The FMCG2019 China FMCG Conference, hosted by New Distribution, was grandly held from August 20 to 23 at Shanghai Fuyue Hotel. The event attracted 3,000 industry professionals including distributors, manufacturers, and internet companies from across the country, with a full house and unprecedented scale. The following is the speech delivered by Mr. Mu Xiaohai, General Manager of Tencent Smart Retail Business, at the conference, organized and published for our readers.
Good morning, everyone. It is a great honor to attend such a grand event in the FMCG industry. The host just gave a very grand introduction to Tencent. Friends who care about Tencent have recently learned about some of our moves. On September 30 last year, we made some organizational adjustments and strategic direction changes, rooting in consumer internet and transforming into industrial internet. Internally, we have also aligned many organizations and integrated businesses. In the process of transforming into industrial internet, we also formed a new BG, and within the new BG, we established our own smart retail business direction and business line.
It is very coincidental that the two previous speakers are also our business partners and ecosystem partners, who run e-commerce platforms. I will briefly talk about the positioning of smart retail.
First, Tencent itself does not do transactions; we will not build our own e-commerce platform. Second, we will not do things dominated by traffic; we focus more on supporting brands and retailers to develop independently. Third, we leverage Tencent's technology, content, and AI capabilities, accumulate methodologies in community operations, help brands with digital transformation, help everyone do their own business well, and achieve their own growth.
So here I will briefly talk about how we view retail in the past period.
Everyone talks about the concept of people, goods, and places in retail. Tencent has its own perspective on this change. In the past many years, people, goods, and places were relatively independent and fragmented. We found that especially with the development of mobile internet, in the past few years, the biggest variable is people. All our consumers are rapidly becoming online and digital, which is the biggest variable. The change in people has driven the rapid integration of places and goods.
Let me give a simple example. When we go to a shopping mall now, in the past, the mall's contact with consumers was only during opening hours. After I went to the mall, I had no more interaction with it. After closing, I could not go again. Now when you go shopping at a mall, you might add the salesperson's WeChat. Theoretically, the store is open in your phone, 24 hours a day. As long as you want to buy something, you can find the salesperson. So from the perspective of the salesperson or the place, people become an extension of the place, which shortens the distance.
From the perspective of goods, we used to say that goods are isolated consumer products, but now through coding, we give goods more information, turning them into carriers of information. Consumers scan codes on mini-programs and directly interact with the manufacturers of consumer goods, allowing brands to directly connect with consumers, thus accelerating the digitalization process. We believe that in this process, the boundaries between people, goods, and places are becoming increasingly blurred, with people being the biggest variable. Tencent Smart Retail hopes to create a super connector that provides increasingly complete infrastructure and data capabilities to help manufacturers respond to these changes.
Why can Tencent do this? As everyone knows, in the B2C field and the consumer goods field, over the past 20 years, Tencent has accumulated more capabilities on the C-end consumers. In this process, we have built strong social connection capabilities, our connection capabilities. As mentioned, WeChat has 1.12 billion monthly active users, and QQ still has 860 million monthly active users. In this process, we also have reach capabilities. As mentioned, WeChat Pay's template messages, WeCom, social fission gameplay, even commercial fission gameplay, and offline scanning are our capabilities and means to reach users.
At the same time, in the entire reach or connection process, the core is content capability. Tencent has always positioned itself as a technology + content company. Connection needs to be warm and have content. It is not about posting a sales ad on Moments every day; after a few days, friends will block you. We need more interaction on content. Through these capabilities, we have built a strong connection capability, and we are capable of making such a super connector.
What exactly is a super connector? It is actually helping merchants build a super-connected growth engine, digital user-driven omnichannel retail. What is omnichannel retail operations? The definition of touchpoints is the means by which brands or products interact with consumers. There are many means. Previously, a store was a touchpoint. Now with the development of online and offline integration, our touchpoints have become very three-dimensional, and we are in the era of omnichannel operations.
Here, there are online and offline touchpoints, social and commercial touchpoints. All these touchpoints truly need three-dimensional operations. How to actively use them through methodologies? The core is a super-connected system, around an ecosystem, and the core tool in this ecosystem is WeChat mini-programs. In this connection, we believe there are several core elements. The first is efficiency. As mentioned, the digitalization of people, the biggest development factor is the development of mobile payment and supply chain, which also has a huge impact on the retail industry. This allows us to form the shortest closed loop online with the shortest chain, quickly reaching consumers and completing transactions in the shortest time.
Second, in the connection process, we need to do private domain traffic operations. Previously, we did a lot, including offline, distributing through channel merchants, and doing business through platform merchants. Especially in the FMCG field, accumulating customer-owned and digital assets is a very big topic.
The goods I distribute are sold, but for the final consumers, who actually bought my products, and what feedback they have, many brand owners have fragmented data. So we need to achieve the accumulation of our own digital assets, truly achieve omnichannel digital management, and do digital asset accumulation to continuously operate living digital assets.
Finally, let's talk about warmth. Warmth is more about content capability. Here, Tencent has created many IPs, entertainment and social scene gameplay, and content products to help everyone better connect with content. This is what I just mentioned about smart retail. We define it as using super connection to help enterprises achieve connected growth. Because retail has many pain points, specifically in the FMCG industry, I think the brand owners present are very clear. First, there is a data gap between brand owners and consumers, and also a gap in terminal management between brand owners and channel merchants. So in this process, we continuously optimize this operational logic.
What will Tencent do? We hope to help everyone with digital transformation, help solve some problems through our technical means, our technology and insight capabilities. We hope to provide solutions from three aspects, truly provide tools to solve these problems.
First, we start from three aspects: connection, conversion, and management. Undoubtedly, for all retailers, whether brand owners or retailers, the first is to find consumers and connect, and the second is how to quickly convert them into customers after finding them. At the same time, how to make my business transparent and visible and improve efficiency is our management demand.
I will talk about the solutions or tool products we have in these aspects, recommended to our brand owners, hoping to help everyone with digital transformation. First, let's talk about connection, which is the most core. As mentioned, in people, goods, and places, in the digitalization or informatization of goods, we hope that goods are not just consumer products, but can become carriers of information.
Through mini-program codes and WeChat scan, because everyone has it, we can establish a qualitative relationship between consumers and brand owners. At this time, goods become the entrance to traffic, and codes also become the entrance to traffic. In this way, we can help establish connections with consumers and also help quickly accumulate a lot of digital assets.
Let me give an example. We are doing this with a brand owner: scan the code to become a member, scan the code to become a fan, scan the code to join. In the past, many FMCG companies found it difficult to establish their own CRM systems. The previous CRM systems were just phone numbers and home addresses left during promotions, and they would send a text message during holidays. As everyone knows, the effect was really low. We hope to build our own membership system based on the WeChat ecosystem, because WeChat has 1.12 billion monthly active users. When they scan to shop, they are directly connected to our membership system, becoming members, earning points, and we can do many promotions and marketing within the membership system, truly turning the CRM system into a living system that helps us quickly operate our members.
This is what we have been doing recently. We cooperated with Mengniu, also through the scanning mode, in the "101 Creation Camp" activity. Through built-in codes, fans scan to vote, get rewards, and can also vote for their idols. After this data is accumulated, Mengniu can also do secondary marketing.
In the marketing process, everyone will find that there is a lot of black industry. Whether we do various marketing or fission, it is a very large underground industry. Many industries are built around the WeChat ecosystem. So we also use Tencent's big data, computing, and AI capabilities to launch our marketing risk control solutions, helping everyone do marketing risk control when doing marketing activities in the WeChat ecosystem.
In the conversion stage, we have also made some attempts and explorations. First, I think there is online conversion and offline conversion. For offline conversion, we are doing smart stores with some brand owners. This is what we are doing with a cosmetics brand. We use Tencent's location big data capabilities and data capabilities. On the front end, we can quickly find precise users for social ad reach, pull them to the store, and then during the interaction with the brand, through coupon verification, we know who came to the store, who finally purchased, and who converted. This funnel form before, during, and after marketing can help scenarios make many decisions. In the tracking, optimization, and re-reaching of marketing activities, there is very good data retention. This is also a flash activity we did in Shanghai with brand owners to help FMCG brands.
For online conversion, while improving online conversion rates, we use AI capabilities to launch a new product called Zhuji. Simply put, this product has two parts: the front end uses AI to learn product content and materials to do interactions. Through learning and combining with current hot topics, we can generate a lot of content. In this process, after the front end generates content, the back end uses Tencent's big data capabilities to classify our members and make personalized recommendations for thousands of people.
Many times when we operate official accounts and mini-programs, we cooperate with some maternal and infant brands. For example, a mother has passed the breastfeeding period, but we still push milk powder every day. But the child has already gone to kindergarten, so you might need to push content related to early childhood education.
But now all fans see the same official account content. After selecting for a long time, in the end, 80% may not be what the audience wants. So through this method, by analyzing the brand's own fan user profiles, we can truly achieve personalized push for thousands of people.
Let me briefly talk about management efficiency improvement. As mentioned, channel merchants and brand owners have control over channels and management transparency. We can use box codes and product codes for cooperation. Many distributors are also doing this. Here, we use the WeChat ecosystem and mini-programs to quickly utilize them, truly achieving inventory management, anti-counterfeiting traceability, and anti-channel conflict management mechanisms.
For the management capability of small store owners, this is also our management capability for small B-end. When cooperating with small stores, we often find, especially in the FMCG field, that in the past, some brands would hire many people to do shelf management, checking whether the goods were placed according to my requirements. Now, through mini-programs, we let small store owners take a photo and upload it directly. The backend can use AI to identify where the shelf is placed. After uploading a photo every day, the backend will calculate discounts. For example, if you upload for ten consecutive days and place the goods like this, I will give you a discount, coupons, or gifts. Similar methods are all through scanning codes and local member interaction. The backend uses our AI and computer vision technology to help everyone improve management efficiency. This is the improvement in management.
I have briefly talked about these directions. In the past two years, we have continuously learned about various aspects of the retail industry. Smart retail is still in continuous innovation and exploration. In this process, we have served many brands, and many brands have given us a lot of experience. We also hope to use our capabilities to continuously output and help everyone achieve performance growth.
In this process, we also hope to find more like-minded partners who are willing to innovate and explore, to grow with us and explore this new path of smart retail together. Thank you all. That is all for today's sharing.