E-business transformation at Me-Online Shanghai Me Mechanical faced challenges from competition and needed to transform its business model. It established Me-Online, an e-business trading platform, to address issues like high inventory and bad debts from its "buy first, sell later" approach. Me-Online provided a more efficient online marketplace that integrated the supply chain and allowed real-time ordering and distribution, making the business model more sustainable and difficult to replicate.

1. E-BUSINESS TRANSFORMATION
AT ME-ONLINE
Group 6 | Section D
“Feng Huang Nie Pan”

2. Introduction
 Shanghai Me Mechanical and Electrical Equipment
Chain Co. Ltd. – SHMEC (Est. 1955)
 Mechanical & Electrical equipment distribution company
 Faced problem during China’s socio economic
transformation process
 Opening up of the economy to the foreign companies
 Private companies emerged with the ability to speedily
distribute large quantities
 Company established Me-online as a trading platform,
using e-business to transform its business model

3. Strengths of the TBM of SHMEC
 Group of 16 corporations - State owned
 Focused – Distribution of mechanical and electrical
equipments, machines, tools, etc.
 Buy first – Sell later approach
 Rich fixed assets
 Rich supplier base
 Large distribution network – Chain Stores
 Diverse customer base
 Inventory – different product portfolio
1

4. Environmental Factors Necessary for Success in
TBM
• Remain a Seller driven market
• No economic liberalization
• More demand than supply – less inventory management
cost
• Less fluctuation in prices
• Efficient and effective sales force – less sale on credit;
Less bad debt
• Proper book-keeping and lack of monopoly of business
staffs
• Efficient order processing, logistics and information
flow
2

5. Value of Service Provided in TBM
 Cater to different product specifications
 Large distribution network
 Chain stores – Easily accessible to customers
 Products sold on credit
 Good business relationship
3

6. Vulnerability due to Changes in Business
Environment
• Competition becoming stiff – Private players entering
the market
• Competitor’s ability to speedily deliver large orders
• Fluctuating Market Prices – Inventory piling up –
Incurring huge losses
• Bad debts – Ineffective monitoring of credits
• Manual book keeping – Improper supplier and user
database – Monopoly of business staffs
• Slow information flow
• Slow response to market – Couldn’t keep pace with
changing market dynamics
4

7. Causes of piling up of
Inventory
 Buy first & sell later business
practice
 Need to build a large inventory
of products with different
specifications
 Commitment to procure products
worth Rmb 1million after
acquiring an agency of a
reputed manufacturer
 Supply of M&E equipment was
greater than demand
 Inefficient management of client
requirements
5
Bad Debts
 Many products were sold on
credit
 Absence of effective
management measures
 Unlimited rights for the sales
staff
 High accounts receivables
 Diverse customer base was built
on a complex network of
relationships

8. Strengths of the NBM of Me-online
 Entire trading process was conducted fairly, equitably and properly
 High efficiency: Users could manage their inventory scientifically, regulate
their distribution management & procure products easily with no inventory
 Specialty: Information & Trading section
 Easy usage: Only a computer with internet connection
 Extension: It was applicable to material & equipment companies of similar
nature
 Originality: 1st company to issue value-added tax invoices directly online
 Me-online e-business platform was of international standard with
sophisticated technology
 Obtained a patent certificate issued by National Copyright Administration
of the People’s Republic of China
 Contained a huge amount of information about capital & logistics
 Employed the digital certificate to ensure that the transactions were done
by real parties, and were secure and irrevocable
6

9. Environmental factors necessary for success of
NBM
 Competition doesn’t have a better trading platform and information
 Expansion of franchise to ensure stability during transformation
 Attention to opportunities offered by the new model
 Ex: Logistics & transportation services
 Increase in internet awareness and penetration
 Enterprises in the upper & lower chain should cooperate more closely
 Proper integration between internal information system of Me-online &
its suppliers
 Dealing with emergencies by having internet exchange platform for
backups
 Development of appropriate human resources
 Innovation and system improvement by establishing future cooperation
with large international manufacturers
7

10. Value of the services provided by Me-Online to
its Customer
 All the information about the products available at
one site
 Improved cooperation along the supply chain
 Distribution done in real time so quick response
time for customers
 24 hour business conduct
 Integrated services
8

11. Key success factors of the Me-online business
model
 Streamlining the business processes -Regulation
ensured greater transparency
 Order driven approach - Reduction in the inventory
 Integration of all the functions
 Improved customer relationship management
 Procurement done in real time
9

12. Sustainability in the Me-online business model
 This business model is sustainable and difficult to
replicate because :
 Large customer base in the sector
 Stable syndicate with enterprise in lower and upper
chain
 Continuous expansion of the franchise
 This model was built on the core competencies of the
company
10