There are several categories:
First, the cost advantage
Cost advantage refers to the advantage of reducing costs with the expansion of production scale. New players in the industry want to come in, and the profit margin is not as good as that of the pioneers with cost advantages. Once the competition is in an anxious state, it is difficult for enterprises without cost advantage to persist.
In the early years, the growth of home appliance industry slowed down, and a price war started. Gree's financial statements were quite ugly, and its profit rate declined seriously. However, after the rough stage of the group war, the industry concentration increased, but Gree lived very well and regained the profit margin. It can be seen that the price war is short-term. After cutting off the outsiders, the home appliance industry has formed an orderly competition situation in which Gree Midea's Haier oligarchs coexist. No one will fight the price war again, and the oligarchs in the industry have rich profit space. This is the competitive barrier brought by cost advantage.
There is a misunderstanding about the moat with cost advantage, and it is easy to mistake the cost performance for the moat. The essence of cost advantage is to have lower cost, thus improving profit rate. However, such as Xiaomi, the focus is on cost performance. Mr. Lei claimed that he was learning the Costco model, taking a low-profit and high-turnover model. However, Costco only makes small profits but quick turnover in retail, and there are still profits in production and other links, while the pricing of Xiaomi covers all links such as manufacturing and marketing. Lack of sufficient profit means that it is difficult to upgrade other modules such as services quickly, and Costco charges membership fees. Therefore, the price/performance ratio of Xiaomi can't be regarded as a moat, because there is no deep integration of the industrial chain, and it has a significantly higher cost advantage than competitors. It just sacrifices its own profits to give profits to consumers, which is not a healthy business model in the long run.
Early millet, through the cost-effective strategy, created phenomenal product explosions on the Internet and enjoyed the dividend of the Internet. The low-cost and high-turnover strategy of e-commerce channels can really play the mode of small profits but quick turnover.
However, once online growth reaches the bottleneck and offline expansion begins, brands such as OV will catch up. The core factor is actually pricing strategy. OV brand has the advantage of offline channel, which can quickly distribute goods in the third, fourth and fifth tier cities, but the premise of taking the dealer model is to have high gross profit and excellent product quality. Xiaomi doesn't have enough profit margin for dealers, and dealers can't afford to sell Xiaomi mobile phones. Therefore, although Xiaomi Home is efficient, it has too few points and is completely backward in offline competition. It can be seen that the price/performance ratio is not a moat, and there is no high-margin price/performance ratio or even a shortcoming of the enterprise.
Two. invisible assets
Among intangible assets, brand advantage is the best. For example, Wang Laoji's "I'm afraid of getting angry and drinking Wang Laoji", Guazi's used car "No middleman makes the difference" and Nongfu Spring's "We are just porters of nature" all have a certain premium space when the brand occupies a place in the hearts of consumers. When Nongfu Spring occupies the mental position of "mountain spring", it is no longer ordinary mineral water, but leaves the impression that "mountain spring is cool and sweet" in consumers' hearts. Similarly, when you feel hot and want to drink water,
These are brand values, which need long-term marketing and historical culture to accumulate. The highest premium of domestic brands is probably Maotai, with a gross profit of over 90% and extremely low cost. Moreover, commodities also have investment attributes. The older the liquor, the more fragrant it is, and the flying Maotai for decades is already sky-high. This is the charm of a brand owned by an enterprise.
In addition to brands, patented technologies and industry access permits are intangible assets, such as insurance licenses, which are extremely difficult to obtain, meaning extremely high industry barriers. For example, Qualcomm's patented technology in the field of chips made Qualcomm reap huge profits from the mobile phone industry chain.
Third, switching costs.
"Is the winner-take-all Internet industry a good track? The article specifically mentions Tencent's powerful moat-acquaintance relationship chain. The migration cost is too high for users. Switching to social tools means that the entire acquaintance relationship chain will migrate at the same time. Even if you are willing to spend time and energy to move, it is unrealistic to expect your acquaintances and friends to move together.
Tencent's moat is hard to be subverted. Even if WeChat and QQ are out of date and new social tools appear, such as virtual projection for future communication, Tencent, which has an acquaintance relationship chain, still has a strong competitive advantage, because it takes a long time to rebuild the acquaintance social chain, which gives Tencent sufficient time to develop social forms that adapt to the new era. We might as well restore the early days of the mobile Internet. New things such as rice chat threaten Tencent's social barriers. However, with the launch of WeChat, especially WeChat can introduce QQ friends, Tencent has gained a monopoly position in the social field of mobile Internet.
Fourth, the network effect
Network effect means that with the increase of user scale, the value of products also increases. The most representative is the platform effect of the Internet. When the scale of users reaches a certain level, head enterprises such as BAT will become the infrastructure of the Internet. Just like water and electricity on the Internet, you can't live without it, so the Internet is a winner-take-all industry. If you make a platform, you can collect the "protection fee" of the platform.
Verb (abbreviation of verb) channel advantage
Channel advantage is a moat unique to China. Different from the developed countries in Europe and America, China has a vast territory and a high population density, with a complex network distribution of sinking cities along the 345 line. It is difficult to fully reach the tentacles of the network in a few years, and at least ten years, the channel advantage will also have strong competitive barriers. The Xiaomi example mentioned earlier was caught up by OV and other enterprises with channel advantages when they entered the offline bayonet. The core of channel advantage lies in the control of dealers, but the premise is that there are high-margin products and excellent product quality. After all, it is necessary to ensure that dealers have enough profit margins to stimulate their initiative. The control of dealers is reflected in whether dealers can avoid the phenomenon of channeling goods in different regions and avoid the damage of dealers' random price increases to the brand. Distribution channels need time to operate, and it is difficult to establish a channel network extending in all directions without several years' efforts.
For example, Yanghe's 1+ 1 model and Gree's store model, once the channel advantage is established, form a unique culture, which is difficult for peers to copy.
However, in the Internet era, with the improvement of the logistics system, the advantages of channels are gradually weakening, but it is also difficult to completely replace them. Harmony is the future direction.
Six, fake moat
There are also some fake moats that are easy to confuse investors. Refers to the competitive advantages of enterprises, but these advantages are unstable in the long run, such as high-quality products, strong management team, high market share, etc., which are often only temporary advantages and cannot be used to resist the attacks of competitors in the long run.
The above is my understanding of the moat. In the long run, the return rate of enterprises with moats is much higher than that of enterprises without moats.
Because enterprises with moats can often make money without hard work, such as Maotai, and even "fools" can operate well, while enterprises without moats can make some hard money, or they can make money without hard work.
Investing in a company with a moat, you can make money lying with your eyes closed. On the contrary, you may always pay attention to the fundamental changes of the company and can't sleep.
Source: Snowball