In recent years, internet-famous products have proliferated, and behind their success, they are all planning offline expansion, as offline sales remain the mainstream for FMCG and will not change in the next decade. However, many such brands have made grand offline entrances only to disappear quietly. What are the reasons? Let's explore. Why Go Offline? Many internet-famous brands ask me how to go offline, how to conduct offline research, and how to plan. Before answering, I always ask them: Why do you want to go offline? Here are the summarized reasons. 1. Online traffic is drying up, and customer acquisition costs are rising. This image is from Liu Run's annual speech a while ago. We can clearly see the change in online customer acquisition costs from 2010 to 2019, from 37.2 yuan per person to 486.7 yuan per person, a tenfold increase in ten years. The implication is that acquiring a new customer makes it hard to break even. To achieve per-person profitability, you must focus on repurchase. However, "people" are the most fragmented thing, and it's hard to break out of their "information cocoons," meaning that after acquisition, content seeding and brand storytelling must continue, which is another significant expense. In general, customer acquisition is getting harder, repurchase is getting harder, money doesn't stretch as far, and the track becomes crowded. Based on this, many internet-famous brands think: if online is so difficult, and the offline market is so large, why not try offline? So they start planning out of necessity. 2. The first engine is ready, and it's time to start the second engine. The readiness of the first engine for internet-famous products includes the following five aspects:

  1. The core competitiveness of the online hero product has formed; its customer acquisition speed, repurchase rate growth, and media buzz are in a healthy state, with stable sales and profit growth, and good cash generation.
  2. The market capacity and profit capacity of the category of the online core hero product are continuously expanding. In the next three to five years, it's a blue ocean in a red ocean, and sailing with the current will only get faster.
  3. Supply chain efficiency reaches its optimal state, product pricing stabilizes, and disruptors cannot shake its foundation.
  4. The hero product in the first engine is far ahead in its category, with absolute volume and profit far exceeding the second place, meaning the potential biggest threat cannot overtake in the short term.
  5. As Liu Run said: As long as you are professional, opportunities are everywhere. The first engine has cultivated the talent pipeline needed for the second engine. If you have at least three of the above five points, you can start researching offline expansion, meaning the probability of success for the second engine is higher. 3. Passion, sentiment, and experimentation. There are many such companies; the boss's genes are the company's genes. Many bosses of internet-famous companies have some offline operational experience, which constantly reminds them that one day they must go offline; it's their founding skill and cannot be forgotten. So as long as the company is profitable online, they get itchy to go offline, or they simply try offline in a certain region, not for profit but mainly to gather experience for later. One point to emphasize: passion, sentiment, and experimentation are not valuable for going offline. Doing it half-heartedly is not the normal mindset for offline success, and it won't succeed or provide reference value. Summary: Many internet-famous products go offline for three motives: first, timing is not ripe, so they are forced; second, timing is ripe, so they proactively go; third, regardless of timing, they try. Comparing the three, only the second has a higher success probability. The Logic of Online and Offline 1. Basic logic exists in both. What is basic logic? For example: I buy a jar of sauerkraut sauce online. I open Taobao, type "sauerkraut sauce," and many brands appear. I choose based on sales data, reviews, first-screen products, etc., then place an order and pay, and finally wait for delivery to my home. That completes a purchase. I buy a jar of sauerkraut sauce offline. I go to a store, walk to the condiment section, see many brands, choose based on brand awareness, price, packaging size, etc., then pay at the cashier, and finally take it home myself. That completes a purchase. Comparing online and offline shopping behaviors: First, the information flow is the same; I need to obtain it based on my situation, but the method differs. Second, the cash flow is the same; I need to pay, but the payee and method differ. Finally, the logistics are the same; it ends up at my home, but the difference is whether I bring it myself or someone else brings it. So the basic framework of shopping: information flow, cash flow, and logistics all exist, but the forms and relationships change, which also means operations change accordingly. 2. The logic of people, goods, and places is changing. Online logic is infinite virtual shelves, infinite products, and near-infinite customer traffic. "People, goods, and places" achieve niche matching through big data precision, even for long-tail products, finding the most suitable consumers. The transaction scenario shifts from passive to active, attracting consumers to the venue. For online, the marginal cost of listing products on infinite shelves is low, and consumers have infinite long-tail demands. One end has infinite supply, the other infinite demand, creating huge opportunities for matchmaking. Offline logic is limited shelf space, a mass configuration: goods don't move, people move. Products are placed on shelves, and consumers actively come to the transaction place to meet shopping needs. The shopping logic here is: Products first get on the shelf (stores can only carry limited products; products that don't bring profit to the store owner are hard to list), then occupy a favorable position (a favorable position means it can better capture in-store traffic), and product turnover must be fast (sales are key to profit, at least best-selling), otherwise, they are eliminated. FMCG consumers are the most fickle; a consumer can remember no more than 10 brands. Online purchase logic is more about think, see, buy, while offline is more about see, think, buy. So the fight for core positions on limited shelves becomes a must-win for merchants. At the same time, the logic of expense usage also changes, which is a pain point for internet-famous products landing offline. Four Suggestions for Internet-Famous Products Going Offline 1. Choose target markets and conduct in-depth market research. The biggest problem for successful online bosses is "taking things for granted": I'm so successful online, offline won't be too bad; business is the same. In reality, the same product online and offline is like different industries. Don't roll out fully at the start; China's market is too vast to understand overnight. My suggestion is: First, study your product and the sales situation of the entire category. Which provinces do your online orders come from? Select the top 3 provinces for research. What's the benefit? At least in these provinces, when the product or brand lands, consumer awareness will save a lot of investment (products without brand awareness face the first hurdle of distribution). Second, deeply research channel partners: understand distributors' views and needs, the attitudes of sub-distributors and wholesalers, the thoughts of terminal store owners, and the operation methods of large categories (if you do snacks, understand the snack category). The ultimate goal is to lock down core target distributors, core channels, targeted outlets, expense investment methods, visual merchandising formats, and target audience education and communication methods. 2. Definitely run small-scale pilots. What is small-scale? You can choose a specific channel in a city in a province, or even a specific type of designated outlets. Choose a few SKUs from one series of your product and conduct consumer experience activities in specific venues. In short, the first step is to pull back your fist and hit one point, aiming to explore product-channel fit, consumer acquisition speed, repurchase frequency, sell-through at small stores, restocking frequency, and changes in store owner attitudes. Quickly determine the right product, the right channel partners, the right channel coverage model, and the right consumer communication methods. Ensure supply chain efficiency, ensure channel profit rationality, and ensure the core competitiveness of the product is effective in the short term. Ensure this combination is not particularly niche and is easy to replicate. 3. Hero product logic + word-of-mouth communication. What is offline hero product logic? When going offline, you must cultivate a hero product. A brand without a hero product won't last, and without a hero product to attract traffic, other products will find it hard to enter stores. For example, Genki Forest: its sparkling water is a hero product that opened many terminal stores, and its other new products followed with much lower difficulty. This is very different from online, where listing products is almost zero cost. Offline, the hardest part is getting new products into stores, requiring customer relationships, trust endorsement, after-sales promises, etc., all of which are costs. All this can be solved or reduced by a hero product. Why word-of-mouth? In the short term, the core to judge whether a product has potential to become a hero is the speed of word-of-mouth. Word-of-mouth increases product popularity, penetration, per-store per-SKU daily sales, and repurchase rates among core audiences. 4. Organizational strength: offline emphasizes execution, online emphasizes exploration. The biggest difference between online and offline teams is that online people are good at exploring, while offline people are good at executing. This is a fundamental difference. Therefore, when running offline, you must set standards with clear concepts. Follow the process of standards + inspection + authenticity + incentives. Final Thoughts: Why internet-famous brands must go offline is hard to answer, and how they should go offline is even harder. Our ancestors taught us that success requires three elements: favorable timing, favorable geographical conditions, and favorable human relations. We can translate this as timing is important for going offline, channels are important, and operators and consumers are important. But how to explore offline requires steady progress, being able to advance and retreat, which is also the best training ground for bosses and operators' mindsets and abilities. This article is a general guide for internet-famous brands landing offline. In the next article, I will bring practical discussions on internet-famous brands entering offline. Stay tuned.