Suning Commerce’s Profit Model Research

With the development of information technology, the Internet has been popularized in the production and lives of human, followed by the widespread application of Internet technology in the commercial field and the flourishing of e-commerce. It is shown from the statistics that by the end of 2015 global e-commerce market size totaled 1.4652 trillion dollars, increasing by 20% compared with the previous year, thus makes it very promising. Chinese e-commerce market presents a scene of prosperity with rapid development under the influence of the global market, being the world’s second-largest e-commerce market in 2015. At the same time a lot of home appliance retailers also joined in e-commerce, but many companies cannot achieve sustained profitability. The development of e-commerce is only short-lived, and some companies eventually went bankruptcy. The reason is that they could not find a suitable profit model. Choosing a right profit model will bring the enterprise to sustained growth momentum, allowing enterprises to maintain a unique competitiveness in the competition, which is the basis of the enterprise development. Therefore, the selection of what kind of profit model has become the key issues that many home appliance retail e-commerce business concern. In this paper, the author takes the leading home appliance retail brand-Suning Commerce as an example to analyze the profit model and gives enlightenment to other similar enterprises.This paper reviews the origin, definition and category of profit model and the profit model of Suning Commerce. Then value chain, elements and financial indicators of the profit model of Suning Commerce were analyzed and compared with its competitors Jingdong Mall and Gome to identify the strengths and weaknesses in the profit model of Suning Commerce and throw light upon the development of this industry. Finally, a conclusion and the vision on the prospects of the profit model of Suning Commerce are presented.It can be inferred from the analysis of Suning Commerce profit model that, on the one hand, Suning Commerce profit model promotes the integration of its resources and the optimization of capital structure, with the sources of revenue expanded, customer experience enhanced, the level of information improved, human resource structure optimized and corporate governance improved; on the other hand, since transition needs adaptation, the goal of the adaptation period becomes unstable in this process, which causes issues such as decreased profitability, online and offline conflicts, organizational conflicts. In regard to the pros and cons of profit model of Suning Commerce, this paper draws the conclusion that other participants in the industry should change strategic goals, prevent financial risks and strengthen the organization management in order to continue to incorporate inspiration online and offline. Meanwhile, the profit model of Suning Commerce does have a promising future, which also provides a good reference for other participants in the industry.