In 2017, the automotive aftermarket is characterized by both fire and ice. In the first half of the year, the capital winter continued, and there was almost no financing news in the industry. In the second half of the year, Internet giants such as Suning and JINGdong made frequent moves, and the market was in full throttle. The baptism of fire and ice, let the players suffer, many enterprises overwhelmed, have fallen, but there is no lack of some enterprises more and more brave.
Lechebang, which was founded for just over 2 years, is one of them. It is not only one of the few enterprises that got financing in 2017, but also one of the enterprises that kept leading all the way in this year, ranking first in the 4S shop track. In terms of track selection, cut mode, operation strategy or ecological closed-loop construction, Lechebang has its own unique playing style, which is an important reason for its winning the favor of capital and market.
Track selection is unique
First of all, in the choice of track, Le Chebang has a unique style. Instead of following the trend and flooding into the camp of 4S shops, le Chebang plunged into the field of isolated 4S shops and ploughed deeply.
For many years, under the traditional brand authorization system, 4S shops with various brands as the main body have formed a certain degree of monopoly and rigidity in the traditional automobile consumer market. At the same time, stimulated by the concept of Internet and policy dividend, more retailers and e-commerce enterprises join the army of automobile consumers to seize market share, and 4S shops seem to be in danger everywhere. But in fact, in the past few years, new car e-commerce and after-sales e-commerce that claimed to beat down the 4S shop model almost all failed. Lin Jinwen, founder and CEO of Lechebang, believes that “in the next five to 10 years in China, 4S stores will still be the focus of consumer consumption, and the dominant position of 4S stores will not change.”
Referring to the American market, after nearly a century of iteration, the main scene of new car, used car and auto finance sales still occurs in 4S shops. Even in the era of electric vehicles, mainstream traditional automobile companies will still occupy an absolutely dominant position in the market by virtue of the accumulation of advantages in technology and resources, and their 4S shop system laid around the world will continue to play a significant role in the future. In addition, from the point of view of domestic competition, 4S stores still occupy the absolute market share, and together with auto service chain constantly erode the business of roadside shops and repair shops, maintain a slight growth, and it is difficult to be shaken in a short time.
As the 4S shop system has always been in a complex and closed state, there are few external forces that can really penetrate into it. With the team’s decades of experience in the 4S store system, Le Che Bang is the only company that has successfully entered the market and become the leader. Its strong Internet gene and unique business model are gradually revitalizing the huge and rigid 4S store system.
The cut-in pattern is self-contained
After choosing the right track, the starting position is also one of the factors affecting the whole race. Le Che Bang 4S shop online maintenance as the best entry point after the car market, very wise.
Automotive aftermarket is one of the few sectors in the market with clear growth prospects, with hundreds of millions of industry size and considerable growth rate. According to Analysys data, in 2017, the size of the automotive aftermarket reached 1.06 trillion yuan (excluding auto finance), an increase of 13.4% compared with the previous year, the market size is expected to reach 1.157 trillion yuan in 2018, and will break through 1.2 trillion yuan in 2019. By the end of 2016, the e-commerce penetration rate of China’s automotive aftermarket was only 16%, but compared with the penetration rate at the end of the first quarter of the same year, it increased by 32.64%, showing a rapid growth. On this trillion cake, the “online transformation” of the automotive aftermarket can be said to be broad and promising.
At the same time, the gross profit of 4S shop maintenance is very considerable. At present, 70% of domestic users still prefer 4S shop for maintenance. The reasons for the loss of 4S shop users are nothing more than high price, long waiting time, opaque service and so on. As long as these pain points are solved, IT is very easy for 4S stores to snatch back customers from roadside stores.
Le Che Bang saw an opportunity. 4S shops usually have free time and busy time. In busy time, users usually queue for a long time, and the service cannot be fully guaranteed due to the shortage of resources. At leisure, the resources of 4S shops can not be fully utilized. By integrating the busy resources of 4S stores, Le Che Bang not only further optimizes the assets of 4S stores, but also strives for preferential prices as low as 50% discount for users. At the same time, the use of Internet technology, to help users to achieve online appointment, repair immediately; Use big data, provide intelligent maintenance manual, let users maintenance items and costs at a glance.
The ultra-low price and high-quality 4S shop service become the biggest driving force for users to pay the bill. The online maintenance business of LEche Bangji 4S shop rapidly accumulates users and ranks first in the market segment in less than a year. At present, lechebang has 14 million registered users online. At the same time, 4S shop maintenance users are relatively high quality, high consumption power, laying a solid foundation for the development of other businesses.
The strategy is step-by-step
Le Che Bang through its own price advantage, the competition into traffic, to achieve a win-win situation.
To put it simply, the cooperative relationship between Le Che Bang and 4S stores means that Le Che Bang brings traffic to 4S stores, and 4S stores give le Che Bang more preferential treatment. However, as an auto e-commerce platform that has not been established for a long time, Lin jinwen knows that Lechebang is not at an advantage compared with those Internet platforms with large traffic in the market. The main advantage of LE Che Bang is that the team has been deeply engaged in the 4S shop field for many years, so they have a better understanding of 4S shops and can obtain greater price concessions compared with competitors.
Based on this price advantage, Lin jinwen led his team to negotiate with high-traffic platforms, in exchange for lower prices than their competitors, to gain access to these platforms’ traffic, thus transforming what might have been a competitive relationship into a win-win relationship. So far, 175 Internet traffic platforms have cooperated with Leche Bangda to provide traffic access for it. Partners include Baidu Nuomi, Tencent Auto, Alibaba, JD.com, Dianping, five major banks, etc.
Therefore, while traditional Internet companies are still relying on the usual marketing methods, that is, relying on advertising and subsidies to earn traffic, Le Che Bang has stopped advertising and subsidies instead. In the development course of Leche Bang after, this way of standing on the shoulder of the traffic giant to obtain traffic for free has been proved countless times. Relying on this pioneering model, LeChebang still retains strong strength after several rounds of cold winters of capital and O2O.
The ecological loop will come into being
Lin jinwen positioned LeChebang as “an O2O auto trading company, a closed loop company between online and offline”. For this certain position, Le Che Bang achieved a great leap forward in 2017. Over the past two years, Lechebang has successfully moved offline maintenance services to online, with 48 cities open and 4,000 4S stores cooperating, making it the largest e-commerce platform in the 4S store field. After obtaining the B round of financing in May 2017, Lechebang further expanded its business, began to build B2B parts trading platform and started 4S store hosting business.
Through cooperation with 4S stores, LEChebang found that 4S stores used about 55% of their income from car maintenance for parts procurement, of which about 20% were purchased externally. However, in this part, single 4S stores did not have an advantage in terms of purchase price. Based on the scale advantage of 4,000 4S stores, Lechebang can get more competitive prices for 4S stores from upstream. It is understood that in half a year, LEChbon B2B parts trading platform has completed the layout of engine oil categories. At present, the main cooperative brands include Castrol, Mobil, Total and other international brands.
Another business layout of LE Che Bang in 2017 is 4S store hosting. For 4S store hosting business, this is another possibility that Le Che Bang tries to combine its own advantages. The so-called 4S store trusteeship means that dealers hand over the management right of the whole 4S store to Lechebang, and Lechebang takes charge of and further upgrades the 4S store in terms of management, capital, talent, procurement cost and other aspects. This will be a powerful model to enhance the competitiveness of 4S shops, especially small 4S shops. On the other hand, with the increase of managed stores, Lechebang will have more initiative in integrating and opening up online and offline resources, and can explore more innovative ways more freely to provide consumers with better quality and cost-effective services.
According to the Report of China Automobile Brand Satisfaction Survey, in 2017, more than 80% of automobile dealers faced the pressure of capital shortage and operating difficulties, and 43% of dealers faced the test of life and death of capital chain fracture. Lin Jinwen once gave a set of figures: there are 28300 4S stores on the market, 6104 operated by the top 100 dealers, and about 12-13 stores owned by the bottom 100 dealers. After the 101 dealers, there are basically less than 10 stores, but there are very few 10 stores, and most of them are single stores.
These small 4S shops are obviously not competitive enough in the face of large groups. They do not have a perfect operation and management system, can not hire the top team, and do not have enough funds to establish information system. Facing the future, may be merged, may be eliminated. Leshebang will play the role of empowering small and medium-sized 4S stores as a super platform, leading to the multi-win model of collaborative network, which will be the most likely leading business model in the next five years.
Reviewing the development course of Le Che Bang, le Che Bang’s success is no accident. Behind this, it is lechebang’s deep insight into the automotive aftermarket, its deep understanding of the 4S shop system, and its precise choice of the track. More importantly, Lechebang always takes user demand as its orientation and regards improving user experience as the core of its business development.