Chapter 16 long tail on the shelf

The long tail, not just a phenomenon that happens on the web, is probably why Chris?Anderson discovered the long-tail phenomenon from Internet phenomena such as Blog, Amazon, Google, and eBay, but in the subtitle of the book he generalized that: the future of commerce lies in "selling less of more categories" (selling less of more ).The successful model of business in the future is no longer to sell a few kinds of commodities in large quantities, but to sell more varieties of commodities, which can also achieve economic economies of scale. This is the new lens through which we view the business world.Any innovation lies in finding a new reference standard that can explain the changing world, and the long tail phenomenon is such a reference standard.An experiment by Canadian psychologist Otfried Spreen reveals the truth: "Our cognition of the real world depends on the past model - our reference standard, which affects our perception of the real world. Perception.” The long tail, or “more categories, fewer sales,” is the pattern behind all the intricate social and business phenomena.

ZARA is the most successful fashion clothing brand in recent years. It has created a business model called "fast fashion", and its success is a long-tail phenomenon.Different from the traditional garment industry's model of "less styles, more quantities", ZARA is characterized by "fast, small amount, and many styles". It launches tens of thousands of garments every year, and the styles are in sync with fashion.Lang Xianping predicted in "Model: Strategic Thinking and Development Model of Retail Chain Industry" that the fashion industry will develop towards the "ZARA model" in the future.He analyzed that in the previous concept, a small amount of money is the only way for enterprises to achieve economies of scale. Therefore, most traditional clothing companies adopt the strategy of less money, large-scale purchases, and large-scale production to achieve economies of scale and reduce the cost of goods. average cost.After conducting research on the finances of ZARA and another fast-fashion typical company H&M, he found that a variety of small quantities of ZARA and H&M also achieved economies of scale.

"Multiple models and a small amount" is the form presented by ZARA. The operating mechanism behind it makes this model profitable. The characteristic of this operating mechanism is the word "fast". ZARA's retail is in a positive cycle of "fast purchase" and "fast sales": the branch stores order twice a week according to the sales situation, which reduces the need to deal with inventory at a discount and also reduces the need for discounts. Reduce inventory costs; fast style updates enhance the sense of freshness, attracting consumers to continue to visit; fast updating of goods in the store also ensures that they can meet customer tastes and can be sold out.

ZARA's "fast" also includes quick response to fashion trends, fast design process and supply chain adapted to fast mode. Both ZARA and H&M are not trying to be fashion creators, but quick responders to fashion trends. Lang Xianping analyzed in "Model", "When fashion trends just appear, accurately identify and quickly launch corresponding clothing styles, So as to quickly respond to the trend." The advantage of this is: "There is no need to guess the fast-changing fashion trends, and the gestation period of the design is greatly shortened while reducing the risk of inventory."

ZARA's rapid design process is reflected in the extremely short "lead time" compared with other counterparts.In the apparel industry, lead time refers to the time it takes for a garment to go from design to sale. ZARA has greatly shortened the lead time. It can be completed in two days at the fastest from design to production, and the lead time is as fast as 12 days. In contrast, Gap's design gestation period alone is two to three months.Clothing depreciates rapidly over time, at 0.7% per day, and computer products at 0.1% per day.Therefore, shortening the lead time has multiple benefits: increasing the value of clothing, reducing inventory costs, avoiding the production of out-of-trend products, and reducing the loss of discount sales.

ZARA's supply chain has some characteristics: the fabrics it purchases are not dyed, but are dyed according to real-time demand. ZARA lets its factories only do highly automated work, uses high-tech production equipment to do dyeing, tailoring and other work, and outsources labor-intensive work.In order to respond quickly, ZARA's procurement and production are carried out in Europe, and only 20% of the most basic styles of clothing are produced in low-cost regions such as Asia. ZARA has a high-tech automatic logistics distribution center, which can guarantee the arrival of trucks in Europe within two days. For the US and Japanese markets, ZARA even uses air transportation at any cost to increase the speed.

When we walk into any supermarket, the choices are almost endless.In fact, even the shelves of super hypermarkets are limited, but the choices they can accommodate have exceeded the limit of our perception. For example, there may be 200 kinds of crispy biscuits on the shelves, and what we need is five kinds and ten kinds at most. .From ordinary supermarkets to super hypermarkets, the categories have increased hundreds of times. For example, the Wal-Mart Superstore in North America provides more than 150,000 SKUs (product variety units, retail terms). Supermarkets are actually long-term in the real economy. A typical example of the tail phenomenon.Of course, this long-tail phenomenon is for a single store. For retail companies with multiple chains, there is still a scale effect based on sales volume behind it.The future of supermarkets, on the one hand, is to develop on the Internet and provide more varieties, that is, to make the tail longer; The long tail portion of the .Let's take a look at how the supermarket is doing.

80% of shoppers at Tesco in the UK use loyalty cards, allowing it to collect a lot of accurate shopping information.Tesco's data shows that a typical household buys no more than 300 SKUs of FMCG, and many of these are replacements for 300 items that are out of stock.TescoExtra offers 80,000 varieties. That is to say, for a typical consumer, 99.6% of the products in the hypermarket have nothing to do with him. Select the products you need from the products. Therefore, the question facing supermarket shoppers now is not whether there are enough choices, but how to weigh the time required for shopping, the convenience of purchasing and the cost of purchasing.As a consumer, consumers probably have the following choices: they can conveniently buy higher-priced and limited-variety products at nearby convenience stores such as 7-11, which usually have 1,500 SKUs; or they can spend a little more time Go to a community supermarket, where there are slightly more varieties and lower prices, such as TescoMetro, which usually has 5,000-10,000 SKUs; you can go to a standard-sized supermarket, they usually have 40,000 SKUs; of course more You can go to the super hypermarkets, which are often located in the suburbs and farther away.In addition to these, there are also discount warehouse stores, which have fewer categories. For example, Costco in the United States has about 3,500 SKU varieties. The packaging of each variety is very large, but the average unit price will be extremely low.We can also shop online, with a near-infinite assortment, but pay for delivery.

Tesco's approach is to integrate all these retail stores and "provide what you really need, where you need it".Due to the unified procurement, the cost difference of different types of stores is extremely small; due to the combined distribution, there is almost no difference in logistics costs.Its stores include the mini Tesco Express, the smaller Tesco Metro in the downtown area, the traditional Tesco Supermarket, and the ultra-large Tesco Supermarket. Shopping department store (TescoExtra), as well as Tesco.com for online shopping. There are a few things Tesco did to make it happen.For example, users can order goods through online shopping, and then pick up the packaged goods on the way home or at a convenience store near home. Small and close shops sell them.Clerks help pick up online orders when in-store transactions are not too busy, which avoids the cost of building a large logistics distribution center for online shopping.Its logistics fleet uses the famous "water spider" system similar to Toyota's factory to achieve efficient and flexible distribution.

Lean production thought proposer James?Womack, Daniel?Jones recently extended Lean thinking to Lean solutions. They commented on the Tesco system this way: "Under this arrangement, each retail store format has two functions. Customers who come to choose their own goods provide direct shopping sources; secondly, for customers who do not come to buy directly, this is another large supermarket that functions as a storage. The clerk picks out the items on the shelves and then delivers them The end consumer. This also satisfies the needs of door-to-door shoppers with different time values ​​and different tastes.”

Alibaba named its C2C website "Taobao". These two words best describe the shopping mentality of consumers today.Consumers are in the "treasure hunt" (TreasureHunt), Michael?Michael Silverstein coined the term to reveal "the truth about what customers buy."He writes, “Consumption has become a treasure hunt—a never-ending quest for goods, shapes, shapes, and All kinds of pricing. For consumers, the market is like a huge bazaar, where there are always discoveries and hidden joys everywhere.” Changed consumers, that is, changes on the demand side, are the most fundamental driving force behind the long tail phenomenon force. Silverstein divides the consumption characteristics of consumers into two types, low-cost consumption and high-quality consumption: "Consumers tend to be low-priced goods and services, and consume high-quality goods and services with high prices. Steer clear of mid-range goods that are becoming duller and less valuable.” The so-called “mid-range goods that are becoming duller and less valuable” are exactly what manufacturers used to mass-produce.If we don’t use “high quality and high price” to define trendy consumption, but use “more suitable for consumers’ own needs” to define it, then we can better respond to the long-tail phenomenon of increasing product categories. Just as the long tail is only a phenomenon that is gradually taking shape, consumers' "treasure hunting" has not yet become a common phenomenon, but it has already appeared in the distribution of consumers' "discretionary money".The word discretionary means "free choice" or "free decision", and does not necessarily have to be used for specific expenditures such as food, daily necessities, housing, etc. A small kitchen appliance.Looking at consumers' discretionary money alone makes all the almost completely irrelevant goods part of the consumer's choice of goods, all vying for this discretionary income. Silverstein calls eBay the world's largest treasure hunt, where shoppers are not buying groceries or necessities, but digging for treasure. Marge, a 56-year-old professional, said, "I don't come here for serious shopping, but for fun. I usually buy things that I usually can't find: out-of-print china, lost or broken Alternatives to glassware, discontinued cosmetics.” Traditional stores have limited shelves, but they also have a way of catering to treasure hunt shoppers.European coffee retailer Tchibo, in addition to selling coffee and coffee supplies, its store also provides non-coffee products, most of which are household items.What makes Chiu Bao different is how it offers its merchandise: It launches about 15 items each week around a new theme, available for a limited time.None of the items are available at other retailers, at least not exactly.It thus creates the effect that "customers know they can always get the coffee they want at Chipot, but never know exactly what to expect by visiting a Chipot store or browsing its website." A long-tail model modified due to constraints in physical space in the real world.