Core Questions: Where are the trends and opportunities for omnichannel new retail? What is Heyin Network's Omni dual-wheel drive strategy? From O2O operations to an omnichannel system, why does Heyin Network choose to tackle challenges head-on? The following is the interview transcript between Yao Xuesong, host of CCTV's "Credit China" channel, and Bei Nianjun, founder and CEO of Shanghai Heyin Network Technology Co., Ltd.
What is new retail? The concept of new retail is not particularly new. Looking at the evolution of retail, we can see that retail has undergone different iterations at different stages, from the earliest large channels to later e-commerce. For omnichannel new retail, it involves a change in the relationship from the consumer's cognitive perspective. We can understand the underlying logic as an era of information explosion. For example, as we just mentioned, CCTV now has 17 channels, which shows that a large amount of information is reaching a large number of consumers. Consumers are already in an online environment where they can easily access a vast amount of commercial and product information. On one hand, we can make it linger in their minds, and at the same time, there are many new retail platforms that make products readily available, such as Meituan, Douyin, and Kuaishou, allowing consumers to quickly get the products they want while they are still thinking about them. So it is actually about re-establishing relationships with consumers in a completely new era of information explosion, rebuilding a complete consumer-oriented full-chain change from consumer awareness, interest reach, conversion, and loyalty. Whether it is product information acquisition or sales channels, everything is new.
How is the industry developing now? I can describe the current development of this industry with an idiom: thriving. We can see many numbers. For example, an important model in omnichannel new retail is O2O, which includes food delivery platforms like Meituan, Ele.me, and JD Daojia that people use daily. Especially during the pandemic, it provided an important channel for consumers to obtain daily necessities and shop. Looking at these O2O platforms, we know that from 2018 to 2022, O2O sales reached a scale of 4 trillion yuan, with a compound annual growth rate of nearly 50%. So it is a rapidly iterating new field, very similar to e-commerce during its rapid growth phase in 2008.
This newness is not only an innovation in consumer purchasing channels, but more importantly, it is an innovation in the industrial chain between enterprises, and an innovation in mutual exchange. Here, the newness, first, is that the point of contact with consumers has changed. To give a direct example, in the 1990s, a consumer might see a Rejoice advertisement after a TV drama. They might think the ad is good, but at that time they couldn't actually buy the product. They might have to wait about a week and go to an offline supermarket with their parents to see the product before they could obtain it. But in the current new retail era, let's imagine: you might see a product on Xiaohongshu, and then while browsing Meituan, you find that the product is in a supermarket near your home. So you quickly place an order on Meituan, and within 30 minutes, the product goes from your awareness to the final sales conversion. The entire chain is completed within an hour. So this is an extremely consumer-centric approach, from convenience to interest, quickly converting it into sales. On one hand, it connects with consumers, communicates with them, and does brand linkage. At the same time, it has high requirements for offline sales channels, which need to have a large supply and complete the entire sales conversion system through interaction with online platforms.
This transformation brings great convenience to consumers. But what does it mean for merchants and manufacturers? What is the Omni dual-wheel drive strategy? First, let's look at brands. In all previous retail models, the earliest was mainly offline channels. By 2008, e-commerce became a new channel, including Alibaba, JD, and later Pinduoduo, which became the so-called mainstream new retail channels at the time. But whether it is offline channels or online e-commerce channels, in the entire model, we can see that it is a zero-sum game model, because either consumers choose offline or online. For channels, it may bring some incremental growth, but it is not a linked system. However, in a new retail model, for example, when we place an order on Meituan, all consumer operations are similar to an e-commerce model, but the delivery and fulfillment are completed by an offline supermarket, so the goods sold are from offline channels, forming a linkage between online and offline channels. It has broken the original zero-sum game. It allows online and offline to work together with a consumer-oriented approach to achieve the best conversion, so it also has a certain offline empowerment function. At the same time, from the traffic perspective, we can see that many social platforms like Xiaohongshu and Douyin have brought significant exposure to consumers, but there are also platforms like Meituan that have huge traffic within their own platforms. Traffic inside and outside the platforms is also actively interacting, creating more conversion opportunities. So new retail now is a model supported by data and information, with a complete flow system online and offline, inside and outside the platforms. Therefore, for many channels, its significance is not to replace, but to integrate all originally independently operated channels and social platforms into a more efficient operating model. We call the systematization of omnichannel new retail Omni, and its core is dual-wheel drive. The first is the concept of omnichannel, covering offline channels including hypermarkets, small supermarkets, mom-and-pop stores, and e-commerce channels. The second is an omnichannel digital marketing platform, similar to Xiaohongshu, Douyin, and Kuaishou, which focus more on consumer communication and content guidance, forming a dual-wheel linkage. So it is an operating model that requires a very high level of systematization.
In your service to brands, have you noticed any concerns from brands, or any deviations in their understanding of new retail? This is an interesting question. For example, the main operating model in new retail now is the O2O model of Ele.me and Meituan. This model was established in 2018, when Ele.me and Meituan started the supermarket delivery model. In the 2018-2019 period, Heyin Network was almost in the process of educating brands about what new retail and O2O are. It wasn't until the pandemic changed everything and consumer mindset was greatly strengthened that brands realized that all the original O2O was a great opportunity for omnichannel new retail. Just like many new things from emergence to growth, it only needs a group of people who can persistently lead the brand in that direction, continuously refine operational maturity, and eventually form scale effects. For Heyin Network, we are honored that from 2018 to 2022, we have consistently made such arrangements. We have now become a large-scale service model in the budget systems of major brand companies, and the breadth and depth of omnichannel new retail services will differ from traditional distributors and TP companies. It is a very comprehensive service system.
Why can't brands do this new retail model innovation or investment themselves, and choose you instead? Similar to the earliest offline model where there was a distributor model, why do brands need distributors to cover certain channels? Because distributors understand the local market better and can help brands complete better operations and offline coverage in various regional markets. Why do brands choose online TP operators to operate on platforms like Tmall and JD? Because they can connect better with the platforms, get more resources and support, and in terms of integrated negotiation capabilities, they can give brands better empowerment. These two points are certainly the core reasons why brands need an omnichannel new retail service provider. Of course, we also have a very important feature here. Since we are talking about an omnichannel concept, it means that a brand may operate up to 20 or 30 new retail platforms. How to choose the best platforms, choose different platforms for different brands, and formulate different operating strategies? For brands, the process of exploring on their own is extremely time-consuming and cost-ineffective. So through professional service companies, they can get one-stop, perfect solutions.
In your view, are these small and medium-sized enterprise brands ready to embrace new retail? What are the requirements for these SME brands? We have noticed that many small and medium-sized brands are currently facing difficulties in digital transformation and omnichannel retail transformation. They urgently need a system that can complete their one-stop new retail transformation services or support. So I think this is also a very important thing that Heyin Network and our MPP system will practice in the future in omnichannel new retail. Some companies have already started, and these companies usually have three obvious traits. First, the second generation of the enterprise is the current successor, and for the concept of new retail, many second-generation CEOs have a strong urgency for innovation and new ideas. Second, for the enterprise, we also need to look at its so-called structure. Because the so-called omnichannel new retail truly changes a brand's long-term fixed operating model and enters a completely new operating model. To give the simplest example, the marketing department and sales department will be perfectly integrated in this regard. This is very important for structural adjustment and resource reallocation. That's why I put the CEO with imagination or demand as the first condition, because only they can complete internal structural upgrades and changes. Third, it requires a certain long-term spirit. Because we have also come into contact with many private enterprise brands that are very impatient and hope that as soon as they do something today, they will immediately see excellent results. In fact, this process requires time to incubate and even time to make mistakes. But we can empower them with methodologies and experiences from operating with many Fortune 500 companies, helping them avoid detours, find better and more efficient operating methods and means, and achieve quick results. So for small and medium-sized brands, all enterprises will eventually walk this path, but each company's situation is different. The three points we summarized are what we see now that can be done well with companies we are cooperating with. The three necessary conditions are a threshold for small and medium-sized brands to embrace new retail. But the main threshold is still in thinking and vision.
In this process, what difficult problems have you encountered that left a deep impression? I think new retail is full of challenges all the way. First, you see that we are very different from many companies. We are not doing one thing; we are doing a "way" (Dao). We are making a strategic, systematic layout. Because it is not a single project or capability, but a model that can completely reshape the entire retail system. So our biggest challenge to ourselves is not to be immersed in our daily tasks, but to find the true way of omnichannel new retail through our daily work, the so-called new retail strategy. Because from daily operations, through tactics, to strategy, and finally to forming a system, it requires a large number of cases and a very high level of the entire company to refine many things. Only at this height, and I think many private entrepreneurs, we really want to do this thing well first, because you are not just doing things; only when you reach the height of the "way" will many of your systems gradually take shape. Of course, I think this is a process of knowing it's difficult and still going forward. That's the first challenge. The second challenge is that for omnichannel new retail, because we are doing omnichannel, first, it must be omnichannel, and second, it means we will come into contact with many different new retail platforms. All the knowledge systems, including operating frameworks and needs for different brands, will be completely different, and even the new retail models we encounter every day are growing. This is the second very challenging point. The third challenge is that for any company, we are a service company as a乙方 (service provider), but the traditional乙方 is responsible for achieving good results based on the甲方's (client's) task requirements. But for a company like ours in omnichannel new retail, we need to run ahead of the甲方, lead them, and tell them where the future is, what they should do, and how we should cooperate, through a higher strategy and a longer-term perspective. So in this process, there is also a process of educating the甲方. For example, not long ago, we just helped Coca-Cola complete offline training for all their 6 bottling plants on O2O new retail. As a service company, completing their training is not just fulfilling the service needs given by the brand; in fact, we are co-creating in terms of models and operating systems, and even at some level, you need to run ahead of the brand to better understand future needs.
How did you enter the new retail industry? I have been in the FMCG industry for over 20 years, with about 20 years of background in foreign companies, and I have experienced the new retail models of those stages. For example, in 1997, we started cooperating with Carrefour. At that time, Carrefour was the new retail offline hypermarket of that era. I remember one Spring Festival when I saw a large number of consumers flocking to Carrefour, I thought this was the future of retail, but at that time, offline hypermarkets were the new retail era. I also experienced the glorious years of Tmall Double 11, and in the 2008-2010 era, it was the era of e-commerce new retail. So for me, new retail is just defined differently in different eras. I have always been a person who is constantly exploring the new.
How do you position your company in the entire new retail industry? Of course, I have always considered myself a leader, because in this matter of knowing it's difficult and still going forward, first, it needs a very iconic figure who can lead a completely different new retail system, including forming a cultural output of omnichannel new retail. Just like every company, many private enterprises might have the first goal to survive and then do existing things well. But for Heyin Network, we hope to complete two stages. The first stage is the stage of the "way" (Dao), which is to complete the output of the entire industry system at the strategic level. The second stage is to complete the stage of social value, which is to better contribute cultural and conceptual values through the CCTV platform. So it must be something that a leader should do.
You mentioned the word "way" (Dao). What kind of concept is this? In Heyin Network, we have the Five Elements Culture: Dao, Fa, Shu, Qi, and Chang. "Dao" is the CEO's strategy. We are very diligent strategically. First, we explore new opportunities for the future and complete early layout, then link more systems to make this thing grow from a small scale to a larger scale. At the same time, we can lead "Fa"—the refinement of tactical methodologies. For the CEO, what I do is mainly about "Dao". Of course, I will also strengthen "Chang", which is the company's cultural construction and social linkage. Actually, what an entrepreneur does is the culture of the field.
Could you summarize your future plans for the company? For the company's future plans, I think there are three very important points. First, maintain the original intention. Because for Heyin Network, there is a very important word: freedom. We hope to explore the entire omnichannel retail with very free means, including the changes it will bring to the entire industry in the future. So under the guidance of this original intention, we will definitely know it's difficult and still go forward, not be affected by short-term interests or other influences, and focus on the active exploration of this matter. Second, maintain innovation. We have formed a Dragon Ball team within the company. The Dragon Ball team is a group of young people born after 1995. They form a small organization outside their daily work to continuously explore newer omnichannel new retail models, and even do some early-stage incubation, allowing them to have a certain entrepreneurial spirit within the company. Third, maintain a state of selflessness. Many companies think they can do everything, but we have seen that omnichannel new retail is a huge ecosystem. It needs a core leader who can link more partners, including the MPP system, to integrate more valuable partners into one system, forming a linked common value, so that the omnichannel ecosystem can truly develop rapidly, form core competitiveness, and finally achieve strategic landing. Being in a brand-new industry, for a company, it is not only necessary to adhere to the three points you just mentioned, but also for our company, this newness also means continuous innovation and continuous effort, walking ahead of brands, customers, and the market. I believe this is also the biggest driving force for the company to move forward.