Exclusive Interview with eBag Wash Chairman Zhang Rongyao: We Are Fully Profitable and Deploying New Services Online and Offline

Leidi Network Lei Jianping December 19 report

In the past three years, the O2O industry has undergone significant changes. Many O2O services have been proven to be false demands, and countless O2O companies have closed down. From a flourishing state to a reshuffle, the laundry O2O company eDaixi not only survived but also announced profitability.

Of course, eDaixi also faced great challenges this year. It has contracted its business in some cities and laid off staff in certain locations. The former CEO Lu Wenyong has started a new venture in the new retail sector. However, eDaixi remains resolute in its transformation and adjustments.

Recently, eDaixi Chairman Zhang Rongyao told Leidi Network that the teams focused on racing for market share and those focused on growth and quality supply chain have different priorities and genes. eDaixi now places more emphasis on quality and the supply chain team, paying more attention to the moat of laundry quality.

"eDaixi needs to consider a balance among processing, delivery, and users, ensuring both the quality experience of clothes and a viable financial model. Otherwise, in some remote areas with insufficient order volume, the small e-butler may not keep up, and processing would be difficult to find."

Zhang Rongyao revealed that after balancing user experience, the moat of laundry quality, and a workable financial model, eDaixi has greatly improved its labor efficiency. Of course, in 2018, eDaixi may resume regional expansion but will better control the pace and scale.

eDaixi transformed from the traditional company Rongchang Laundry and seized the opportunity of laundry O2O during the mobile internet boom. Many traditional companies, seeing numerous O2O companies fail, were schadenfreude but hesitated about whether to transform.

In response, Zhang Rongyao called on traditional companies to resolutely transform and warned against schadenfreude. "Let me give a simple example: if I had 100 million yuan, would I invest in Rongchang Laundry or eDaixi? I would definitely invest in eDaixi."

If Rongchang Laundry had not transformed until today, with 1,000 stores nationwide, 5,000 to 6,000 employees, and thousands of dry-cleaning machines, its managers would face the problem of being unable to afford closure even if it went bankrupt.

"Countless traditional companies are today glad they did not transform, but this is a mistake. Ask yourself, you might say you are just getting by. You can see them helplessly watching the end of days approach day by day."

Zhang Rongyao pointed out that the longer traditional companies delay transformation, the more troublesome it becomes. Transformation is something many traditional companies nationwide must do, and during the process of becoming mobile internet companies, everyone should focus on the supply chain and their financial models.

eDaixi becomes heavier, holding many centralized processing intelligent factories

As a mobile internet company transformed from a traditional enterprise, eDaixi's development over the past four years has not been easy.

The transformation from Rongchang Laundry to eDaixi mainly faced three major challenges: 1. Transformation involved changing the past supply chain, finding new profit points, adjusting relationships in the new profit chain, and also adjusting shareholders and the team.

After the traditional enterprise transformation, it immediately needed to race for market share. This process required a team with a user-first gene, courage, tenacity, explosive product design ability, and strong execution to quickly promote products.

After the race for market share, coordinating the relationship between the attackers and defenders is necessary; these two types have different genes. At this time, it is necessary to calmly sort out the supply chain, explore the business model through the supply chain, and establish a more effective financial model.

The rough competition of racing for market share, with battles across land, sea, and air, is completely different in team genes and patience from the current focus on business models, financial models, cost control, expense control, quality, and experience.

Zhang Rongyao told Leidi Network that fortunately, eDaixi has always been decisive, found a newer team, focused on the supply chain, quality, and financial models, and last month's profit could reach over ten million yuan, which is actually not easy.

After eDaixi had secured its position in the laundry O2O field, it began refined entrepreneurship, building a moat of quality, and gradually started involving offline because face-to-face communication with customers must be offline.

In this process, eDaixi launched the Craftsman Workshop project and also holds many centralized intelligent processing factories, hoping to control the quality moat through online and offline integration. In short, eDaixi is now "becoming heavier."

Zhang Rongyao pointed out that eDaixi's "becoming heavier" is different from the traditional enterprise's understanding of "heavy"; this is a new service. This new service transitions online to neighborhood mutual assistance butlers and offline to categories with high experience factors, with all processing integrated with intelligent data.

On one hand, customers do not necessarily need to go to laundry shops, and laundry has an 80% gross margin, allowing eDaixi to convert individual customers into groups through mobile internet, doing centralized washing. Possibly, Beijing's 10,000 laundry shops will become four or five laundry factories in the future.

On the other hand, the Craftsman Workshop now concentrates many functions such as clothing alteration, phone repair, zipper repair, shoe repair, and key duplication into a 20-square-meter store, becoming a neighborly big brother role, solving many of users' daily life needs at once.

The service industry will give birth to the next BAT

 
Compared to two or three years ago, the O2O industry has clearly cooled down, and various industry voices have decreased significantly. However, Zhang Rongyao believes the service industry will definitely give birth to the next BAT because China has over a billion people, and there will be huge demand space for life services.

Of course, there are still many false demands in the O2O industry. Regarding this, Zhang Rongyao said that judging whether O2O is a false demand depends on distinguishing between in-store and at-home services; some may be commission-based models.

For example, group buying operates on a commission model because the vast majority of people want to experience restaurants and cafes; this is + Internet, not Internet +. But laundry is Internet + because customers don't want to stay inside the laundry shop.

If it's only about improving efficiency, then the commission model is better; it's not Internet +. Forcing this model into an O2O model will result in service quality worse than before.

For example, the O2O experience of car washing is worse than before, with lower efficiency and higher costs because labor is more expensive, even though car washing might be scaled and mechanized. Zhang Rongyao said that looking back, the car wash O2O model is quite laughable now.

Zhang Rongyao said that life services must return to the service itself. Many traditional companies make money in manufacturing through land, retail through land acquisition, and life services through selling stored-value cards, then speculate on real estate after selling the cards. None of these return to user experience.

When Xiaomi faced pressure and ridicule, Zhang Rongyao wrote an article titled "Mocking Xiaomi Will Lose This Era." The core point of the article is that traditional companies must transform to mobile internet, and the transformation must be decisive and unwavering.

"I now find that many entrepreneurs care too much about their image and are very vain. This is a taboo and very dangerous. Being overly protective of one's reputation leads to insufficient responsibility towards results, shareholders, and users, and even worse, negligence of duty."

This kind of negligence in entrepreneurship is when many teams receive a lot of funding and benefit, but the projects fail. This approach shows a lack of appreciation for the opportunities given by the times. "I once said at CEIBS that founders can burn money but cannot neglect their duties."

Entrepreneurial teams must be responsible—to shareholders, users, and the company. Founders must endure grievances.

The transformation of Rongchang Laundry to eDaixi was difficult but persisted. Zhang Rongyao said that during the transformation, everyone in the chain would complain, but the most important thing for the founder is to be responsible to employees and society. The company surviving is the responsibility to employees and society.

In the wave of O2O adjustments, eDaixi also made many adjustments in the past year and a half. "Surviving means everything can be made up. In the past three years of adjustments, many people criticized me, but eDaixi survived, and many original employees understood."

Zhang Rongyao said that now eDaixi has finally solved all problems and is thriving. Everyone understands what needed to be done in the past.