Reposted from: WeChat Official Account [Li Jiaoshou] (Professor-Li) 【Re-think】 “Online vs. Offline” Just after the Singles' Day shopping frenzy, the retail industry once again fell into a classic reflection: should we go online or offline? Yesterday, I read an article saying that offline is the opportunity, and even Jack Ma said, “Pure e-commerce will have a hard time in the future.” Today, I saw another analysis saying that a large number of offline retailers are constantly trying to embrace Internet+ and transform into e-commerce. So we call this question the “Schrödinger's retailer”—given a retailer, no one knows whether it should go online or offline. So, should we go online or offline? First, before we get tangled up in a lot of trendy terms (like “retail brand upgrade,” “experience economy era,” “Internet+ revolution,” “the spring of physical stores,” “scenario-based marketing”), we must first accept a key concept, which is also the core concept of this article, and that is: For example, a delicate and beautiful keychain, if you open a store on e-commerce and try to market it yourself, it will definitely not be easy. Because most consumers find it hard to initiate a purchase on e-commerce for such a small need, and go through a series of actions—select, order, pay, fill in address, wait, answer the courier's call, unpack the package... On the contrary, while you are walking down the street eating ice cream, you see a lady with a stall full of shiny, beautifully designed keychains. Even if you don't need one at the moment, you might buy one. Because offline, it's easier for us to psychologically “initiate a purchase.” On the other hand, many products also face problems if sold purely offline. For example, a guy who doesn't know much about cosmetics is going to a hot beach for vacation and needs to buy a good sunscreen. So he goes to a supermarket and faces a dazzling array of sunscreen brands. Apart from obviously unreliable judgment methods like “expensive is good” or “well-known brands are good,” you really want some objective third-party evaluations to tell you which one truly suits you. But in the online environment, you just need to search for “basic sunscreen for men,” “how to choose sunscreen,” or simply look at e-commerce ratings and product detail pages, and you can make a better choice. So the key to choosing a retail format and discussing online vs. offline is to see: how do consumers actually complete a purchase process? (PS: Many people design retail formats entirely based on business dreams, but ignore how consumers actually buy a product.) How to analyze it specifically? Actually, it's simple: just compare these 5 stages, and the advantages of online vs. offline:

  1. Need Generation Stage: How do consumers evoke needs—e.g., craving, wanting to buy a cake
  2. Search Stage: How do consumers obtain information—e.g., finding what cakes are available
  3. Evaluation Stage: How do consumers make decisions—e.g., which cake to choose
  4. Purchase Stage: How do consumers complete the transaction and get the product—e.g., pay cash and take it home
  5. Service Stage: How do consumers get service after purchase—e.g., who to contact if the cake is damaged 1. Need Generation Stage: How Consumers Evoke Needs Generating needs is often the first step in a purchase—before getting consumers to buy your chocolate cake, you often need to make them realize they need this cake. In this step, different products show differences—some products are hard to generate needs online, while others are hard to generate needs offline. For example, the exquisite keychain mentioned earlier: most people see it, like it, and buy it; it's hard to go to e-commerce specifically to place an order for a 3-yuan item. Another part of products is hard to generate needs purely offline. For example, there's a burrito shop downstairs from my company. It looks no different from other burritos and easily gets lost among hundreds of nearby snacks. But later, they posted an article on WeChat: “China's First Google Chef Selling Snacks in Wangjing” As a result, it became an instant hit, with people queuing every day and unable to buy—through “storytelling,” they generated a lot of demand for this type of burrito, which is hard to do offline. Since we all need to “stimulate user needs,” how should we choose between online and offline? At this point, we need to look at the first key difference between online and offline: In terms of product display, offline has an advantage in product display, while online has an advantage in content display. This means: if your product is more easily driven by the display of the product itself, then it's suitable to stimulate needs offline; if your product is more easily driven by intangible value (like the story behind it), then it's more suitable to do it online. (1) Stimulating Needs by the Product Itself—Offline For many products, the product itself is the best way to create demand (simple product display can increase sales), and at this time, online is less efficient than offline in creating demand. For example, if you sell egg rolls at 10 yuan each, to attract customers online, you have to do a series of complex actions—write a compelling copy, find the right channel to drive traffic, and even run information flow ads to get more attention... Anyone who has done e-commerce operations knows: the money spent to attract one person's attention to buy an egg roll often exceeds the price of the egg roll. On the contrary, once I walked downstairs after work and bought an egg roll. The egg roll lady's marketing was very simple, mainly relying on the wind—I just passed by the stall, inhaled a few breaths of Beijing smog mixed with egg roll flavor, and paid 10 yuan to buy it. So, if you find that your product needs a lot of product display (i.e., reminder marketing) to stimulate demand, making consumers think “I need to buy this,” then offline is clearly more cost-effective (online traffic is getting more expensive). This is why many internet retailers, like Three Squirrels, are also laying out offline stores—online e-commerce improves the efficiency of product circulation, but it's hard to make people think “I need to buy Three Squirrels again” (of course, you can plan a viral campaign, but that's hard). So to solve this problem, Three Squirrels is preparing to open flagship stores in many cities (especially non-first-tier cities). The flagship stores are filled with various snacks and have tables and chairs, not for direct sales, but to complete the “stimulate demand” work, making people think of buying Three Squirrels—I believe even a person who swears not to eat snacks will inevitably buy once they see and smell the snacks up close. This is the role of offline product display. (PS: This is why Three Squirrels doesn't encourage customers to buy in-store, but encourages them to browse the store and then order online.) (2) Stimulating Needs by Content—Online Offline product display is definitely better than online. But online content display has an advantage: consumers are more likely to patiently read an article or watch a video, while offline labels obviously can't contain so much information. So, if your product's demand is more driven by content, then you should choose online for the need generation stage. For example, the swell water bottle: if simply placed in a supermarket full of various water bottles, consumers might not find it special, just looking a bit nicer, but it's hard to support such a high price. But if you see an article online like “This Harvard Beauty Made a Bottle, Sold 4 Million, Sweeping the US Trendsetter Circle,” it's easier to generate demand for this product. Another example: when buying a rice cooker offline, you see most are 150 yuan, but a few are over a thousand yuan. The difference is the label says “IH” technology, and many people might not be interested. But if you see a review of the rice cooker online (the taste of rice brought by IH technology), see recommendations from food bloggers, and see other users' reviews, you might actually become interested in a “rice cooker that brings better taste.” These “content values” above, before the internet, were often solved by on-site salespeople—“Hey, looking at rice cookers? I recommend this IH technology rice cooker; it cooks rice more fragrantly. Huang Xiaoming uses this kind of rice cooker to cook rice!” Solving these problems through salespeople is relatively inefficient, and training so many salespeople to learn so many scripts is very difficult, and more importantly, consumers increasingly don't trust these people. Instead, it's better to hand the task of stimulating needs to online, where often one “content” can solve the problem. So, when your product's demand is mainly driven by product display, offline has the advantage; when your product's demand is mainly driven by content, online has the advantage (especially through content marketing). 2. Search Stage: How Consumers Obtain Information Earlier, we talked about the differences between online and offline in the “need generation” stage; but sometimes, consumers already have a clear need in mind (e.g., I want to buy a nice chair, or I want someone to come install a security door), and they need to find out what solutions are available, which means the purchase enters the “search stage.” So in this round of PK, what will happen online vs. offline? I think everyone will say: This stage must be online-dominated! In most cases, this is correct, because the emergence of the internet essentially improves the availability of information—previously, finding a solution (like a nearby hotpot restaurant or a door-to-door computer repair service) was often troublesome, but now you just open the corresponding app and find it instantly. Take car retail as an example: most car buyers already have a clear need (I need a car), but they need to find out almost all possible options. Previously, it was very troublesome offline—going from one 4S store to another, and not even seeing all models. But now, just open Autohome, and with a simple dropdown list, you can complete the entire “search” stage—40-60W, business type, sedan, XX engine, etc., and see all options within 1 second. This is the huge value that internet-reorganized information brings to the distribution of goods and services: allowing everyone to get standardized results at the fastest speed. Even many original offline stores, to improve the efficiency of consumers' “search for solutions,” have moved this “search stage” online. For example, Lianjia Real Estate originally had many offline stores, which could well stimulate demand (seen by people wanting to buy or rent), help people evaluate (agents show you houses), facilitate purchase, and provide after-sales service, but the “search” stage was very troublesome—it was hard for a person to instantly get most suitable housing options. So in the real estate industry, this process was moved online, obviously bringing greater value. But does this mean that in the consumer's “search stage,” online is always better than offline? Of course not. Although online can provide a lot of standardized information, for complex customized information, offline still has the advantage. For example, imagine the “purchase process” of seeing a doctor when sick: in the need generation stage, it's simple—you're sick, so you have the need; then in the search stage, you need to get treatment options, and then go get medicine. This stage obviously requires professional doctors to participate—they need to tell you what disease you have and provide appropriate options. And this is hard for large-scale internet information to satisfy. Another example is Indochino, a custom suit brand abroad, which also puts the “search for solutions” stage offline—providing simple tailor shops in major US cities (temporary stores built with simple materials) to measure customers' bodies, find suitable fabrics, etc., and then send the finished product via e-commerce. So, if customers in the search stage need a lot of standardized information (like rental information), you should consider an information-based online model; if they need more customized information (like prescriptions), then even pure internet e-commerce needs to consider laying out offline. 3. Evaluation Stage: How Consumers Make Decisions Sometimes, consumers already have many alternatives in mind, and they just need to compare and choose—like whether to buy a Xiaomi or Huawei phone, or Wuliangye or Moutai liquor. This is the “evaluation stage” in the purchase behavior. Sometimes, consumers can complete other stages online, but they specifically need to evaluate offline—for example, the final choice of clothes often requires trying them on offline. Sometimes it's the opposite: other stages can be done offline, but evaluation specifically needs to be done online—for example, when hungry and passing a food street, you find N restaurants (need and search stages are done), but you hesitate about which one to eat at, so you take out Dianping to look. So, in this stage, how to choose between online and offline? Actually, it's simple. The key is: When your consumers evaluate products and make decisions, do they need more subjective feeling information, or objective third-party information? For some products, consumers mainly need subjective feeling information to make decisions, and offline is more favorable. For example, buying clothes: although you can see ratings online and the most detailed material information, whether it looks good on you, you only know after trying it on. At this time, you need offline. Another example is perfume: the best-selling perfume might smell disgusting to you, and you might find a cheaper niche perfume more to your taste. The common feature of these products is that high price and high quality don't necessarily suit consumers; it depends more on the consumer's subjective feeling. Coincidentally, in the offline environment, consumers are more likely to get real subjective feelings, thus making judgments that are beneficial to themselves. For other products, consumers mainly need objective third-party information to make decisions, and online is often more favorable. For example, before eating at a restaurant, it's hard to judge through direct subjective observation (because you can only see the decoration, price, waiters' looks, etc.), and at this time, you most need objective third-party information (like Dianping). Another example is the sunscreen case at the beginning of this article: although on the surface sunscreen and perfume are similar products, consumers' evaluation methods are very different—sunscreen is more about practical performance, and consumers really need objective third-party information (like professional reviews, e-commerce ratings, etc.), rather than salespeople's obviously biased pitches. This means: the evaluation stage for these products is more suitable to be completed online. In summary, when consumers' evaluation of products is critical, if their evaluation mainly relies on subjective feelings, then offline is suitable; if their evaluation needs objective third-party information, then online efforts are needed. (PS: I once encountered a restaurant slogan during my travels: “Over a thousand positive reviews on Dianping.”) 4. Purchase Stage Alright, we've finally reached the purchase stage, which investors call “closest to money.” Many times, consumers already have the need, know the options, and have chosen the option (like I habitually use XX shampoo), and the main concern is the purchase stage—whether it's convenient to buy. This is also the most discussed point between online and offline models: is buying more convenient online or offline? Actually, both online and offline have advantages—in terms of purchase convenience, online's main advantage is saving space, while offline's main advantage is saving time. So, when consumers care more about time convenience, offline often has the advantage—for example, products sold at 7-Eleven convenience stores: consumers want to get them immediately (like a bottle of water), so even if it's much more expensive than e-commerce and supermarkets, it's still very popular. When consumers care more about spatial convenience (not having to go out to buy), online often has the advantage—for example, fast food: consumers are too lazy to go downstairs far just for a 10-minute boxed meal, so it's better to use Ele.me to deliver it home. In addition, another big advantage of online in convenience is long-tail products. For example, in a fifth-tier small county, if you want to make “butter pancakes” as described in elementary school textbooks, maybe no supermarket in the county sells butter—because among 200,000 people in the county, maybe only 10 have a need for butter, and the county supermarket can't add an SKU (Stock Keeping Unit) for just 10 people's needs. So online e-commerce solves this problem. In summary, in the purchase stage, if consumers care about time convenience, that's an opportunity for offline; if consumers are too lazy to go out and need to buy it, that's an opportunity for online. 5. Service Stage: How Consumers Get Service After Purchase For many products, the transaction doesn't mean the end of the business—there's also the service stage. In this stage, should we choose online or offline? To sum up in one sentence: If the service is more based on the product, offline is often more suitable; if the service is more based on people, online is often more suitable. For example, for middle-aged and elderly people in third-, fourth-, and fifth-tier cities, buying a smartphone often requires a lot of after-sales service—today you ask me to download a song, tomorrow you find the speaker module is broken, the day after tomorrow you want to add a screen protector. This kind of service is based on the product, and mailing the product online for service is too troublesome, so offline is more suitable. This is an important reason why OPPO and vivo's model of turning phone sales outlets into car 4S store models is so successful—offline is more suitable for providing this kind of service. Some services are more based on people themselves. For example, diabetic patients, besides seeing a doctor, need daily body management, which requires a lot of consultation (can I eat this?), and the internet is the fastest way to transmit information, so it has an advantage in this regard. This is why many offline-based brands have also established online user communities to provide continuous high-frequency services, thereby continuously driving traffic. (For example, now every barber shop guy has added countless customers on WeChat.) In summary, in the service stage, if it's based on the product, offline is suitable; if it's based on people, online is more suitable. Conclusion No more nonsense, here's a diagram to summarize: Whether you are currently an e-commerce or offline retailer, you need to see which stage should be changed. For example:
  • Pure offline: move the first stage online, and it becomes: content marketing + traditional retail
  • Online: move the first stage offline, and it becomes: experience store + e-commerce
  • Pure offline: move the last stage online, and it becomes: community marketing + traditional retail
  • Pure online: move the second stage offline, and it becomes: customized e-commerce O2O... Well, I believe you all have more ways to play than I do. 【This article has been authorized for reprint. Copyright belongs to the original author Li Jing. For reprint, please contact the original WeChat account “Li Jiaoshou”】 -END- The best learning platform for FMCG distributors in China Focusing on providing professional, practical, and actionable tutorials for companies and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent Article Selection | 002 Distributor Market Operations | 003 Terminal Visit Management | 004 Sales Supervisor Skills | 005 Sales Improvement Techniques | 006 Channel Expansion | 007 Managing Distributors | 008 Distributor Development | 009 Distributor Internal Operations Management | 010 Team Management | 011 Efficient Distribution Techniques | 012 Sales Manager's 18 Skills | 013 KA Operation Methods and Strategies | 014 First Lesson for New Salespeople | 015 Internet, Brand | 016 Distributor B2B Transformation | [Long press QR code to follow]