In 2016, Jack Ma's concept of "New Retail" sparked a frenzy among internet platforms, manufacturers, and retailers. Unmanned retail was all the rage, unmanned supermarkets were hot, and O2O was a chaotic battleground. Traditional retail experienced a wave of turbulence. Meters/bonwe, which took an unconventional path, invested heavily in e-commerce transformation but failed. Alibaba's latest attempt in New Retail, "盒小马" (Hema Mini), is now facing closure. As I mentioned in "There Is No New Retail in the World," the pitfall of New Retail lies in the word "new." Now is the perfect time to reflect on the essence of retail, revive the retail industry, and move toward the second half of retail. What is retail? How can traditional retail monetize data? These are the key questions to solve now. The Essence of Retail Return to common sense, from tactics and trends back to the "Way." Retail is actually our daily life, closely related to us. Let me share three observations. First, Swedish furniture retailer IKEA has huge shopping spaces, and people worldwide, from young women to older folks, enjoy visiting IKEA to take photos and eat ice cream. But recently, IKEA plans to open small stores in prime locations in London and New York. These stores are display-only, with no on-site purchases. It's said they will feature AI and AR interactive experiences, with orders placed via mobile and delivered to home. Meanwhile, at Walmart in China, customers are also using their phones to scan barcodes on toothpaste and chips, shopping while browsing, then using a dedicated "scan-and-go" checkout lane for quick payment and exit. Shopping experience offline, payment online. This seems like a better solution for "retail O2O." Second, I've noticed several times that young children try to poke screens or magazines and books, sometimes asking, "Why doesn't it move?" Instant interaction and constant connectivity are essential for the new generation, becoming a habit. They constantly ask their parents for phones and iPads. The post-00s generation lives in an era of internet ubiquity; even for authoritative information, they go online to search. The internet has become an extension of the human brain. "Software is eating the world," a famous Silicon Valley VC uses this as its investment creed, and it's one of the biggest trends of the internet era. WeChat's user base exceeding one billion is a milestone; this tool is becoming ubiquitous, a super connector. In Zhang Xiaolong's recent widely shared speech, he mentioned WeChat's original intention is to be a "tool that keeps pace with the times. " What is a tool? It's an extension of human body and brain; only when properly combined with humans can it bring about productivity transformation. Third, blockchain was all the rage a year ago. Even when the technology was immature, it quickly attracted many fervent believers because it aligned with the trends of decentralized transactions and traceability. Unfortunately, it had only theory and underlying philosophy, but the technology wasn't mature, and infrastructure wasn't built. It was thrown to high heights and then plummeted. So, a utopia is a castle in the air. The same goes for New Retail. Only by finding a model that fits the existing ecosystem and trends, leading by half a step, can you iterate with small steps and stay ahead. New Wave: Experience vs. Ecosystem Why do I repeatedly emphasize the complexity and infrastructure of retail? Because many trends fail on these points. O2O, unmanned retail, and unmanned shelves focus on user experience but fail to connect and activate the upstream supply chain and logistics system. They only have a seemingly advanced terminal. They seem to solve the last-mile problem, but they still require manual restocking and ignore the first two or three hundred kilometers. Engaging end users relies only on limited traffic; without accumulation, it's hard to sustain blood-making and blood-supply capabilities. The recent closure of Hema Mini in Suzhou is the same story. They only focus on experience, on users taking photos, feeling, and posting on social media, but they don't integrate existing infrastructure well. However, Alibaba's acquisition of hypermarket RT-Mart and Amazon's acquisition of convenience store chain (in the U.S.) show that integrating existing assets still has great potential. New things often naturally capture attention but lack universality. New players clamor to disrupt tradition but are quickly slapped in the face. Because almost every business has a long chain in the front end, beyond the eye-catching terminal. People tend to focus on the most eye-catching part, but if the skin is gone, where can the hair attach? For example, in New York's Times Square, there's a FamilyMart store with food, coffee, various shopping experiences, and even a bar at the back where you can drink beer and chat. But can this cool model be replicated elsewhere? There are few places in the world with the foot traffic of Times Square. Blindly copying the surface will likely end in failure. This is also why Hema Fresh struggles when expanding beyond first-tier cities. The majority of retail brands still rely on a complete supply and logistics system for "goods," with each link adding margin to reach the terminal. Optimizing this path is a more realistic and feasible approach. New Battlefield: Tian Ji's Horse Racing, Strategic Alliances Once a fast-fashion giant in third- and fourth-tier cities, Meters/bonwe, endorsed by Jay Chou with the slogan "Don't follow the usual path," transformed to e-commerce, launching websites and apps, and suffered a huge loss of 300 million yuan in 2017. In contrast, Semir, a brand that was once a tier lower than Meters/bonwe, stuck to its retail network. In brand strategy, it entered the children's wear track and maintained growth in gross and net profit. When e-commerce hit, Meters/bonwe panicked and used its weakness to compete in others' strongholds, while Semir weathered the storm and rose against the trend. This fully demonstrates the need to adhere to Tian Ji's horse racing strategy when competing with strong opponents. For traditional retail brands, rashly changing tracks is too risky, and entering the internet battlefield without any advantage is futile. Instead, they should firmly cultivate their own territory, play to their strengths, and deepen their moats. Brands with retail stores should focus on offline scenarios, base themselves in regional markets, and dig deep. Whether convenience stores, supermarkets, or clothing stores, they should make their path so well-trodden that others have no way to go. Then, they should form strategic alliances, choose traffic giants, remove intermediate links, and more effectively penetrate the consumer market. Alibaba excels in e-commerce and finance, while Tencent excels in users and tools. They have also chosen different strategies and battlefields. Alibaba's new retail attempt "Hema Mini" is facing closure, but Alibaba, starting from its strength in finance, helps traditional mom-and-pop stores collect payments, solve cash flow pressure and loan issues, and can address the actual funding problems at the back end of the retail chain. Tencent Smart Retail, on the other hand, integrates retail within the WeChat ecosystem, creating more dimensions of social fission and consumption. Tencent has strategic cooperation with over 20 industry-leading brands, using a decentralized approach to build private domain business models, truly testing whether omni-channel operations are feasible, connecting online users and offline stores, rather than pure e-commerce. So far, after one year, among the 20+ brands cooperating with Tencent, some have seen incremental growth of up to 10%. New Business Model: Enclosure Movement vs. Omni-channel From the various examples I've given, two major digital trends can be summarized:

  1. Stabilization of human digital IDs: People's digital identities have become their real identities; the comprehensive digitalization of users has also driven the dissolution and reconstruction of the boundaries of the three retail elements: people, goods, and places. In the mobile social ecosystem, the purchasing habits, paths, and needs of "digital users " are becoming more complex. They want merchants to meet their needs anytime, anywhere, and to buy desired products promptly. People are also becoming new "places," becoming sales channels and key nodes. In the three hours you spend on WeChat daily, in the virtual social space, there are always "grass-planting maniacs" and "unboxing experts." They should serve as key nodes and mini-KOLs, allowing ordinary people to become salespeople and guides, helping retailers sell goods and enter a virtuous cycle.
  2. Digitalization of people brings infrastructure changes: New lifestyles and consumption habits are changing financial and consumption infrastructure. This means every industry has the potential and conditions to redo everything with the internet. But does redoing mean breaking and starting over? Absolutely not. It should be maximizing the use of existing infrastructure and optimizing intermediate links. Consumers' purchase paths, habits, and needs will become more complex, but do these sporadic needs have to link to an official website or an app? Too troublesome. Traditional retail's enclosure movement or rebuilding city walls is each fighting for itself, creating information silos. The digital assets accumulated are quite limited, making it hard to sustain blood transfusion and achieve scale. So how to leverage each other's strengths and form alliances? Tencent has actually proposed its own ideas. Tencent Vice President Lin Jinghua mentioned: Future business will definitely be digital. What Tencent wants to do is help merchants digitize user assets and further achieve omni-channel digital operations. This goal includes two paths: 1. Help traditional retailers activate existing stock: Traditional retailers have mature offline stores, receiving large amounts of traffic daily. But they haven't truly connected with customers. Tencent hopes to help traditional retailers digitize offline customers, activate existing users, and guide them to online private domains. 2. Leverage .com 2.0 to gain incremental growth: In Tencent's definition, .com 2.0 is a collection of omni-channel private domain business models that achieve scale transactions. Private domain means the business belongs to the merchant, not restricted by platform rules, and no need to hand over users and data assets. Omni-channel means true online-offline integration. Scalable means this is not a flash-in-the-pan test but a truly effective, market-verified, universal methodology. The era of private domain traffic has arrived. Brands must achieve user insight, retention, repurchase, and fission. In traditional retail, people came, bought, and left. Now, when people come in, you must retain them, make them buy repeatedly, and after repeated purchases, get them to bring in new customers through fission. Do these three steps well. .com 2.0 has already explored three new forms. The actions of traffic giants are worth attention from every consumer and retail practitioner. First, brand portals. Many retailers have failed in building their own e-commerce apps. Ultra-light, use-and-go, no-download mini-programs have become a better alternative. From official flagship stores to card packs and official account pushes, experience must be the top priority. So, handing this over to Tencent, which values tools and user experience, can provide better solutions. Mini-programs and official accounts can be interconnected within the WeChat ecosystem, enabling short-path conversion, suitable for merchants with strong brand power and a large base of official account followers seeking monetization channels. Second, sales guides. In luxury stores, shopping malls, banks, wealth management companies, and even barbershops, there are always salespeople or advisors adding you on WeChat. Then they occasionally greet you, send messages about discounts or new arrivals. But some salespeople have low emotional intelligence, disturbing you daily, and you just want to block them. What will the future of sales guidance look like? Dealing with consumers is hard to replace with cold machines, whether it's customer service, sales guides, convenience store clerks, or financial advisors. But their work efficiency and performance incentive mechanisms will be supported by more data. Bestseller, which owns brands like Vero Moda, ONLY, and Selected, sells more than Uniqlo and Zara. It has over 8,000 stores and 40,000 sales guides in China. After cooperating with Tencent Smart Retail, using the WeMall sales guide mini-program, Bestseller's sales guides broke through store geographic and time limits, achieving monthly sales of over 45 million yuan, equivalent to the total sales of the previous 7 months of mini-programs. Finally, social fission. In fact, Pinduoduo may be the last company to harvest a large amount of fission traffic from WeChat. Yonghui may be the brand least expected to do social fission. But after cooperating with Tencent, by using the best seasonal promotional products, continuously forming group buys, and adding home delivery services, they can achieve 60,000 daily orders, activating and expanding store efficiency, and better connecting with people. This is also the core essence of Tencent's .com 2.0: fully owned by retailers, user experience paramount. New Momentum: Data as Oil, Three Connections Project Historian Harari said in "21 Lessons for the 21st Century" that data is the oil of the new era. But oil influenced the course of human civilization because the invention of the internal combustion engine turned resources into power. The data era also needs a suitable internal combustion engine. In reality, we have the Three Connections Project: water, electricity, and roads. To achieve Tencent's .com 2.0, in the virtual world, there is also a "Three Connections Project" to serve as the internal combustion engine. "Connect Touchpoints": Ignite the spark. There are many consumption "touchpoints " in WeChat, social, and content, which need effective management and connection. Retailers' touchpoints mainly consist of four parts: owned online touchpoints like subscription accounts and service accounts, offline store touchpoints or payment touchpoints, social touchpoints from users and fans, and paid commercial touchpoints. How to sort out all touchpoints, achieve integration, and finally settle private domain assets in mini-programs is the first step in smart retail transformation and can yield short-term results. Tencent has launched the "Multiplication Action " for this purpose, providing practical operational guidance and support to retailers, teaching traditional enterprises how to do business within the Tencent ecosystem. "Connect Performance": Provide momentum. Through practice, find the most suitable business model, set long-term KPIs, get employees online, connect store sales, sales guides, and performance, manage and improve human efficiency, and sustain operations for scale growth. "Connect Data": Better, faster, and more economical. Finally, digitize online and offline user assets, combine big data mining, refine operations, and further reduce costs and increase efficiency. For example, Tencent's "Zhu Ji" module can use user tags and festivals to AI-generate personalized, precise marketing content, showing different faces to different people. Ask yourself: Can media create differentiated content for different users? Can operations tailor to thousands of users and take care of every aspect? When touchpoints, performance, and data systems are connected, and data empowerment is used to achieve the ultimate experience for each user, it will be within reach. The Second Half of Retail: Integrating People, Goods, and Places with .com 2.0 Traditional retail seeks places and manages goods. But in the second half of retail, by connecting data, goods can find people, and people can become places, achieving a closed loop of consumer experience from "real life" to "data life." Tencent, with its advantages in data and tools, has launched .com 2.0, centered on "people," using actual cases and pilots to help physical retail brands from point to surface. When the New Retail concept emerged, many players rose, but the ultimate model has not yet been explored. As the market returns to rationality, retail always involves many players in many links. Only through strategic alliances can they optimize human efficiency, store efficiency, experience service, and data integration. In the smokeless battlefield of retail, different players play to their strengths, deeply cultivate their own fields, and effectively monetize data assets. This is the key to winning from a distance. Once the tip is adopted, a reward of 400-2000 yuan will be paid. China FMCG + Internet Professional New Media Dedicated to FMCG manufacturer transformation and channel digital solutions