How can dealers use their existing resources to convert public traffic from three spaces into their own private domain traffic?

Traffic in Three Spaces Before the advent of internet e-commerce, brand owners had to solve two problems to sell products to consumers: communication with consumers (awareness) and product distribution (transaction).

In the past, communicating with consumers was relatively easy for brands—just advertise on centralized media like CCTV. However, distribution was more challenging because China's distribution channels are complex, vast, and fragmented, forming a multi-tiered, three-dimensional market. To get products into consumers' hands, brands needed a large number of dealers to deliver goods to millions of small retail stores. Although the channel is multi-tiered, at the micro level, a dealer's business is one-dimensional, typically serving only local retail channels, with few dealers covering multiple cities or regions.

With the internet, the logic of user traffic has shifted: from a single physical space to a coexistence of three traffic modes: offline, online, and social. The term "traffic" has expanded from footfall to include online clicks, visits, shares, and follows.

Here's a detailed explanation of the three spaces of traffic:

First Space: Offline Traffic (Location-based Traffic). This refers to the number of vehicles or pedestrians passing a specific point within a given period. Traffic volume depends on the location. The value of a store is directly proportional to its traffic; high offline traffic areas are typically transportation hubs, key accounts (KA) shopping districts, etc.

Second Space: Online Traffic (Platform-based Traffic). This refers to the number of visits to websites or apps within a given time, including page views. Common online traffic sources include B2C e-commerce platforms like JD.com and Tmall, content aggregation platforms like Toutiao, and video platforms like Youku and iQiyi that aggregate content and users. These platforms have significant centralization characteristics; traffic volume depends on the platform's distribution, and the platform controls allocation.

Third Space: Social Traffic. This refers to the information flow generated by user interactions. Examples include WeChat, Weibo, influencer live streaming, KOL communities, influencer e-commerce, micro-commerce, and content e-commerce. Strictly speaking, this is typical ecological traffic with multiple species coexisting, no centralized distribution mechanism, and obvious decentralization.

Traffic essentially represents user attention, which is a scarce resource. At any given time, if consumers focus on online, they won't focus on offline. So, with total traffic constant, the three modes compete to varying degrees. If traffic is likened to a river, social traffic clearly occupies the upstream, platform traffic the middle, and location-based traffic the downstream.

It's evident that platform and social models are increasingly encroaching on offline traffic. For traditional trading and distribution companies, relying solely on offline business is far from sufficient from a developmental perspective. Yet most dealers still operate only in the first space, doing location-based traffic business.

From a supply chain perspective, platform-based transactions are an unstoppable trend in channel transformation. If traditional distribution merely moves goods, its value may be limited.

Dealer Value and Capabilities Dealers typically possess supply chain capabilities, including warehousing, logistics, capital, marketing, finance, and operational organization. Their role involves providing upstream manufacturers with capital advances and inventory, while offering downstream retailers and even some consumers supply chain and exclusive products. They are small but complete.

Currently, these capabilities serve traditional offline retail, but with slight adjustments, they can fully support business across all three spaces. This article focuses on how dealers can use existing resources to convert public traffic from three spaces into their own private domain traffic.

Public Domain Traffic vs. Private Domain Traffic Whether doing business offline or on online platforms, the core is leveraging channel traffic to reach consumers. This traffic often doesn't belong to the brand or dealer. To access it, brands must pay the platform, hence common fees like entry fees, barcode fees, display fees, store anniversary fees, and online fees like Zhitongche and drill ads. These are essentially costs for purchasing traffic; anyone who pays can access it. This traffic is public, so we call it public domain traffic.

Public domain traffic often uses bidding models. As traffic becomes scarcer, prices rise. In 2013, Taobao's customer acquisition cost was about 30 yuan per person; by 2017, it had soared to 250 yuan per person, a cost increase most companies cannot bear.

Private domain traffic, unlike public, doesn't require third-party purchases. Once acquired, you don't pay extra for future access. This controllable traffic is private domain. WeChat friends, official account followers, and mini-program users are examples.

Of the three spaces, the first and second are public domain, while the third is private domain. Recently popular community e-commerce, micro-commerce, Xiaomi's online mall, and many influencers opening their own stores are all essentially building private domain traffic to do business.

How to Build Private Domain Traffic? First, we must recognize that traffic exists everywhere, and dealers have the ability to reach it. Supermarket shelves, store displays, and our salespeople encounter many direct or potential buyers daily.

However, in the past, the transaction ended after purchase, with no deeper relationship between dealer and user beyond the product. But if we change approach and gather these potential consumers into our own traffic pool through promotions like group buying, fission, coupons, flash sales, gifts, and one-code-per-item, getting them to follow our official account or become friends with our salespeople, we gain the ability to communicate beyond physical space. There are many ways to store traffic: personal WeChat accounts, communities, corporate official accounts, service accounts, and Weibo can all serve as traffic pools.

We see Dongpeng Special Beverage aggregating over 20 million fans through one-code-per-item; Pinduoduo aggregating tens of millions of UV through group buying; and community group buying aggregating local residents into WeChat groups for commercial monetization...

As long as you can aggregate small, scattered traffic, you have business opportunities.

Operations Of course, user operations aren't just about rudely pulling groups to sell; they require certain skills.

To convert users from attention to transaction, user operations are necessary. Different traffic pools require different approaches. Below is an operational conversion chart I used for a domestic company in 2013-2014, which readers can reference:

The general principle isn't complex, roughly divided into four parts: Experience → Aggregation → Refinement → Conversion.

As mentioned, aggregation isn't difficult; dealers can easily gather users. But the fans gathered aren't necessarily your users. You need to refine your target users through various means, such as official account articles, coupons, offline fan meetings, new product discounts, and Weibo reposts.

Once users reach a certain scale, conversion opportunities arise. Dealers can operate their own e-commerce through self-built mini-programs, WeChat malls, and promotional tools like group buying and fission.

The logic of traffic has changed; channels have evolved from one-dimensional to multi-dimensional, and the boundary between channel and marketing is blurring. Dealers lacking e-commerce operation capabilities, user management skills, and the ability to do integrated online marketing in local markets will inevitably be eliminated in future intense competition.

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