Click to read the original article for details. Digital empowerment at the channel end (the so-called B2B platform) can improve a company's operational efficiency, but it cannot directly bring growth to the company; so what can various 'digital empowerment' methods at the consumer end (the so-called C-end) bring to companies? The various digital methods at the consumer end are essentially an upgrade of promotional methods; in a sense, they are not yet worthy of the evaluation of 'strategy' as public opinion calls it—the consumer demand satisfied by the product itself has not changed, and facing the same consumers, making consumers 'buy more' in this situation is likely (only) through promotions.
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In the process of building the so-called 'traffic pool', penetration will gradually increase, continuously adding new consumers. This is also the reason why many case data show 'surge' year-on-year; the large increase is due to a low comparison base; it will stabilize after a certain period.
As for examples of achieving growth by transforming existing products or launching new products through the accumulation of consumption data, this is not something that can be solved by the 'traffic pool' alone, so it will not be discussed here. Private Domain Traffic The term 'private domain traffic' is probably a mobile internet era version of the long-existing 'membership system'. By using methods such as one product one code, mini-programs, and official accounts to gather consumers in a so-called 'exclusive traffic pool', and by operating on consumers to achieve the goal of helping business growth—most companies probably plan private domain traffic this way. But there are two problems that may make the above plan less 'beautiful': 1. How to evaluate the input-output of the 'traffic pool' Brands do only two things at the consumer end: 'sell to more people' and 'sell more', i.e., increase penetration and increase consumption amount. In the process of continuously 'acquiring new customers' to build a traffic pool, brands have actually already conducted a round of screening: consumers willing to become members of the brand's 'traffic pool' are either customers who already have some loyalty to the brand, or 'bargain-hunting' customers who covet various promotional activities. So, under the objective fact that (stage) actual consumption demand is limited, how can continuously investing additional operation and maintenance costs in those consumers who originally had loyalty bring them more consumption increment? How should the marginal benefit of resource investment be considered? As for those 'bargain-hunting' customers, what they buy is the 'promotional intensity' rather than a specific brand; if promotional resources are invested in this part of consumers to exchange price for volume, it seems to violate the original intention of building a 'private domain traffic pool'. 2. What if private domain traffic becomes a competition for market stock? What if the fashionable concept of 'private domain traffic' becomes homogeneous in actual operation? Consider this scenario: the number of consumers in a regional market/category market is relatively stable, and several different brands in the same business format are building their own traffic pools, such as fast-fashion clothing companies like Semir, Yishion, and Kuaiyu, or dumpling restaurants like Qinghe Chuanjia, Xijiade, and Baoshengyuan, or oatmeal companies like Ximai, Nestlé, and Calgee—they are all competing for the same target consumers. At this time, under the premise that the brand's own products and services have not changed, what is the value of the so-called 'private domain traffic' to the company? Or is it just a change of form to continue the 'promotion war'—just like in reality, consumers are members of multiple brands (stores), and they go to whichever brand has the biggest discount... In addition, the official account 'Tencent Smart Retail' will irregularly publish successful cases of Tencent's 'Doubling Action' with major brands, mainly used to demonstrate how to use 'private domain traffic' to help retailers achieve business growth. Although Tencent's cooperation with China Resources Vanguard and Yonghui has not avoided various problems for retailers, it must be admitted: for retail brands such as clothing and home furnishings, Tencent's stable traffic based on mini-programs has indeed created a consumer interaction platform that can break through spatial limitations and be online at all times. However, based on the information currently available: in the published successful cases, the corresponding growth model is basically 'traffic diversion + promotion', that is, obtaining sales increases by carrying out 'discount activities' for 'more people'. And the few FMCG cases include cooperation with Mengniu during the 2018 World Cup; but based on the author's understanding of this industry and the Mengniu brand, this cooperation is basically 'more form than substance'. So if one believes that Tencent's 'Smart Retail' can bring differentiated competitiveness to companies, at least the author holds reservations. Live-streaming E-commerce Trust in the personal endorsement of 'internet celebrities' and 'KOLs' is essentially no different from trust in product brands and corporate brands; it's just a different form of expression. 'Internet celebrity product promotion' in the mobile internet era is essentially the same as 'star endorsement' in the traditional media era—even for some consumers, trust in internet celebrities has surpassed trust in mainstream official media. 'Internet celebrities' have clearly obtained a more 'transcendent' status than officials; the loyalty of 'hardcore fans' is beyond imagination. What exists is reasonable. Under the premise of acknowledging that live-streaming platforms like Douyin and Kuaishou have become and may continue to be emerging sales channels for some time in the future, how to correctly view such channels seems worth reflecting on. 1. Reporting only the good news, lacking objectivity in viewing the overall situation continuously Public opinion always makes a big deal of the 'highlight moments' of live-streaming e-commerce, but ignores the overall business performance of a brand that 'created miracles' in live-streaming e-commerce. During the 2018 Double Eleven, Kuaishou influencer Sandage... '...sold 30,000 orders of Liangmianzhen toothpaste priced at 19.9 yuan in 1 minute'; but Liangmianzhen's cumulative net profit attributable to listed company shareholders excluding non-recurring items from 2006 to 2018 was a loss of about 1.2 billion yuan... For '30,000 orders in one minute', related reports flocked to it; for 'cumulative loss of 1.2 billion yuan', at least when promoting 'product promotion', it is never mentioned... 2. Can all 'non-branded products' and 'long-tail products' achieve 'curve overtaking' through social e-commerce? An objective fact must be acknowledged: in the current domestic market environment, no matter how 'weird' a product is, someone will buy it (look at the product categories on Pinduoduo, look at the shelves of supermarkets in lower-tier markets); and based on China's huge population base, even a 'tiny' proportion of consumers placing orders in front of the screen is a godsend for small brands. So, for these 'non-branded products', are 'social e-commerce' and 'live-streaming e-commerce' really their 'strategic channels'? In fact, this market will still undergo free choice and fair competition, and there is no absolute; it is still necessary to treat this channel objectively and not deliberately elevate it. 3. Should this channel's business be systematically planned? Mature brands probably treat live-streaming e-commerce channels as promotional information release platforms for major promotion nodes, such as this year's 618 when Douyin's Beef Brother did promotions for Tsingtao Beer (mainly large price discounts). But what about those small brands? One or two internet celebrity product promotions may bring 'miracles', but if a product wants to develop in this channel for a long time, especially generic products, what is its long-term driving force? When 'old iron' fans become aesthetically fatigued, why would they continue to listen to internet celebrities recommend the same product? Are small brands satisfied with the 'one-shot deal' of live-streaming e-commerce? Is 'live-streaming e-commerce' their only sales channel? From this perspective, systematically planning one's own business is more practical and important than overemphasizing the social e-commerce trend. In summary, digital empowerment at the consumer end, at least at this stage, is more reflected in the diversification of promotional methods and refined management. It can improve the brand's internal operational efficiency and meet stage sales needs; but to obtain more lasting competitive advantages, it is necessary to conduct specific analysis and comprehensive consideration of all aspects involved in the business. Source: Sales and Market (ID: cnmarket)