ICZOOM builds a component trading platform, focusing on small enterprises
The size of the global electronic system market is more than $ 1 trillion, and China accounts for about $ 600 billion. According to the information disclosed by "International Electronic Business Information", "At present, there are about 3 million electronics manufacturers in China , but only 3,000 large blue-chip manufacturers can obtain the direct services from original brand manufacturers or agents. The remaining long-tail customers rely on multi-tier channels such as the small distributors, traders and component B2B platforms to get the components they need. "
The reason why small, medium and micro enterprises are ignored by vendors or distributors is that the running cost is too high in the traditional electronic component business model, ICZOOM takes the first-mover advantage to a transparent e-commerce platform for electronic components with anonymous exchange function, SaaS solutions, and one-stop order fulfillment, focusing on serving medium, small, and micro enterprises.
At the ASPENCORE, Mr. Xia Lei, the founder and CEO of ICZOOM, discussed and explained that "What a SaaS-type matching e-commerce and integrated supply chain service platform is”
Mr. Xia Lei said that Arrow electronics established the component distributor model in 1935 and it has been 80 years of history. IBM invented a computer in 1970; a mobile phone in 1980; wireless phone in 1990; notebook and a camera phone in 2000… There is always new technology in this industry that forces us to update our products.
It used to be acceptable for distributors to serve medium , small, and micro companies because they could make 10%-20% profits; meanwhile, vendors need agents to promote their technology, but then Americans invented the Internet, which making this business model unsustainable.
"After 1990, the gross profit margin of the integrated platform must have fallen. Currently, Arrow, the world's largest agent, has annual revenue of nearly 30 billion U.S. dollars; however, its annual net income is only about 2-3%.
It may not work if the firms still copy arrow's business model to develop China's component distribution industry, So ICZOOM takes a different approach, positioning the company to serve medium, small. and micro companies.
China imports most of its components from Hong Kong. If a long- tail customer builds its own supply chain in Hong Kong, it will cost about three to four million yuan a year, which is a large expenditure for them. However, small and micro enterprises also need to obtain good services and need to provide their customers with the same high-quality services.
ICZOOM is a e-commence platform that bring a new trading method with no product price difference unlike distributors, We only need customer service department or use the system's intelligent algorithm to match the orders for buyers and sellers.
In addition, our platform also provides SaaS suite for free. Customers can use our SaaS systems to manage logistics, business teams and their customers.
He pointed out that the end customer of a product is the object of everyone's service. First, it depends on if the product has market opportunities. Making a new product includes the stages of Design In, Design Win, and Prototype Production. Vendors and distributors will get involved in the Prototype Production. Or the product can be made.
Customers can use this software platform to publish supply and demand information for free. Through our platform, the original factory can publish products, solution suppliers, OEMs/ODMs can push product solutions, distributors can manage inventory and supply chain, and manufacturers can issue inquiry.
All services provided by ICZOOM can be implemented as software modules. Users can use this software platform to release their products for free. Through our platform, the original factory can publish products, solution suppliers, OEMs/ODMs can push product solutions. Based on the principle of not earning price difference and being open and transparent, our self-developed SaaS solution is permanently free of charge, which can gradually form a closed-loop ecology of the upstream and downstream coexistence of the industrial chain such as original factory, solution provider, distributor and terminal manufacturer. He pointed out that many component e-commerce companies are losing money because many projects can't follow up when they really enter large quantities. Distributors spend a lot of efforts in the stages of Design In, Design Win, where there is no profit to be made. In Prototype Production stages, they negotiated the price and accounting period with the manufacturer and began to purchase in large quantities; however, the new technology eliminated the outdated products in less than half a year, which led to overstock issue. That’s why many component e-commerce companies are losing money of running their business model.
When it comes to Prototype Production, efforts made during Design-in and Design-Win stages cannot be converted into benefits. . The reason is that the purchasing department decides whether to buy during Prototype Production. The purchasing department will compare the reliability, price and account period of the material in many ways. This is the time when the distributors cut in.
What ICZOOM does instead is to earn logistics and service fees, while e-commerce platform is only for promotion. As long as the scale is continuously expanded, the cost will go down, and even if it earns a point, our platform will be profitable." He said, "So a medium-sized company can fully use our software system to manage its company. And we are not self-running platform to make a profit on the price difference. Our platform are open and transparent, so we have no conflict with everyone, we are similar to third-party service agencies such as banks. "
As the company's business expands, the ecological running system must rely on a risk control model of the component industry, “We need to empower all of our ecological customers on the premise of a large amount of industry data accumulation and openness and transparency," he said.
He revealed that our company has now tried to do risk control for dozens of medium, small, and micro enterprises, but the current data (corporate credit) have not fully formed a reliable risk control model. “If you manually assess the risk of everything, then the company can’t afford it, so a risk control model must be established. At the same time, we ultimately want to provide a neutral third-party risk control model for the component industry. I hope we can make it happen in the next few years. Our risk control model is not completed because the amount of data tested is too small, but this multi-trillion-dollar industry has huge potential ..." he concluded.
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