Click the original text to learn more details. "You can agree with them, oppose them, praise or disparage them, but you simply cannot ignore them." When Pinduoduo was at the height of controversy, Huang Zheng often quoted Jobs' words to justify himself. This is also the best interpretation for social e-commerce. Since Tencent's Paipai.com started playing with social elements in 2014, this model has been questioned. However, judging by recent capital investments in this field, the social e-commerce model seems to be gradually gaining recognition and validation. At the same time, more and more social e-commerce companies are achieving rapid growth, and "You Hao Dong Xi" is one of them. Relying on the mother group, entering the family consumption scenario from fresh produce, achieving monthly GMV exceeding 80 million RMB in two years, and receiving four rounds of financing from Xu Xiaoping, the B-round financing of 50 million USD announced on July 16 is already the second financing within this half year. "We don't call ourselves social e-commerce; we are community e-commerce." Chen Ying, founder of "You Hao Dong Xi," told Yecao New Consumption. Recently, through a two-hour interview with Chen Ying, we conducted an in-depth review of the core characteristics and business model of this "community e-commerce" company, and had an effective discussion with Chen Ying on topics such as understanding community scenarios, predicting the value trends of community e-commerce, and how to view competition and barriers. Initially, it was for public welfare. Unlike the self-deprecation and helplessness of a certain bike-sharing founder, Chen Ying genuinely wanted to do public welfare. Before coming to Beijing to establish "You Hao Dong Xi" in 2016, Chen Ying had three years of public welfare and entrepreneurial experience in counties and villages. "Help rural China," In 2010, Chen Ying wrote this genuine thought in the career vision column of his Harvard Business School MBA application. This was his choice after graduating from Fudan in 2005 and entering Bain, following five or six years of consulting and investment career. "At that time, I wanted to create some value. I felt that business was not direct enough; if you want to help someone, you help them directly. Doing public welfare is more direct." For Chen Ying, consulting and investment were good jobs, but they still had a gap from the value in his heart. Chen Ying, who came from a rural background, thought of doing rural public welfare, but without specific understanding, he chose to return to school. Chen Ying, founder of "You Hao Dong Xi" During his studies at Harvard, Chen Ying used winter and summer vacations to conduct research, traveling to Gansu, Northwest China, Hunan, Hubei, northern Jiangsu, and even rural India. He conducted research and participated in some local public welfare projects while considering what to do and in what form. After extensive research in rural areas, Chen Ying chose to do his own public welfare project rather than join a public welfare organization, as it would be "closer to what he wanted to do." His subsequent award in the Harvard Public Welfare Entrepreneurship Competition further solidified his thoughts at that time. So after graduating from business school in 2012, Chen Ying led a group of brothers, with 100,000 USD from a public welfare organization and 20,000 USD from Harvard Business School, and plunged into the rural areas of northern Jiangsu, starting rural e-commerce with fresh agricultural products as the entry point. This laid the foundation for "You Hao Dong Xi" to do fresh produce later. From upward (helping sell agricultural products) to downward (selling external products to rural areas), after more than a year of attempts, Chen Ying found that doing e-commerce in rural areas in the form of public welfare was unsustainable. The logical starting points of public welfare and business are different. Public welfare considers the final number of people served and how many people can benefit from it, while business must consider whether it can make money. Rural e-commerce was not a profitable business at that time, and even now, without Pinduoduo, everyone might still be immersed in the illusion that all people need consumption upgrades, and the consumption power of the 300 million bottom-level people would still be below the surface. Thus, the consumption power of rural areas in 2012 and 2013 can be imagined. "If it weren't for public welfare, we wouldn't have done rural e-commerce," Chen Ying told Yecao New Consumption. But at that time, public welfare did not have a mature financing structure, so Chen Ying and his team had to consider building a business model to enable the team to obtain financing. In 2014, Chen Ying, with a changed mindset, took VC investment and chose county towns with slightly stronger consumption power, diving into the O2O boom. Using WeChat accounts and communities to help local merchants organize offline activities, they did local life services, expanding to more than 600 county towns nationwide at its peak. Although the data was good, the consumption power of county towns was still insufficient, and once subsidies stopped, it was hard to sustain. Coupled with the fact that Meituan and Dianping were facing a decisive battle and were both sinking their services to third- and fourth-tier cities, the merger of Meituan and Dianping in October 2015 meant that other projects had slim chances to continue surviving and financing in this market. At the beginning of 2016, Chen Ying decided to transform. After three years of public welfare and entrepreneurship in counties and townships, Chen Ying reached an initial conclusion: The demand in counties and townships is how to help farmers sell their products well and how to get rich; while the sales channels for good products should be in first- and second-tier cities where consumption upgrades are the demand. Once, Chang Qing, a Harvard classmate, recommended a batch of Chen Ying's oranges in a community mother group, and within two hours, they sold more than what a county town could sell in a week. This result further strengthened Chen Ying's idea of transforming into first- and second-tier cities. Combining previous fresh produce and community experience, the new project "You Hao Dong Xi" was officially launched in May 2016, and Chang Qing also joined as a co-founder, responsible for operations, and was the first "Selector." Entering the family consumption scenario of first- and second-tier cities from fresh produce, targeting the main decision-makers of family consumption—the mother group. Obviously, the community gameplay and fresh produce capability were key to the early breakthrough of "You Hao Dong Xi." Correspondingly, the two cores driving "You Hao Dong Xi" are: the "Selector" responsible for the front-end channel and the "Taste Seeker" responsible for the back-end supply chain. Although the positioning of "You Hao Dong Xi" is to do consumption upgrades for urban families, it did not obsess over categories and SKUs. At that time, Chen Ying realized that the core was to build trust around the people. Therefore, choosing community as a channel was not simply based on previous community experience. Moreover, as Chen Ying said, many communities in first- and second-tier cities already had similar groups selling things, and these sellers were the prototypes of "You Hao Dong Xi's" "Selectors." "You Hao Dong Xi just turned it into a business model, providing better supply chains for sellers and better experiences for buyers." 1. Community is the most suitable scenario for retail Compared to other general merchandise, the fresh agricultural products that "You Hao Dong Xi" focuses on are the goods with the largest consumption volume and highest purchase frequency in daily life. But at the same time, their characteristics such as low standardization, short shelf life, high loss, difficult quality control, and strict requirements for transportation and storage are a pain point for most retail players. Since 2015, the annual year-end inventory of the "fresh e-commerce death list" has almost become a media routine. But the battles in the external fresh e-commerce battlefield seem to have nothing to do with "You Hao Dong Xi." Since its launch, it has been hidden with its users in the haven of communities. In addition to the three years of understanding of rural areas and agricultural products accumulated in counties and townships, the smooth development of "You Hao Dong Xi" during this period is largely due to the social e-commerce model. Compared with traditional B2C e-commerce, social e-commerce focuses on differentiation and customized services around people. User satisfaction is based on the comprehensive feeling of service plus product, adding the warmth of trust and service. The former largely competes on price, and the cost for users to switch to other platforms is almost zero. "The problem of retail in this era is no longer 'whether it exists' but 'whether it is suitable.' The standard for judging suitability is not only price. Why was price the most critical factor in the previous generation of e-commerce? Because price is comparable. Now the core is that there are other things beyond price, and these things are incomparable," Chen Ying told Yecao New Consumption. But defining "You Hao Dong Xi" as social e-commerce seems not precise enough. "We don't call ourselves social e-commerce; we are community e-commerce." From the perspective of the three elements of retail—people, goods, and places—traditional e-commerce talks about "goods," WeChat business and other social e-commerce talk about "people," while Chen Ying's emphasis on "community" actually highlights the concept of "place." Chen Ying believes that consumption requires scenarios, and in the entire social field, community is the most suitable scenario. "In comparison, WeChat store is more like a shelf, which can display goods, but it is not a place; there is no communication and atmosphere. A friend circle is a square; selling things in a square is like shouting on the road for people to come and sharpen knives, but it is not a place for shopping." Community is not a natural retail place, but it has the potential to become one: First, the closed nature of community gives it an inherent "purposefulness." "The first characteristic of a place is to have a clear purpose to define what the place is for. I can't go to a cinema to play video games, nor can I go to Starbucks to sell face masks," Chen Ying said. Returning to online communities, most communities now have their functions: groups for chatting with close friends, groups for reading check-ins, groups for fitness check-ins, etc. Almost every group has a clear purpose. In Chen Ying's view, as long as the purpose is clear, it is entirely possible to build a group specifically for sharing and selling "You Hao Dong Xi" products. Conversely, many groups may fail because of this. For example, an active group of close friends is hard to directly transform into a group for selling things, because the community population is definitely vertical, gathered together based on the group's purpose and some commonality. If the purpose is chatting, selling things will not be recognized. Second, there is a one-to-one correspondence between groups and stores. "For example, the group owner corresponds to the store owner, others correspond to consumers or members, and the mini-program corresponds to the counter. The mini-program itself is not e-commerce; its cashier and display functions correspond to the store's counter. Through some purposeful operational means and rules, a group can be turned into a store." Chen Ying believes that the place attribute of community e-commerce represents an important future development direction for social e-commerce. 2. The Selector is a "personal entrepreneur" In the above one-to-one correspondence between community and store, the role of the store owner is called "Selector" in "You Hao Dong Xi," positioned as an online seller and sharer. In many social e-commerce models, the core KPI for roles similar to the Selector is usually to attract new users or develop subordinates, but "You Hao Dong Xi" seems to emphasize "truly product-based sales and service." "We want to help Selectors understand what is more valuable and that they should really spend more time on doing good sales and service," Chen Ying told Yecao New Consumption. This means that the front-end users of "You Hao Dong Xi," whether Selectors or consumers, cannot achieve rapid fission. "Fission," a label almost inherent to social e-commerce since its birth, is torn off here. However, for "You Hao Dong Xi," which started with fresh produce, this is not a disadvantage. If the back-end supply chain and warehouse construction pace cannot keep up, front-end fission is futile. But the benefits of this mechanism and value are obvious. Not encouraging subordinates and new people means that each community is a community of acquaintances, and every transaction is based on consumers' trust in the Selector. Selectors build groups based on personal credit, pledging their personal brand. Therefore, Selectors may even value the quality of products and services more than the platform. It is not an exaggeration for Chen Ying to call Selectors "personal entrepreneurs." Under this mechanism, the strong customer service capability of Selectors is incomparable to that of stranger social e-commerce that focuses on attracting new users and fission. This also derives the possibility of tapping the deep value of consumers, which is equivalent to giving up the opportunity for horizontal expansion to a certain extent, and correspondingly gaining the opportunity to deeply explore the deep-seated needs and consumption potential of the population. This is probably the biggest difference between "You Hao Dong Xi" and traditional e-commerce. 3. The "Selector" model is the mainstream retail form in the future In this, the mining of deep value still needs to be completed by Selectors. Essentially, it is "You Hao Dong Xi" serving Selectors, and Selectors serving users. Under this mechanism, the role of Selectors is self-evident. Currently, "You Hao Dong Xi" has nearly 50,000 Selectors. After giving up the fission opportunity of individual Selector user groups, the growth of new users must rely on the growth of Selectors, which is also the key to the growth of the "You Hao Dong Xi" model. Chen Ying said that Selectors are not a new model; they are the same as real estate and insurance brokers in history. But the traditional broker model requires high unit price and high gross margin categories to support it. The emergence of WeChat has changed production relations, and more categories can be circulated in this form. The first wave of Selectors for "You Hao Dong Xi" mostly came from groups that were originally individual brokers. If the first wave was about converting existing stock, then the sustained growth opportunity lies in developing incremental volume, which is behind cultivating more people's recognition of this way of working. "Let all users realize that sharing and selling in WeChat groups is not low. Just like Taobao before, let users realize that they can open stores on Taobao. This is what companies like ours need to educate." Chen Ying believes that retail has moved from the era of "goods" to the era of "places," and now to the era of "people." The rise of individuals is an obvious trend. The great improvement in individual sales efficiency itself means that more people will take on the role of sales. And the "Selector" model, or the personal direct sales model, will become the mainstream retail form in the future. "Taste Seeker" is the second core of "You Hao Dong Xi," essentially undertaking the back-end supply chain support work. "You Hao Dong Xi" positions it as a product manager, with the core being to select and create products that meet user needs. The "users" mentioned here largely refer to Selectors. 1. Core capability of Taste Seekers: iterating products around users From the overall model of "You Hao Dong Xi," Selectors are essentially selling products for Taste Seekers. Although compared with 50,000 Selectors, there are only 50 Taste Seekers. But compared with the traditional fresh e-commerce procurement and sales model, there is still a big difference: "You Hao Dong Xi" essentially breaks the overall procurement work into pieces and distributes it to 50 Taste Seekers. This means that each Taste Seeker has great autonomy, and the standards for category selection and development are defined by the Taste Seekers themselves. Two points support this mechanism: first, based on "You Hao Dong Xi's" expectation of the professionalism of Taste Seekers, each Taste Seeker is only responsible for a single category. Under this mechanism, it is inevitable that the Taste Seeker is the one who understands the category best; second, feedback and supervision from Selectors, with the opening rate of new products as feedback, evaluate the success or failure of product selection. Therefore, the Taste Seeker is a highly professional role, and continuously creating and iterating products around user needs is the core capability to build. Essentially, it is a strategist, not an executor. Chen Ying said that this professionalism must be cultivated internally. The personal requirement for Taste Seekers is professional understanding of a certain category or field, but the methodology for deeply mining and analyzing categories around user needs is the same. However, because of this, the richness of the front-end categories of "You Hao Dong Xi" heavily depends on the number of back-end Taste Seekers. Whether a category can be done depends on whether there is a Taste Seeker professional enough in that category. 2. Category expansion logic: vertical to people, not vertical to categories According to Chen Ying, each Taste Seeker launches 2-3 new products per month, and 50 Taste Seekers can launch more than 100 new products per month. Subtracting the 30-40 products that are removed, it is equivalent to a net increase of more than 60 new products per month. Behind the new product data is the result of category expansion, from fresh produce to the entire family consumption scenario, which is what "You Hao Dong Xi" is doing. This expansion logic is still relatively clear. The community model faces a vertical population, not vertical categories. Serving around people inevitably faces category expansion. And the family consumption scenario is the boundary that Chen Ying has drawn for "You Hao Dong Xi." At the same time, category expansion also brings two major challenges: First, the challenge of matching corporate genes and capabilities with new categories. "You Hao Dong Xi" has some fresh produce experience, but when expanding from fresh produce to other categories in the family consumption scenario, it has no advantage. Chen Ying believes that the core here is to create "differentiation" for each category. The logic of product selection is based on users' actual needs rather than brands. For example, in fresh produce, "Gannan navel orange" is a recognized "brand" product, but there are many other navel oranges of equally good quality on the market. Because they have not been explored, they have to ride on the popularity of the former for sales. Users' actual need is high-quality navel oranges, not branded navel oranges. Behind the demand for brands is the demand for quality. This logic of exploring product differentiation can actually be applied to other categories, using differentiated competition to make up for temporary capability deficiencies. Second, when multi-category strategy faces vertical competitors, there will be professional challenges. Choosing multi-category development inevitably means giving up some professionalism in each category because energy is dispersed. Facing this problem, Chen Ying's method is to reduce the number of SKUs. Chen Ying believes that the professionalism of vertical e-commerce is reflected in the segmentation of vertical fields, which may require many SKUs to appear more professional than others. But under multi-category, such segmentation is not needed. "We don't need too many SKUs under each category. We believe that in each category, 20% of SKUs meet 80% of people's needs. We just need to do these small but refined products well, and when we do fewer, professionalism can keep up." 1. The endgame of decentralization is multi-centralization The thousand-billion social e-commerce that has risen in a short time, no matter how controversial, cannot be ignored. "From a retail perspective, large retail must be a stock. We can't say that this year everyone eats 10 buns, and next year 30. I can only eat 12 next year, so it must be mutually squeezing." In this environment, the development of social e-commerce will inevitably face resistance from two aspects: On the one hand, like traditional e-commerce, it will face resistance from offline. Consumers either buy online or offline, and the core is the scenario. Under the trend of online-offline integration, "You Hao Dong Xi" also revealed that it is exploring the combination of offline and online, how to become a more stable "multi-touchpoint" scenario. On the other hand, it will face resistance from traditional e-commerce. The popularity of Pinduoduo's group-buying model is the best example. After major e-commerce platforms felt pressure from Pinduoduo, Taobao launched "Taobao Special Edition," and JD launched "JD Group Buy." Whether these responses ultimately play a decisive role, the first-mover advantages of giants will still bring considerable pressure. However, Chen Ying is relatively optimistic about this. "Brands can do it, platforms can do it. This is a change in mainstream trends, but it is hard to say who will ultimately be the biggest winner, because the social model itself is decentralized, and its Matthew effect will not be as strong as that of the previous wave of traditional e-commerce." The "decentralization" here can be understood as a social network with people as nodes. From the perspective of roles like "Selectors," each person or enterprise has a wave of people they serve, and each group has its own needs and preferences. After mixing in personalized services or the warmth of trust, homogeneous competition within the industry decreases, which also means it is difficult for one company to dominate. Traditional e-commerce giants also have the possibility of combining with new model enterprises. "This is also a way for them to release capabilities, and their supply chain momentum will be stronger," Chen Ying said frankly, and he is not opposed to such a combination. 2. Heaviness is the barrier to doing e-commerce in this era Looking at the model of "You Hao Dong Xi," whether it is the front-end sales system based on Selectors or the back-end supply chain system based on Taste Seekers, it is not a light model. GMV exceeded 80 million in two years. Although this speed is not slow, to a large extent, it may benefit from the first wave of direct sales dividends from Selectors, and category expansion also depends on the introduction and cultivation of Taste Seekers. At the same time, to reduce intermediate links and deliver goods to consumers as soon as possible, Chen Ying chose to build his own warehouses, which also means that every time they enter a new place, "You Hao Dong Xi" needs to build the warehousing and logistics system from scratch. For "You Hao Dong Xi," which wants to cover 200 first- and second-tier cities next year, how to maintain sustained growth in the future is a challenge that its heavy model brings and must face. Chen Ying said, "Heaviness is where you differentiate. Therefore, more refined iteration and management of supply chain, products, Selectors, etc., will be the main direction we focus on in the future. What the outside world sees as heavy is also the long-term value we will always adhere to. Heaviness is the barrier to doing e-commerce in this era. If you are afraid of heaviness, how can you do it?" Although many new opportunities have emerged in the e-commerce field in recent years, whether retail or e-commerce, it is still a fully competitive market. Emerging social e-commerce companies should indeed rethink and define what their barriers really are. Source: Yecao New Consumption (ID: yecaoxxf) -END-