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Editor's note: This year's糖酒会 (Chengdu Food and Drinks Fair) featured many forums discussing mobile internet. There is no longer debate on whether traditional liquor companies should actively integrate with mobile internet, but no insightful methods have been offered on how to do so. From the simple and crude 1.0 model of JD.com and Tmall, which simply placed computer shopping onto mobile phones, to the so-called Xiaomi 2.0 mobile internet thinking, the former lacks innovation and evolution, while the latter is constrained by the existing business and organizational capabilities of liquor companies, making it difficult to implement and see results in the baijiu industry. So, is there a feasible way and strategy to truly help liquor companies achieve integration with mobile internet? Li Zhenjiang from Hejun Consulting, in last night's [Hejun Huicui · Innovation Through the Fog], provided some experiences and viewpoints through the successful mobile internet transformation practices of three liquor companies with completely different sizes and systems. He summarized this as the 'Mobile Internet 1.5 Model' for traditional enterprise transformation, lying between 1.0 and 2.0. Below is the original speech:
Li Zhenjiang: Hello everyone, I'm glad to share with you. Two years ago, when talking about e-commerce, everyone said e-commerce was powerful. But at the end of 2013, mobile internet began rapid development. In just two years, the traditional understanding of e-commerce has become the 1.0 model of the internet, using internet methods to transform traditional industries. Everyone is discussing this. Personally, I believe that in the internetization of traditional industries, the apparel industry has given us great inspiration.
The case of Li Ning is widely discussed. From 2008-2009, when the largest domestic apparel brand began to decline, to last year when it fell to 500 million, we can see that Li Ning had already laid out its internet strategy three years ago. But why did it still decline so sharply? What is the logic behind the overall decline of the entire apparel industry? Through research, we found that traditional apparel relied heavily on effective traffic from commercial real estate to drive consumer purchases. Now, as the entire country's commercial real estate is in a bubble, the essence is that the distribution principles of traditional traffic have undergone tremendous changes. Coupled with the impact of the internet, we see today that the transformation of the apparel industry is extremely difficult, and the cost of buying traffic online is extremely high. So we say the apparel industry will struggle today.
The internet must be combined with traditional industries, but people don't know how to combine them, and what the future should look like. For the internet, our first understanding is as a tool and methodology, and only through exploration have we gradually evolved this model. Because we say from an economic management perspective, business models are never designed but naturally grow. What we see today is that in this environment of new and old worlds, traditional enterprises have been given the soil for internet transformation, but how to make the internet transformation? How to be compatible with the mobile internet environment? Today I will share two cases that have been practiced and achieved certain results.
The first is the HeLong company we are serving. This company has no brand, no resources, and no capability. Under such circumstances, in two years, under the leadership of the company's leader, it went from zero to 20 million. At the end of last year, due to industry adjustments, it declined to 12 million, with sales halved. At the beginning of the year, we predicted that the company's volume would continue to shrink this year.
Such a company, by the end of August this year, saw sales grow counter-trend by 60%, sales revenue increase by 30%, employee wages rise, and costs decrease by more than 60%. This is the effect of five months of practice since Hejun entered in March. How exactly did we do it? In this process, we did several things:
First, we all know that the internet requires directly reaching out to mass users and communicating directly with them. But in this process, we found that direct transaction cycles are difficult to achieve because consumers are not yet mature in making purchases through the internet on computer screens, let alone directly transferring to mobile phones. The formation of shopping habits will take a period of time. So we say that although using mass users to learn from Xiaomi's 2.0 model can be cultivated, the time cycle is relatively long, requiring a long process of cultivating consumption habits in between. What is the business that directly generates transactions with the liquor factory and is also close to consumers? It is our terminals. So, through mobile internet tools, we grasp consumer fans on one hand and terminal fans on the other. Thus, a dual-platform, multi-account approach emerged to improve overall operational efficiency, doing both commercial organization and consumer organization. The effect achieved: after five months of operation, the total promotion costs have not exceeded 200,000 yuan, and the originally planned 2 million yuan in advertising costs have not been touched. So far, in the Yanji market with a population of 300,000, our platform has 15,000 fans, and by the end of the year, it will exceed 30,000. On the other terminal platform, there are now 400 terminal store owner users, and by the end of the year, it will exceed 600. What does this mean? My platform has become the largest self-media platform in Yanji, the most effective communication platform with local terminals. Many store owners even directly make purchases and provide feedback through WeChat without calling. In managing the terminal chain, I no longer rely on salespeople and traditional distributors. In this way, we shorten the chain and increase efficiency.
Let me share a viewpoint. Just now Wang Wei said that in this era, there must be respect for human nature. We say that the essence of mobile internet is transactions based on relationships, not relationships based on transactions. Store owners are people we make friends with, and finding fans is also about making friends. We can imagine that in our traditional channel chain from distributor to sub-distributor to terminal, retail terminals are actually the most neglected, have the least say, and are the most humble and lowest business group. But in this process, we jokingly say let the most awesome and the most foolish people have a chance to show off, letting store owners without capital and voice become local stars. So we held a very important event a couple of days ago called selecting the "Most Beautiful Boss Lady in Yanji." Why did we do this? Not to promote the boss lady, but to promote her store. We have 15,000 fans here, and we have all the terminals that carry our products. In this way, we can direct effective traffic to the terminals. Where you should go to consume, you go there, but in this process, we have drawn closer to the terminal store owners. So we don't pay display fees in stores, but our products are always placed in the best positions. So, during the Mid-Autumn Festival, in 7 days, 400 terminals were supplied on-site, and all products were sold out within three days. Moreover, the product price exceeded the local mainstream price, and even many terminal store owners complained to our company because they didn't get the products. This is our business logic: using mobile internet tools, on one hand, we circle consumers for continuous communication, interaction, trust, and participation; on the other hand, we grasp the traffic gates of terminals that can generate sell-through. By distributing this traffic to the ports that can be monetized, our business logic is formed. This is what we call the 1.5 model of new and old world integration. Effective traffic is redistributed. This business logic is not hard to understand.
Our two accounts: one is called Lehe Lehe, our terminal platform, now with 400 terminal store owners, with frequent daily interaction and communication. The other is Lehe Life, now with 15,000 fans, with high daily interaction and article readership. The content is not only fun and interesting but also related to local current events. Last week, an article with 15,000 fans had over 34,000 clicks, meaning the article was shared very widely. Locally, this account's brand awareness even surpassed that of the liquor factory. Additionally, how to interact with consumers? One is to satisfy consumers' voyeuristic desires. For example, we often have small internet activities. On Qixi Festival (Chinese Valentine's Day), if you replied on the platform, 7 girls would sing for you. That day, 6,000 users interacted simultaneously on the online platform. Since that day, the platform's interaction rate and readership have been around 3,000 people. This activity was very fun and playful. After the Most Beautiful Boss Lady selection, the most popular boss lady's personal account gained over 500 fans. That is to say, the terminal owner didn't spend a penny, and the company helped him find a private plot for sell-through. This helps terminal sell-through, and in turn, when we pull business, why wouldn't they cooperate? So I say that today's poor industry situation is not a problem of manufacturer-dealer conflicts, not a price issue, not an innovation issue, but a problem of not having more help for terminal sell-through. If we solve the chain and the guidance of effective traffic, our sell-through will naturally happen.
You see this product, this unintentional product, not fully prepared, achieved rapid sell-through during the Mid-Autumn Festival. We are planning the next one, which must be profitable. Such products directly face terminals, terminals face consumers, and we publish on our own platform without advertising or consumer policies. Even when terminal policies are not advantageous, sell-through is still very good, and many consumers actively buy. So, by opening up the logical relationship and solving effective traffic, we have the 1.5 model of new and old world integration as we perceive it. This is done through全民营销 (all-people marketing) and全民创业 (all-people entrepreneurship). At first, many in the company didn't understand, didn't know what value the internet brought, and were resistant and wait-and-see. But now, after continuous communication and interaction and seeing results, the whole company treats this as a very important matter, and at the enterprise and organizational levels, it has risen to a new height.
The first case is called creating something from nothing. But mobile internet also has a great value: linking resources. The second case is the Zhijiang project, which actually uses mobile internet methods to solve Zhijiang's resource integration and effective traffic acquisition in the Wuhan market.
So first, in the Wuhan market, we contacted a well-known local media program called Haochigou (Foodie), which recommends various restaurants. This platform itself has 110,000 fans. We turned it into an offline Haochigou club through the online platform, so it's easy to acquire 50,000 fans in the next two to three months. These consumers will become very important traffic supporting our catering channels in Wuhan. It's like Lao Bai's Suining model, taking a group of people to eat. So we quickly launched on this platform.
Second, we partnered with Wuhan's largest liquor direct-supply platform, Jiulide, to jointly operate its 40,000 fans. At the same time, Jiulide acts as our local consumer logistics service provider. In this way, we help the business solve fan operation issues, and the business helps us solve logistics operations that we cannot solve ourselves, providing consumers with the closest and most convenient experience.
Third, we made Zhijiang's public account more humanized and personalized, using a personal approach to solve its core 10,000 fans. In this way, the platform will have nearly 100,000 fans. What effect does this have? The traffic of 100,000 fans in Wuhan becomes the largest self-media in Wuhan. There are no more than 4 self-media in Wuhan with over 100,000 fans, and my 100,000 will solve the sell-through problem for catering and retail terminals. The 1.5 model, with such a huge volume, solves the acquisition of effective traffic, and we connect with the largest local distributor to jointly revitalize the 3,000 local businesses. So we can preliminarily foresee that in the 200 million yuan Wuhan market, Zhijiang can expect 80% sales growth and a 30% reduction in cost rate next year. And in this model, I can guarantee that regardless of the product's state in the process, as long as the chain problem is solved, the three-tier chain of manufacturer, distributor, and terminal, and the manufacturer can directly face the terminal, the business becomes a logistics distribution company and service provider. If more money can be put into the terminal, it essentially solves the capital chain and profit distribution method under the traditional business format.
So, the essence of mobile internet is low cost, high efficiency, and more transparent information. So we call it transactions based on relationships, not relationships based on transactions. Making friends with terminals is not empty talk; it's effectively helping them solve sell-through problems, making your relationship with them very close. All alliances and cooperation must involve mutually exchanged resources. So, we say that the 1.0 model of mobile internet is what JD.com and Tmall are doing today – just changing the phone screen, the essence hasn't changed, it's still transactions. The 2.0 model, like Xiaomi, directly targets consumers, which is possible, but the organizational capabilities of traditional enterprises are not matched. So, we say that using the 1.5 model is very practically significant for today's traditional enterprises undergoing internet transformation. So, treat consumers as fans to be managed and operated, and the same for terminal store owners. So, we will continue in HeLong and Zhijiang, based on terminals. We will organize terminal owners into a carnival. They are the ones who pay for me, so they must be the objects of my direct service.
Yongfenbuli (a liquor brand). Let me give you two numbers: after less than 1.5 months of operation, without spending any money, Yongfenbuli has already exceeded 10,000 fans on the platform. Although the content is still being tested, with this model in place, it is certain that with the endorsement of Wuliangye, Yongfenbuli in the Handan market will far exceed all our previous expectations. And it is certain that products with community significance will emerge where manufacturers can profit, merchants can profit, and sell-through can be sustained.
In this process, Hejun has indeed found many methodologies and strategic supports over the past year and a half to plan for enterprises. In this process, our methodology is also continuously updated. Previously, we were shy about discussing techniques, but facing an unknown future, techniques and methodologies are very important. Here, we have found how to operate fans, how to make community-based products, including product pricing, product concepts, how to form business alliances, negotiation methods, and resource exchange techniques. We have also summarized our own set of methods, strategies, and techniques.
Finally, let me share three feelings as a conclusion:
Under the new model, the correctness of epistemology is crucial. With correct understanding, the trial-and-error cost of methodology will be lowest, and my success rate will be highest. These are things we have never encountered, and even unpredictable.
Second, methodology is not thought up; business models are always summarized, not designed. Methodology is not thought up; it is forged through practice. So we update and iterate on a weekly basis. This is a very important task for the Hejun project team. Every day at 12 o'clock is our project discussion meeting time. On a weekly basis, we make the methodology and details more flexible across project teams. The next day, we test and learn; if it works, we replicate; if not, we adjust and improve. So, we say that weekly updates become precious.
Third, leverage the enterprise's existing resources to help the enterprise generate internal mobile internet capabilities. We must leverage the resources of manufacturers and partners to jointly explore a certain matter and contribute ideas for the new model. Without this, all our reforms might face the fate of being stifled.
So, in conclusion, while looking up at the stars, we must also keep our feet on the ground. The next ten years will definitely be the best window for traditional enterprises to transform to the internet. Whether you are the pig standing at the wind outlet depends on your personal judgment and choice. Thank you.
Source: WeChat public account: Hejiu Original title: "[Hejun Huicui] Mobile Internet 1.5 Model – Dare You Not Be So Awesome? Can Make All Terminal Owners Become Enterprise Fans" Report -------------------------------------- Like this article? Feel free to click the top right corner to share to your Moments;**** About us: WeChat name: FMCG Distributor Professional Consulting Management Account introduction: 20 years of FMCG distributor operation and management experience, professionally targeting distributor internal affairs: We understand distributors better than manufacturers, and we understand internal management better than distributors. Senior marketing experts help your enterprise develop.
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