Li Mu did not participate in the three-day Taobao webmaster conference. He only appeared on the first day and introduced the Taobao Alliance's 20 Algorithm to the webmasters. Just this new algorithm alone made him popular among webmasters all over the country.
The webmasters who had been working alone and immersed themselves in running their own websites truly experienced the convenience and superiority of relying on a large platform from Li Mu and the Taobao website. This further increased the appeal of the Taobao Alliance to individual webmasters.
After the news of the Taobao Alliance's 20 Algorithm was reported on the Internet, almost all the webmasters in the country who had not joined the Taobao Alliance submitted their applications to join the Taobao Alliance's backstage. Among them were not only famous websites with hundreds of thousands of daily UV visits, but also some small websites that had just been registered and had almost zero traffic.
A large amount of Internet traffic converged from various websites to Taobao, and the direct impact was the rapid rise of Taobao website's data.
Taobao website's advertisements were all over the website, and all the advertisements were directed to the products, not the website. It greatly stimulated the users' desire to buy. Therefore, with the promotion of the entire Taobao Alliance and its member websites, the registered users of Taobao website soared, and the trading volume of the platform also increased.
The increase in online product display and exposure directly transformed into the buying behavior of users. Therefore, a national online shopping, a national Taobao craze was set off, and the e-commerce industry became hot in an instant.
The result that Li Mu was happy about was that through this layout, there were a large number of small and medium-sized sellers. In a short period of time, with the promotion of the Taobao Alliance's advertisements, they made a considerable profit on Taobao website. The most direct impact was to stimulate a large number of netizens and private individuals to register as Taobao sellers.
For an industry to truly rise, the increase in the number of employees was the most important symbol. No matter how big the market was, it would be a waste if it could not bear the burden. In Li Mu's view, the best situation for an industry exhibition was when there was an excess of employees. It must not be because the market demand was insufficient.
Li Mu used the Taobao Alliance to bring the entire internet industry in the direction of e-commerce, which had a huge impact on the entire industry.
The internet industry was amazed by the Taobao website's perfect turnaround. Originally, everyone in the industry thought that Li Mu's Taobao website had focused almost all of its energy on the B2 business. The two big promotions pushed the B2 business to the peak. Under such circumstances, the image of Taobao's B2 was almost ingrained. The internet industry had not yet entered the vertical development mode. Almost all the employees were greedy and wanted to expand horizontally as much as possible. The more the better. Therefore, they were most afraid of being labeled by the users. Once they were labeled, it meant that the development direction would be restricted by half.
Initially, Boss Ma wanted to seize the opportunity to take the lead from Li Mu. He also felt that Li Mu's B2 was too strong, and it was difficult for him to turn around. Therefore, he wanted to use his light and flexible characteristics to seize the market share of Li Mu 2. However, no one expected that Li Mu did not care what kind of label his platform was given in the eyes of the users.
Li Mu used the model of the Taobao Alliance to directly control the traffic resources of the entire industry. He almost forcefully branded the second brand of Taobao website in the eyes of the users, which was BSP. Such a domineering and perfect turnaround could no longer be called a textbook, because no one in the entire industry could imitate it.
Regarding Li Mu's achievement, even Boss Ma admired him from the bottom of his heart. He frankly said in an exchange with the core team, "I never dreamed that Li Mu would use such a method on B2, and it was so efficient. Now that shopping at Taobao has become a social trend, opening a shop at Taobao has also become a business craze. This move of Li Mu's is really brilliant."
A team member in charge of operations said, "The main reason is that Taobao website is too powerful. An alliance model like the Taobao Alliance can only be done by Taobao website. Even if other companies think of such a method, they don't have the ability to do so."
Lu Zhaoxi said curiously, "The advertising costs of the Taobao Alliance seem to have always been subsidized by Taobao, right? Now that the traffic diversion is so fierce, I don't know how long Taobao website can hold on. "
Cai Chongxin, who had recently been marginalized because he opposed encouraging sellers to sell fake products, had basically lost confidence in Le Taobao. In the meeting, he basically didn't speak much. Today, when everyone was talking about this topic, he said, which was rare for him, "Needless to say, Li Mu will definitely gradually transfer these costs to the Taobao sellers. In the end, the Taobao Alliance's advertising costs will definitely be paid by the sellers, and the sellers will definitely not reject this method of advertising. After all, to the sellers, they pursue greater profits, and they can completely bear this bit of advertising costs, and they are even willing to bear it."
Speaking up to this point, Cai Chongxin continued, "In the future, the sellers' products will be promoted by the Taobao Alliance, and the sellers will bear the advertising costs themselves. By paying a small amount of cost, they will be able to obtain greater profits. To the Taobao sellers, this is also a very good virtuous cycle. If Li Mu is willing, he can even use the Taobao Alliance to make money."
Lu Zhaoxi took over the conversation and blurted out a question, "You said that using the Taobao Alliance to make money, is it buying low and selling high?"
"That's right." Cai Chongxin said, "The Taobao Alliance has almost monopolized the product promotion resources on the internet. They can completely buy low and sell high to their sellers. They can even set up a bidding mechanism, and let the sellers fight for the promotion resources themselves, just like auctions. In general, if the purchase price of a UV is ten cents, and it is sold to the Taobao sellers at double the price, the Taobao Alliance can create a profit of 100%. Two times is two hundred percent. "
A colleague from the operations department frowned and asked, "Director Cai, if the Taobao Alliance's traffic price is so high, will the sellers pay the bill?"
Cai Chongxin said without hesitation, "They will definitely pay the bill, and they will definitely fight to pay the bill."
Then, Cai Chongxin added, "Think about it, for an online store, no matter what they sell, the lowest price is at least ten yuan, and the profit margin is at least two or three yuan. If it's clothing, the average price is at least thirty yuan in spring and summer, and the average price is at least fifty yuan in autumn and winter. The profit margin is at least 30-40%."
"Let's take clothing for example. If the average net profit is ten yuan, and a UV is ten cents, then as long as the traffic conversion rate is more than 1%, the business can be done! Even if the conversion rate is only 2%, fifty UVs can bring in an order. Based on this calculation, investing five yuan can bring in ten yuan of income. Who wouldn't want to do it? What's more, in the clothing industry, the conversion rate is much higher than 2%. With the Taobao Alliance's model, I think the conversion rate is at least 5%. "
The colleague shook his head and said, "Small and medium sellers are all light assets and low-cost operations. If you want them to pay extra for marketing, I'm afraid it won't be easy."
Cai Chongxin smiled and said with a bit of disdain, "Don't think of the sellers as being so short-sighted. Do you think they only sell one order for a profit? Don't be silly. Why would a company invest so much money in advertising? Other than the profits from advertising, they also have to consider the long-term potential profits. Let me ask you, do you only spend once in every clothing store? "
Cai Chongxin's words made the colleague's face turn red. He immediately understood what Cai Chongxin meant. Taobao sellers spend money to buy users, not to buy a single transaction, but to accumulate these users and continue to generate new buying behavior for a long time in the future.
The others immediately understood, and they all realized that Cai Chongxin had a much deeper view on this issue than others.
At this time, Cai Chongxin said again, "If I were a seller, I would be willing to buy users with no or even negative profits. If I pay 10,000 yuan for marketing every month and earn back 10,000 yuan of profit, it might seem like I'm working for nothing. But if I don't invest in marketing next month, the users I bought with 10,000 yuan last month might bring me 5,000 yuan of profit. This 5,000 yuan would be a net profit. Think about it, there are so many Taobao sellers. Once they figure out the pattern, what will happen? It will definitely become inevitable for sellers to compete for traffic. At that time, Taobao will definitely be able to earn a lot of hidden profits through these sellers! This is a truly healthy development model! "
Cai Chongxin accidentally smoothed out a way for Taobao to make money in the future. A large portion of Taobao's income in the future came from the cost of marketing paid by sellers. And with the continuous development of society, the continuous popularization of online shopping, and the continuous increase of people's purchasing power, the cost of Taobao sellers to obtain traffic also increased. Taobao operated this kind of business without any capital, turning all Taobao sellers into hard laborers.
Boss Ma's Taobao website did one thing very well: Any online shop that didn't spend money on marketing would definitely not be able to rise, and all the online shops that were established in the early stages would definitely fall if they didn't spend money on marketing. In short, if one wanted to make money in Taobao, one had to first help Taobao earn money.
Lu Zhaoxi did some rough calculations at this time, and then said in surprise, "If you look at it this way, traffic is really a good business! Li Mu used a low price to integrate these traffic, and then sold them to Taobao sellers at a high price. Although the platform doesn't take commissions from sellers in name, by reselling traffic to earn money, they can at least make a lot of money! "
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