Long press the QR code or click "Read Original" to register. 30+ industry experts, 100+ B2B platform founders, 800+ manufacturer and distributor friends, gather in Fuzhou to discuss the Internet transformation of the FMCG industry. Recently, I read an article by Diao Ye titled "The Disappearance of Brands," which roughly argues that in the future, category-based brands will disappear, and countless apps or public accounts will first gather a group of people, then sell them anything around the common characteristics of this group, with the key being the ability to cross categories arbitrarily. I cannot definitively say whether category-based brands will disappear, but I completely disagree with the notion that apps or public accounts gathering a group of people and then selling goods—what VCs and some influencers consider as community e-commerce, mobile e-commerce, or influencer e-commerce due to changes in traffic distribution—are viable. Most of these concepts are pseudo-concepts; they might make quick money in the short term, but in the long run, they lack user value and investment value. The Disappearance of Brands First, let me share a joke: Taobao brands. I heard that Taobao brands are now rushing to go public, and we must strongly support that. Looking at the data, if they don't go public soon, they might not have a chance. A fox set up a stone tablet on the cliff of a chicken farm, writing: "If you don't bravely fly down, how do you know you weren't originally an eagle soaring in the sky!" From then on, the fox ate the chickens that fell to their deaths at the bottom of the cliff every day. The sellers are the chickens that were fooled into jumping, and later everyone knows who the fox is. Taobao brands are the most famous pseudo-concept in Chinese e-commerce history. To lure a large number of people into the trap, they carefully crafted the halo of success for Taobao brands through traffic preference policies, attracting a large number of sellers who have never truly operated a brand but believe that brands can be built on traffic, to recharge Ma Yun's faith. "Boss, look at that Taobao brand selling clothes for hundreds of millions a year; let's open a Taobao store too!" This is the most famous cannon-fodder mindset in e-commerce history. In essence, a Taobao brand is a candle flame, only lit to attract more moths. The method is simple: artificially channel large amounts of traffic to certain sellers, giving them extraordinary selling capabilities. If Taobao brands were truly brands, why can't they sell well once they leave Taobao? Because they are not brands at all; they haven't directly occupied users' minds, haven't lowered the psychological threshold for consumption, and haven't established direct connections with users. They just have a good relationship with the mall and got a prime location. If a commercial pedestrian street happens to be built in front of your house, does your stall become a brand? Traffic is valuable for selling goods, but it has no direct value for brand building. Taobao brands have spent several years proving this. So when Diao Ye and some VCs believe that changes in traffic distribution mechanisms will lead to the birth and death of brands, I disagree. No matter how channels change, the way brands are built remains unchanged for a hundred years; only the way goods are sold changes. Traffic cannot build a brand. Your E-commerce Approach Has No Future But haven't various apps and influencers sold a lot of goods? Hasn't this round of traffic shifting from BAT to various self-media, apps, or so-called communities changed the e-commerce landscape? For example, Luoji Thinking, various influencers, and even WeChat businesses have made a lot of money; I don't deny that. China is a vast country, and the development of consumption patterns always goes through some inevitable stages: Consumption concepts are immature, and a large number of novice users will pay for low-value, high-hype products. With a large population, the absolute number of target audiences in each niche is very large. Channels are complex, making it hard to unify the market; any brand that captures the dividend of a certain channel can soar. Tolerance is high. If a director makes a bad movie and then a good one, everyone will forget the bad one because users with low spending power can only afford movies. There are many "losers." As long as it's cheap enough, it can attract users who will compromise on anything. Information and credit are opaque, and the cost of counterfeiting is low. It hasn't been long since Chinese people truly began to have consumption power beyond survival, and consumer culture is still quite immature. Some people who suddenly became rich don't even know how to enter high society. In a country with immature consumption concepts, users might feel proud of buying a high-configuration domestic phone, a Luoji Thinking membership, or even a limited-edition piece of clothing produced by an influencer in Dongguan. This seems a bit surreal but is very real. Every wave of traffic dividends brings some early movers who make a fortune. It's nothing special; China has a large population, and smart people are in short supply. I'm not against making quick money; if you don't take it, others will, so you might as well take it yourself. Dividends might help an internet company that happens to have a good product, but they rarely build a consumer brand. In my view, this round of e-commerce brands or business models derived from changes in traffic distribution are all selling models, and none of them have a particularly bright future. Who Will Have the Last Laugh? Why do I always emphasize brands? Looking at the history of comprehensive business development, successful retail models that survive and win depend on two points: brand and efficiency. Brand means: no matter where you are, I will find a way to buy. Efficiency means: no matter what I sell, my efficiency is the highest. Even on the Taobao platform, traditional brands, with stronger ability to bear traffic costs, easily replaced most e-commerce brands once the platform matured. The e-commerce brands that survived also developed the vitality of traditional brands. Why am I not optimistic about various concepts of e-commerce? First, I see that new business projects derived from this round of traffic distribution changes are no different from the Taobao brands of the past. Everyone is just operating traffic, not brands and users. This is a common problem among internet entrepreneurs. I've seen Luoji Thinking discuss business models multiple times, always discussing how to sell goods, not how to build consumer brands. So I'm not optimistic about Luoji Thinking's long-term monetization ability. Once Luo Pang loses his novelty, this traffic monetization model will reach its end. Most influencers, apps, or so-called communities are no different from Luoji Thinking. I once communicated with an influencer friend and suggested she either focus on cultivating a brand or harvest the results while she's young, take the money and run. Beauty fades; don't talk about sentiment. Because I believe all selling-based business models, when competing on retail efficiency, will eventually lose to Taobao and JD.com, with no exceptions. So, friends doing apps, self-media, or communities, don't be too complacent. Look at Meitu Xiuxiu Group: 400 million active users, explosive traffic, yet to this day they're not doing well; they can't sell anything except ads. Even channels have their own brands. Walmart is an efficiency-based channel, while 7-Eleven convenience stores and Watsons are brand-based channels. Their prices aren't particularly low, but their brand connotation and cognitive inertia are strong. I think most self-media or communities selling goods are unlikely to become efficiency-based channels; brand-based channels are a direction to strive for. If you want to sell everything, you'll end up selling nothing. More importantly, the so-called scenario-based selling by self-media is a temporary phenomenon. People living on the internet only see changes in traffic aggregation, but not the trends on the supply chain side. Supply Chain Forces Retail Industry Elimination Global Labor Force Change Trend Chart First, let's look at this chart, which shows the global labor force change trend. The inflection points for most countries appear at relatively similar positions, with some countries earlier. Overall, the period of rapid growth in the global labor force has ended. Special attention should be paid to that thick, dark curve: China. Around 2013, China entered the inflection point of a cliff-like decline in the labor force, and the decline speed is astonishing. Obviously, the country has noticed the shortage of people and hastily opened the two-child policy, but from the global trend, even fully opening up birth rates cannot reverse the population decline. How should we view this curve? Experts believe that this decline in the labor force will lead to a global economic pattern: Japanization. On one hand, China's GDP has been rising and maintaining high growth, becoming a strong economy. On the other hand, the labor force is declining, unable to meet the demand for labor in economic growth. This will cause changes in manufacturing. Industries with stronger cost-bearing capacity and more decent business models will absorb the labor force first, while low-value-added industries will be eliminated and transferred. Therefore, the tertiary industry will squeeze out the secondary industry's living space. People would rather work at an Apple store than produce iPhones at Foxconn. In the future, workers on production lines will earn much more than white-collar workers. Based on the trend of labor force decline, the manufacturing that can survive will have these characteristics: Very high efficiency, low dependence on people, reducing costs through scale, such as highly mechanized assembly lines. Very high value, able to accept high labor costs and even flexible production, such as luxury goods. In the future, even flexible production will be based on moderate flexibility supported by overall scale. Products tailored to each individual are impossible in most industries. The mobile phone industry has moved quickly in supply chain aggregation. Small-scale phone manufacturers have been gradually eliminated. Now, if you want to produce a few hundred phones, you might not find a manufacturer, or even parts. Many industries will see such scale trends in the future. Supply Chain Changes Force Retail Industry In the past, China had the world's largest production base and the cheapest labor force, supplying cheap goods to the world at any time. This supply chain advantage benefited small sellers by allowing them to produce various sources of goods at any time (even inventing the globally unique drop-shipping model). Therefore, China also has the most sellers in the world—so many that the market can't accommodate them. In the early days, Taobao basically developed on cheap counterfeit goods. Up to now, most of China's e-commerce has survived on the demographic dividend, with not only very low product and labor costs but also no taxes. But in the future, everything will change. First, the supply chain aggregation effect brought by the sharp decline in the labor force will destroy this status quo. Because upstream small-scale manufacturing disappears, downstream retailers without scale and brand influence will also struggle to survive (without supporting supply chains). Second, after consumption upgrades in all commercial societies, the consumption habits of mainstream users will ultimately point to branding, not personalization. In mature commercial societies, people are increasingly busy and have no time to browse. Consumer brands are the most efficient way to consume because brands mean all services are more complete and reassuring. Therefore, in developed commercial countries, "small and beautiful" cannot become the economic mainstream. Third, due to information overload and cognitive capacity limits, consumer brands in any field will tend to aggregate (people simply don't remember that many brands). Only a small number of brands with the highest sales efficiency (also representing the strongest recognition) will survive, while small brands keep pushing each other, dying on the beach in turn. Fourth, as commercial society matures, the retail industry will have more laws and regulations to protect user interests, including taxation, qualifications, and safety. At that time, self-media won't be able to organize sources of goods casually, and might even lose the qualification to sell. For example, health-related products, from a regulatory perspective, simply cannot be sold casually by self-media. In summary, whether it's the trends on the supply chain side or the development trends of consumption concepts, all these changes lead to only two survival paths for retail enterprises (online or offline): Branding: no matter where you are, I will find a way to buy. Efficiency: no matter what I sell, my efficiency is the highest. E-commerce projects that fail to achieve these two points will be eliminated by supply chain changes and consumption upgrades within the next five years. Look at Europe, the US, and Japan, especially Japan, which is culturally closer to us. These countries, which have experienced labor force declines and completed industrial transformation earlier, will be a microcosm of China's future business. What survives will be influential, scaled brands. Occasionally, a "small and beautiful" so-called century-old shop will be treated as rare news. If your business model is related to product distribution, I wish your project can go public within five years... So, it seems that doing e-commerce (or retail) is not very promising. Yes, according to this population trend, e-commerce is really not a promising career; it's far worse than the entertainment industry. But since so many people have entered this chicken coop, we have to believe in a chicken soup for the soul: any industry has opportunities at any time, as long as your methods are a bit more correct than others. Opportunities in E-commerce I've written thousands of words, and this bowl of negative chicken soup is a bit big, seeming like there's no opportunity in e-commerce. But that's not my original intention. After all, my current startup project is also related to e-commerce, and I've spent a long time thinking about the path to success, how to surpass most traditional competitors at the strategic level. I believe that on the other side of negativity, there are huge opportunities. After all, when society undergoes major changes, the first to die are those who cling to traditional baggage due to vested interests, while those who bravely embrace the new world usually have decent luck. On the bright side, human consumption behavior won't disappear; it will become more vigorous. I think that based on e-commerce, consumer brands, and even extreme single products, the following directions are full of opportunities: Changing users' social image Enhancing life happiness Bringing users a sense of security Changing the original dimension of a product (light luxury or high-end) Changing the value chain Due to space limitations, I'll analyze these five directions in future articles. Additionally, even if these five directions are met, entrepreneurs still need to solve the traffic problem. Without traffic, nothing exists. E-commerce projects, even if they seize first-mover advantages, will eventually face homogenization in products and channels in most industries. In the end, they can only compete on user mind share and per-traffic cost, because product costs are already fixed; only sellers with low traffic costs can survive. The traffic dividend in the mobile era is basically over. Any company buying traffic from any channel faces the same cost. Only by implementing a decentralization strategy can you obtain lower-cost traffic than competitors. In the post-dividend stage, any e-commerce project that fails to decentralize will have a very high mortality rate. The decentralized communication model for consumer brands includes six key elements, which I've shared in past lectures. I hope to write an article about them in the future. Decentralized communication is an extremely important survival skill for all e-commerce projects. In any case, newcomers should be cautious about entering various forms of e-commerce, as the overall trend is not optimistic. The various success methodologies discussed online for years are mostly pseudo-methodologies exported by platforms (like those direct-drive car tips), designed to make you sink deeper into the platform. Most people can't even discern the validity of these theories, let alone start a business. New Food Era · New Distribution —— 2016 China "FMCG + Internet" Summit Forum —— This is a grand event focused on how FMCG industry channels will transform under the trend of Internet+ transformation Agenda 09:00-09:30 Registration 09:30-09:35 Host opening 09:35-10:05 2016 China FMCG Industry Trend Analysis Report - Zhao Bo 10:05-10:25 FMCG Enterprise Transformation Strategy and Path - Liu Chunxiong 10:25-10:45 Opportunities and Challenges from FMCG Channel Reform - Liu Zhao, CEO of Waiqin 365 10:45-11:25 Alibaba Retail Link Full Empowerment - Guo Kunkun, Alibaba Retail Link 11:25-12:00 Roundtable Forum - Brand Transformation: Improvement vs. Reconstruction? (Guests TBD) 12:00-13:30 Lunch 13:30-14:00 Distributor Transformation: City Distribution Trends - Wang Qi, CEO of Weijie City Distribution 14:00-14:30 Roundtable Forum - Why Should Distributors Do Logistics in Transformation? 14:30-15:00 Detailed Explanation of Zhongshang Huimin's One Machine, Two Wings Strategy - Su Xiaoxin, VP of Zhongshang Huimin 15:00-15:30 Detailed Explanation of Zhanghe Cloud Factory Strategy - Yang Lixiang, Zhanghe Tianxia (Content TBD) 15:30-16:00 Supply Chain Finance as a Lubricant for B2B Driving Traditional Business - Chen Xian, CEO of 51 Order 16:00-16:30 2B Investment Principles and Approaches - Xu Xiaoping, Founder of ZhenFund (Guest TBD) 16:30-17:00 Small Retail, Big Opportunity: China's Retail Transformation and Upgrade - Wang Jianfeng, GM of E-commerce Division, Yurun Group 17:00-17:30 Roundtable Forum - Who is the King of FMCG B2B Models? (Guests TBD) 18:00-20:00 Dinner For manufacturer and distributor friends who want to transform, this grand event is not to be missed. Interested friends can long press the QR code below or click "Read Original" to register. Registration: Long press the QR code below or click "Read Original" ↓↓↓ Click "Read Original" [Register]