During the COVID-19 pandemic, thank goodness for home delivery services. Otherwise, the contradiction between quarantine and essential needs like vegetables would be hard to resolve. Home delivery has also brought new retail, which had been fading in recent years, back into the spotlight. Perhaps home delivery will become a new wave of investment, and brands will invest more resources in home delivery in 2020.
-01-
For internet platforms, a crucial step from incubation to scale and momentum is "crossing the chasm." Over a decade ago, a best-selling book in the U.S. was titled Crossing the Chasm, which discussed how high-tech products face a huge gap between market launch and social acceptance. Crossing this chasm creates a massive market; failing to cross it means death.
Seventeen years ago, SARS allowed Alibaba to cross the chasm. The current pneumonia epidemic may allow new retail's home delivery business to cross the chasm.
I just saw a case: Better Life (步步高) launched a home delivery platform within 48 hours and achieved impressive business results. However, due to the hasty launch, it adopted a community group buying model, with orders via WeChat and delivery by community leaders.
-02-
The home delivery model was forced by the pneumonia epidemic. Consumers have essential needs for vegetables, but the epidemic requires them to avoid crowded places, and some areas even mandate the closure of many stores.
The only way to satisfy both seems to be home delivery.
When discussing business self-rescue, one must understand: Since most daily necessities were previously purchased offline, when traditional channels (in-store) are blocked, new channels must be opened.
Without new channels, there is no way to self-rescue!
Vegetables are essential, and the home delivery channel opened through vegetables quickly became the main channel for other categories like daily necessities, now extending to more categories.
If you already have an online platform, you can order online. If not, you can establish a community ordering channel in the short term. If even community operations are impossible (e.g., for the elderly), you can order at the community (gatehouse).
As previously reported, Hema, because it had home delivery, sold out. Due to a shortage of staff, it had to "share employees" with many restaurants that were closed. Xibei, a restaurant chain, also relied on home delivery.
-03-
Retail stores now have four states: closed, open, home delivery, and open + home delivery.
Because a large proportion of stores are closed, open stores are doing better than usual, with higher average transaction values, and the best are those with "open + home delivery."
During this epidemic, household consumption is much higher than usual, not only for vegetables, rice, flour, oil, and instant food, but also for daily necessities. So, as long as there is sufficient traffic-driving products or home delivery, sales are not bad.
Recently, some have said that gatekeepers have become hot commodities. Because some stores had not connected with users before, they had to resort to last-minute measures, borrowing the gatehouse. The gatekeeper became the connection point between the store and users.
Stores that had already implemented new retail did not have this problem, either having built platforms or having "group leaders" with communities.
Even gift items, which were once considered problematic, are now being sold through community group buying with "solitaires" (接龙). I promoted this solitaire method to many distributors in 2019, but the response was generally lukewarm. In an emergency, it has become effective.
-04-
In recent years, we have frequently mentioned "three-dimensional space." Many do not understand it, but home delivery is a concrete example of three-dimensional space.
Platform e-commerce did not perform well during the pneumonia epidemic, and food delivery platforms were mediocre. These platforms are only suitable for specific categories. Bulk daily necessities were originally sold through offline stores. Now, offline stores are restricted, and some areas only allow a few supermarkets to operate. Online business has also been less than satisfactory.
Apart from new retail platforms with independent apps, such as Hema and Xibei, community groups have played an important role in this round of home delivery. After all, there are not many new retail stores like Hema; most are traditional offline stores.
How do traditional offline stores do home delivery? Besides supply chain and delivery capabilities, the most important is the role of community groups as "connecting links."
Commercial groups generally fall into two categories: vertical groups, which are used by niche products and micro-businesses; and community groups. Community group buying utilizes community groups. For bulk daily necessities, only community groups are suitable.
Community groups have two characteristics: First, community-based. As long as it is community-based, there are strong offline relationships. This is the offline dimension of three-dimensional space. Second, group-based. People with strong offline relationships are pulled into a group. This is the group dimension. If there is a mini-program or app, the three-dimensional space is connected.
In this emergency-born home delivery, community groups are the focus. Initially, it was vegetable solitaire ordering, then extended to daily necessities, and now to gifts. Many gift items that were worrying people a few days ago can be partially absorbed through community groups.
Order via community groups, deliver to the community. This is contactless home delivery.
-05-
Some brands are already preparing to invest in home delivery in 2020, and some ask me how to build groups.
This is a great misunderstanding of community groups.
In the past, channels were public infrastructure for B2B; whoever used them well owned them. Now, community groups are public infrastructure for B2C home delivery; whoever can activate them owns them.
Brands do not need to hope to build community groups; they naturally exist. The characteristic of community groups is that they are an extension of the community. Strong offline relationships, strong group interaction.
General commercial groups are semi-acquaintance relationships, like vertical groups. Community groups are acquaintance relationships. For business, community customer groups are both acquaintances and regular customers.
The quarantine during the pneumonia epidemic is about minimizing contact with strangers. In home delivery, community groups provide trust because they are acquaintances; even if contactless delivery is not absolutely safe, it feels psychologically safe.
The reason Chinese channels are fragmented is that distribution terminals are fragmented. The more fragmented, the stronger community relationships. Community groups are naturally fragmented and distributed.
Since they are distributed, brands cannot form groups themselves; they can only activate existing groups. Some stores' last-minute measures work because they had strong offline relationships before. So, community groups naturally have the ability to connect three-dimensional space.
More importantly, community groups unify new marketing and new retail. From a cognitive perspective, because of strong offline relationships and the group's dissemination function, the cognitive threshold is lowered; at the same time, groups and mini-programs can place orders, providing transaction capability. Whether in-store or home delivery, delivery is not a problem. During the pneumonia epidemic, community delivery played a role.
-06-
Many stores hastily launched home delivery. After the epidemic ends, home delivery will definitely shrink sharply.
Although it will shrink, a portion will remain. Crossing the chasm relies on this remaining portion.
Where will this remaining portion settle? Certainly not on the hastily launched stores, but on platforms that were prepared in advance.
Some platforms were about to give up, but now they have suddenly become capital favorites.
Whether home delivery will become mainstream in the future remains to be seen. However, the connection with users established through the epidemic is the core of new retail.
In new retail's people-goods-scenes, connecting with users is key. Home delivery is just a delivery method.
Source: Teacher Liu's New Marketing (liuchunxiong1964)