---
title: "New Consumption 2021: 10 Questions Insiders Won't Say"
description: "In 2021, new consumption saw initial market patterns, capital as a tool for brand壁垒, and heightened brand awareness, yet brands face unresolved issues like product aesthetics, sales performance, and the trap of copying successful models. The article outlines 10 unspoken challenges, from design and positioning to supply chain and brand replication, urging brands to focus on sustainable growth and authentic positioning."
author: "黄晓军"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-01-16"
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# New Consumption 2021: 10 Questions Insiders Won't Say

> In 2021, new consumption saw initial market patterns, capital as a tool for brand壁垒, and heightened brand awareness, yet brands face unresolved issues like product aesthetics, sales performance, and the trap of copying successful models. The article outlines 10 unspoken challenges, from design and positioning to supply chain and brand replication, urging brands to focus on sustainable growth and authentic positioning.

Source: Shenk New Consumption (ID: xinshangye2016)
The value of "Know-How" and "Know-Why".

In 2021, new consumption presented several characteristics:

**First, the initial pattern has emerged.**
After 872 new consumption investment and financing events from 2020 to the first half of 2021, over 174 billion yuan flowed into this sector.
Various sub-sectors within the industry have seen the birth of leading brands under the fervent support of capital institutions. Opportunities for challengers to overturn the established order are not absent, but the window is narrowing.
As a result, in the second half of 2021, new consumption investment and financing events gradually declined. While follow-on investments in existing brands still occurred, news of new brands securing initial funding was scarce.
This does not necessarily signify a "new consumption bubble." Rather, it signals that the industry has moved from its infancy and early stages into a golden growth period.
Data source: IT Juzi, Chart/ Shenk New Consumption

**Second, capital has become a direct tool for new consumption brands to raise barriers.**
Unlike traditional consumer goods that were poor at marketing and constrained by capital, new consumption has achieved a groundbreaking transformation. By leveraging market rules and financial leverage, the new consumption industry, once seeking capital, has turned itself into capital.
A series of new consumption brands, represented by Genki Forest, Heytea, and Pop Mart, have begun to use capital power to form alliances and enhance their own barriers.
It's worth noting that for many years prior, the strategy for overseas consumer brands entering the Chinese market was capital, catching many domestic brands that were simply doing business off guard.
The case of McCormick and Laoganma we discussed earlier is an example.
Although Laoganma's philosophy of never touching capital is commendable, in fierce market competition, when almost every industry leans toward capital intensity, rejecting capital and refusing to use capital is essentially giving up part of the opportunity to grow bigger and stronger.
The capital mindset of new consumption brands is changing the "big but not strong" situation in China's traditional consumer sector.

**Third, brand awareness has risen unprecedentedly.**
For a long time, the argument that "China has no brands, only factories" has been heard. Compared to international classic brands like Coca-Cola, P&G, and Unilever, China's consumer market indeed seemed lacking. But in the new consumption era, domestic products that long pursued small profits and quick turnover have begun to realize the long-term premium brought by brand value.
Xiaomi, DJI, Bosideng, Joeone, and even emerging players like SHEIN and Anker have made considerable efforts in brand building.
The most typical example is that Xiaomi's high cost-performance model, once widely studied, has gradually been cooled. Selling products at higher prices, maximizing average order value, and tightly embracing consumer segments have become what brands are thinking about.

**Finally, signs of breaking through brand involution have emerged.**
Brand involution in 2021 was largely due to many brands' dependence on limited resources, leading to diminishing marginal returns on those resources.
For example, live streaming and influencer marketing. Initially, these resources were a sharp sword for improving efficiency across the marketing circle, but unfortunately, resource scarcity gradually became imbalanced, and bargaining power fell into the hands of channels.
As a result, live streaming became a vanity project for boosting GMV, while profits and genuine brand building suffered declining returns.
But GMV, as a criterion for category leadership and a key indicator for market share capture, losing this advantageous position could cause brands to lose the initiative in chaotic, disorderly competition.
Thus, the involution of losing money for applause was formed.
Now, live streaming has been rectified through tax issues, and influencer-led sales will gradually shift to self-broadcasting. The ultimate competition will return to the brand's own individual labor productivity.

In summary, after experiencing praise and criticism in 2021, new consumption has figured out a logic that cuts to the essence. In the next 5-10 years, this industry may become one of the sectors with the most unicorns and brands reaching 10 billion or 100 billion yuan in scale.
But from the current perspective, there are still some unspoken problems in this industry, which I summarize into 10 aspects:

## **My product just can't look good**
New consumption is about new consumption behaviors driven by new consumption relationships.
What are new consumption relationships? Social media communication, online-offline integrated transaction methods, digitalized middle-office management, etc.
But we need to know that, just as productivity determines production relations, consumption relations are also determined by consumption power.
The main consumers in the current market are the post-90s and post-00s young generation. Their demand for products is not only about practicality and functionality but also sociality.
Appearance has become the most significant explicit factor.
Many bosses have complained that to optimize the appearance of products and even packaging, the proportion of design and R&D personnel has significantly increased. This is actually a cost item that didn't need to be considered in the past.
We've talked about bebebus strollers; their storage design, how they don't look like strollers, and even the bright color combinations... These have little "use value" in terms of functionality, but they show high value to young mothers.
So, they are willing to pay 3-4 times more than competitors for bebebus.
Use value, exchange value, price, value—these common-sense concepts every boss understands. But what troubles them most is how to enhance appearance without losing use value.

## **My product is better than the number one
but doesn't sell well**
In the past year of communicating with companies, I've encountered at least three brands expressing this frustration.
One laundry care brand said, "My product has better quality control than Blue Moon." I even bought their laundry pods; to be honest, the clothes come out just as clean—what users directly perceive is the same, so brand becomes key.
A small appliance brand said, "My high-power hairdryer is better than Dyson's, and Xiaomi's is not worth mentioning. Most importantly, my cost is lower."
But he sold a hairdryer better than Dyson at a price lower than Xiaomi.
A food brand said, "Our baked goods absolutely beat Orion and Dali." Unfortunately, good products don't speak for themselves. Before I met him, I hadn't even seen this brand on supermarket shelves.
The more a founder focuses on the product, especially if they hold patents and are the chief engineer, the less need to question product quality. But the more such brands are obsessed with turning their R&D results into products rather than thinking about how to gain market insights and use their own resources to fit.
Being too focused on the product is like holding a handful of sand tightly; you might keep a little, but it may not be enough.
Appearance-ism is the sprout of new consumption.

## **You can think of me as
the next Coca-Cola**
How to introduce what your brand does to the outside world? Benchmarking has become popular.
First, there's the big-brand alternative, like "my shoes are no different from Adidas, but cheaper." This is the Putian model.
We don't lack Made in China; we lack good Chinese brands.
Second, there's "be the next Coca-Cola." "Let's put it this way, we are the next Coca-Cola, the next Suntory, the Chinese ZARA..."
There are actually two problems here:

**First, not recognizing the shift in the basis of market competition.**
The classic brands you benchmark against mostly emerged during the product competition and sales competition stages. That is, many companies lacked sales awareness and experience, thinking that improving product quality would bring more orders; later, as overcapacity intensified, they gradually realized sales is also a core skill.
Now, abundant capital indicates the industry is transforming. What could previously form barriers through scale is no longer effective in the face of capital. Large capital institutions can easily inject over a billion yuan, and with new media and new channels, a new brand can achieve in two to three years what previously took ten years of scale expansion.
Consumer goods barriers return to essence, and brand mindshare comes to the forefront. That is, the basis of market competition is shifting from "sales competition" to "marketing competition." Whoever can meet consumer needs more efficiently wins.

**Second, the logic of economies of scale has failed, and the era of individual and individual economy is coming.**
The internet, especially mobile internet, has activated the matching efficiency between individuals by breaking physical space constraints. Under economies of scale, overall consistency and matching were emphasized, but as individual-to-individual matching efficiency improves, the logic of economies of scale needs to be recombined.
Individuals and individual-oriented enterprises are the protagonists of future business.
This tells us that the companies we once benchmarked achieved scale effects under the logic of economies of scale, products of mass markets. Today's user groups are gradually breaking down into niche circles or even individual users. Brands need to be brands for these groups, not brands for scale markets.
The brand assets, channel capabilities, and organizational capabilities that classic brands have accumulated over decades carry the imprint of their times. Current new consumption brands are brands of people, imprints of the new era.

## **Every morning when I open my eyes, it's
traffic, traffic, traffic**
In 2021, traffic costs were high, and this trend will continue into 2022.
The problem lies with ourselves.
In 2019-2020, when everyone complained about expensive traffic, forming alliances for cross-industry marketing was the only way out. Two brands with overlapping audiences would do an event or a co-branded product to attract each other's fans.
In 2021, everyone could only invest in influencers and then do self-broadcasting.
But there is a group still searching for traffic depressions. Ten years ago, Weibo was a traffic depression; a brand stirred up the youth movement of traditional baijiu on Weibo. Two or three years later, Xiaohongshu was called a traffic depression; a brand seeded the domestic beauty movement on Xiaohongshu.
Now, where is the traffic depression? Find it.
From another angle, the traffic problem is actually a customer acquisition cost problem.
Since around 2016, the high cost of customer acquisition has been a frequent topic among bosses.
But from a financial model perspective, the single customer acquisition cost can be spread over multiple repurchases; this is the difference between ROI and LTV.
ROI generally refers to return on investment. For example, we spend 100,000 yuan on an ad campaign, attract 10,000 people, 1,000 pay, average order value 200 yuan, sales 200,000 yuan, profit margin 50%, earning 100,000 yuan.
At this point, investing 100,000 and recovering 100,000, we basically only earn the turnover. Once customer acquisition costs rise, it becomes a loss-making business.
But if among the 1,000 converted users, they make N repurchases over the years and even recommend others, their individual value cannot be calculated by ROI but by LTV—customer lifetime value.
With the disappearance of internet demographic dividends, the number of users cannot double again, but the value users can create still has more than double the space.
Shift from the original "attract 10,000, convert 1,000" traffic funnel logic to a traffic trapezoid logic: see 1,000 people bringing 10,000 new customers, and 10,000 new customers potentially bringing 100,000 newer customers...
In this way, using products, services, CRM, marketing, etc., to focus on managing customer lifecycle is what should be done now.

**I insist on extreme cost-performance**
Extreme cost-performance is essentially small profits and quick turnover.
If your market share is sufficient, you can do it.
For example, Shuangtong Straws, monopolizing 90% of the global market share, produces 170 million straws a day and sells 7,000 tons of straws a year.
If your average order value is sufficient, you can do it.
Xiaomi does extreme cost-performance, but why can its sales per square meter be second only to Apple?
In terms of share, Xiaomi had brands like Apple, Huawei, and Samsung ahead. It's more about digging efficiency in every link and increasing average order value. Power banks, bracelets, earphones, balance bikes, rice cookers, bicycles... multi-category low-frequency SKUs under high foot traffic ensure high-frequency consumption every day.
Japanese management consultant Tatsuo Muramatsu once said that a continuous increase in customer numbers is not necessarily a good thing.
"Customer-attracting marketing" and "bringing customers to your company or store" increase foot traffic. This is indeed important; an empty store becoming lively, a quiet office phone ringing non-stop, gives a good feeling of "making money."
But as customer numbers, employees, and inventory increase, you have to expand office or store space, increasing expenses. If you take additional bank loans, monthly repayments also increase.
In short, while revenue increases, expenses also increase; customer numbers may double, but profits are hard to double.
The only way is to find ways to increase average order value.

## **I want to replicate Haidilao**
In April 2021, I gave a speech at the Shenzhen Pet Expo, mainly about how Haidilao builds service-ism, for reference by pet industry offline chain companies.
But after the meeting, someone added me on WeChat and said, "I want to replicate Haidilao."
Bosses, don't try to replicate, because what you copy is bound to be wrong. In Haidilao's service, some talk about handing out wet towels, shoe shining, and manicures; some mention mystery shoppers, scoring systems, rewards and punishments; some mention the mentorship system and family culture...
These are things I've also talked about.
But I need to clarify that I don't advocate this particularly narrow replication path. This seemingly successful growth logic is actually an external summary of the company's past experience and an artificial interpretation by external analysts.
And how much of it is effort and how much is luck is still questionable. So, it may not be a shortcut for other brands.
You could go ask Zhang Yong now; maybe some attributions about Haidilao, he himself doesn't know.
Replication is what new consumption brands should let go of in 2022.

## **I'm down-to-earth
building my own supply chain system**
For a while, I loved to say: the carnival of explosive products, not the victory of brands.
This was mentioned in a Huxiu article about Perfect Diary, which also said the latter was making efforts on branding, such as hiring spokespersons, multi-branding, and more importantly, building its own factories and supply chain system.
Especially in the first half of the year, self-built supply chains and full industry chain strategies were showcased by various emerging consumer brands. In their words, they value long-term value.
But we need to distinguish whether your specific segment is suitable for building your own supply chain.

**First, what is your supply chain management capability?**
In fact, the full industry chain is a development model introduced by COFCO Group.
The full industry chain model is a business model led by the highly integrated concept of "research, production, and sales," bringing traditional upstream raw material supply, midstream production and processing, and downstream marketing all under the company's high control.
As a Fortune 500 company, COFCO Group hoped to improve market competitiveness by dominating the entire chain. Around 2009, COFCO began extending its industry chain tentacles by acquiring and merging upstream and downstream companies.
Supply chain management expert and CEO of Xisi International, Liu Baohong, discussed COFCO's full industry chain model in World Executive. He said that this kind of merger actually reflects COFCO's insufficient supply chain management capability.
Generally, when a company cannot effectively acquire and manage resources through the market, it will take the path of vertical integration, turning external resources into internal resources and external competition into internal regulation.
But the problem is that if a company lacks the ability to manage external resources, its ability to integrate and manage internal resources is also limited. This leads to low returns on internal resources and weak competitiveness.

**Second, what kind of products are suitable for self-built supply chains?**
One viewpoint is: industries with low technology dependence can transfer costs like production and processing outward.
Three Squirrels in the snack industry is more suitable for this model, with core processes self-operated and non-core processes outsourced. They independently develop product formulas and production techniques, while processing is done by certified suppliers, and final products are formed after Three Squirrels' repackaging and inspection.
But for products like phones, computers, and cars, where technology dependence is high, you must do it yourself.

**My category is too niche
I want to expand the category quadrant**
For a long time, we've discussed the path for new brands to rise from 0 to 1, roughly:

**Step 1: Lock in the target group.**
Anchor the brand's audience, such as the post-90s generation who are the main force in the new consumption era, or career women who have just graduated and need to polish their self-image, or new mothers preparing for pregnancy or already pregnant.

**Step 2: Lock in the category.**
Choose a small entrepreneurial entry point, which can be differentiation, a blank market, or even directly facing the industry leader with a more efficient approach, but ultimately it must create additional value for consumers.

**Step 3: Lock in the position.**
The ideal state is to become the number one in the chosen niche, seizing the user's mindshare as the category leader.

**Step 4: Expand the quadrant.**
Leverage the brand recognition as category leader to expand into related categories, increasing market size and brand barriers. How is this done specifically? For example, self-heating hot pot, using supply chain capabilities to make self-heating rice and self-heating instant noodles.
For a brand, the biggest threshold on this path is whether your own resources and capabilities match. Even Wang Xing of Meituan Dianping said, "Our choice of business is related to customer needs and also to business capabilities. Ride-hailing and food delivery have similar capabilities—they are offline-oriented, require layout in various cities, use the internet to improve experience and reduce costs."
But if you try to do another Taobao, it exceeds your capability boundary.
In fact, wanting to grow bigger is not a problem; the problem lies in blindly pursuing expansion of the category quadrant to become big.
A niche category, in the context of the Chinese consumer market, is itself a false proposition. As an investor once said, "There may not be niche tracks formed by very narrow groups like in Europe and America, because even the smallest group in China is larger than a whole country elsewhere."
Within your capability boundary, doing your own category well allows you to stand firm. And in the current competitive landscape, the issue of expanding category quadrants has mostly been solved by brands through investment and mergers.
It must be emphasized that not all scale expansion brought by capital leverage is feasible. In this process, we must ask ourselves:
Do we already have the capability to operate these categories or external brands? Can its supply chain, logistics, quality control, marketing, IT systems... be controlled by the middle-office capabilities developed under the current category?

**You're the internet celebrity
Your whole family are internet celebrities**
Once upon a time, "internet celebrity brand" was a compliment, but now it has turned negative. Once someone mentions an internet celebrity brand, there's a feeling of "good marketing, bad product."
As a result, many brands are reluctant to create internet celebrity phenomena.
But it's important to know that becoming an internet celebrity is a necessary path for brands in a social media communication environment; it represents a brand's capability.
A simple example: there's a pure domestic oat product carefully cultivated by Chinese scientists. The product is excellent, but the appearance and marketing are lacking. Yet it still sells 1 million yuan a month on Taobao, and even becomes an internet celebrity during some promotional events.
When outsiders say its marketing is good but the product is bad, it's actually self-defeating.
What kind of marketing is the best? It must be good at all 4Ps of marketing, meaning the product is good, pricing fits, promotion is great, and place is strong.
So, don't reject being an internet celebrity. Having the ability to become an internet celebrity has always been a sign of growth for a brand.

## **We must not forget our original intention**
Not forgetting the original intention is good, but how do we empower it?
The answer is sustained growth. China has too few long-lasting consumer brands. Overseas, there are countless century-old brands; domestic companies generally decline in succession, are forgotten in 3-5 years, and are mostly SMEs.
Chinese companies do not yet possess true operational capability. Since the reform and opening up, they have gained the ability to expand scale, control costs, and sell, but these are only survival capabilities.
Business operational capability refers to a company's ability to lead the supply chain system and the value chain formed by investment and technology, with the company determining the direction and flow of capital and technology.
When a company has a certain level of scale, cost, and sales, it can survive in the market, but this does not mean it can sustain growth. Only with higher operational capability can a company grow steadily.
How to ensure the underlying driving force for sustained growth? It must be designed from the beginning when empowering the original intention.

**First, at the start of entrepreneurship, have we done market segmentation step by step?**
Before making a national-style ice cream or cold brew coffee, the brand needs to consider the entire industry's situation, analyzing geography, demographics, family lifecycle, consumer behavior, and more.
Even a toothpaste can find multiple segments like anti-cavity, whitening, flavor, packaging, and price. Although many segments are obvious, the segmentation process must be done.

**Second, how did we determine the target market?**
After segmenting several markets, we ask ourselves whether these markets are profitable, penetrable, and not false propositions, to determine if the segments truly exist.
For the segmented markets, we also need to assess market trends, ceiling, competitive relationships, and our own resources and capabilities to decide whether we can enter the market and how many segments we can enter.
This is often overlooked by brands; they only see the original intention but forget capability.

**Third, the original intention is ultimately reflected in positioning.**
Positioning is a classic theory that has influenced brand management for 50 years.
But most people don't truly understand positioning.
First, we should be clear that positioning is actually a highly competitive concept. Its premise is to gain a greater competitive advantage for our brand, positioning where competitors don't have it but you do, or where competitors have it but yours is better.
Second, it's also key to consumer communication. Because positioning means establishing your unique existence in the consumer's mind, and this positioning creates a huge attraction for them.
Finally, it's an organic combination of the business system.
So-called positioning includes product positioning, audience positioning, price positioning, regional positioning, business format positioning, scale positioning, and promotion positioning—check each indicator, and you can truly understand what the original intention is.

**Fourth, the original intention may be false.**
Stick to the original intention and operate the brand, but at a certain stage, most brands find that the original intention conflicts with the current market situation—this requires repositioning.
Positioning is hard to do once and for all. We must understand a phenomenon: repositioning is more common in reality than initial positioning.
Repositioning is not forgetting the original intention. In the face of the original intention, the market is always uncertain. Only by using your own uncertainty to hedge against market uncertainty can the original intention ensure certainty.
In 2022, we must not forget our original intention.
But now that live streaming, the industry's traffic highland, is declining, private domain competition is intensifying, and capital support is fading, if your brand's empowerment from the bottom is timely, please don't give up the idea of "doing it all over again."

*Cover image: Pexels
**Are you "watching" me?**


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