【Core Viewpoints】 Private domain 1.0 is direct sales digitalization; private domain 2.0 is chain digitalization; private domain 3.0 is distribution digitalization. Private domain 1.0 is a small dish; private domain 2.0 is a main course; private domain 3.0 is a grand feast. Private domain 1.0 is too small; private domain 2.0 is too narrow; private domain 3.0 is too big and too difficult. Private domain 1.0 suits e-commerce enterprises; private domain 2.0 suits chain retail; private domain 3.0 suits distribution enterprises. Private domain 1.0 has shaped many people's perception of private domain, but it is precisely the pitfall of private domain. Only by jumping out can there be a future. Summary: Exclusive private domain is "a small dish," while shared private domain is "a grand feast." Only private domain 2.0 and 3.0 are strategic options for companies. The concept of private domain lacks clear connotation and boundaries. Or rather, its connotation and extension are constantly changing. Therefore, when discussing private domain, it is inevitable that people talk past each other, with each person's understanding differing greatly. Reviewing the practice and evolution of private domain, it can be roughly divided into three stages: Private Domain 1.0, Private Domain 2.0, and Private Domain 3.0.
Private Domain 1.0: A Small Dish
The reason it is called private domain is because it corresponds to public domain. Private domain and public domain are a pair of opposing concepts. This is the premise for understanding private domain. What is public domain? Public domain is e-commerce platforms. Platform traffic is public domain traffic, and e-commerce enterprises have to buy traffic. Traffic is expensive, which is why private domain emerged. What is private domain? Private domain is the de-platforming of traffic. Therefore, Baidu Baike defines private domain traffic as: Private domain traffic refers to traffic that is diverted from public domains (internet), other domains (platforms, media channels, partners, etc.) to one's own private domain (official website, customer lists), as well as traffic generated within the private domain itself (visitors). Private domain traffic is customer data that can be used for marketing activities such as multiple links, touchpoints, and sales. So, private domain is not about buying traffic but about diverting traffic. I have repeatedly said that this definition is somewhat "shameless." Private domain traffic is actually "traffic smuggling" from public domains. Not only does it "smuggle traffic" from public domains, but it also digs at the traffic of all partners. Doing something not so ethical and writing it into Baidu Baike openly is indeed because public domain traffic charges are too high, forcing platform merchants to do some "sneaky" things. So, the earliest practitioners of private domain were those playing e-commerce. In 2021, Tencent announced 70 "private domain top students," mainly in beauty and daily chemicals, clothing and accessories, shoes and bags, sports, and baby products. These are the main players in e-commerce. Take Pop Mart, which does private domain best, as an example: in 2021, it had 15 million private domain users, and its mini-program transaction volume reached 898 million yuan. Is this scale large? It is not small for e-commerce enterprises. But for leading FMCG companies, it is "a piece of cake." Tsingtao Beer's e-commerce scale is far ahead in the beer industry, but it only accounts for 2.5% of the company's total. If they do private domain, it is hard to exceed 10% from public domain diversion, and by sales volume, it can only be a few thousandths of a share. The share is too small, not worth doing, and cannot become a strategic option for the company. Many internal digitalization personnel in leading companies are confused about this: they mistake it for a trend, but it is too small. Not worth making a fuss, but they still have to do it. The approach of private domain 1.0, digging at traffic corners, is destined not to grow big or go far. Such a small and absurd practice, because of digitalization packaging, seems to become a digitalization trend. Even some ten-billion-yuan companies bet their future on it, thinking every day about how to divert traffic from partners. However, private domain has also done a very satisfying thing: de-platforming. In the past, the platform's mission was to "make it easy to do business in the world," but now platforms are the most expensive business. The public hates someone, and going against them is satisfying, even if it is not aboveboard. Platform e-commerce, under the banner of "de-intermediation," has accumulated considerable traffic. Now it is private domain's turn to raise another banner: de-platforming. Therefore, de-platforming is also a means of gathering traffic. I have repeatedly said that platforms are not B2C but B2P2C (P is Platform). Platform merchants are invisible middlemen. Platforms are Alibaba's business logic, while private domain enters Tencent's business logic. Private domain is direct e-commerce (F2C), truly de-intermediating and de-platforming. The merits and demerits of private domain both stem from this. Private Domain 2.0: A Main Course Sometimes, the first step of a great business is not big, or even not glorious, but eventually it walks out a great path. Because business is constantly evolving. When private domain 2.0 emerged, the original private domain automatically became private domain 1.0. Private domain 2.0 is currently the model with more benchmark cases. Let me give a few examples. KFC has over 330 million registered private domain members, and all 7,900 stores are conducting private domain operations through WeChat Work. New consumer brand Nayuki had 43.3 million registered members in 2021, with a member repurchase rate of 30%. Miniso had 14 million private domain members in 2021, with 7.8 million monthly active users on its official mini-program, and member purchase frequency nearly 1.5 times higher than non-members. If we observe these cases, we find a common feature: they all have offline stores. Offline stores are the typical feature of private domain 2.0. Reaching users, connecting users, and activating users through stores to form private domain traffic is the business's duty, compared to diverting from public domains. Stores are the strongholds for gathering private domain. This is a major difference from private domain 1.0. Private domain 1.0 is centralized private domain, with customer operations at headquarters, and no matter where traffic is diverted from, it ends up at headquarters. Private domain 2.0 is distributed private domain, with private domain dispersed across stores. The second feature of private domain 2.0 is: chain or franchise stores. Because in chain or franchise stores, the interests of the head office and stores are highly aligned, not distinguishing between each other, and daring to place private domain in stores. It is this feature of private domain 2.0 that makes private domain less "selfish." The third feature of private domain 2.0 is: the head office and stores can be connected through WeChat Work, and the head office and stores share private domain. WeChat Work + personal WeChat become the main tools of private domain 2.0. The distributed private domain connected through stores allows private domain 2.0 to have the opportunity to achieve a larger scale than private domain 1.0. First, stores have more touchpoints with users. The main diversion methods of private domain 1.0 are platform diversion, product scanning, and official accounts. But private domain 2.0 connects users through stores, completing the connection simultaneously during the transaction process. The transaction process is inherently a trinity of cognition, transaction, and relationship. Second, the store scenario is more conducive to connecting users. For example, Helens customers can only order by scanning a code. This is a scenario design very conducive to user connection. An earlier enterprise to adopt store-user connection was Xibei. In 2016, Xibei founder Jia Guolong believed digitalization was a trend and invited experts to implement it. By 2017, they had obtained 10 million registered members. At that time, there was no concept of private domain, let alone private domain 2.0. Third, connection and activation are completed simultaneously. User connection is a challenge, and activation is an even bigger challenge. A leading FMCG company's official account has 40 million followers, but basically no commercial value, mainly zombie fans. Connecting users through store scenarios, some customers are "activated upon connection." For example, Xibei's "parent-child activities," which have persisted to this day, have gained a large number of paying users, which is a good method of user activation. It is precisely because of these values of private domain 2.0 that it has been well applied in chain and franchise enterprises: 1. Local service categories, such as catering and entertainment, including McDonald's and Helens; 2. Retail chain categories, such as Watsons, Pagoda, and Qian Dama; 3. Short-chain channel brands, such as footwear and apparel, and luxury goods. For chain and franchise enterprises, private domain 2.0 is like an upgraded membership system. But it differs from traditional membership: traditional membership is one-way, and if users do not consume, they are disconnected; private domain users can be communicated with in three dimensions: offline, community, and online. McDonald's and KFC's delivery can be done through O2O platforms or store mini-programs. Therefore, they are among the few stores with their own delivery "riders." Currently, the value of private domain 2.0 is still not fully utilized. User connection has been achieved, and KFC already has a massive 330 million+ members, but how to activate and operate them is a new topic. KFC's 330 million+ members exceed the total online users of any brand. The scale of private domain 2.0 can be large enough, and its importance is definitely at the company's strategic level. Therefore, private domain 2.0 can already be called "a main course." Private Domain 3.0: A Grand Feast The concept of private domain has a somewhat exclusive connotation. As the shortest business path of direct e-commerce (F2C), private domain 1.0 is both de-intermediating and de-platforming. Exclusivity means excluding any intermediate media. In the internet context, "middlemen" seem to have "original sin." Private domain 2.0 differs from private domain 1.0 in that it introduces an intermediary: the store. The model of private domain 2.0 can be expressed as F2b2C. If you can take a small step, you might take a big step. Since private domain 2.0 can introduce a small b, why not introduce more intermediate business entities? Thus, private domain 3.0 based on the distribution system was born, and the model can be expressed as F2B2b2C. Private domain 3.0 has the following characteristics: First, small b stores remain the scenario for connecting users. Apart from the less glorious "platform diversion" and one-item-one-code scanning, other means of connecting users are roughly based on the connection of people, goods, and scenes. Connecting users through people is exactly the strength of small b. Between small b and users, there are strong offline relationships and strong community interactions, extending to online, which is the internetized private domain. Connecting users through scenes is exactly the advantage shown by store-user connection (private domain 2.0). Scene-based user connection has three major characteristics: first, scene connection has potential energy; second, scene connection activates immediately; third, scenes can connect in batches. Scene connection is a big topic, and I will elaborate on it later. Second, private domain 3.0 is shared private domain. As long as the b2C connection is completed, any business entity in the channel chain can share the connection. Private domain 2.0 (F2b2C) is shared by two entities (headquarters and stores); private domain 3.0 (F2B2b2C) is shared by three business entities (manufacturer, distributor, and store). Private domain 2.0 shared connection has no profit distribution issue, while private domain 3.0 shared connection has a profit-sharing issue. Profit-sharing issues also exist in traditional channels, but now they are transferred online. Third, the integration of online and offline. Private domain 1.0 transactions must be reflected online; private domain 2.0 does not require transactions to be reflected online, even if offline transactions can identify users; private domain 3.0 similarly does not require transactions to be online. Fourth, private domain 3.0 is from a marketing perspective. In practice, we find that viewing private domain from a marketing perspective is most efficient. Connecting customers online is to facilitate activation and operation. As for the transactions after conversion, whether online or offline makes no difference. How traditional enterprises do private domain is solved with the emergence of private domain 3.0. Private domain 3.0 is distribution private domain. With the help of the million terminals formed by deep distribution, connecting hundreds of millions of users, private domain is no longer a small dish, nor just a main course, but a "grand feast" that can lead channel digitalization. The Evolution Logic of Private Domain The evolution from the early exaggerated "small dish" to the current "grand feast" whose importance is underestimated is very interesting. Private domain 1.0 is too small in scale, at the level of tens of millions or hundreds of millions, at most billions. It is only suitable for traditional e-commerce enterprises, has no promotional value for FMCG enterprises, and cannot bear the mission of digitalization. However, private domain 1.0 has fixed many people's perception of private domain and they cannot extricate themselves. Therefore, stepping out of the shadow of private domain 1.0 is very important for the development of private domain. Private domain 2.0 has a narrow scope of application, only suitable for retail chain enterprises, and is difficult to expand to other fields, but its expansion of the private domain concept is decisive. Once you learn the business logic of private domain 2.0, there is no obstacle to evolving to private domain 3.0. The concept of shared private domain derived from private domain 2.0 is revolutionary, and it is the beginning of the combination of online and offline private domain. There are many successful cases of private domain 2.0. I suggest everyone pay more attention to and study private domain 2.0, and jump out of the pit of private domain 1.0. Private domain 3.0 is too big; in fact, it is not just the business of the digitalization department, but a change in the entire distribution channel system, so it is too difficult. Especially the proposal of the shared private domain concept solves the sharing and collaboration of the entire channel chain. This is the right path for FMCG private domain. Shared Private Domain Is the Right Path Private domain 2.0 has shown that stores (including community group buying leaders) are the best nodes for connecting users. This is true for both chain and franchise channels and distribution. Stores have three major touchpoints to reach users: people (relationships), goods (one-item-one-code), and scenes. Therefore, stores are the best connection points for private domain. Stores have three means to connect and activate customers: offline, community, and online. Therefore, stores have fewer zombie fans. This is also the strength of stores. However, we must also face a basic reality: stores do not have the capability for private domain operation. In the baby products industry, the proportion of stores adding user WeChat exceeds 90%, but many stores watch their private domain traffic decline. Because stores are good at connecting customers and activating customers, but not good at private domain operation. Private domain 2.0 solves this problem: stores are responsible for connecting, activating, and serving customers, while the head office is responsible for operating customers. This changes the connection, activation, and conversion of private domain from being the responsibility of one entity to the combination of multiple business entities. This is a major difference between traditional channel digitalization and pure online. Connection requires relationships, enthusiasm, and scenes, while operation requires professionalism. In centralized private domain, operation is handed over to customer service or even AI, and the user experience is poor. In private domain 3.0, stores remain the business entities for connection and activation, while operation can be jointly completed by the manufacturer and distributor. I have even proposed the concept of "dual middle platforms", where the manufacturer's middle platform and the distributor's middle platform jointly are responsible for user operation. The more it lands offline, the heavier the role of the distributor. Currently, many forward-thinking distributors are already practicing this. The difficulty of shared private domain is channel profit sharing. As long as incremental value can be created, profit sharing is not a problem. How to share profits will definitely find a way in practice. The principle I propose is "traffic profit sharing", which is different from the "transaction profit sharing" of traditional channels. Transaction profit sharing means making a profit in buying and selling; traffic profit sharing means that no matter who completes the transaction, wherever the traffic comes from, profits are distributed backward through the channel. For example, if traffic comes from a store and the transaction is completed by the manufacturer, then even if the manufacturer does not make a profit on this transaction, the store and distributor still make a profit. Private Domain 3.0: The Combination of New Marketing and New Retail This was inadvertently proposed by friends when discussing community group buying in a group. New marketing or new retail are digitalization mindsets from different standpoints. New marketing is the digitalization mindset of brand owners and distributors, aiming to sell the same product to more people; new retail is the digitalization mindset of retailers, aiming to sell more products to the same person. Private domain 1.0 is typical new retail thinking, also called direct e-commerce (F2C). Private domain 2.0 has a bit of new marketing dimension within new retail thinking. In private domain 2.0 operations, offline and online roles are equally important, and online transactions are not particularly emphasized. What is the difference between new retail and new marketing thinking? New retail emphasizes one entity and one dimension. Cognition, transaction, and relationship are all completed by one entity (the manufacturer) in one dimension (online). New marketing, based on traditional marketing, emphasizes multiple business entities (manufacturer, distributor, retail store), multiple dimensions (online, offline, community), and the three business roles of cognition, transaction, and relationship being both separated and seamlessly connected. For example, relationship offline, cognition in community, transaction offline, or the three roles swapped, are all completely possible. Private domain 3.0 is new retail thinking from the perspective of traffic sources, and new marketing thinking from the perspective of emphasizing relationship and cognition roles. The combination of new marketing and new retail thoroughly connects online and offline, integrating them into a whole, making business truly an integrated omni-channel rather than separate multi-channels.