Preface Business opportunities are fleeting; how can enterprises seize them? Retailer Lao Wang is troubled recently because many enterprises are talking about digital transformation, but without it, his company hasn't gone bankrupt; with it, results won't appear quickly. Facing the wave of business evolution, Lao Wang and his team haven't even figured out where the door to digital transformation is. Currently, the relationships among enterprises, employees, consumers, supply chains, and industries have evolved from the linear relationship era of Consumption 1.0 to the intersecting era of 3.0, with increasingly diverse and close connections. This diversity and closeness provide more mature soil for commercial digitalization. Although digitalization is not the sole factor for a company's success, and purely discussing digitalization won't make a company stand out immediately as an industry leader, the question of whether to do it or not is a big one. However, despite being a perplexing issue, digitalization can help Lao Wang's company fully leverage the next major opportunity: seizing the "fleeting moments" of business. For this reason alone, it is highly attractive to Lao Wang. Because: consumer behavior has become unpredictable and even fleeting. If digitalization isn't used to capture these "fleeting moments," time as a variable might eventually deliver a heavy blow to the enterprise. Visions of Digital Transformation Vision One: Lao Zhang runs an international beverage company that treats hyper-personalization as a key factor for market growth. He has deep data cooperation with several retail brands, providing exclusive products to some of them. His company mainly produces milk-containing beverages. Unlike other manufacturers that focus on increasing beverage thickness or launching low-sugar or sugar-free options, he differentiates by offering different flavors based on regional differences, especially for overseas markets. For example, he incorporates special local ingredients (like Thai lemongrass) into beverages to better suit local tastes, and even directly sources specific local ingredients to cater to local consumer preferences. △ Thai lemongrass He even launches limited-edition seasonal beverages to celebrate local holidays in specific markets, and these beverages may only be sold for a very short period each year, just a few days. The solid backing that enables Lao Zhang's company to execute these refined product and market strategies is their use of targeted consumer opinion platforms to survey and collect feedback from consumers in various regions, gather corresponding data, and use proprietary analytics platforms to continuously generate new user insights. The factory is also equipped with IoT sensors that allow flexible operations. By adjusting the formula via computer, it takes at most 2-3 minutes, even considering external variables like weather and air pressure, to ensure the finished beverage tastes exactly as expected. Lao Zhang's company is an excellent example that vividly demonstrates how FMCG enterprises can precisely seize the fleeting moments of personalized markets. Vision Two: Lao Liu manages a large retail convenience store company. Based on end-user feedback, the stores are suitable for operating fresh food products. In capturing consumers' "instant needs," take sushi as an example. The company uses a mall application where users can customize their orders online by choosing ingredients other than rice, sending the customized order directly to the sushi production line, where robots make it to meet consumer demand promptly. Robots can standardize the entire sushi-making process, with an average serving speed 20 minutes faster than competitors. Through optimized cold-chain delivery, multiple deliveries per day ensure efficient arrival to consumers. Thus, even if N brands of chain convenience stores open on the same street, Lao Liu's brand clearly holds the strongest competitive advantage. In fact, the above are beautiful visions for digitalization in the new retail and FMCG industries. Although in reality, many enterprises are still far from the true path of digitalization, and most are still struggling to explore, these beautiful business scenarios may, with technological development and the evolution of management thinking, appear extensively in our daily consumer lives in the near future. What is Digital Transformation? Technological progress has made people's lives more personalized, diverse, and rich, and in business, many small opportunities and small markets emerge. Can traditional enterprise organizational structures and business processes seize these opportunities? Can these small markets, or "instant markets," be timely identified and satisfied by enterprises? Some enterprises have already used digital means to directly contact consumers, and data analysis capabilities are increasingly powerful. Enterprises today have an unprecedented depth of understanding of current and potential markets. With complex backend technologies, enterprises can quickly adjust business directions and provide market-required services at an increasing speed. If enterprises can organically integrate technology, business, marketing, supply chain, and other functions, they have the opportunity to offer new products or services for "instant markets." This not only means meeting specific consumer needs but also meeting consumer needs at a specific time period, and it means enterprises have found the key to building a deeper moat. You have it, I have it better; you have it better, I am faster; you are faster, I understand; you understand, consumers have already purchased, experienced, and spread it at my place. Always one step ahead. How to control "instant markets" is both an art and a science, and behind it highlights the need to build an enterprise based on digitalization that can provide personalized products and services to consumers according to specific contexts. Okay, the question finally arises: What exactly is digital transformation? After professional tracing, digital transformation has gone through the following three stages over the decades: Stage 1: Electronization Standardizing established business processes through technical means to achieve the goal of improving efficiency. For example, hiring a software company to implement software and directly solidify the enterprise's original management model and processes. This stage has no business or process innovation; it only solidifies processes. Stage 2: Informatization Redesigning business models and processes, and achieving value chain integration and industrial competitiveness enhancement through informatization means. For example, restructuring and optimizing business processes to significantly enhance competitiveness, such as redesigning and optimizing the marketing business segment. Stage 3: Digital Transformation Using digital technology to reconstruct the value chain, reorganize business processes, or create new ecosystem platforms. For example, connecting suppliers, employees, consumers, and even the industry and third parties, breaking the limitations of original business models and processes, and implementing digital transformation with the goal of better creating value by reconstructing the value chain or system ecosystem. At this point, there is a clear feature: All people on this chain are united, forming a new small ecosystem and a community of shared destiny. Currently, the digital transformation we discuss falls under the concept of Stage 3. In the direction of digital transformation, based on successful cases at home and abroad, the main aspects are as follows: 1. Reconstructing business models: For example, JD.com and Alibaba's big data businesses use data analysis to discover new business opportunities. 2. Optimizing operational efficiency: For example, FMCG brand companies or retail enterprises use store visit management systems to collect real-time behavioral data of sales representatives and supervisors, improving sales and store management efficiency. 3. Strengthening customer communication: Here, we must cite the example of Haier. Haier created a hit product through user interaction and flexible production, based on big data to enhance business insight and connection, thereby achieving production optimization and developing more personalized and viral products for users. 4. Empowering employee development: Supporting mobile office work, fragmented time learning and training, and skill upgrading. For example, popular online learning platforms, collaborative work platforms, and knowledge-sharing platforms. 5. Empowering upstream manufacturers: For example, a retailer's data forms market analysis for a certain category or product, and the results feed back to upstream manufacturers to better develop products that meet consumer demands, not only shortening development time and saving costs but also improving the success rate of product development. 6. Users as partners: In the future business world, every user could be your salesperson. For example, if you buy a house from Vanke, you automatically become a Vanke sales recommender. If other users buy houses through your recommendation, you will receive a certain rebate. What are the Manifestations of Digital Transformation? Digital transformation manifests differently across industries. For new retail and FMCG, the manifestations are as follows: First, IoT-enabled The mission of the Internet of Things is to solve the information exchange problem among trillions of entities. By digitizing every object and creating a digital twin world, it optimizes the comprehensive operational efficiency of the original system. The manifestation of IoT in the entire retail circulation chain: For example, the beef hamburger you eat at noon; the beef's safety traceability information lets you know where the beef comes from, its growth conditions, which company processed it, and how it reaches your table. How is this achieved? Because of smart animal husbandry, each cow can have a unique identity tag from birth. For example, low-power IoT can allow a battery to last 3-5 years, fully covering a cow's growth period. With records of the cow's life, it enters a smart factory. Based on the production environment and feed quality, the meat is graded, and processing is done for this identified cow. The use and flow of each piece of meat are clear until it reaches your table. With these, consumers can achieve product traceability to the greatest extent. It may seem the impact is not significant now, but with upgrades in hardware devices, network environments, transaction models, and consumer habits, it will have a huge impact on the future retail industry. Second, Cloud-based Cloud computing has become a major trend and catalyst for enterprise digital transformation and is also the core of new digital infrastructure. The global trend of digital business cloudification will evolve along the lines of basic resources, business tools, and core system operation models, bringing lower operational costs, higher operational efficiency, and new technologies and operation models. For example, in new retail scenarios, high concurrency, high throughput, and massive data storage businesses urgently require instant elastic expansion and contraction of IT resources, which is the biggest pain point of traditional IT infrastructure and operations. Cloud computing just solves this problem. In retail scenarios, massive transaction data has been accumulated, which is the greatest wealth of retail platforms and merchants. How to fully utilize big data for monetization is the primary issue. Traditional IT architectures cannot effectively use this data. Cloud computing provides more possibilities for big data analysis and the development, application, and monetization of data assets. Third, Data-driven and Middle-platform Data is the core raw material for building digital business and catalyzing industrial intelligence. Massive big data must have full-chain technical support for aggregation, collection, cleaning, filtering, classification, storage, cognition, analysis, and intelligent application to discover new knowledge, promote intensive integration, collaborative development, efficient utilization, and networked sharing of production factors, forming a new resource allocation model. Speaking of this, we must mention a widely circulated story: In mid-2015, Ma Yun led Alibaba executives to visit the famous Finnish game company SuperCell, known as the "best" game company in the world. In December 2016, this company with fewer than 200 people was acquired by Tencent for $8.6 billion for 84.3% of its shares. Each employee contributed an estimated valuation of over 350 million yuan, far exceeding Alibaba's per capita 34 million yuan at its peak market value of $400 billion. At SuperCell, teams of 5-7 people form independent development teams. The team decides what products to make, launches products to the market for trial and error as quickly as possible, with almost no management involvement. Meanwhile, common algorithms, models, and assets in game development are well accumulated, avoiding reinventing the wheel for common or frequently used functions, greatly improving development efficiency. Supercell's model greatly shocked Alibaba's executives. After returning, Alibaba soon announced the launch of the famous epoch-making "Middle Platform Strategy" in China's internet history. The Middle Platform Strategy roughly means: Business middle platform and data middle platform, sinking core logic, big middle platform, small front end, sharing middle platform business and data capabilities. Under the "business middle platform" model, front-end business departments can call product technology modules on the platform like building blocks to quickly build new business scenarios. The "data middle platform" breaks the chimney-style IT architecture between different business departments, connects data silos, achieves the goal of "all business datafication," and brings continuous efficient innovation. Through architectural adjustments, the goal is to quickly support front-end business innovation and process reorganization, ultimately forming the prototype of today's enterprise-level internet architecture. At the same time, it ensures the front-line business is more agile and can adapt to the rapidly changing market more quickly. In plain language: If the business department kids want to build a castle with blocks, you just find the shapes you want in the block pool and build directly. As for how the shapes in the pool are formed, the business department doesn't need to know; that's the middle platform's job. The business department's job is to respond quickly to the market, quickly acquire capabilities, quickly apply capabilities, and quickly show results. Fourth, App-ification and Mobilization The global technology architecture system and development operation models are accelerating restructuring. The development of open-source cloud architecture, container technology, and microservices supports rapid testing, release, and deployment, creating conditions for the mobile deployment of various apps and software. Current microservices architecture decomposes overall functions into discrete services to decouple original solutions, and traditional software architectures are continuously decoupled into functional units. How to understand this? It means: Future retail will rely on these functional units for reorganization. For example, mini-programs may be based on this, developing multiple mini-program matrices for different businesses, such as coupon mini-programs, food delivery mini-programs, mall mini-programs, etc. Characteristics of Digital Transformation 1. New Form Bringing new digital business. From the digitalization and online process of business links, the consumer side has achieved a high degree of digitalization and online presence, and has begun to reversely force and drive the recycling of supply-side links such as design, R&D, and procurement. Digital internet technology systems are penetrating from transaction links of value delivery to production links of value creation. Digital business is a new business form that uses data flow automation in a world defined by data + algorithms + computing power to optimize business and support decision-making under uncertainty. In short: The consumer side is changing, reversely forcing the B-side to change too; otherwise, you cannot respond to the gunfire from the front line. 2. New Subject New digital enterprises. From the consumer side to the supply side, digitalization covers the entire domain, all scenarios, and the full chain, such as eleven business elements: brand, product, sales, marketing, channel, smart service, finance, logistics, supply chain, organizational management, and information technology. Intelligence is based on a closed loop of digitalization for intelligent decision-making, achieving precise response to market demand changes, that is: Moving away from human experiential decision-making to real-time data-driven decision-making as the core. 3. New Benchmark Business operating systems help enterprises digitalize. In the wave of digital business development, benchmark enterprises have emerged. Starbucks, L'Oréal, Mengniu, and many other domestic and international first-class enterprises with a spirit of reform are undergoing digital transformation and demonstrating cutting-edge exploration and best practices in this field. Benchmark enterprises have made mistakes, paved the way, and promoted the improvement of digital infrastructure, laying a better foundation for subsequent enterprise digitalization. 4. New Driving Force The growth password for enterprises in the digital era. In an era of great change, enterprises need to continuously update their business engines (internal and external) to maintain momentum for sustainable development and remain invincible in the market. In the digital era, the driving force for enterprise growth comes from consumer asset operations. From the exploration and practice of many excellent enterprises, it can be found that the new password for future enterprise growth is the growth effect brought by a new combination of four elements: consumer assets, product power, organizational power, and digital power. This is also why the opening said: Digitalization may not determine the success or failure of an enterprise, but it will certainly use the variable of "time" to prove the impact of this invisible force. Final Thoughts: The wheel of business development rolls forward, and digital transformation is an inevitable trend. For traditional industry enterprises, the digital economy era has not changed the fundamental process of value creation, transformation, and realization; what has changed is the requirement for enterprise response efficiency. Therefore, enterprise digital transformation cannot be superficial, just creating beautiful data visualizations or installing a system. Instead, it should improve the ability to respond to rapidly changing markets, and practically apply new technologies such as big data, artificial intelligence, cloud computing, IoT, and blockchain to expand existing demand and develop incremental demand. At the same time, digital transformation is not just a matter for one enterprise. To achieve complete digital transformation, it is necessary to coordinate the transformation and development of various enterprises at the industry chain level, requiring enterprises to break down the original barriers in data, and achieve cooperation as a community of shared destiny with co-creation, co-construction, and win-win. Furthermore, enterprise digital transformation also needs government support. From the top-level design of digital transformation, the government can mainly play a guiding, supporting, and safeguarding role. Finally, digital transformation is an exploratory process that will inevitably encounter various difficulties. From the materials currently available online, we still lack a micro-level understanding of enterprise digital transformation, and lack practical guidance for enterprises, especially small and medium-sized enterprises. After all, digitalization for such enterprises is still like a flower in a mirror or the moon in water—beautiful but intangible. This may require timely analysis of enterprises that have successfully undergone digital transformation to help more enterprises learn advanced transformation experiences. What other difficulties and operational feasibility exist in the digital transformation of new retail and FMCG? We will discuss this in the next issue. About the author: Liu Fang, author of "Traffic Monetization," which topped five lists on JD.com and Dangdang; new retail business marketing consultant, personal brand marketing consultant; over ten years of experience in the retail/FMCG B2B industry; invited and column author for multiple business media platforms; special invited new consumer private domain traffic mentor for "Wu Xiaobo Channel" 890 New Business School and International Industrial Design Competition; special invited sharing guest for the private domain academy of Hudongba, a billion-user platform; previously responsible for the top retail brand's tens of millions of private domain traffic and 100,000+ viral article operator. -END-