Click to read the original article for details Brands are flocking to the emerging field of social new retail. Recently, another major brand, Yili, announced its entry into social new retail with a new lactic acid bacteria product. It is understood that Yili's 'Xinshiji' brand new probiotic product, Yixiaojun, was officially launched on July 19. With this new product, Yili Group officially entered the social new retail field. According to official introduction, this new product was developed by Yili's research team over nearly 2 years, operated across all channels by social new retail operator Tang Xiaoyao, and introduced DuPont (US) for contract manufacturing. Yixiaojun probiotics use solid beverage as a carrier, combining 5 probiotic strains to effectively support intestinal health. It is packaged and produced using DuPont's patented stability system, using aluminum foil bags to maintain maximum probiotic activity. The 'Xinshiji' brand is owned by Yili's wholly-owned subsidiary Lizhimei (Shanghai) Investment Co., Ltd., while the operator Tang Xiaoyao (Dalian) Biotechnology Co., Ltd. was established on January 29, 2018, and previously mainly operated the weight management meal replacement product 'Tang Xiaoyao Meal Replacement Biscuits'. This is not Yili's first foray into social new retail. Yili first entered social new retail in 2018, also under the 'Xinshiji' brand, launching two solid beverages, 'Collagen Peptide' and 'Yeast Beta-Glucan', signing Jiangsu Suzhou International Trade Co., Ltd. as the channel operator. What is social new retail? In fact, social new retail is not that 'new'; it is just an evolved version of the previous 'WeChat business' model. The core of the transformation from WeChat business model to social new retail model is inseparable from 'social networks'. Whether it is social new retail or WeChat business model, it is a platform or headquarters that recruits countless people to become franchisees, then gives them profit incentives, encourages them to promote information through social media, and attracts more people to join or purchase products. The so-called 'new' mainly lies in: social new retail is a platform-based operation model. In the past, WeChat business was through a general agent who distributed goods to lower-level agents in a hierarchical manner, and the last level person sold the products. Now social new retail has changed the multi-level model. The platform headquarters directly recruits individual franchisees, with no hierarchy, and franchisees do not stock up, so all products are shipped by the headquarters. This means that although the headquarters recruits many franchisees, the products remain at the headquarters. Also, because there is no hierarchical profit relationship, all WeChat business people need to directly sell products to consumers to obtain profits. Therefore, social new retail mainly focuses on selling products to consumers, and the platform headquarters does not sell goods to franchisees, which is very different from the traditional WeChat business model. In recent years, China's social new retail has developed rapidly. Relevant data shows that this year it is expected to reach a market size of one trillion yuan. Now, many FMCG brand companies have entered the field, such as Yili, Mengniu, Nestle, Wahaha, etc. Is it promising for brands to find third parties for social new retail? In fact, most brand companies do not participate in the operation of social retail business. Except for production, which is completed by the brand, pricing, recruiting agents, marketing, and a series of actions are all completed by the operator. The so-called operator is basically an outsourced WeChat business or social retail team. According to incomplete statistics from New Distribution, most brand companies currently find third-party operators to run their business. However, looking at these entrants, the operational level of the backend is uneven, and some brands have even earned a 'bad reputation' because of it. Among them, Mengniu and Wahaha, which entered early, have suffered the most. Mengniu's initial operator for the Manran product was Beijing Youxuan Qiantong Technology Co., Ltd. In August 2018, the company was involved in a major online pyramid scheme case and was identified by the Hubei Jingshan County Industry and Commerce Bureau as 'involved in pyramid schemes', resulting in a fine of 43 million yuan for Youxuan Qiantong. Due to the huge fine and frozen accounts, Youxuan Qiantong was unable to ship or refund the contracted WeChat business agents and sales. Youxuan Qiantong claimed innocence and blamed the then general manager of Mengniu's social new retail platform for decision-making and management errors. Although the two parties terminated the contract in March 2019, and Mengniu announced a cooperation agreement with Qingxiang Manran (Hangzhou) Network Technology Co., Ltd., designating Qingxiang as the sole legal distributor for Manran products, it still cannot change the fact that tens of thousands of agents in the Manran project felt disappointed with the Mengniu brand because of the previous operator. Wahaha is not much better. After several changes in market operation teams and investment policies, many agents withdrew due to losses, and some agents compared their experiences with the investment promises they had initially learned, believing they were 'cheated'. They formed agent rights protection groups to seek explanations from Wahaha. According to insiders, Zhongnan Tianyan, responsible for the market operation of Tianyan Jingjing, initially united seven 'WeChat business companies' to operate the product, including Weiyun International, Xinghuo Alliance, Weishijiao... These seven WeChat business companies each operated independently, causing this chaos. The source of the above problems is the uneven talent in the WeChat business industry and the 'hands-off boss' attitude of brands. After 'transforming' into social new retail, the tricks of WeChat business people have not changed much. They still use three-level distribution, starting with users, celebrity endorsements, etc. With the endorsement of big brands, these WeChat business teams are even more at ease, boasting about the magical effects of products and full of lies. And brands rarely have independent project teams involved in operations, leading to a state of basically leaving things unattended. What aspects can brands start with when finding third-party operators? 1. Learning attitude Brands entering social e-commerce are mostly trial projects. There are no professionals in the company who can take on such responsibility. Generally, the e-commerce department or new retail department sets up a project, and then finds a professional and experienced operation team in this industry to do it. Since it is a field they are not familiar with, brands must adopt a learning attitude. Project leaders should quickly familiarize themselves and enter the project as learners, communicate with more professionals in the industry, and participate as much as possible in every step of planning and operation processes to have a clear understanding. 2. Risk control During the project process, brands must do risk control. The cases of Mengniu and Wahaha are at least a lesson. For brands, brand value and corporate reputation are tied together. A slight mistake may cause irreparable loss and damage to the enterprise. Therefore, when brands intervene in third-party operations, in addition to adopting a learning attitude, they should also do risk control well. Although WeChat business has gradually transitioned from individual WeChat business to brand WeChat business and professional WeChat business stages, after all, the industry's accumulation and precipitation are not enough, and there are no particularly standardized rules and regulations. There are too few professional talents, and to complete indicators and sales, they are prone to taking risks. 3. Incubate an independent department within the organization During the operation process, brands should be ready to build an independent team at any time. The rise of mobile internet has changed consumption scenarios. With the development and maturity of mobile internet, social e-commerce has become a mainstream business form. For brands, social e-commerce is an unavoidable channel, and the sales of traditional FMCG enterprises are being eroded step by step. Why, without any preparation, are the bigwigs of traditional FMCG entities still rushing into the social e-commerce field? Because decision-makers of FMCG enterprises truly feel the changes of the times. They have to try to do this business. And in the future, more and more brands will enter, so incubating an independent team within the organization to do this is particularly important. Either don't do it, or invest in doing it well. Besides finding third-party operators, what other ways can brands enter this field? Looking at the brands currently in social e-commerce, they still stay at the distribution concept of 'controlling channels', making diversified channel layouts. In fact, the word 'control' has been gradually failing since the birth of mobile internet. Socialized division of labor, professionals doing professional things, is an eternal truth. In the past, brands dominated industry changes and market development, but with the rise of the internet, platformization and ecologization have gradually become the mainstream business forms. Therefore, in addition to cooperating with professional third-party operators, brands can also appropriately actively embrace social platforms. Perhaps, in the eyes of brands, third-party operators can focus on doing their own products well, but it is undeniable that platform-based social e-commerce is gradually rising. They have relatively stable user groups and mature market operation strategies behind them, which can help brands achieve better distribution and precise reach to users. For example, Yunji, which has successfully listed, and Global Catcher, which is quietly making money. Brands focus on consumer insight and thinking, develop good products, and build good brands; platforms focus on operating users well and delivering good products to users. Each takes what they need, which may not be a bad thing. According to a senior executive of an imported biscuit brand who revealed to New Distribution, they cooperated with Yunji and achieved sales of 14 million yuan in one day, with astonishing sales. Now there is no longer a stable channel, an unchanging channel. Controlling channels has become a thing of the past. Actively embracing cooperation may yield huge dividends!