I interviewed Long Wong who discussed Omni Channel Supply Chain in China.
Can you provide a brief background of yourself?
It's nice to speak to you again. So my name is Long Wang, and I'm currently the COO for Uco.com. We are the leading distributor retailers for online cosmetics. We work with major brands to set up their online distribution.
Previously, I also had experience in offline apparel retail, and I used to work for Amazon in China as the head of operations. I also hold an MBA from MIT.
Can you talk about omnichannel in China? What is the current status?
A lot of attention is placed on offline shops. In China that means franchisees for distribution or distributors. With e-commerce coming along it has brought disruption to the offline model because in the past sales through distributors was broken off by region. They used a lot of franchisees and distributors which means that the branch would separate the sales into many different regions. now with e-commerce, the geographic separation has been eliminated and we are dealing with customers directly. As e-commerce grows into a significant part of a brand's retail pie, there are new channel conflicts.
The idea of new retail is that retail is no longer separated by channels, meaning offline or online, but rather as a whole. This brings a new dimension of challenges to the supply chain.
First of all, in terms of inventory ownership because as I said many of the brands used to work with distributors and franchisees. They did not have total visibility into their inventory. When attempting to integrated it is difficult because you don't know where your inventory is. You don't have exact data of where exactly your end customers are.
With that in mind, how do you integrate the service? How do you split the incentive schemes and profits. This requires new business models and new thinking.
The new retail is not a thing that can be easily set up and pushed forward.
What kind of business models or new ways of approaching supply chain are needed?
There are two ways. From the top line point of view how do you bring in sales and market share. China today is very different from 10 years ago when retail and the economy as a whole were growing fast. Now with the overall economy slowdown, the growth has slowed.
Now with that in mind, it is a lot harder to try to understand the model. You have some brand working on the top line how to bring in the growth with the omnichannel and it has become a more marketing play, which we need to be aware of because we need to know how does that marketing bring you marketshare?
Now on the supply chain on the other hand, do you know where your products are? Knowing your consumers, having that information with a lot of the big data with the information you get more direct from the online channel. A lot of brands can be much better and more efficient integrating your with the consumer more directly to vendors.
I think the supply chain needs to build a system and process around them. There's always the pressure of being faster, being better than your competitors. And how to balance the investment.
Do have any recommendations then for supply chain managers or executives?
I think the supply chain managers in China, the challenge is always how do you change fast enough. At the same time, how do you be risk averse enough to be, to protect the bottom line. How to use some of the outsource partners to solve some of the supply chain. Again, there's no good answers. There's always a balance to mitigate the risk and at the same time to try to leverage a lot of solutions. To use in-house and outsourcing strategies.
Do you have any success examples you might be able to share about some outsourcing partners that were working or that could be a good way to go?
I will use Uco as an example. Many of you may know that the cosmetic industry has been quite late, much later than apparel and other categories to enter e-commerce. Big cosmetic companies value their brand and marketing channels. And they do business online. They face the challenge of how to maintain the brand image and not to hurt any of those.
There are also a lot of finance, accounting and corporate governance issues that need to be managed. That is how Uco has helped a lot of companies maintain their brands and image and at the same time absorb some of the visibilities in terms of sales, marketing and execution. Dealing with local platforms like JD and Tmall to achieve sales growth and their e-commerce ambitions.
Moving forward, for the past years, we have been moving on a lot of the omnichannel initiatives working with the brands offline to provide a service offering. Alibaba and Tmall have been pushing a lot of the online and offline integration. And we provide the technology and project solutions as well as the brand image.
I always say that there's two kinds of partners. One is a quality long term player that is a strategic match for your strategic initiative. And the other kind is more a low-cost, small, a play on saving money. So when companies or supply chain managers look for partners, we need to understand first thing about what are they looking for. So if they are looking for cost, be prepared for the risk that may come along.
If you want a partner tha can help you solve the problem, then it's really important to understand the partners, understand the capabilities and, I would say, also bring a level of trush because sometimes trust goes a long way in terms of a successful partnership.
Trust in terms of how to execute. In terms of spending time to communicate, to communicate your requirements, your bottom line, communicate the strategic goal, so that the strategic partner you choose is capable and sustainable to help form a strategic partnership to help you to achieve your strategic goals.
Thank you for sharing today, Long.
You're welcome. It's great to talk to you again.
About Long Wong
China eCommerce, Supply Chain & Operations Expert