Last year, financial writer Shen Shuaibo proposed that whenever a track is hot in the domestic market, it will inevitably go through four stages: First, teams doing real work begin to attract capital attention; Second, speculators enter and start fishing in troubled waters; Third, the bubble is pierced under the objective laws of the market economy, and speculators retreat; Fourth, the industry returns to rationality. By the first half of 2021, the industry bubble was gradually being pierced, and the wave of closures came. At that time, friends in Shanghai specially organized a gathering to discuss how to break through in the second half of new consumption. But I always felt there was something wrong with this formulation; the second half of new consumption might not have arrived yet. It wasn't until 2022 that several brands I had favored successively encountered problems: traffic disappearing, revenue declining, capital retreating, internal discord... all problems were exposed. In the end, you will find that the dividing point between the first and second halves is not the appearance of the closure wave, but the brand beginning to clean up the traffic battlefield. Behind the rise of new consumption, there are actually three forces. The first is the population. In Q4 2018, Nielsen data showed that the post-90s generation had become the main consumer force in the internet era. This group has a more open attitude and actively explores self-development; labels such as the individual generation, adventurers, and slash youth are their notable tags. These people have become the main force in China's consumer market, especially for new-style tea drinks, popular coffee, and trendy clothing. The second is traffic. The emergence of new media with video as the main carrier has once again brought traffic depressions for brands. As early as the end of 2016, Luo Zhenyu proposed the concept of a "time battlefield." He said that the total national time available for mining on the internet is 1.825 trillion hours, and time is becoming a brutal business battlefield. That year, Douyin launched and quickly became one of the apps with the highest daily usage time across all age groups. A well-known case is Wang Baobao and Ubras. Data circulated online shows that after investing in Douyin, the health food brand Wang Baobao, which entered with the oatmeal category in 2018, saw monthly sales grow from 1.2 million yuan to 40 million yuan in just 9 months; the women's underwear brand Ubras, founded in 2016, saw an astonishing 800% year-on-year growth rate in 2020 after investing in Douyin information flow. Similarly, Bilibili, Kuaishou, Xiaohongshu, etc., all became traffic depressions for new consumer brands for a period of time. The third is capital. Yu Ge of Big Eyes Buy Buy Buy once said in a speech: In 2019, the entire capital market situation was that there was money in hand but nowhere to invest; raising money was not difficult, but there was a lack of targets. At this time, online consumption surged, and suddenly several high-valuation consumer unicorns emerged, making VCs see the high growth rate and era dividends of the consumer track. There is another reason rarely known to the outside world for the influx of hot money into the consumer industry—dollar funds. In a phone communication, Chen Xiaomei of Qirong Venture Capital mentioned: Some dollar funds, when investing in high-tech, big data, and other fields, were actually more or less restricted, and large amounts of money began to shift to consumer and catering fields. The official website of the investment and financing journal "Financing China" released the "2019 Private Equity Fund TOP30," showing that compared with 2018, the amount raised by dollar funds in 2019 increased by 874%. Among them, many dollar funds consistently focused on domestic consumption upgrading and industrial integration. As a result, in the following two years, the consumer industry enjoyed capital dividends. The turning point came. First, the traffic dividend disappeared. By now, a large number of brands have plunged into Xiaohongshu and Douyin. With the full assistance of capital, the former traffic depressions have become overcrowded. The 10x ROI of the past is now considered good if it reaches 1 or 1.5. Second, capital returned to rationality. Under such circumstances, the marginal cost of brand marketing revenue growth has risen rapidly, the investment return period has lengthened, and there is even no hope of return. As a result, capital has returned to rationality, and financing for consumer brands has become a problem again. Of course, you can also understand that most capital is also speculative; if there is no short-term return, they will naturally retreat in large numbers. The traffic issue can be discussed further. Two or three years ago, social media platforms such as Douyin, Xiaohongshu, and Bilibili formed traffic depressions. Brands that first spoke out on these platforms, such as Perfect Diary, Wang Baobao, and Ubras, achieved maximum effective communication at extremely low traffic costs. But starting in 2021, seeing the opportunity, a large number of new brands simultaneously flooded into Douyin and Xiaohongshu, and the traffic depression was quickly squeezed into a red ocean. In the first quarter of that year, many brand owners complained to me that their ROI had dropped painfully. This is not the biggest problem. What is more annoying is that the customer traffic attracted at high cost is actually not ideal in terms of return. First, the efficiency of user repurchase and old customers bringing new ones is low. Behind this problem is actually the issue of product homogenization. Currently, most brands focus on the marketing end, while product development and even the entire supply chain construction are placed on mature processing factories. What problem does this cause? Multiple brands rely on the existing achievements of a few processing factories, leading to a large number of similar products flowing to the market. They are no different in function, quality, etc., except that they are wrapped in different LOGO labels. When these brands all acquire customers online and promote, users' choices are flexible; they do not have much stickiness to a similar brand's products, and naturally there is not much word-of-mouth fission. Second, the brand's multi-category products do not better carry the customer traffic. This is directly related to the communication of new media channels. Especially platforms like Douyin and Kuaishou, their recommendation mechanism pushes information based on personalized interests, that is, interest e-commerce. Brands will create diverse content to push their products based on different interests, scenarios, etc. Users may be penetrated by the content and pay in such scenarios. But he is not buying the brand's order, but the individual product itself. For example, if a beauty brand uses lipstick for interest e-commerce, its other products such as eye makeup and skincare are actually difficult to monetize from this wave of traffic. Unless the brand re-creates interest content for eye makeup to reach interested people. In addition, more brands actually do not have enough SKUs to alleviate user churn. When people buy your product due to occasional interest or the impulse to "try something new," but you do not have more differentiated new products to reach users long-term, this wave of users will be lost. As a result, brands need to continuously acquire customers at high cost and continuously accept the fact of low customer acquisition return. In the end, the brand is working for media platforms and KOLs. The three factors supporting new consumption are capital, traffic, and population. Now only the population remains. Brands return to rationality and think about the essence of business: how to create real value for this group of people has become the key to breaking through in the second half of new consumption. Around the population, brands urgently need to rethink several issues: First, reposition. Second, re-sort the value chain. Third, rebuild the internal organizational guarantee system. Reposition. A large part of the brands on the market, at the time of their founding, were not brand logic but traffic logic. So their positioning is mostly aimed at traffic. For example, regardless of whether the ceiling is high or not, first seize a new category, so that you can obtain category traffic at low cost on traffic platforms. Quickly create the first in the category, gain mind share, and then consider long-term brand growth and expand the category quadrant. For example, regardless of the user's consumption scenario, first create a product that fits the target group's social currency, then mass-plant grass-planting notes to artificially cultivate a user lifestyle. Although everyone knows this gameplay is not economical, when you have money, it can indeed burn out one or two brands on a platform. But when you stop investing, you will find that sales do not go up, and repurchase is almost nonexistent. At this time, we need to reposition with sufficient precision. Position a sufficiently precise population, such as young women aged 25; position a sufficiently precise price gap, such as a unit price of 20-30 yuan; position a sufficiently precise consumption scenario, such as single and staying at home... Don't worry that our positioning is too precise; there is a term called brand spillover. After you form a brand effect in a certain group, the people around them will also follow to understand your brand. Wei Zhe of Jia Yu Fund once said: Win the gold medal for products for 25-year-old women, thoroughly penetrate 25-year-old women, and your brand will naturally spill over to other groups. Specifically, 17- and 18-year-old girls will look up to how older sisters consume, hoping to be more mature; 30- and 40-year-old women hope to stay young forever and will look down on 25-year-old women; 25-year-old women have left university for 3-4 years, have their own income, start dating, and have children. This group will not only spill over to the opposite sex men, but also to children after having children, and at the same time influence the previous generation. Re-sort the value chain. Only when we position precisely enough can we have targets for future product development, channel construction, and marketing activities. Product aspect: Currently, many new consumption brands believe in one point: China has the most mature supply chain system in the world, so we do not need to build our own supply chain. This has become an excuse for many brands to emphasize marketing over manufacturing, and they have all adopted the light model of OEM processing. Theoretically, this is not a problem. The real industrial era must have full social division of labor; companies using the money for building factories for quality control may actually be more effective. However, so far we have not been able to solve two problems: First, the OEM model will cause market homogenization competition. Second, the OEM model is prone to product quality problems. Therefore, I have always advocated that brands slow down and build their own supply chains. The last person to say that China's infrastructure is complete was Pinduoduo's Huang Zheng. He said that domestic logistics is already mature and can be divided and collaborated rather than self-built. But soon, Pinduoduo gave birth to a dark horse in express delivery, J&T Express. I have mentioned the importance of self-built supply chains more than once. Under today's new retail development, the voice of channels may become stronger in the future, and brands will likely age. Moreover, the essence of brand business is nothing more than the enterprise collecting brand tax from users; it is just a matter of how much brand tax. But in the future, what will become scarce assets in the entire consumer goods field is high-quality upstream supply chains. No matter how e-commerce platforms, community e-commerce, content e-commerce, etc. develop, high-quality supply chains will always be one of the underlying core competitiveness. This is what brands need to do. Channel aspect: The statement that positioning the young generation and only doing online is actually very pale. Consumer goods ultimately are retail business; at least so far, retail business is still in the era of channel dominance. It is necessary to go offline. When Zhang Liaoyuan of Three Squirrels planned to open 1,000 stores in 2020, he explained the logic of going offline: First, although the online virtual shelf can display enough products, users do not browse deeply. They generally only accurately choose those popular products, that is, bestsellers. But generally speaking, bestsellers have lower profits and are not easy to make money. With the continuous growth of SKUs, even if the online virtual shelf can hold them, users may not finish viewing them. Second, although everyone is creating extreme cost performance, the online environment breeds a serious price comparison mentality. In this online environment, other low-priced products are also affecting user decisions, even if the price difference is only 0.01 yuan. Third, the express cost of online consumption cannot be covered. High cost performance triggers user consumption, but low unit price will inevitably increase the proportion of logistics costs. Fourth, the consumption experience is difficult to guarantee. For example, in the beauty industry, the consumption scenario of trying makeup in stores offline is the most common. After all, users can more intuitively contact all SKU products offline, the effect of low-margin bestsellers is diluted; the experience is improved, and consumption conversion is bound to rise; the price comparison atmosphere is diluted, and users do not have to bear logistics costs... This is the general logic for all online consumer brands to go offline. Brand aspect: Marketing must aim at the target. A milk tea brand I once communicated with, in order to cater to the general public such as students, white-collar workers, and the elderly, carried out marketing with different positions in multiple scenarios, resulting in uneven brand attitude communication. But overall, this is actually a bit greedy for more and faster, dispersing company resources, and only performing inefficient copy-paste at a low level. Any enterprise has limited resources. If the core and most important strategic direction is determined, then all elite troops and resources must be mobilized, saturated attack, focus on one point, and achieve a breakthrough at this point. As Huawei's Ren Zhengfei said, find the smallest incision, saturated attack, and achieve a single-point breakthrough. Rebuild the internal organizational guarantee system. Lu Xiuqiong, global expert partner at Bain & Company and former CMO of Coca-Cola, even proposed that the boundary of the consumer goods industry business was previously determined by supply chain and channels, but in the future may be determined by technical capabilities and organizational capabilities. There needs to be innovation internally, and this innovation will inevitably erode the original interests. This is the biggest difficulty when the enterprise's first curve migrates to the second curve—from financial, talent, and other aspects, they will unconsciously favor the business that is making money, rather than the business that is not decisive in the future and currently not profitable. This first requires the decision-maker's strategic determination, and second requires rebuilding the internal organizational guarantee system. First, the organizational system of the market segment should be improved. If we are determined to concentrate resources for a single-point breakthrough, then we must do a good job in channel incentives and open up the upper and lower channels; we must now explore a set of effective marketing models in the base market; we must first firmly choose one channel to concentrate resources to thoroughly penetrate, and then consider full-channel layout. Second, the organizational system of the marketing segment should be improved. After our main single product runs a closed loop, we need to enter the mainstream market through marketing methods and ignite the consumption trend. The traditional approach is HBG big penetration, marketing communication + filling gaps + supporting customers + leading brand concept guidance. In new media marketing, a young talent team is indispensable. Finally, optimize or even reshape the overall internal operation system. First, stress test the internal operation system. To quickly spread a product to the market is actually a test of production capacity, channels, brand, and other aspects. We start from the end, use financial models to calculate how long it takes for a product to be laid out in how many channels, affect how many consumers, and generate how much repurchase... Then use this calculation to coordinate within the company's various departments on a small scale first, to see which links need more time and resources to be tilted. Then give an adjustment period, and after all links are deployed, start running together. In this way, the market operation system, the enterprise internal operation management system, the single-product vertical value chain system, and the brand management organization platform system can achieve real-time synchronization, concentrating strength on one point for saturated attack. Second, build the product lifecycle management and user lifecycle management systems. The management of the full lifecycle of goods mainly focuses on the polishing of single products and insight into demand. On the one hand, extend the product lifecycle as much as possible, so that the so-called internet celebrity bestseller becomes a large single product that continuously generates profits; on the other hand, continuously explore new large single products, achieving one new product explosion after another, crossing the non-continuity of brand growth. Furthermore, behind the large single product, reserve a second echelon of the single category, like a reserve force that can replace the temporary failure of the brand single product effect caused by black swans at any time. The management of the user's full lifecycle is actually a guarantee for the management of the product lifecycle, after all, the length of product heat depends on the sustainability of user consumption. The brand's management of a single user's lifecycle mainly focuses on the AIPL model, that is, awareness, interest, purchase, and loyalty. These links, when placed in brand marketing, are the homework of product polishing, content planting, community interaction, fission, and repurchase. They are basically what the new generation of consumer brands after 2016 are good at. However, in the second half, it is not about emphasizing that it needs to be done, but involves more specific training of frontline talent.