Click read the original text for details Author: Ba Jiuling Source: Wu Xiaobo Channel (ID: wuxiaobopd) From search to recommendation is the watershed of e-commerce. According to media reports, Taobao is about to launch an app called "Taobao Master", which focuses on sharing benefits among close friends. According to relevant media "spoilers", its model is roughly as shown below: To be honest, this model is full of the flavor of Pinduoduo and Yunji. It seems that no matter how many times it falls, Alibaba's determination to enter social commerce remains unshaken, and the vast private domain traffic will be its next direction. In the 2018 year-end show "Foresee 2019", Mr. Wu first proposed the concept of "private domain e-commerce" and believed that "the private domain social traffic formed since 2017 will see a blowout in 2019..." Half a year after "private domain e-commerce" was proposed, many questions remain unanswered. For example, what are the characteristics of "private domain e-commerce", what is the difference between "private domain e-commerce" and WeChat business, and what are the business models of "private domain e-commerce"? To answer these questions, Wu Xiaobo Channel exclusively released the first "2019 Private Domain E-commerce Report" (hereinafter referred to as the report), which through concept explanations and case analyses, gives you a preliminary exploration of "private domain e-commerce". How much do you know about the power of private domain? According to the report's definition, in the internet environment, private domain, relative to public platforms, refers to online private environments, such as WeChat Moments, communities, Weibo friends, QQ friends, interest tribes, forum friends, etc. After a period of personal experience, Xiaoba was deeply impressed by the power of private domain communication. In early May, to rescue a newborn stray kitten, Xiaoba needed to find a lactating mother cat in the same city, so he turned to the "omnipotent Moments" and Weibo for help. As a result, within four hours of posting, Xiaoba successively found three mother cats that not only met the conditions but even met precise conditions (such as the district where the kitten was located). This efficiency was unimaginable in the past. When most people are concentrated on a few social platforms (mainly WeChat and Weibo in China), our efficiency in reaching strangers becomes increasingly high. Similarly, when Xiaoba wants to sell a product in a social private domain environment, it can be as efficient and precise as finding a cat. This is why Mr. Wu said at the year-end show: "Social private domain e-commerce has been proven in 2018 to be the most efficient e-commerce model today." As for the relationship between WeChat business and "private domain e-commerce", the report believes that WeChat business is a part of private domain e-commerce and is currently the largest and most mainstream group of "private domain e-commerce". If you want to distinguish between the two, it is that WeChat business has a "geographical restriction". In 2017, Tencent Research Institute in "A Brief History of WeChat Business: Rise, Prosperity and Adjustment" defined WeChat business within the WeChat ecosystem. In contrast, "private domain e-commerce" covers a much wider range. But in any case, if you are planning to start a business using your personal connections, whether on WeChat or other platforms, congratulations, you will become a "private domain e-commerce" practitioner. Why did they "cheat" on private domain? Some may ask, since it's all about selling goods, shouldn't you go to Taobao, which has the largest platform and the most traffic? However, nowadays big platforms seem not to be a good choice. For example, the GMV (Gross Merchandise Volume) of several e-commerce giants has not been looking good recently. According to the latest FY2019 financial report, Alibaba's GMV grew 16% year-on-year, with growth further slowing down, and this is already the best performer among traditional e-commerce companies. JD.com didn't even mention its GMV data in the first quarter of 2019. In contrast, private domain has shown astonishing explosive power in recent years. Pinduoduo and Yunji, which focus on private domain, have emerged as new forces in the e-commerce market. Pinduoduo's GMV grew 234% year-on-year in 2018, and in the first quarter of 2019, GMV growth remained at 181%, while Yunji's GMV grew 140% year-on-year in 2018. Moreover, while traffic growth on traditional e-commerce platforms is declining, the 80/20 rule within the platforms has hurt small and medium-sized merchants. According to statistics, 200,000 top merchants on Tmall buy 80% of the traffic, while 9 million small and medium-sized merchants on Taobao share the remaining 20%. So, not to mention opening a new store on Taobao, some small and medium-sized merchants have started to "cheat" on private domain. Since 2011, Taobao and WeChat have been fighting to prevent mutual sharing, but this high wall has been easily broken by a small card with a printing cost of only 4.5 cents, printed with the store's personal WeChat ID. Image source: Card in Xiaoba's express package This practice is now standard for Taobao stores. These cards help them convert their customers from stranger relationships on Taobao to acquaintance relationships based on WeChat. The report calls this practice of precipitating users from Taobao to WeChat "traffic privatization". In simple terms, merchants want to use WeChat to do more "repeat customer" business and increase product repurchase rates. ▲ Traffic privatization In 2016, Taobao enterprise store "Huajie Shiyang" began adding a card with the owner Huajie's personal WeChat ID to customer packages, and even wrote her WeChat ID on the store's homepage. Over the years, the store has gradually precipitated 710,000 fans from Weitao to WeChat. As of Xiaoba's writing, Huajie has more than 200,000 WeChat friends from Taobao stores, distributed across more than 50 WeChat accounts. Why are there more and more WeChat businesses around us? As of 2017, the number of WeChat business practitioners in China had reached nearly 20.19 million. Some people compared this with China's total population at the time and found: one in every 69 people might be a WeChat business. After all, the threshold to become a WeChat business is not high. "Ah! Xiaohua" runs a small women's pants factory in her hometown. Around 2016, after trying on a few pajama pants from the factory's inventory, she felt good and came up with the idea of selling pants on Moments. So, she casually took a few photos, edited the copy, and with a few steps, this white-collar worker born in 1992 embarked on the path of WeChat business. And acquiring customers is not difficult either. "Ah! Xiaohua" calculated that adding 5,000 people to a WeChat account costs less than 20,000 yuan, which translates to a customer acquisition cost of about 3-4 yuan per person. What does 3-4 yuan per person mean? Since 2018, the customer acquisition cost for each of Alibaba and JD.com has exceeded 300 yuan per person. Even the booming Pinduoduo had an average customer acquisition cost of about 10 yuan in 2017, but by the fourth quarter of 2018, it had surged to 183 yuan. Data source: 2019 Private Domain E-commerce Report *Customer acquisition cost (yuan) = current period marketing expenses / increase in active buyers In comparison, the customer acquisition cost for WeChat businesses in a private domain environment is almost dirt cheap. In addition, "private domain e-commerce" has more autonomy than Taobao. Taobao's rules are not friendly to sellers. First, sellers need to pay for traffic through various tools; second, rules such as seven-day no-reason return and exchange, and good/bad review mechanisms, make Taobao sellers' business precarious. In a private domain environment, without these mandatory rules, malicious buyers dare not easily "act rogue", and sellers can also break free from platform restrictions and have more autonomous decision-making power. ▲ Malicious buyer After the May Day holiday, an incident of "buying 18 pieces of clothes and returning them after traveling" was pushed to the top of Weibo hot search. It turned out that the incident was caused by Taobao seller Mr. Li discovering that he had encountered a "trying-on group", so he couldn't bear it anymore and angrily exposed it. But he also said that most Taobao merchants face such situations with anger but dare not speak out. Instead, for fear of bad reviews, they often have to agree to returns even if the returned goods are in terrible condition. "Ah! Xiaohua"'s factory also ran a Taobao store for a period. Indeed, no matter how careful, unreasonable after-sales issues still occur from time to time. According to her understanding, some online celebrity stores with high customer quality sometimes have after-sales rates as high as 40% (including returns and exchanges). And when "Ah! Xiaohua" agrees to communicate with buyers, she can consciously screen buyers: "People come to buy based on trust. Some buyers may have personal reasons. If we ruin the hard-earned reputation because of this, it's really not worth it." First a consumer, then a seller In the field of "private domain e-commerce", agents are an important link that cannot be ignored. If a "private domain e-commerce" practitioner starts recruiting agents, it means his "business has grown big". Agents are the so-called middlemen, the bridge connecting upstream and downstream. The traditional agency model is often top-down, such as manufacturers finding a few people as direct salespeople to sell goods externally. Capable direct salespeople may develop into general agents, then layer down. In "private domain e-commerce", the traditional agency model is retained, but there are also new breakthroughs, such as developing consumers into agents. ▲ Members and store owners Yunji, which just went public, is a typical example of this model. On Yunji, users can become diamond members by buying a product package worth 398 yuan, and immediately get two rights. Right 1: Enjoy specific rebates when consuming; Right 2: After becoming a member, if you can bring acquaintances to consume, you can additionally get a certain percentage of commission, thus becoming a "store owner". In terms of identity, these members + store owners are both consumers and sellers (agents), combining the two. On other platforms, they may be called buyers, catchers, etc. The "Taobao Master" mentioned at the beginning is essentially similar to Yunji's store owner model. However, some people become store owners purely to enjoy discounts on consumption; others gradually lean towards the seller role, continuously activating their own and surrounding private domains, and slowly grow into "private domain e-commerce" practitioners. Another advantage of the consumer and seller being the same person is that for buyers, the seller's self-use is the most effective quality endorsement. This also reveals the secret of "private domain e-commerce" selling goods in acquaintance relationships - trust. The first batch of consumers of "private domain e-commerce" comes from the circle of acquaintances, and familiarity is the first step to trust. To strengthen this relationship, "private domain e-commerce" practitioners must always "brush their presence" politely rather than awkwardly in front of their target users. The report believes that most "private domain e-commerce" practitioners will strengthen their IP attributes, also known as "building a persona", with the ultimate goal of creating a memorable image and maintaining connections with users. ▲ Moments For example, "Ah! Xiaohua" positions herself as a joker among WeChat businesses. When promoting products, she often uses self-deprecation to highlight the product's benefits. And "Huajie Shiyang", because it provides food and nutrition products, appears in Moments like a sister next door, always concerned about everyone's nutritional status, and her personal life posts are often family-oriented. Zhu Cheng, founder of "I am a buyer", wants to empower the supply chain for his platform's buyer team, so his Moments are mostly scenes of "large-scale purchasing or channel cooperation". From top to bottom: Ah! Xiaohua, Huajie Shiyang, Zhu Cheng In summary, the transaction premise of "private domain e-commerce" is people, and only then products. Several reasons to hate WeChat business But success comes from trust, and failure also comes from trust. Trust crisis is often the biggest crisis faced by "private domain e-commerce". Between 2015 and 2016, WeChat business grew wildly, and during these years, WeChat business was collectively blacklisted. The China Consumers Association's "Online Shopping Integrity and Consumer Cognition Survey Report" released the year before last showed that in 2016, WeChat business ranked first in dissatisfaction among online consumption in China. When Xiaoba was organizing relevant materials, he also found that research on WeChat business was endless before 2016, but after 2017, few people analyzed this model, and if they did, it was mostly skeptical. There are countless reasons to hate WeChat business, and a few high-vote ones can be listed casually: Despite the negative reputation, after the wild growth and industry reshuffle, the right path for "private domain e-commerce" is gradually becoming clear.

On the one hand, trust assets have become the core asset of "private domain e-commerce", and later entrants are more careful than ever to protect their reputation;

On the other hand, as some big brands begin to try private domain channel specials, they also join the "private domain e-commerce" army, becoming a part of the competition, thereby driving players in this field to improve quality and service. Since 2015, consumption has gradually become the main theme among the three major drivers of China's economy. Especially at a time when globalization is hindered, consumption has become a strong backing for China's transformation. To this end, innovations based on expanding consumption are endless, and "private domain e-commerce" has developed under this background. So, in the era of mass consumption, can everyone really become a "private domain e-commerce" practitioner? What are the typical gameplay methods of "private domain e-commerce"? Sources:

  1. "2019 Private Domain E-commerce Report" Wu Xiaobo Channel Xiao Report Team
  2. "A Brief History of WeChat Business: Rise, Prosperity and Adjustment" Tencent Research Institute
  3. "2017 WeChat Business Industry Research Report" iResearch This article has been authorized by Wu Xiaobo Channel. Recommended to follow the knowledge service platform - Wu Xiaobo Channel.