542: Chapter 89: 1.5 Billion, She’s Worth It!_3 542: Chapter 89: 1.5 Billion, She’s Worth It!_3 “The expansion and diversification of upstream and downstream industries can actually be considered similar, but in specific operations, we will always face various problems, as each industry has its own uniqueness, which I believe everyone might have experienced.”
The black-haired wealthy woman swiftly sketched a quadrant graph.
“But for OC, the expansion of upstream and downstream and diversification is actually a matter of cost and benefit expectation.”
In broad terms, costics belong to the consur goods industry, where the market size of specific products and services depends on brand strength and marketing level.
Other factors are also important, but these two are core.
If the product is OK, then brand strength will naturally increase, and the market will buy in.
If the brand strength is average but the marketing level is high enough to cover the costs of marketing investnt, then there can still be a market.”
OC’s diversification will focus on the costics field, our cross-sector moves are not extensive, and our marketing models and product quality are also OK.
Under these premises, our rate of success in diversification will be quite substantial.
This is a general analysis from a broad perspective.
On specific dinsions, there are four points I need to make clear to everyone.”
Having finished the quadrant graph, Temir continued.
“The first point is that upstream in the perfu industry are essential oil and fragrance companies, like costics raw material suppliers, as well as manufacturers like OEM factories.
Their profit margins are between five and fifteen percent, which might sound low, but are actually viable.
It’s a good business, yes, a good business.
The problem is, the global concentration in the fragrance and essential oil industry is too high, with a CR5 ratio of over sixty percent.
From 1999 to 2017, the global CR10 sales ratio in the industry increased from 64.6% to 77.2%.” (CR is the abbreviation for concentration rate, aning “degree of concentration”)
At this point, the black-haired wealthy woman looked at Giorgio and said.
“OC could engage in the upstream, but the profit expectations of the upstream aren’t that great, just like what’s shown in the graph.
The concentration of brands in the raw material and production end is high, and even if OC invests a lot of money, it may just earn a small amount.
Now let’s continue with the downstream situation of the perfu industry, which is the second point.”
Just as Temir was about to continue, Sandi raised her hand.
It was apparent she was there to shore up her best friend.
Mi’er felt gratified, as if gifting that necklace hadn’t been a loss after all.
“Mi’er, going back to what you ntioned about OC’s expectations for diversification, you said OC’s marketing is quite impressive.
Do you have any specific examples?”
Achilles realized sothing was amiss.
Alexandra’s manner of questioning, wasn’t it just like a straight man setting up a joke?
In fact, this was normal.
Everyone here was a top-tier mber of leading families, rolled out of intense competition; none were too dumb, with a solid level of foundational knowledge.
“OC has less than a hundred offline stores, but we generated three hundred million in sales.
The key lies in two aspects, one is successful online marketing, and the other is differentiated marketing.
However, Sandi, and everyone else, this marketing success isn’t actually due to a particular form of success, but my success.
Yes, I am the founder of OC.
I understand perfus, the costics industry, and the market.
I know how to run a business, and now I also know how to make products.
This is my success.
Under my personal managent as the founder, OC has more advantages in all aspects than many of our competitors.”
Ladies and gentlen, I am Temir.
Nice to et you, my OC is very successful!
“A founder-led company and a professional manager-led company are two different models, which I am sure everyone understands.
In the past, OC’s achievents have been proven by the market.
In the future, I will continue to grasp marketing, product, channel and all other key elents.
OC can continue to succeed.”
Watching his spirited sister, a shadow crept into Achilles’s eyes.
Ha, your success is the most laughable joke I’ve heard this year!
Seeing that Sandi had no intention of continuing to inquire, Mi’er returned to her original pace and kept talking.
“The downstream of the perfu industry is the specific channels, which are a very challenging problem to solve.
Most of the small startup perfu companies die at the step of opening physical stores—the profitability of individual perfu shops is too problematic.
The changeover of perfu market channels highly aligns with the costics market.
In the last century and the beginning of this one, departnt stores and KA (major supermarkets) were the primary channels.
Then it transitioned to the CS channel from 2007 to now, naly costics specialty stores like Jolan Woman, etc.
OC initially expanded through leveraging the CS channel.
One key reason we made it this far is because I didn’t blindly expand into branded physical stores; we mostly spread offline through counters and small shops.
OC’s strongest channel is actually e-comrce.
We achieved explosive revenue by leveraging comprehensive e-comrce platforms like Amazon and beauty-specific online platforms.
The logic here is, many major beauty and luxury brands only sell their perfu categories on their own platforms—to so extent, I have to thank them for their arrogance.
Overall, speaking solely of the perfu industry, downstream expansion is a trap with no good solutions, which is why I must diversify—after all, there’s a ceiling to online platforms, and marketing costs aren’t low.”
Giorgio fell silent.
Mi’er’s understanding of the perfu industry was undeniably profound, and most people might never realize the things she talked about in their lifetis.
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