Source: Teacher Liu's Digital Marketing (ID: liuchunxiong1964)

Is digitalization about the F2C model or the F2B2b2C model? This is not a simple technical issue, but a fundamental question about the mainstream direction of digitalization.

F2C may succeed, but it certainly cannot solve the fundamental problems of traditional enterprise digitalization. Even if F2C is done, F2B2b2C must still be done. In short, F2B2b2C is a hurdle that traditional enterprises cannot bypass.

In 2020, under the pandemic, digitalization was "racing ahead," and the vast majority chose the F2C model. But the outcome was quite unfavorable. Below is a dialogue between a company president and the president of a digital service company.

A president of a 5-billion-yuan enterprise thought it was "better than nothing," while startups and niche enterprises might see it as a "pleasant surprise." Therefore, the effectiveness of a digital model depends on matching it with the type of enterprise.

The difference between the two major digital models, F2C and F2B2b2C, is: F2C has a low "threshold" and a low "ceiling"; F2B2b2C has a high "threshold" and a higher "ceiling."

The low threshold of the F2C model means it is relatively easy to start; the low ceiling means the final scale is not large enough. It is not difficult to reach a scale of 100,000 to 1 million users with F2C, but reaching 10 million is harder, and reaching 100 million is very unlikely.

The high threshold of the F2B2b2C model does not mean high costs, but rather that it requires mobilizing many resources, especially the difficulty of transforming traditional channels. However, once the high-difficulty resources take effect, the ceiling can be astonishingly high.

The Difference Between F2C and F2B2b2C

Both F2C and F2B2b2C models reach, connect, and operate C-end users. That is similar. But they differ greatly, with the following distinctions:

1. F2C is a pure online model; F2B2b2C is an "online-offline integration" model.

2. F2C is about removing intermediaries and terminals; F2B2b2C is about "factory, store, and retailer as one entity."

3. F2C is about creating another e-commerce; F2B2b2C is about digital transformation of channels.

4. F2C has only one operating entity (F2C, the brand owner); F2B2b2C has three operating entities: brand owner (F2C), distributor (B2C), and retailer (b2C).

5. In F2C, all transaction profits go to the brand owner (F); in F2B2b2C, transaction benefits are redistributed among the three parties according to the principle of traffic entry points.

6. F2C connects with users mainly in two ways: 1. Converting public domain to private domain; 2. Fission through various C-end touchpoints. F2B2b2C, being a "dual private domain" system, mobilizes channel forces in an organized and systematic manner to reach, connect, and activate C-end through super touchpoints of people, goods, and places in terminals.

7. F2C is a centralized digital system; F2B2b2C is a centralized + distributed digital system.

8. After F2C is implemented, there is still a traditional channel independent of digitalization; after F2B2b2C is completed, traditional channels disappear and are fully integrated into the digital system, that is, online-offline integration and factory-store-retailer integration.

Why did the first round of digitalization collectively choose the F2C model?

When traditional enterprises realize that digitalization is an unavoidable hurdle, their first digital move often chooses the F2C model. I believe there are six reasons:

First, the digitalization race in 2020 was such that whoever had an idea got company support, with no clear preference from the company. Therefore, the investment was not high, and funds were spread across various tracks, relatively dispersed.

When traditional channels do not support it and costs are low, it is easy to choose the F2C model. Because the F2C model is relatively simple to start and does not require support from traditional fields in the short term.

Second, because F2C is unrelated to traditional channels. Some people think digitalization should have no traditional components and be relatively pure. The F2B2b2C model inevitably involves traditional distributors and sales teams. This perception is still influenced by the e-commerce model.

Third, F2C is a variant of the B2C digital model. Until now, the view that digitalization means removing intermediaries still has a large market. With e-commerce B2C as a "role model" and "benchmark," it is hard not to adopt the F2C model. Unless practice proves F2C has problems.

The F2C model is technically and commercially feasible, but it cannot achieve the scale expected by leaders in traditional industries.

Fourth, the F2C model is promoted by many lecturers, consulting firms, and system service providers. Since 2020, private domain traffic training has been hot, and digital consulting has been booming. F2C is a combination of platform e-commerce (B2C) and social e-commerce (user fission), that is, the platform e-commerce model with social e-commerce traffic generation.

The removal of intermediaries in platform e-commerce has influenced a generation of digital practitioners. The fission model of social e-commerce has produced many talented lecturers.

Digitalization of small enterprises is easily influenced by social e-commerce. Digitalization of traditional industry leaders is easily influenced by consulting firms.

Fifth, F2C has relatively mature operational models. For a model to be fully promoted, it must have a relatively mature operational model—modelization. Especially the introduction of social e-commerce models into F2C has many ingenious methods. Although social e-commerce (micro-commerce) is declining under the influence of live streaming, its tools and methods have found a new battlefield in digital F2C.

Sixth, the influence of new retail system tools. The F2C model is essentially brand-owner new retail, that is, manufacturers directly entering the retail field. After Ma Yun's "new retail" theory was proposed, a large number of system service providers provided technical tools to promote it.

The Pain of F2C

Direct connection between F and C is difficult; there must be an intermediate touchpoint. Otherwise, traditional enterprises would have already reached C directly, without going through the trouble of deep distribution to reach small b.

The logic of F2C is: F first finds "touchpoints" to reach C, then connects more C through "fission."

Touchpoints and fission are the two keywords of F2C.

Touchpoints must be numerous, and fission speed must be high.

User scale of F2C = Number of touchpoints × Fission speed

The two major parts of traditional enterprise marketing: the marketing department (brand department) deals with media, and the sales department deals with channels. These are the touchpoints with marketing value; other touchpoints of the enterprise do not have value for connecting with C-end.

Since the F2C model is essentially about removing intermediaries and terminals, it conflicts with the fundamental interests of sales departments and channel distributors. Therefore, even if the sales department provides "touchpoints," it is either because they do not see the conflict of interest, with a "confused" component, or it is "fake support" under company orders.

Since there are no organized touchpoints, two other types of touchpoints are available: one is using users attracted by platforms as touchpoints; the other is using commercial big Vs, super IPs, KOLs, and KOCs as touchpoints. Of course, converting these public domain traffic into private domain costs money.

The reason F2C is so keen on "converting public domain to private domain" is that public domain is the only touchpoint with scale to reach C-end in their eyes. Although converting public domain to private domain is fraught with difficulties and will inevitably face resistance from public domain platforms.

The first problem of the F2C model is: lack of organized, large-scale touchpoints.

The second keyword of F2C is fission. From the fission platform perspective, there are online fission and community fission.

When digitalization enters the traditional enterprise field, the product types change significantly. We have always emphasized that platform e-commerce is a "paradise for entrepreneurs, fertile soil for niche markets," while traditional channels are "mass channels."

Public users have fission advantages, but mass products have less fission potential.

User fission has two main forms: one is value resonance; the other is interest inducement.

Value resonance fission is mainly suitable for niche and segmented markets. For example, Jiangxiaobai has very different reactions from niche and mass users. At the niche and segmented level, there is strong resonance. At the mass user level, there are many critics.

Interest-induced fission is now more difficult. If interest inducement is effective, it will inevitably be continuously increased, and costs will remain high.

The second problem of the F2C model is: fission is difficult.

Even if the two major difficulties of [touchpoints + fission] are solved, the F2C model has a third problem: activating new users is difficult.

Fission only solves the problem of user connection; becoming active users requires activation. Some enterprises reach millions of users but find it hard to operate because many users "sink to the bottom."

The ways F2C activates users are very limited: coupon inducement and continuous reminders. However, these two methods are only suitable for continuous activation and high frequency of already activated users, not for new users. Or early users are easier to activate, or they become active with just a stimulus.

Few touchpoints, difficult fission, and difficult activation—these three problems are hard to solve in the F2C model. I do not favor this model for traditional enterprise digitalization.

In summary, the F2C model starts well but ends badly.

The Difficulty of F2B2b2C

If the F2C model is easy to start but becomes harder as it goes, the F2B2b2C model is difficult from the start, and may even fail before starting.

The core of the F2B2b2C model is bC integration. In 2019, I proposed "BC integration" to solve this problem. In the "six doubles" design of the digital operation system, I proposed "dual paths" and "dual private domains," also to solve this problem.

Currently, the concept of BC integration is gradually being accepted by system service providers and traditional enterprises. System service providers have made BC integration into a technical service system from a technical perspective, which is an important step. At the FMCG Digitalization Conference initiated by "New Distribution" in September 2021, BC integration basically became the mainstream technical system for system service providers.

The implementation of F2B2b2C still faces several major hurdles:

First, the "bC technical binding" of bC integration from a technical perspective. Currently, this mainly involves BC dual codes and BC mini-programs. There is still a cognitive process for technical issues.

Second, the "interest distribution path" behind the concept of "dual private domains" is not transaction distribution, but traffic entry point distribution. Some enterprises are already practicing this, but gaining recognition still takes time.

Third, there is a lack of operational models for channel digitalization. Without modelization, large-scale promotion is impossible. Based on observation and practice, I have proposed a "five-step method" operational model, which still needs to be refined in practice, repeatedly verified, especially by influential enterprises.

The proposal of an operational model must go through a process: trial and error, trial and success, and modelized replication.

Fourth, enterprises must make up their minds to mobilize in an organized and systematic manner. The premise for an enterprise to make this decision is that it has completed the cognition and verification of the first three issues before daring to make the decision.

Difficulty in starting may be due to illogical reasoning or a long road ahead. Based on my observation and practice of traditional enterprise digitalization, I believe the logic, operation system design, and operational model issues of F2B2b2C have been basically solved. This series of articles fully proposes the operational framework of the F2B2b2C model.

Achieving great things, difficulty is a barrier.

The Great Gains of F2B2b2C

Traditional channels were the main battlefield before platform e-commerce emerged. The F2B2b2C digital model will make channels the main battlefield of digitalization again.

Because F2B2b2C has "dual scenarios" and "dual customer relationships," while e-commerce and traditional channels have single scenarios. Dual scenarios can benefit from both sides and encroach on the share of single scenarios.

F2B2b2C can also achieve "dual integration": online-offline integration and factory-store-retailer integration. This is not only a digital system but also very important for stabilizing the offline channel system.

For traditional enterprise digitalization, without online-offline integration and factory-store-retailer integration, digitalization problems cannot be fully solved and must be done again. Otherwise, there will always be a traditional stronghold not integrated into digitalization.

Traditional channels are traditional, and platform e-commerce is also becoming traditional. F2B2b2C uses digitalization to solve two traditional problems.

Currently, traditional enterprises do not question digitalization; the question is which digital path to take. Whichever path is taken, it must match the scale of the enterprise, not be insignificant small-scale efforts.

Only the digitalization of the F2B2b2C model can solve the comprehensive digitalization of enterprises.

Properly Handling the Relationship between F2C and F2B2b2C

If it is a startup enterprise without online resources, then using B2C platform e-commerce and F2C as the main digital models is fine. But if it is a traditional enterprise, digitalization ultimately consists of three major models.

One is the B2C model relying on platform e-commerce, which cannot be ignored. Online retail already accounts for 30% of total social retail sales, and this share cannot be abandoned. For certain categories, B2C is still the mainstream digital model.

The other mainstream model is F2B2b2C. Of course, some enterprises use F2b2C, which corresponds to the traditional direct distribution model, such as Coca-Cola. Since it is the mainstream model, it has the largest user scale. No matter how many marginal models are done, they cannot make up for the lack of the mainstream model.

No matter how large the scale F2C achieves, it will never be mainstream in the future; it will only be a supplement to the mainstream. This is also why many FMCG companies become increasingly disappointed in digitalization: it is too far from expectations.

Will the F2B2b2C model eventually evolve into the F2C model? I know many people from e-commerce backgrounds have been advocating this to traditional enterprises.

My view is: try it if you don't believe me.

But it's better not to try; you'll regret it.

Once you try to evolve F2B2b2C into F2C, the road back to F2B2b2C is also blocked.

Regarding the relationship between the two models, I believe it is a primary-secondary relationship. F2B2b2C is the main battlefield of digitalization, while F2C is the edge battlefield and auxiliary battlefield.

We cannot completely deny the value of F2C, but we must affirm the value of F2B2b2C as the main battlefield of digitalization.

The F2B2b2C business model will not be monopolized by any enterprise, just as deep distribution was not monopolized by any enterprise.

When a model becomes the mainstream of an era, most enterprises have no choice but to follow. This was true for deep distribution after 2003 and e-commerce after 2012.

When it must be done sooner or later, enterprises that do it early enjoy model dividends. A batch of enterprises doing deep distribution only needed to simply implement the "eight-step deep distribution method." The "customer relationship" in deep distribution was "exchanging face for sales." When deep distribution entered the "terminal resource investment war," it became a resource war.

Since the F2B2b2C model requires organized and systematic use of channel resources, the first practitioners, despite flaws in operational skills, will definitely enjoy the dividends of model innovation. Followers will not only have to do it but will also turn it into a resource war. The early "Taobao brands" in e-commerce enjoyed platform traffic support, but now e-commerce is also a resource war.

From model innovation dividends to resource consumption war, this is an unavoidable law.

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