Click the image for details. Traffic, as defined by Baidu Baike: the number of vehicles or pedestrians passing a specified point within a specified period; on the internet, it refers to the number of visits to a website address within a certain time. Consumers have a fixed 24 hours per day, so wherever user attention goes, traffic follows. With the proliferation of mobile internet, the total amount of information users access has increased, the density of information access has increased, and the channels for information access have multiplied. The total volume of traffic has further shifted from offline to online as the internet-connected population grows. However, consumers' total time remains constant; what changes is the form of traffic. Traffic is divided into two types: Cognitive traffic: where there is no obvious consumption purpose, and users are attracted by content producers through advertisements, topics, and other content, triggering attention, searches, memory retention, and even conversion into transactional traffic. Transactional traffic: where there is a clear consumption purpose, with very clear paths and behaviors; consumers also obtain information through searches, price comparisons, and similar actions.
In the past, cognitive traffic was solved through communication, characterized by centralized media and mass communication;
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Transactional traffic was solved through distribution channels, characterized by multi-tier transactions from distribution to retail, ultimately delivering to consumers. Now, the logic of cognitive traffic has shifted from mass communication to precision communication and segmented communication, while transactional traffic has shifted from tiered distribution to platform traffic purchasing. As the basic supply of information increases, consumer choice expands significantly. Coca-Cola says, "Our competitors are not just Pepsi, but the total amount of liquid a person can consume daily." Yet today, the boundaries of competition are increasingly blurred, and substitute products are multiplying. Who would have thought that the emergence of Douyin (TikTok) would affect gum sales? Thus, in the internet age, anyone competing with brands for traffic is a competitor. I. Three Types of Traffic Related to Business The development of retail traffic in China can be divided into three stages: The first stage: offline traffic, also known as location-based traffic; the second stage: online traffic, also known as platform-based traffic; the third stage: social traffic. Offline traffic: Before the internet, traffic that could generate direct transactions was generally found in densely populated areas. An industry saying goes, "golden corner, silver edge," meaning traffic volume is proportional to the location of the store. Foreign enterprises like Walmart and Carrefour, which are KA (Key Account) stores, opened stores in transportation hubs, business districts, and other high-traffic areas, aiming to attract enough customers through prime locations. Of course, the tens of thousands of products and good shopping experience within the store also attract a large number of consumers. So, from another perspective, the reason stores dare to charge you display fees is essentially a form of traffic fee. Offline traffic also has different attributes depending on the location, such as communities, business districts, CBDs, factories, etc. The product mix sold in different places varies accordingly. Online traffic: With the popularization of the internet and home computers, a new traffic model emerged: e-commerce platforms, the most typical being JD.com and Tmall. Of course, there are also video sites like Baidu, Youku, and iQiyi. These traffic sources have significant centralization characteristics; traffic volume depends on the distribution by the traffic owner, and the allocation of traffic is in the hands of the platform. Taobao and Tmall do not produce traffic themselves, nor do they occupy prime traffic locations. Instead, they build platforms, attract merchants to join, and attract consumers with a rich assortment of products. As the purchasing population grows, more merchants are attracted, and the platform becomes richer. Through price comparison, increasingly cheaper products attract more consumers. In this process, the platform, as a third party, earns revenue through traffic distribution and services to merchants. This traffic has a very obvious Matthew effect. In 2016, China's online retail sales totaled 4.97 trillion yuan, accounting for 14.95% of total retail sales of consumer goods, with giants monopolizing the vast majority of profits. Social traffic: With the proliferation of smart mobile terminals, after users' social relationships migrated to WeChat, a third major traffic model gradually emerged: social traffic. Examples include WeChat, Weibo, influencer live streaming, KOL communities, influencer e-commerce, micro-commerce (WeChat business), and content e-commerce. These all belong to social traffic, though some are one-way and some are two-way. Strictly speaking, this is a very typical ecological traffic, where multiple species coexist, without a centralized distribution mechanism, and decentralization is very evident. Under social traffic, many new retail species have been born, such as the micro-commerce model that empowers individual entrepreneurs (e.g., Yunji, Sibu, Dalinjia), Pinduoduo, which leverages social networks to reach fourth- to sixth-tier markets, and the community group buying that became popular in 2018. All are new business entities based on social traffic. II. Competitive Relationships Among Multiple Traffic Types After the emergence of new traffic models, to some extent, they have indeed squeezed traditional traffic models. But this does not mean that traditional traffic has disappeared. In fact, the quality and quantity of traffic have increased over the past decade. On one hand, the proliferation of mobile terminals has increased the number of internet users, expanding the traffic base. On the other hand, the overall online time per user has continued to increase, expanding the traffic per individual. Finally, consumers' purchasing power has increased, and consumer demand has been further released by mobile internet. However, entering 2018, WeChat's registered users reached 1 billion, essentially covering all internet-capable users in China. Second, user online time has not seen significant growth in nearly five years. This means that the overall internet dividend in China has ended, and market growth has shifted from capturing incremental traffic to competing for existing traffic. With total traffic unchanged, the three traffic models will have varying degrees of competitive relationships. However, humans are three-dimensional beings living in four-dimensional space, essentially physical in nature. So, in a sense, it is unlikely to completely detach from physical attributes and enter information attributes. We see that offline traffic, though shrinking, will not disappear. Similarly, online platform traffic, with its great richness and comfortable shopping experience, is also unlikely to disappear. But overall, if traffic is a river, social traffic clearly occupies the upstream, platform traffic is in the middle, and point-of-sale traffic is at the end. Social traffic is a new business model with potentially explosive growth in the next few years, even a decade. From a sociological perspective, social interaction is a human instinct and an innate basic ability. The combination of this gene-deep habit and the proliferation of mobile internet brings enormous imagination space. III. Cognitive-Transactional Relationship and Integration of Online, Offline, and Social New principles for customer communication in the internet age:
From mass communication to segmented (layered) communication
From broad communication to precision communication (technology)
From functional to emotional (consumption upgrade)
From indoctrination to inspiration (creation)
From pre-transaction communication to post-transaction communication (funnel to ripple)
From single-channel to integrated communication (full network, full channel, spatial sense) In response to the current integration of online and offline, the marketing rules for interaction between enterprises and consumers must also undergo systematic reconstruction: the integration of cognition, relationship, and transaction with online, social, and offline! Cognition:
Online traffic: Communication should be omnipresent.
Social traffic: Solve trust issues through KOLs.
Offline traffic: Tailor to core users' needs and create exclusive scenarios. Relationship: Online traffic: 24/7 online, real-time interaction.
Social traffic: Build a core 1990 community matrix through communities.
Offline traffic: Build relationships with consumers through good offline experiences. Transaction: Online traffic: B2C, C2C, O2O.
Social traffic: Social e-commerce, content e-commerce, community e-commerce.
Offline traffic: Deep distribution, precision distribution. IV. Full Network, Full Time Period Online Market competition is essentially a battle for user attention, but consumer attention is being diluted by various apps on mobile terminals, making attention a scarce resource. Consumers are becoming "Schrödinger's cat"—before a transaction occurs, you can never be sure where they will place an order. Therefore, the logic of sales has shifted from channel competition to traffic competition. The emergence of various e-commerce platforms has shortened the time between user contact and transaction. If users cannot be converted to purchase immediately, their attention quickly shifts, causing brands to waste marketing expenses and miss sales opportunities. So, based on this logic, brands must achieve the following in the future: Brands must be online across all three traffic models, across the entire network, all time periods, and all traffic domains. And within limited time, convert user attention into transactions; only those who do so will win the race. Of course, different types of FMCG products have varying proportions of online and offline. For instant consumption goods, physical point-of-sale locations are a rigid need, so most transactions will still occur offline. For planned consumption goods, since delivery time requirements are not high, a large portion of transactions will occur online. From a transaction perspective, the fragmentation of retail scenarios is already a major trend, and it will be difficult for centralized traffic distribution platforms to emerge in the future. Enterprises' organizations must also follow the fragmentation of retail scenarios, evolve, and adapt to market demands. Large enterprises, in the digital era, must begin to attempt organizational change and restructuring. And around the new traffic logic and consumer needs, create value for consumers. New Distribution will hold the 2019 (5th) FMCG + Internet Conference during the Chengdu Spring Sugar and Wine Fair from March 16 to March 18. This conference will focus on the topic of "Breaking the Game" and conduct in-depth discussions with numerous brand owners, supply chain service providers, distributors, and retailers. Compared to previous conferences, this summit will be fully upgraded. In addition to original topics such as channel innovation, city distribution logistics, and distributor transformation, it will add multiple parallel forums on new marketing cases, IP + FMCG empowerment, community group buying, and innovative retail. Through three days of ten high-density, high-quality expert sharing sessions, we believe every brand owner and distributor can learn the latest business models, expert insights, and practical methods, finding new tools and methods to break the game in 2019 and return to a path of high-speed growth. Review of Previous Conferences -END-