Previously, any business system related to communities was called private domain traffic. But during this year's epidemic, when communities were closed and e-commerce had no logistics, it was the 'community groups' of traditional stores that became the main channel connecting residents. Traditional channels have always been regarded as public domain traffic. This is a major step for communities moving from the commercial fringe to the mainstream, from private domain traffic to public domain traffic. In December 2019, I predicted this direction in my article "The Disappearance of Community Dividends, the Real Beginning of Community Commercialization". The COVID-19 pandemic only accelerated the pace of communities entering public domain traffic. -01- "Community+" and "+Community" There are two forms of community commercialization: "Community+" and "+Community", representing the commercial forms of private domain traffic and public domain traffic respectively. As private domain traffic, the business logic of communities is "Community+". In "Community+", the community is the main channel, and other tools are auxiliary. Private domain traffic forms a closed system. For example, early WeChat business (micro-commerce) was a typical multi-level community distribution system, and private domain traffic still has traces of this. Multi-level distribution is community plus community. As public domain traffic, the business logic of communities is "+Community". The community groups that played an important role during the epidemic are "community store + community", in the form of "+Community". The community store is the main body, and the community is the connecting bridge, the amplifier, and the router. -02- Community+: Private Domain Traffic As private domain traffic, "Community+" has roughly evolved into three models in business. The early stage was the WeChat business model, typical multi-level community distribution, recruiting people and groups. In the end, WeChat business had no friends left, and even this group itself didn't want to call itself WeChat business. In the middle stage, "IP + Community+" formed, where IP enhanced the stickiness of the community. At this time, the community had distributed characteristics. The boundaries of distributed communities far exceed those of multi-level distribution communities. Now, private domain traffic has evolved into a more complex system of "IP + Community + Offline", and some even have offline stores, but the stores are just embellishments. Therefore, many people now cannot distinguish between private domain traffic and public domain traffic, and simply call all business systems with community elements private domain traffic. A couple of years ago, didn't WeChat business also call itself new retail or social e-commerce? Borrowing new concepts is a characteristic of the community business system. Among China's three major traffic systems, the community business system has more trainers (lecturers) and faster concept updates. I have always emphasized that the boundaries of private domain traffic are limited and the ceiling is very low. It is difficult to count the transaction volume of private domain traffic, ranging from over 600 billion to 2 trillion. In 2019, China's total retail sales of consumer goods were over 41 trillion, with private domain traffic accounting for between 1.5% and 5%. Private domain traffic has several characteristics: First, the community is the trading platform. Of course, current technical means can also guide traffic to other platforms, such as mini-programs; Second, private domain traffic achieves the integration of cognition, transaction, and relationship in a single spatial dimension of the community. Of course, because it is indeed difficult to achieve the trinity in the community space, more "Community+" appears, which is to make up for the shortcomings of multi-level community distribution; Third, there are special requirements for products, such as significant differentiation and high gross margins. -03- +Community: Public Domain Traffic The business practice during the epidemic is typically characterized by "+Community", such as "convenience store + community", which we call community groups. Hunan's Bubugao quickly built a community group system in 48 hours, which is "store + community". Even Hema, which has an APP, also established "store + community". The brand live streaming that was popular during the epidemic is also different from the influencer live streaming on Douyin and Kuaishou, but rather "channel + community + live streaming". Without a channel path, where would brands get live streaming traffic? Brands and retailers that had no 2C access in the past suddenly connected with users (2C) through "+Community". Traditional channels are exactly what we call public domain traffic. Traditional marketing is 2B, but this time through "+Community", 2C was achieved, and community commerce entered public domain traffic. Since 2017, a group of new marketing experts, such as Teacher Zhang Xuejun, Teacher Fang Gang, Teacher Niu Enkun, and Teacher Ding Ding, have been practicing connecting three-dimensional space through communities. The basic path is: terminal + community + network. The nationwide community practice during the epidemic, in just one week, advanced much faster than our past three years of promotion. -04- Market Share of the Three Major Traffic Sources Now traffic can be divided into three major types: First, private domain traffic. As mentioned earlier, it accounts for approximately 1.5% to 5% of total retail sales of consumer goods. Second, commercial domain traffic, i.e., platform e-commerce traffic. Some people used to classify it as public domain traffic, but we think that's problematic. Because platform e-commerce traffic has to be purchased, and it is a relatively closed traffic system. How large is commercial domain traffic? According to the National Bureau of Statistics, e-commerce accounted for 23.1% of total retail sales of consumer goods in 2019. Note that this data should include all e-commerce, not just platform e-commerce. Therefore, it should also include the share of private domain traffic. Third, public domain traffic, i.e., traditional channel traffic. In the FMCG industry, the stock of public domain traffic is particularly large. Teacher Fang Gang and I estimate that the share structure of FMCG is 1990, that is, private domain traffic accounts for 1%, commercial domain traffic accounts for 9%, and public domain traffic accounts for 90%. Of course, this is similar to the Pareto principle, not an exact share structure. -05- Successful Case 1: Xiaobaizuan Facts are more convincing than reasoning. Just before the Spring Festival, I happened to observe a case in Hunan. The brand is called Xiaobaizuan, and the founder is Liu Chao. Once, Liu Chao visited a baby care store in Changsha. Liu Chao had placed a batch of goods worth several thousand yuan in the store. After several months, they hadn't sold, and the store owner asked for a return. Liu Chao proposed on the spot, "Can I help the store owner promote?" Because the store had a relatively stable user group and had also built a community. So, Liu Chao applied her proficient community operation skills, not only helping the store owner sell the remaining goods, but also reordering, and recommending a batch of stores for Liu Chao. Liu Chao saw this opportunity, separated this business from the original system, and established an operation team to help stores with community promotion. Sometimes, one backend staff member could help 20 stores with community promotion in a day. There are two points in this case that are very important: First, the "dual IP strategy". Xiaobaizuan is a B-end IP, and it is difficult to directly do 2C. At the same time, the store owner is also a localized IP. If the store owner is not an IP, her community value is not great. Therefore, "store + group" cannot be done by all stores. In 2018, when I inspected Three Squirrels' alliance store strategy, it was also a "dual IP" strategy. Second, Xiaobaizuan's backend team. The store owner is a localized IP, but she doesn't know how to operate the community. The community has become a standard business configuration, but professional operation is not something everyone can do well; otherwise, the "dual IP" would lose its value. How to interpret the Xiaobaizuan case? Liu Chao thinks it's a private domain traffic play, while I firmly believe it's public domain traffic. Whether it's private domain traffic or public domain traffic depends on whose standpoint (angle) you take. The store's users are, of course, the store's private domain traffic. But for the brand, unless it's a specialty store, you are just one of the store's suppliers. Therefore, the store's traffic is the public domain traffic of the brand (supplier). The stores that Xiaobaizuan cooperates with had normal sales before cooperating with Xiaobaizuan. Xiaobaizuan only activated the store's traffic and increased the store's sales by supplying new products and professional operation. The store's traffic can be used by all suppliers. Whoever can activate users and create incremental sales, the store is even willing to contribute existing sales to the supplier. My conclusion is: The store's private domain traffic is the supplier's (brand's) public domain traffic. For Xiaobaizuan, the form of traffic is "store + community". Whose community is it? It's the store owner's. Xiaobaizuan didn't build stores or groups; it's just a supplier (brand) that activated the store's community, so it took a share of the traffic. When talking about "private domain traffic" and "public domain traffic", you must have role awareness. Whose private domain traffic and public domain traffic is it? The commercial domain traffic mentioned earlier is both the platform's private domain traffic and the brand's (merchant's) commercial domain traffic. The traffic of new retail platforms is both the platform's private domain traffic and the brand's (supplier's) public domain traffic. My traffic classification is mainly from the brand's perspective. From the retailer's perspective, all traffic is private domain traffic. From the brand's perspective, the 2B of traditional channels is public domain traffic; direct 2C through communities is private domain traffic; and 2C through platforms is commercial domain traffic. The community groups during the epidemic were first 2B (distribution to stores), then 2C (through communities), so this is the brand's public domain traffic. -06- Successful Case 2: Lidu During this epidemic, two brands performed very well: one is Tsingtao Beer, and the other is Lidu. Because they were prepared and had laid out plans early. Most of the community partners that followed later were just improvising. The day before yesterday, Lidu's chairman "Commander Tang" said that Lidu's sales during the epidemic increased by 170% compared to the same period, and online sales increased by 400%. That's a very good performance in the liquor industry. On January 12, 2019, Lidu used the annual "King of Wine Competition" to launch an online activity. They spread the offline activity through communities and then placed orders through the cloud store, creating a performance of "2.8 million in 28 minutes", and they tasted the sweetness. In September 2019, Lidu launched a completely new model. The model's characteristics are: offline experience + community communication explosion + cloud store ordering + logistics distribution. During this year's epidemic, Lidu held a "February 2 Online Sealing Ceremony" and did 7 days of live streaming. Immersive experience, three-level experience, this is Lidu's specialty. Therefore, Lidu's offline partners must be Lidu fans. This is similar to Xiaobaizuan's "dual IP strategy". Lidu's community operation also has a team, namely the Chief Communication Officer. However, Lidu cares more about "county-level communication explosion". Teacher Fang Gang proposed "do a good job in one store offline, do a good job in one county online", which refers to Lidu. Lidu's play typically connects three-dimensional space. From offline experience, to community communication, to cloud store, and finally logistics distribution. Lidu's partners really have "no funds, no inventory". Similar to Xiaobaizuan, Lidu uses "partner + community", but it helps partners activate the community. In October last year at the "Tianjin Autumn Sugar Fair", I discussed this issue with Lidu's senior management team. I said, "This is an ideal business model for the future." Because the model had basically matured, it came in handy during the epidemic. In Lidu's new marketing system, offline experience is the core. The characteristics of rendering experience are: deep experience, strong cognition, high communication. Because the experience is highly communicable, there is material for community operation. Anyone who has experienced Lidu is willing to check in and post on WeChat Moments. -07- The Evolution of Community Commercialization Community commercialization started with WeChat business. WeChat business is community group distribution, so it is naturally private domain traffic. Community commercialization became mainstream starting with niche products, such as craft beer. Niche products use vertical communities, i.e., communities with common interests. Whether vertical communities are private domain traffic or public domain traffic depends on whether the offline store (partner) is a specialty store; if it is, it's private domain traffic. Now we have entered the "community group" stage, suitable for mass products. In business, a community can be simply understood as a residential area. The characteristic of mass products is a very small sales radius. For example, if we go to buy a pack of instant noodles, a 5-minute walk is the business circle radius. Therefore, such stores are community stores. The biggest benefit of community commerce entering the "+Community" model is the full realization of brand 2C. The only difference is that private domain traffic and commercial domain traffic achieve 2C directly in one step. Public domain traffic is first 2B, then 2C. Therefore, we also call it BC integration. In 2019, e-commerce already accounted for 23.1% of total retail sales of consumer goods. How can traditional brands and traditional channels become internet-based? In the past, we always thought that internetization meant e-commerce, which I think is the thinking logic of platform e-commerce. Teacher Shi Wei believes that business has three major links: cognition, transaction, and relationship. Among them, the most critical link is cognition, which determines transaction. The advantage of platform e-commerce is that it facilitates transactions, but cognition is its weak link. This is where e-commerce is widely criticized, even more harmful than low prices (price chaos). Through the "store + community + cloud store" method, traditional brands and traditional channels can achieve 2C, and the 2C of community channels has an advantage over e-commerce 2C in terms of cognition. As long as the three-dimensional space is connected and cognition reaches 2C, then whether the transaction occurs in the offline store, community, or network is no longer that important. In "store + community + cloud store", the middle link is the community. Therefore, we have always emphasized that the community is the router for connecting three-dimensional space and also the amplifier of traffic. When traffic in three-dimensional space reaches its peak and traffic costs remain high, connecting three-dimensional space is conducive to leveraging the advantages of each spatial dimension in cognition, transaction, and relationship, thereby reducing traffic costs. Source: Teacher Liu's New Marketing (ID: liuchunxiong1964)