Another point, in my view, although our positioning may seem niche, I think it is actually mainstream. Why do I say that? Because we are targeting the mainstream young people in cities, and their lifestyle is the same as each of ours, including me and you. We all spend a lot of time either at work or on the way to work, or we are all anxious every day, busy with our hurried lives, and often have to work overtime late into the night. This is a common mindset among everyone, and there may be a feeling that we hope to escape this city and live a slower-paced life.
The following is the interview transcript:
Host: Do we have inventory?
Column host @Cui Xi's private messages are open, welcoming entrepreneurs to contact us, and we welcome your valuable opinions and suggestions.
Xu Xiaohui: Last week, I met an investment friend who provided some data, not sure if it's accurate, but Douban has reached a burst period, with traffic already surpassing Kaixin001. I haven't verified the data yet. A community like Douban has the potential for sudden growth. Kaixin001 was quickly recognized by everyone due to certain applications, but after the appearance of Sina Weibo, these applications were quickly diverted to Sina Weibo or other new media platforms. However, a medium or community like Douban doesn't need to worry about such problems because the user group has very strong stickiness. At a certain stage, there will be explosive growth. This data still needs to be verified. This was the good news I heard last week.
I don't know what the rumors specifically are, but since you're doing this thing, you will inevitably face various speculations about you, which is fine. The most important thing is whether this matter can be done well. Currently, we still cooperate with Vancl, and in the next one or two weeks, V+ distribution will also go online. Last week, I called Chen Nian when he was in a noisy place, and he said we would schedule another time. Everyone is excellent colleagues, including now the colleagues at Vancl with whom we communicate a lot. I am grateful to any of my former employers.
After I started this brand, I learned a new term: "healing," originating from Japan. I hope that it has a healing effect and function. When people see the non-commercial presentation of special topics on the website, it helps relieve stress. In the seemingly dreamlike fairy tale stories we weave, being emotionally moved is enough. It is the carrier that the mainstream young people need to alleviate the anxiety of their lives. This is the sentiment of all netizens, and it is the common point we are trying to find.
Xu Xiaohui: The choice of the timing for entrepreneurship is like being pushed by a wave. Although it cannot be said that you are powerless, there are many things destined by fate. In my entrepreneurship, even if I didn't want to, I found countless people pushing me to that position. This is a very strange feeling. In a more idealistic sense, it is fate. The choice of timing is really something that cannot be controlled by an individual. For example, when I left Yahoo! in 2006 and returned to Kingsoft for the second time, I gave up the opportunity for them to help me solve the household registration issue. At that time point, if I had stayed for another month, I could have obtained Beijing's hukou (household registration), but I switched jobs because of that month. All job switches are like this; the new employer hopes you can quickly take up the new position, so you have to make a choice. I chose my career and gave up the seemingly valuable Beijing hukou.
Xu Xiaohui: The average order value is about 240 yuan, with daily orders ranging from 400 to 500. In terms of registered user scale, we have nearly 100,000 registered users, which is a very good number for us.
Because of starting a business, Xu Xiaohui, who just became a father, did not have much time to accompany his eight-month-old son. He only has time to play with his son in the morning. If he hadn't left Vancl, holding the title of vice president and stock options, he could have waited stably until next year for the company to go public and cash out.
Another way to package or present cultural elements is that you will discover in the next one or two weeks that Chuke will start selling books. Among the book lists, 13 types of books were personally selected by me, such as "Six Records of a Floating Life" and other books related to life. This does not conflict with the brand's positioning. Many personal colors are injected into it, and many colleagues are people with artistic youth style. We all have an idea together. Work is certainly hard and busy, but I believe that in work, we must always find something you like to do. Chuke, as a literary clothing brand or a lifestyle brand, is what our group wants to do. If we let this group of people make Seven Wolves, we can't do it because we don't like it. We like this thing, this taste. Just like many consumers who like our taste, that's enough. We need to use our intelligence to do something we like. You liking it is more important than anything else.
The choice of timing, in many cases, is like moving from Kingsoft to Vancl and then starting a business again. Even though you have plans for your future, the timing cannot be planned. Like the wave of e-commerce, perhaps next year will be the time when the three major powers are determined, or such a situation. If you don't act this year, there won't be an opportunity next year. Despite the fact that my child is only eight months old, or whatever, I don't have time to accompany him, and it feels regretful that I can only play with him in the morning. But there's no way, this is your choice.
Host: His meaning is, if you don't do clothing, would he invest in other brands?
"But there's no way, this is my choice." Xu Xiaohui said.
Xu Xiaohui: The current team size is not large, nearly 50 people. Among these 40-plus people, the largest department, which we counted last week, has around 11 people in the website department responsible for everything from visual planning, shooting, topic production, and website creation, etc., all series of work related to visuals or brands. So, this department has the most personnel. In my view, B2C, to a great extent, especially fashion B2C, is selling photos. Therefore, we put a lot of effort into visuals. There will be a complete revamp of the website within this week, and at that time, everyone will see a more artistic version of Chuke appear.
Xu Xiaohui: Now our product selection process is becoming more proceduralized, decided collectively rather than individually by me. This is part of step-by-step streamlining. Many investors' views are contrary to your concerns. Some investors we've met asked, since you're expanding so fast, and even some products are agency-based, aren't you worried about maintaining your current taste and keeping the investment path purely for your own brand? On the contrary, investors are concerned that your style might deviate. From our perspective, first of all, we will adhere to this positioning. If in the future, due to business restrictions, we need to expand in business, we might do other brands. Just like Vanke did with V+, it doesn't affect Vanke itself. Outside of Chuke, we might do Eke, Sanke, turning into different styles. But the foundation remains the same. For the positioning of a slow life, there is still a lot of space. Because our positioning is actually based on style and target audience, without boundaries in categories. For example, next week we'll launch a miscellaneous goods channel, selling home products besides books, or even sandalwood or sachets. This business can grow infinitely large, just like Muji. In the next three to five years, we will develop more solidly.
Xu Xiahui: Regarding capital, a large amount is tied up in inventory. If you sell with a 50% gross margin, and you aim to do 10 million yuan in sales this year, 5 million yuan is tied up in goods, which are in inventory. In this situation, inventory is indeed a big problem. Not having category boundaries doesn't mean unlimited expansion in styles, as resources can't support it. Although the brands are many, each category aims for a premium strategy. Men's and women's wear each have around 100 styles. In this phase, or in the next year, this is an ideal number of styles. We try to make refined items rather than doing tens of thousands of SKUs like JD.com. We indeed can't achieve that. However, we don't have significant restrictions in categories. In terms of styles, we will definitely follow a premium strategy.
When talking about Lei Jun, when I visited Xiaomi Technology, I also chatted with Lei Jun about angel investments. I mentioned that I try to avoid conflicts between projects I invest in. Doing clothing naturally involves some competition with Vancl, even though we believe our brand is quite niche. Lei Jun also said, "I won't ask too many questions about your industry situation because many things are hard to discuss." During this process, they gave me a lot of advice and help, including Lei Jun calling me last week to inquire about our investment situation. Their advice and resources are more important than the money invested.
Xu Xiaohui: Yes, in the B2C industry, including Vancl, everyone has a profit margin ratio of 40-50%. This is determined by the business model of self-owned brands. Channel-type businesses may have relatively lower margins. However, yesterday when I looked at Mecox Lane's financial report, their gross margin for the previous quarter was 36%, which is already a high margin in the channel business.
Xu Xiaohui: There is pressure, but how to combine the things I like with commerce requires exploration. After the website went live for a month and a half, consumers acknowledged this taste through their orders. Such pressure accompanies whatever you do, without a doubt.
Xu Xiaohui: Yes. Although we haven't been around for eight years, I've only been here for half a year, but it has given me more experience than the sum of my entire career. Many things are unexpected, and you realize there are so many things you don't understand. Only then can you empathize with your former boss, whether Lei Jun or Chen Nian. Their decisions you once didn't understand or even misunderstood become clearer when you reflect on some of their choices and decisions. You'll find that you would make the same decision today, even though some decisions may hurt others internally or externally. In this process, you'll discover that despite the pain, you must make these decisions to ensure the safety of the project and the team.
Entrepreneurship is inherently a high-failure-probability endeavor, so I try to place the trial-and-error time as early as possible. Even if this venture isn't successful, I still have the chance to rise again. If I were to do this at 40, opportunities would decrease. While working at Vancl, I gained a lot of growth, whether from Chen Nian's help or the company's impact on my career. In the process of working at Vancl, I faced various external temptations, whether project lures, traditional enterprise offers, or the desire to do many things.
Xu Xiaohui: When I left, Mr. Chen mentioned that since I was also doing clothing, I told him I intended to enter the apparel field. He said, "Since you're also doing clothing, I'm sorry, I can't invest in you because Vancl also does clothing."
Second guest: Founder of B2C "literary" brand Chuke, Xu Xiaohui
We are currently shooting special albums. After listening, they understand from an emotional perspective what our positioning is. The current special is called Private City, where we photograph many representative figures in Beijing, capturing the connection between individuals and the city. These contain many personal experiences and emotions. When it goes live, people will see that this is not just a commercial site for selling clothes but more about expressing the lifestyle of young people in the city and their thoughts about the city. In this process, we may convey our concepts of discovering beauty and emotion in everyday life effectively. This is the primary message our brand aims to deliver. Secondarily, we focus on how to sell our clothes, products, and merchandise. These aspects are complementary and crucial for a clothing brand.
Chuke initially positioned itself as representing a slow lifestyle. Although not everyone can live a slow life, such positioning packages idealism or fairy tales. In these stories, people relieve much of their stress because, in real life, they cannot leave the city or abandon their livelihoods. In this case, you provide a medium for alleviating anxious emotions.
Host: By observing Vancl's development, it initially positioned itself as high-end with higher prices, gradually adjusting to become a fast-fashion, affordable mass-market brand. Have you thought about whether your current inclination towards literature might lead you to discover that this market is too small and eventually shift towards an affordable or mass consumer market?
This scorecard shows that the average order value reaches 240 yuan, with daily orders ranging from 400 to 500, and nearly 100,000 registered users. If calculated simply, the monthly sales are approximately 3.5 million yuan. "This is a very good number for us," Xu Xiaohui revealed that Chuke's gross margin could reach around 50%.
Host Cui Xi: Dear Sina netizens, good morning. Welcome to the series of interviews on emerging forces in e-commerce technology by Sina Tech. Today, we are delighted to have our second guest, an old friend who has worked in the internet industry for a long time, Mr. Xu Xiaohui. He recently started a B2C vertical website with a literary style. Please let him greet the netizens first.
Xu Xiaohui: Let me explain the name first. Many people have various associations after seeing this name. To clarify, I studied Chinese language and literature, and this name originates from the Ming Dynasty's 'Chuke Paian Jingqi'. 'Chuke' means the first edition or original meaning. Regarding the positioning during the preparation of the website project, we have been thinking about our differentiation in the highly competitive clothing B2C market. Our current brand positioning is called 'slow life'. After the website went live, there were two evaluations that were quite interesting and accurately reflected consumer understanding. One person commented that this might be China's most culturally rich e-commerce platform. Another person evaluated it as a Douban version of Vancl. For our positioning, we indeed hope that this brand embodies cultural sophistication and spiritual connotations.
Host: Due to time constraints, there is one final question regarding entrepreneurship. There are debates outside about whether you, as a scholar studying Chinese language and literature and fond of reading literary books, can successfully run a business. Would you feel a lot of pressure doing this, or how do you deal with the pressure and external doubts?
In the industry, there are two interesting evaluations: "This might be China's most culturally rich e-commerce platform" and "Douban version of Vancl". Xu Xiaohui has heard many doubts about whether the brand is too niche, but he always responds with two reasons: First, any new B2C brand starts as niche. Second, Chuke reflects the desire of mainstream urban populations to escape their stressful lives and embrace a slower-paced fashion.
Everyone harbors a dream of entrepreneurship, which is often suppressed. However, while at Vancl, due to the rapid development of the industry, there were numerous temptations that gradually magnified the small dreams inside you until you couldn't suppress them anymore. You had to break free and do this, especially when external opportunities presented themselves, whether personal recognition or funding. In such circumstances, the dream of independently achieving something or carving out a new territory is infinitely amplified. Finally, when you jump out, despite later realizing the hardships involved, which differ from the idealistic imagination, this process brings immense growth. An old colleague from Kingsoft, the founder of Storm Player, was asked what the biggest change was going from a large company to a startup. I remember it vividly; he said that in one year of entrepreneurship, he experienced more than he did in eight years at Kingsoft.
Leading this entrepreneurial journey for six months, Xu Xiaohui experienced various difficulties of starting a business but also unprecedented gains. He came to better understand some of the decisions made by Chen Nian at Vancl that he once questioned.
Where does the capital come from? Although Lei Jun and Chen Nian did not invest, many angels interested in e-commerce did. Xu Xiaohui's initial capital was roughly ten million RMB, and he is currently negotiating the first round of financing.
Xu Xiaohui: Hello, netizens. I am Xu Xiaohui.
Host: Is this also your answer?
Host: Since you previously worked at Vancl for a long time, people might wonder why you left Vancl, which was doing well, including having several platforms and plans for going public. Why did you leave to start your own business?
Xu Xiaohui left Vancl when his boss, Chen Nian, asked him what he wanted to do. Upon hearing the answer "B2C clothing," Chen Nian helplessly said, "I'm sorry, I can't invest in you because I also do clothing."
Host: You left Vancl, and there might be rumors that it was due to differing philosophies with the upper management?
Xu Xiaohui: He has resources to invest. Unfortunately, doing clothing prevents that.
Peking University's Department of Chinese Language and Literature left a mark on Xu Xiaohui. The "Chuke" brand, positioned as "slow fashion," is derived from the Ming Dynasty's "Chuke Paian Jingqi." On Chuke's webpage, you can frequently see phrases like "If only life were as beautiful as our first meeting," which come from Nalan Rongruo and are highly admired by the bourgeoisie literary youth.
Whether positive or negative opinions don't matter much to me. I completely disregard such voices. The only thing I consider is, as a journalist asked me, what is my greatest hope for the future? My greatest hope is that if someone interviews me again in a year and the company still exists, I will feel extremely gratified. That is my greatest hope.
Host: You mentioned earlier that outsiders evaluate this as possibly the most culturally rich e-commerce site, which poses a danger because the target audience is very small. You might think that being niche isn't a big problem. We see Douban defined as part of the literary circle. After such a long development of the internet, we can't say Douban hasn't done well, but it hasn't exploded either. Do you think Chuke might end up in a lukewarm state?
Host: You have a good relationship with Lei Jun and Chen Nian. Lei Jun invested in Vancl through angel investments, leading to speculation on whether you received money from him. Did Lei Jun and Chen Nian give you any advice on what you're doing?
Xu Xiaohui: Sometimes it's hard to compare. In the clothing field, it's above average. After all, we are a budget-friendly clothing brand. Vancl has