Click the image above for details Without the pandemic, discussing this topic might have been premature. Although various new retail O2O platforms, backed by capital, expanded aggressively, their actual operations and risks of closure were unknown. Clearly, the pandemic seems to have given new retail O2O a ticket to success, with frequent reports of financing, user growth, and regional profitability. If anyone still doubts the viability and value of the new retail O2O model, they are like a frog at the bottom of a well. According to research data from New Distribution Consulting, in the 30 days after the 2020 Spring Festival, due to the pandemic, the number of people working remotely from home surged. Stimulated by the home economy, fresh food O2O platforms saw a 58% year-on-year increase in active users.
According to industry insiders, for example, at Hunan Bubugao chain stores, home delivery business accounted for over 20% of sales. Walmart also stated that its O2O channel sales increased 4.4 times compared to the same period during last year's Spring Festival, with orders from the Walmart-to-home mini-program growing 15.2 times.
These data reflect that: Home delivery e-commerce, led by new retail O2O, has become a major trend after this pandemic. Before this, New Distribution had published several articles on the topic of FMCG manufacturers needing to quickly follow up on home delivery e-commerce, offering some suggestions and ideas, but mostly from the perspective of new retail platforms.
Recently, I had the opportunity to exchange ideas with several brand owners, and I deeply feel that new retail O2O represents a trend dividend for FMCG manufacturers to increase volume and profit. Some leading brands have already begun practical exploration with remarkable results. Therefore, this article is written from the perspective of brand owners, discussing how FMCG brands can get on board with new retail O2O.
1. O2O is not just a sales channel, but also a marketing channel 2. The imbalance in O2O development leads to significant regional differences 3. Who manages O2O? E-commerce department or channel department?
-01- O2O is not just a sales channel, but also a marketing channel I think many brands have already started cooperating with new retail O2O platforms, whether it's home delivery e-commerce, community group buying, or platform e-commerce like Meituan and Ele.me, but most only view it as a sales channel.
In fact, the value of O2O platforms goes far beyond that. If viewed as sales, it might just be treated as a channel internally.
Let's look at two sets of data. According to public data, Meituan Waimai has 400 million registered users and 50 million monthly active users; Ele.me has 420 million registered users and 50 million monthly active users.
Meituan and Ele.me can be said to have massive user bases, and regardless of what they sell, they are huge traffic platforms. With user traffic, there is communication value. Now look at another set of data. According to the O2O report released by New Distribution Consulting, taking JD Daojia as an example, the platform's user profile is 25-35 years old, with young consumers accounting for 68%. 70% of users have a monthly income of 10K-20K.
This data is a dream come true for FMCG manufacturers: young opinion leaders. Even if it means losing money, it's worth investing in as marketing promotion. Therefore, for brand owners, this is not just a channel for rapid growth, but also a marketing battlefield.********
Further extending, as a sales channel, besides product listing, natural sales, and price management, the rest is sales investment, looking at ROI. But fortunately, these platforms are all digital platforms based on the internet, so the effect of promotional conversion is immediately visible and real-time checkable. As a sales channel, the key is the match between product structure and platform, as well as the formulation of promotional strategies. As a marketing battlefield, there is much more to do. Brand building, product promotion, new product launches, etc., can all be tried. Most importantly, it can truly achieve "unity of brand and effect." Invest money on O2O platforms, and you can see results immediately. Previously, spending 200,000 on traditional media, you had no idea how many people saw it, how many were interested, or how much sales it brought. You could only rely on predictions and third-party monitoring agencies. But now you can see data within 3 days, and through data comparison, observe the effect.
Of course, the value of data is not limited to the current campaign. Once data is accumulated, it can be further analyzed. Optimize communication and promotion strategies, product strategies, and consumer insights, etc. If it's within the Alibaba system, it can flow back to Alibaba's data bank and be converted to Tmall and Taobao for further operations.
New retail O2O platforms face the most valuable young consumer group, making them most suitable for product promotion and new product launches, especially for new products.
These young consumer groups inherently seek novelty, differentiation, and personalization in their consumption demands. In the past, new product launches often chose traditional online e-commerce, but limited by the low value and immediacy of consumer goods, further sales of new products were often restricted. But now, with the high integration of online and offline, this pain point is almost perfectly solved.
For brand owners' new product launches, the later process path can be considered as follows: online, through content seeding and transaction conversion, conduct new product testing with immediate user feedback. After iterative maturity, officially enter offline.
For offline choices, such as Pupu Supermarket, Dingdong Maicai, KA store online home delivery business, Meituan, Ele.me, do further sales testing. ** Based on sales volume, anchor store profiles. Based on standard store profiles, expand distribution coverage. Through this form, precise distribution of new products can be maximized. Therefore, new retail O2O platforms are also very efficient pre-market testing grounds for FMCG manufacturers' new products entering offline.
-02- The imbalance in O2O development leads to significant regional differences The above is the value and significance of new retail O2O platforms for FMCG enterprises. It's no exaggeration to say that every FMCG manufacturer should currently attach no less importance to O2O platforms than to any other channel. At this moment, it's a dividend period. As the saying goes, "What you grab is what you earn." Once O2O platforms mature, tolls and bridge fees will inevitably increase.
Heavy investment is certain, but FMCG manufacturers must also clearly recognize the limitations of new retail O2O. A typical characteristic is the imbalance in regional development, and the difficulty of layout management brought by a hundred schools of thought contending.
For example, the representative of "front warehouse" O2O, Miss Fresh, mainly operates in East China and South China; Dingdong Maicai mainly in Jiangsu, Zhejiang, and Shanghai; Pupu Supermarket in South China, Fujian, etc. The representative of community group buying, Xingsheng Youxuan, is in Hunan.
Although many new retail O2O platforms are continuously expanding their layouts, the imbalance in platform coverage across cities leads to blurred boundaries for brand owners' cooperation regions. Under each covered market, the development stage is different, and the depth of cooperation is also limited.
In addition, the types of new retail formats in each market are also emerging endlessly. In each city level, high-tier cities have mature new retail formats, mid-tier cities have rapid development, and low-tier cities are in the budding stage.
What's more troubling is that each new retail format often has vastly different cooperation models. These are the key reasons why brand owners hold a wait-and-see attitude towards O2O platforms, not daring to easily intervene or form strategic cooperation.
There are difficulties, but that's not a reason not to cooperate. Looking at the entire new retail landscape, platform-based O2O represented by Meituan, Ele.me, Dmall, Taoxianda, and JD Daojia is relatively mature. Brand owners should invest heavily and explore more marketing plays on these platforms. For self-operated O2O platforms represented by Miss Fresh, Dingdong Maicai, Pupu Supermarket, and Xingsheng Youxuan, the mature markets are limited, so brand owners are better suited to position them as "sales channels." Diversified product sales, precise cost investment, and trying new product promotions in mature markets. Currently, during the development period of O2O, every FMCG manufacturer should set clear strategic positioning based on their own category consumption characteristics, rather than just simple trade cooperation, and should not hold a wait-and-see attitude.
-03- Who manages O2O? E-commerce department or channel department? For leading brands, the development of O2O is probably clear. But the next problem is internal organizational alignment. Who manages O2O? Is it the e-commerce department, the channel department, or an independent O2O team? In fact, facing such a new format, there are both risks and opportunities. Worrying whether it will be the next B2B.
Of course, the answer is definitely no; O2O is absolutely not the next B2B. The current model has been fully validated, but there is a risk of closure for specific enterprises with poor operations.
Opportunities are obvious: all incremental. So who should take over O2O is a headache. "The matter itself is not difficult, but the interests are too messy, making it hard to do." New retail inherently involves the offline channel department, but it can also be understood as e-commerce, which should be done by the e-commerce department. Various complex interest relationships, responsibility, authority, and costs are all dilemmas.
On this point, because each enterprise and category is different, internal organizations have their own systems. Instead of finding answers from within, it's better to find answers from outside. In the short term, platform-based O2O (Meituan, Ele.me, Dmall, Taoxianda, JD Daojia) is nationwide and relatively mature, so it's most suitable to be managed by the e-commerce department, positioned as marketing-led with sales execution;
Regional self-operated O2O (Dingdong Maicai, Pupu Supermarket, Miss Fresh) has multiple market levels, some mature. E-commerce handles contact, channel leads, positioned as sales channels, with marketing selected for testing;
Local O2O platforms, single market, channel-led, sales channels.
In simple terms, for national O2O platforms, the e-commerce department coordinates as a whole, focusing on both marketing and sales; for regional O2O platforms, e-commerce handles contact, regional units are responsible, focusing on sales with marketing as a supplement. Other O2O is left to local authorities. In the long term, whether to hand over to the e-commerce department or the channel department depends on the overall development of O2O: whether it's national or regional. If we look at past retail, it's mostly regional, just different sizes of regions. If we look at e-commerce, it seems there has never been a regional concept, only national.
Regarding the specific development and models of new retail O2O platforms, New Distribution will hold a special "Community E-commerce O2O Summit" forum at the 2020 (3rd) China FMCG Conference in Shanghai from August 24-26. At that time, New Distribution will invite more experts and corporate executives in the community O2O field to share more development trends in new retail formats. Interested friends should not miss it!