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1688 intends to get closer to the industrial chain. on september 18, a beijing business daily reporter learned that 1688 yanxuan has launched oem products, which will gradually extend from the liquor category to pets, smart home and other categories. the platform is responsible for product development, design and packaging, while the factory is responsible for product research and development and production. nowadays, in order to cope with the fierce price war, e-commerce and live broadcast organizations are moving closer to the production end with oem or private brand operation modes, in order to seek product differentiation and balance traffic and profit distribution with manufacturers.

keep 10% of net profit

1688 will further strengthen the consumer mentality of source procurement and wholesale on the product side. beijing business daily reporters found that taobao's 1688 yanxuan flagship store has launched two new 500ml 53% maotai-flavor liquors named "source pure brewing" and "source artisan collection". after using the coupon, the prices of the two bottles are 356 yuan and 596 yuan respectively. the words "1688 yanxuan x galaxy train" are printed on the product packaging. according to customer service staff, the product brand is "1688 yanxuan" and the liquor manufacturer is guizhou hetianxia. currently, the product has also been put on pre-sale on the 1688 app.

in march this year, 1688 announced its entry into taobao and opened the 1688 strict selection taobao store, the 1688 enterprise self-purchasing tmall store, and the 1688 industry expert selection tmall store. at that time, according to a 1688 insider, 1688's opening of a store on taobao was not to sell goods, but to incubate single products in a larger market. at the same time, 1688 will try to do the oem business of strict selection and expert selection.

"we are not following the model of netease yanxuan. from packaging design to finding oem factories to develop products, and then to stockpiling, netease yanxuan operates according to the operating chain of brand companies." the person in charge of 1688 yanxuan and 1688 member store business explained to the beijing business daily reporter that the oem model of 1688 yanxuan is similar to that of xiaomi youpin and shein. it is not a simple matter of "tearing off the brand and then oem", but a joint factory to make new products that lead industrial development and consumption trends.

it is understood that the oem model of 1688 yanxuan is that 1688 yanxuan is responsible for industrial design and product packaging design, and also bears the investment costs of domestic and foreign channels. the factory is responsible for product research and development based on the platform's demands, as well as stockpiling and delivery. the platform will leave 10% of the net profit for the factory, and the pricing power and channel selection of the product sales are determined by the platform.

"our new company is called 1688 yuanxuan, and it will further iterate on the yanxuan brand. in the future, the entire new company will be staffed with approximately 300-500 people." the above-mentioned business manager mentioned that the oem business will gradually extend from the liquor category to categories such as pets and smart homes.

cut channel premium

it is not new for platforms to explore oem business. as early as 2016, netease yanxuan, which mainly uses the odm model, set off a wave of private brands, and giants such as taobao xinxuan, jd jingzao, xiaomi youpin, and suning jiwu rushed to join the market.

the oem model and the private label model are different, and the differences are concentrated in the depth of e-commerce's involvement in manufacturing production and the uniqueness of product development. the former can quickly enter the market, and the risks of inventory and production are mainly borne by the manufacturer, but the control over product quality and production process is weaker than the private label model. private labels have higher control over product research and development and profit margins, but require a large amount of capital investment, and the market flexibility and response speed are not as good as the oem model.

however, the core logic of the above two models is still that e-commerce uses the large amount of consumer data accumulated on the platform to penetrate into the upstream of the supply chain in order to shorten the distance between manufacturers and consumers to gain price advantages and thus form its own brand influence.

at that time, the giants were optimistic about the private label track, mainly to cater to the trend of consumption upgrading in the market at that time and take the "small and beautiful" boutique route. however, eight years later, the market environment has changed, user consumption has become more rational, and e-commerce or live broadcast organizations have re-emphasized oem or private label business and strengthened cooperation with oem factories. on the one hand, it is to meet the users' high cost-effective shopping needs, and on the other hand, it is to find a breakthrough in the competition of commodity homogeneity, realize product differentiation, and at the same time, strive for a certain profit space for themselves, thereby coping with fierce price wars.

"this year, many c-end users went to 1688 to consume, mainly because they did not want to pay for the channel premium. instead, they looked for more cost-effective products on 1688, forming a consumption trend of buying factory goods. at the same time, some small sellers also looked for factories on the platform to drop ship their goods to avoid stockpiling," said jiang rong, an e-commerce research expert.

the live broadcasting organization jiaogepengyou has also felt the change in cost-effective consumption. cui dongsheng, vice president of jiaogepengyou holdings, revealed to the beijing business daily reporter that the jiaogepengyou team went to nantong, guangzhou, fujian and other industrial belts to trace the source and inspect the core products produced by high-quality factories this year. at the same time, based on big data analysis and live broadcast product testing capabilities, the two parties jointly developed or launched products that meet market demand.

"take the 'women's bags' vertical live broadcast room of make friends as an example, we will carry out targeted development with the factory, including referring to popular elements and fan needs, and determining production styles, product colors and pricing issues." cui dongsheng said.

cover more customers

so, after 1688 tries its oem business, how should it balance the distribution of traffic between oem products and other manufacturers' products? will it form a competitive relationship with other manufacturers? in response to this, the person in charge of 1688 yanxuan and 1688 member store business told the beijing business daily reporter that 1688 yanxuan will not blindly follow the trend of oem for popular products, and the purpose of this business is not to make money. "we hope to increase the value of the industrial chain and achieve product innovation through oem, rather than letting the industry belt disorderly increase prices."

"1688's strict selection is actually to endorse the factories with the platform's brand, and the selected factories can get more traffic support, so the factories are more willing to give low prices, allowing users to enjoy benefits and achieve a win-win-win situation," jiang rong pointed out.

more and more consumer demands are beginning to converge on the production side. it is understood that in recent years, the people who shop at 1688plus member stores are mainly young business people aged 25-35 from first- and second-tier cities, mostly women, including tik tok and kuaishou anchors, internet celebrities, and cross-border buyers. these people contribute nearly half of the transaction volume of 1688 yanxuan.

therefore, in order to facilitate more c-end users, small and medium-sized sellers, anchors, etc. to trade on the platform and reduce the cost of the transaction link, 1688 has been doing screening from the launch of its strict selection business in 2022, to the opening of the "plus member store" in 2023, and now trying to incubate private label products. the platform is always doing screening, which is to select and grade the business capabilities and product quality of manufacturers. at the same time, the platform uses the membership system and taobao traffic to screen out users with family consumption, stockpiling, purchasing, as well as bulk and periodic purchasing needs.

however, the diversified development of 1688 is bound to encounter different strong opponents in different fields. in august this year, pinduoduo proposed to invest 10 billion resources to vigorously support new merchants and industrial belts with product and technology innovation capabilities, and significantly reduce the transaction fees of high-quality merchants. jd.com is also recruiting professional service providers for industrial belts and providing support such as traffic and policy inclination.

in order to cope with competition and find more places for growth, it is understood that after entering taobao, 1688 will also open member stores in douyin, xiaohongshu and kuaishou. in addition to online, 1688 will also accelerate offline expansion. in addition to the zhejiang and guangdong industrial belts, 1688 will focus on the yangtze river delta and pearl river delta industrial belts and invest in offline product selection center stores. in the next three years, it will cover 177 industrial belts and 40 cities.

beijing business daily reporter he qian