated in this field. Steel and Silver is a subsidiary of Shanghai Steel Union Holdings, which was founded in 2000 to provide steel information. In the domestic steel trade circle, Zhu Junhong, the chairman of Shanghai Steel Union, is almost unknown. He is also the chairman of the board of steel and silver.
Before joining the steel and silver, Huang Jian also deliberately visited the company. Of course, the name at that time was the peers to "take the Bible, learn and learn." Because of his many years of business dealings, he and the then 48-year-old Zhu Junhong have long been familiar with. At the time of the camp, the two also discussed the business model of steel e-commerce in the chairman's office on the ninth floor of the company.
Zhu Junhong painted a blueprint for the future development of steel and silver for Huang Jian, which will be a platform-type e-commerce company, similar to the Tmall Mall in the steel industry. However, he did not tell the future partner how the steel e-commerce should be profitable.
"How to earn money was not known at the time, just thinking that as long as it is big, as long as it can provide services to users, it will certainly make money." Huang Jian recalled. "The big direction is there, but the front is smog and can only move forward in the groping."
After talking about it for a few times, Zhu Junhong threw an olive branch to Huang Jian, hoping that he would come along with the steel and silver, and the latter did not consider too much. The idea of ​​holding it and trying it would be agreed.
Although Steel and Silver had been registered as early as 2008, it was not until mid-2013 that the company actually started operations. At this time, the actual steel trading volume of the company was rampant and the manpower was relatively scarce.
Many years ago, Zhu Junhong had plans to cross the border from steel information to steel e-commerce, but he did not wait for the right time. He understands that as long as the traditional steel trade industry remains profitable and is sought after by financial capital such as banks, it is difficult for such spoilers such as e-commerce to have opportunities. Until 2013, the steel trade circle was overcast due to the downturn of the steel industry, and the first year of e-commerce was counted.
In the middle of the year, Zhu Junhong made a decision: from the information team of Shanghai Steel Union distributed throughout the country, some of the staff were recruited to supplement the steel. By the beginning of 2014, Steel and Silver had set up a small team of about 60 people to officially launch e-commerce business.
Xu Saizhu, who is the "post-80s" with Huang Jian, is another current vice president of Steel and Silver. In 2013, she also worked in the Shanghai Branch of Shanghai Steel Union. At this time, she was also transferred to the steel and silver team by the headquarters to form a team in Zhejiang.
After joining Shanghai Steel Union in 2006, Xu Saizhu witnessed the ups and downs of the industry over the years, as well as the local steel traders in Zhejiang. "Which relationship does this family have with whom, what kind of steel is made, and what kind of mentality the traders have is clear." Xu Saizhu told the interface journalist.
However, for steel and silver, these people are only steel sellers in the middle of the industrial chain. What is really important is to find the terminal buyers. The first task after Xu Saizhu's transfer was to sort out the potential steel customers in Zhejiang to find out which steel mills they wanted from, and how the procurement pace. This information is unfamiliar to her, and the purpose of collecting them is to make steel and silver successfully cut into the steel trading.
Cohesion can also be understood as an intermediary, which is regarded as the most primitive form of trade - to find customers with purchasing needs, and then introduce the other to a steel mill or a large steel trader with the goods in hand, so that the two can complete the steel transaction. For the steel and silver that intends to truly enter the steel trade industry chain, this kind of "doing a matchmaker" is the first step to open the situation, and free combination is naturally an inevitable choice.
To this end, Xu Saizhu took the team around the docks in Zhejiang, and she usually used Shanghai Steel's information products to "play customers." "It is to chat with the customers of the information products, and then slowly guide to the trading side, ask the other party what the current procurement plan is, and also mention which customer I have resources here, there are cheaper ones that can be sold to you." Xu Saizhu said .
Most of the steel mills and traders she mentioned with steel resources are customers of steel information products that they are familiar with. If a similar free combination is successful, you can slowly gain the trust of buyers and sellers, thus making the brand image of steel and steel as a steel e-commerce.
However, in the already mature Hangzhou steel trade market, buyers and sellers are very familiar with it, and it is not easy to make such a matching business. Xu Saizhu thought of a cross-regional approach, such as introducing the supply of Hangzhou to customers in nearby areas such as Lin'an and Fuyang. The buyers' information of these third-tier cities is relatively closed, and the customer service personnel of the steel and silver have the opportunity to match them for free and to connect the two sides of supply and demand.
In addition to information asymmetry, there are credit problems. In 2012, the credit crisis of the steel trade circle was detonated in Shanghai and spread across the country. Traders running the road, repeating mortgage fraud and other issues, so that the industry's credit fell to the bottom, the buyer paid the money but failed to mention the goods has become a common thing. The intertwining of steel and silver has inadvertently played the role of a trading guarantor and established the trust of both buyers and sellers of off-site steel.
At that time, the matching transactions were mostly completed offline. With the assistance of the steel and silver customer service staff, these transactions were recorded on the company's website and included in the platform's matching transaction volume. The management of the steel and silver also understands that the payment for the matching transaction is not handled by the company, and the actual meaning of the platform is actually not large.
Xu Saizhu and her colleagues soon discovered that this blending mode brings low customer stickiness to steel and silver. Buyers and sellers who joined the steel and silver were mixed after several transactions, and soon jumped over the intermediary to start the business directly. This means that after the brand of steel and silver is slowly starting, it is necessary to quickly cut into a new trade model.
In the second half of 2014, SILCO began to pilot a new business model called consignment, in which the sellers placed the steel in the steel and silver department for sale. If there is a transaction, the payment will also be settled through the platform. In addition, steel and silver will also buy out some steel sources and sell them through the platform. This model is called self-operated.
Consignment and self-employment are more similar to an agency business. Compared with the combination, they give the steel and silver grip the control of the steel, which is naturally the trading mode that the platform wants to expand.
However, compared to the earliest launch, the volume of self-operated and consignment transactions was negligible in 2014. In this year, the total turnover of steel and silver steel was 13.37 million tons, of which only 2.265 million tons were self-operated and consignment transactions, and the remaining 83% were from the joint.
“First chicken or egg first” is always the paradox facing steel and silver.
"As a new platform, you have no users or merchants. At this time, you tell the merchant that you want to sell the goods. The other party will ask you why you can sell the goods. The user will also say that you have no reason why. Where do you buy it?" Although he did not join the steel and silver at the time, Huang Jian understood the difficulties faced by the company.
At this time, Zhu Junhong made a decision to increase the self-employment of steel. Obviously, this model conflicts with the goal of becoming a trading platform like Tmall. But in the management's view, this is a road that steel and silver must go through. "If you have the goods, and you can quote a relatively favorable price every day, the buyer will come."
As a result, steel and silver have successively negotiated with some steel mills and traders to buy out steel. During the period, I also encountered some difficulties, because many steel mills and traders were holding the "wolf coming" mentality, and they were very disgusted with the new format of steel e-commerce, fearing that they would be affected by e-commerce as a physical store.
Therefore, in order to get the goods, the steel and silver are signed by many business policies that are not a good long-term agreement (hereinafter referred to as the long association). The so-called long association is to stipulate the purchase amount per month, and the purchase price is adjusted according to the seller's benchmark price for the month. Such terms are naturally more favorable to the seller.
At this point in time (March 2015), Huang Jian joined the steel and silver. "After coming, the chairman said that purchasing needs more people, let me manage the purchase. I said it would be fine. It doesn't matter if you have done it." Huang Jian said.
What he does not know is that since the company's business is tilting towards self-employment, the procurement business is crucial for this year's steel and silver. And to a certain extent, this is also an extremely difficult bone.
According to the previous plan, in 2015, steel and silver has more than 100,000 tons of long-term purchases per month. Based on the steel price at that time, the company's funds for procurement were around 500 million yuan. Huang Jian’s primary job is to optimize these orders at the execution level to save money. For example, he will consider which transportation company to choose, which warehouse to enter, how to grasp the supply rhythm, and so on.
Not long after, Huang Jian, who gradually became familiar with the company's business, realized that these long-term orders were risky. In his view, for steel and silver companies that are intended to become platform-based enterprises, too much self-operated business is not suitable. It means that companies need to judge the rhythm of steel prices, like traditional traders, rather than arbitrarily market conditions like trading platforms.
People in the steel trade circle understand the truth. In the ever-changing commodity market, it is not easy to achieve high-level and low-sucking in the strict sense. If the steel price unilaterally declines, it will mean that the steel will be shipped from the steel mill to the warehouse, and the market price of these goods will depreciate all the time. In the course of freight transportation of steel, there are often logistics delays caused by factors such as fog and strong winds. When they can be shot, they are completely out of the grasp of steel and silver.
To this end, Huang Jian also looked for Zhu Junhong and expressed his opinion: Although steel and silver are eager to make large platform trading volume, the risk of self-operating hidden is too great, and there is no room for control. “This possibility (steel continues to fall) has happened many times in 2015. How can this kind of control be controlled? Unable to control.” He asked himself. If the steel price drops by 200 yuan/ton a day, the loss of 200,000 tons of self-operated steel will be around 40 million yuan.
Unfortunately, when steel and silver increased the proportion of self-operated business, it was catching up with the cliff-like decline in domestic steel prices for a whole year. In the whole year of 2015, steel prices plummeted by about 1,300 yuan / ton. At that time, the same weight of steel, its price was once less than cabbage.
The steel and silver management team that is in danger of the military may not have expected the risk of self-employment. After the risk exposure, I want to withdraw, it is already involuntarily. Some steels know that they have to lose, but steel and silver want to retreat and can't retreat. Because there is a long association, the breach of contract is not only related to the deposit, but also many additional liability for breach of contract.
As far as the company's strategic level is concerned, if the self-operated ratio is rapidly reduced at the transaction end, it may hurt the activity of the consignment transaction, which is contrary to the original intention of strengthening the self-operated business. In the first half of 2015, self-operated accounted for nearly 40% of the total transaction volume of steel and silver (self-operated plus consignment). After the increase in consignment volume in the second half of the year, the reduction in self-employment is considered to be a viable option for limited impact on total trading volume.
"Retreat" began in May 2015, and Zhu Junhong used this term to refer to the company's adjustment to reduce the proportion of self-employment. During that time, Huang Jian and Zhu Junhong worked overtime until 9:00 every night to discuss how to clear their own business. "I can make every business in a factory, can this business be done? If you can't do it, how can you back?" Huang Jian recalled.
In the first five months of 2015, due to the loss of self-operated steel, the loss of steel and silver reached nearly 240 million yuan. In 2014, the company only lost nearly 18 million yuan in the whole year.
In reviewing this experience, Zhu Junhong said, "Before doing self-employment, we are expected to lose money, but I don't know how much I lose. Because I don't know that steel prices will fall so much, I didn't expect the market to be so violent."
For the senior researcher in the steel market, the huge losses in 2015 must still leave some feelings. At the end of 2016, when the interface journalist asked if the company’s self-operated ratio had dropped below 5%, Zhu Junhong replied: “Now we are basically few, and we can’t wait for one or two.”
In exchange for this huge price, Steel and Silver successfully used the self-operated business to drive the growth of the consignment business. In 2015, the company's steel trading volume reached 10.89 million tons (including consignment and self-employment), nearly five times that of the previous year. The transaction scale has grown steadily since July 2015, and the transaction volume in the second half of the year accounted for nearly 2/3 of the total volume of the year. This result is in line with the logical deduction of Zhu Junhong’s previous efforts to increase the proportion of self-employment.
The downside of steel prices has also indirectly contributed to the increase in the volume of steel and silver consignment transactions. "(At the time) traders' goods are also more difficult to sell, or they need to sell faster, because the price is lower every day, the faster you sell, the smaller your loss." Huang Jian explained that this also shows the platform The ability to sell steel is constantly improving, and gradually it has made users dependent.
During this period of time, the behavior of the steel and silver adjustment staff structure also reflected this to a certain extent.
In the second half of 2014, the total number of employees of Steel and Silver exceeded 1,300, most of them were customer service personnel responsible for sales. This was related to the company's strategy at the time – relying on human tactics to increase steel trading volume. At that time, the customers who were recruited at the time were basically the customer service personnel with experience in steel trade. After joining the steel and silver, they also brought the customers who had business contacts to the e-commerce platform.
More or less affected by the losses in the first half of the year, the steel and silver in June 2015 increased the intensity of personnel optimization. After Huang Jian took over the sales department at that time, he also realized that the company had been recruiting too fast and the screening was not strict in the previous year, which led to some problems in the team. By the end of 2015, the total number of employees of Steel and Silver has dropped to 806. Among them, the number of customer service personnel decreased from 664 at the beginning of the year to 531. The number of technicians responsible for the back-office construction of e-commerce websites increased from 84 to 128.
Huang Jian said that at that time, the customer service personnel who could not keep up with the pace of the company's development were eliminated by raising the standard. “The original customer service staff traded two or three thousand tons a month, which was already very good at the time. But as my requirements continue to improve, the completion of two or three thousand tons of people may be just a qualified customer service staff, only in my place. Take four thousand dollars, you can't go on, you can only choose to leave." He told the interface journalist that the personnel optimization is more similar to a blood exchange, because the company is constantly recruiting new people while eliminating customer service personnel.
At the end of 2015, Steel and Steel recorded a full year loss of around 440 million yuan. When the company landed in the New Third Board in December of that year, its registered capital was only 640 million yuan.
Zhu Junhong told the interface journalist that he had apologized on the company's board of directors and said that he had lost more money this year. But other directors told him not to review, "If there is no loss, there will be no status today." In his view, although the self-employed business has caused losses to the company, it has laid the foundation for the subsequent traffic growth. If there is not such a process, it can take up to a year for steel and silver to achieve the current transaction scale.
In 2016, the amount of consignment transactions for steel and silver increased to approximately 18 million tons, an increase of 65.3% over the same period last year. Among them, the proportion of self-operated steel has dropped to less than 5% of the total.
In the third quarter of last year, the average daily consignment of steel and silver reached nearly 100,000 tons, which is close to the break-even point of the steel e-commerce proposed by Zhu Junhong. He predicted two years ago that if steel e-commerce companies reach a certain amount of trading, they can use service fees and supply chain financial profits, and 100,000 tons of single-day consignment is considered a critical value.
Steel Silver began trying to make a profitable node in March last year. At that time, the company had just achieved a peak of 146,000 tons in a single day in 2016. "Users are so dependent on me, then I have to try to charge at this time, otherwise when will I collect the money?" Huang Jian explained the reason for choosing the consignment commission at that time.
At the beginning of 2016, Steel and Silver had cancelled the platform trading points. This is a policy that encourages buyers to consume, and users can redeem points earned in steel and silver for gifts such as mobile phones. After reducing the promotion costs, the implementation of the charging model to consignment sellers became the second step of the company's profit plan.
"Even if he is already an old user, he will not be willing to pay for it from his pocket." Huang Jian admits that it is not easy to let the users who have enjoyed the Internet dividend pay the commission. It needs a gradual adaptation. process.
Some sellers even raised the question: "How can Internet companies collect money?" However, after a few days of suspending the consignment business, the user agreed to the request for the transaction commission of the company, because it lost the distribution channel of steel and silver. Later, he found that the speed at which he sold steel was greatly affected.
By the end of 2016, 40%-50% of the consignment transactions (in terms of tonnage) of the company have received commissions, and the billing ratio varies according to the steel varieties. For the time being, there is no charge, or because the steel resources sold by the seller are more exclusive, the steel and silver do not have enough right to speak, or the other party cannot pay the fee at the system level.
For the fee, Zhu Junhong's understanding is that if the e-commerce platform can help users sell steel at a good price, the company will not be too concerned about the service fee of a few yuan per ton. For the platform, a small amount of trading commissions will be a huge income.
In addition to service fees, Steel and Silver's more revenue last year came from the supply chain finance sector. This is a financial service for platform users, similar to the shopping white bar of the B2C website.
Steel and Silver's financial services are based on its analysis of users, which helps it reduce the risk of borrowing. For example, a “Your You Flower” product that provides short-term turnover for buyers is a historical transaction record of the steel and silver comprehensive analysis applicants on the platform to determine whether they are eligible for borrowing.
In the second half of 2016, after transferring some of the previously responsible sales segments to Huang Jian, Xu Saizhu was appointed to form the Steel and Silver Supply Chain Finance Division to conduct more systematic management of supply chain financial products.
As steel trading volume climbed day by day, the company's management found that the pain points of buyers' funds became more apparent. Compared with consumer goods, steel trade transactions have very high requirements on capital, and the unit price is usually more than 100,000 yuan. After the steel trade crisis in previous years, few financial institutions are willing to provide low-interest loans to small and medium-sized customers in the steel trade industry chain.
Xu Saizhu revealed that after one year of supply chain finance business, its total number of users exceeded 361, while the static borrowing amount reached about 1.2 billion yuan. These funds came from cooperative financial institutions or owned by steel and silver.
As the supply chain finance business is still in its infancy, risk control is placed in a more important position. Last year, Xu Saizhu's department launched a financial service for engineering users. Nearly 200 users applied for it, but Steel and Silver took into account the loan control, and finally only gave more than 20 of them. If the access conditions are appropriately relaxed under the premise of controlling risks, the imagination of the supply chain financial business income will be larger.
Despite this, relying on the increasingly fine commissions and financial services revenue, steel and silver has successfully turned around last year. The company’s annual report disclosed on March 30 showed that its 2016 net profit reached 18.246 million yuan. The most important competitor of Steel and Silver is looking for steel mesh. After completing 13 million tons of steel trade last year, it also announced an annual profit of tens of millions of yuan.
In Huang Jian's view, when he entered the business two years ago, the steel e-commerce industry was still in a stage of contending, and two years later, the market structure has begun to appear. At the beginning of March this year, Huang Jian was promoted to the position of executive vice president by the vice president of Steel and Silver. In view of the current stage of development of steel e-commerce, there are still many things left for him and his colleagues.
In terms of the total domestic circulation of 500 million tons of steel, the transaction volume of steel and silver last year only accounted for about 3% of the total plate. It is undoubtedly a top priority to continue to increase the company's market share. At the same time, steel trading involves more processes and details than ordinary consumer goods, so the proportion of online direct transactions has yet to be improved through standardization.
The good news is that for this steel e-commerce platform and the industry in which it is located, the road ahead has become clearer after the glare of the previous years.

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