The Three Axe Questions Find a quiet time, perhaps late at night when minds are calm, and suggest that the traditional boss take the e-commerce director to a secluded spot, have some tea, chat, and ask three questions: First, if we stop spending on Taobao promotion, can our online store still survive? Second, if we don't stop but replace it, moving the Taobao promotion budget to another area, where do you think it would be better spent? Third, if we must stop it entirely, refusing to invest in promotion, do you think you would still do e-commerce? Would you know how? Why ask these three questions? Because only by asking this way can you force his mind out of the Taobao cage. Rather than three questions, these are three axes to split the fixed mindset of e-commerce. Of course, the purpose is not necessarily to stop promotion fees; we just push a variable to the limit to see how the e-commerce function changes. Why focus on promotion fees? Gross margin 50% Advertising fees 15%-20% Logistics and shipping 5%-8% Tmall commission 5% Warehousing and picking 5% Personnel wages 10% Net profit 2%-10% E-commerce Cost Structure As above, with a 50% gross margin, 15%-20% on promotion is normal. A traditional enterprise working hard all year to achieve 200 million in sales gives 40 million to Taobao, essentially working for Taobao. Other costs are basically irreducible; as long as you do e-commerce, these costs are fixed. To generate profit, the only reducible cost is promotion. However, as everyone knows, traditional e-commerce is a traffic economy. The biggest problem in the e-commerce industry is high traffic costs, low margins, and severe homogenization leading to low loyalty and repeat purchase rates. For many e-commerce businesses, as soon as they stop advertising, orders drop sharply. The fundamental reason for high promotion fees on Taobao is that this business model is a "cash-absorbing model"! It maximizes the "seizure" of sales. On the surface, Taobao provides a platform for consumers to buy cheaply; in essence, it robs merchants, but under a more noble banner: the new commercial civilization. So, if you don't change your approach, even strategic losses have no future. The bigger you grow, the more you get sucked in. Those who advocate strategic losses are asking you to invest heavily and continuously in promotion, but that's a trap! Platforms like Taobao and JD can afford strategic losses, but brand owners cannot. Once a brand owner goes to such a platform, the goal is to make money. Forget strategic losses; above 10 million in sales, you must pursue profit! The question is, where does profit come from? Where to move the promotion budget? Back to the second question: if you could move the promotion budget to another area, where would you put it? The best answer is customer management, i.e., CRM. Why? Let's return to the most fundamental issue: what is the greatest significance of e-commerce? It is direct contact with consumers! Of course, direct contact doesn't mean you can sell directly, but you have consumer information and interaction. So, consumers are your greatest asset. You should shift from buying traffic from Taobao to buying traffic assets. Only assets can appreciate and create value; simple traffic purchases are one-time consumption. Your purpose in going to Taobao is not to get sales but to acquire consumers. That is the fundamental intent of e-commerce. Many e-commerce practitioners, dazzled by various Taobao tools, often forget their original intention and their own rhythm, being led astray by endless Taobao and JD activities, as if not participating means losing out and losing the future. If you forget your fundamentals, do you think you have a future? Look at IKEA. They have an excellent membership management system. They do advertise, but they turn advertising-attracted customers into members after purchase, manage these members well, and then don't need to spend advertising money to attract them again. Continued advertising is for attracting new customers. Since the customer pool always has attrition, fresh blood is needed, so advertising is necessary, but not as aggressively as for companies without membership management. E-commerce's greatest supplement to traditional enterprises is here: traditional advertising rarely accumulates customers, and even if it does, the accumulated customers belong to retailers, not brand owners. So traditional enterprises need large annual advertising budgets. On Taobao, e-commerce practitioners criticize traditional marketing waste, yet they still do wasteful things themselves. They think knowing where consumers come from and what they bought is precision marketing, which is laughable. Each big promotion, they spend millions on advertising, bring in tens of thousands of consumers, then ignore them, and continue round after round of advertising, while dormant consumer data sleeps. Many say Han Du Yi Shang (a Chinese online fashion brand) does well because of good management. Actually, the most fundamental reason is their excellent membership management. They have 500-600 member QQ groups, managing hundreds of thousands of members. Through interaction, they increase stickiness, understand consumer needs, and generate high-value organic traffic. An American marketing guru proposed the concept of "key account management," also called strategic account management. Previously, companies counted product sales, e.g., how many laptops or phones sold, not how many products a consumer bought. Without customer management, to get a laptop buyer to buy your phone, you need to re-market, which means cost. Customer management is particularly beneficial for multi-brand, multi-product companies. It allows you to complete jumps between brands and products with minimal marketing cost. So, customers are the core asset. Product success doesn't mean customer success; only companies that manage customers successfully can endure. In the past, customers were satisfied in batches; now, they are satisfied one by one. This is the marketing proposition of the new era. To satisfy one by one, you must rely on customer management. Previously, customer management was a tool, a database; now, it's a systematic project, a comprehensive system integrating marketing resources, covering all touchpoints from online to offline, from Taobao to the entire web. We call this the Grand E-commerce Strategy. Can this system really break the Taobao fate? Grand E-commerce Strategy Back to the third question: if there were truly no promotion budget, all stopped, would you still do e-commerce? Would the project collapse? The thoughtful reader might say, in this fiercely competitive era, how can you compete without promotion? Others' ads are everywhere; you have no voice. How can you win? We want to occupy a place, compete for position. You only talk about profit, only see money, not the big picture. Your level is too low. As said, Taobao's cultural attributes determine that investment is a bottomless pit. Investment won't give you a superior position. With fate sealed, how do you change? Of course, assuming we stop promotion fees isn't really stopping; it's forcing you to integrate resources and build a full-touchpoint management system from online to offline, from Taobao to the entire web. With mobile internet development, the widespread use of WeChat, Weibo, and QR codes provides a foundation for integrating touchpoints. Mobile internet subverts traditional internet due to its agility. Through points or serial codes, you can accumulate consumption data from all touchpoints, better understand consumption habits, and interact with consumers. So where do resources come from? Every consumer you've accumulated is an asset. Besides their own consumption potential, they are a base for word-of-mouth. Company and employee Weibo and other social platforms, traditional PR, events, and advertising—previously controlled by the marketing or brand department—need to be integrated in the Grand E-commerce era. Every online or offline activity can be accumulated, including TV ads. Offline distribution system resources, product packaging—every package is an opportunity to interact with consumers. These seemingly unrelated touchpoints can be linked via mobile internet to create a responsive touchpoint management system. This isn't a legend; it's a system being explored by Zhou Ying, e-commerce director of COFCO Foods, and Rui Jin Lin (a digital agency). They use a points strategy to integrate CRM across platforms. Whether on the official website or Tmall, each consumer gets points after purchase by scanning QR codes or serial codes. When consumers get points, their information accumulates in COFCO's CRM customer pool. So, no matter where consumers buy products, they can be managed centrally on one platform. Previously, points belonged to platforms like Taobao and JD, data wasn't integrated, and brand owners had limited operational space. But now it's different. The points strategy liberates consumption information elements attached to products. Through big data analysis, these elements become secondary marketing tools for brand owners. Figure: Integrating E-commerce Platform Data Figure: Points System Diagram COFCO is a typical FMCG company, contacting consumers about 60 billion times a year, but under traditional marketing, they haven't formed membership stickiness, relying only on continuous advertising to evoke memory. If they could turn those 60 billion contacts into membership recruitment opportunities, putting a QR code on each product, consumers could scan for points each time they contact, regardless of which COFCO product. This would make consumers unconsciously seek COFCO products, transferring goodwill from one brand to the group's other brands. Though just a vision, it provides a solution to the O2O dilemma traditional enterprises face in e-commerce: wanting to connect but fearing conflict. Now, no matter which channel sells, as long as it's your product, you can manage members uniformly. Previously, it was all about whole-network marketing and Taobao transactions; now, it's about marketing anywhere, transacting anywhere, with data in your hands. Figure: Membership Recruitment Vision Figure: Reverse O2O Example Figure: Online-Offline Integration This thinking truly opens up the e-commerce landscape, fully utilizing resources, shifting from the "open store-promote-transact" model to Touchpoint management of consumers. Who can't buy traffic? It's just a matter of efficiency; with practice, anyone with normal intelligence can do it. The question is, how do you turn traffic into assets? Use the money "donated" to Taobao for internal strength, improving customer management, building systems (like automated customer systems), and mining consumer needs. For most brands, on an annual basis, if you don't have 80% customer retention, you're not a brand, you haven't done e-commerce well, you're losing money, and you're not a qualified e-commerce practitioner! The Grand E-commerce is a revolutionary system. With your own Grand E-commerce system, you won't need to rely heavily on Taobao, completely escaping the fate of traditional e-commerce. If you're tired reading this, read the rest tomorrow. I swear I won't write such a long article again. What Grand E-commerce Means The most revolutionary aspect of Grand E-commerce is "de-platformization" and "de-centralization." Why can't you leave JD and Taobao? Because they "hold consumers hostage to command brand owners." Brand owners are long-term controlled by platforms, begging Taobao one moment, JD the next. When they fight, brand owners must tread carefully. This is the root evil of traditional e-commerce platform-centricity. Such competition only raises costs and eliminates e-commerce advantages. Under the Grand E-commerce strategy, it's completely different. The focus is on full-touchpoint consumer management. Whether search, online ads, BBS, email, SMS, product packaging, hang tags, store shelves, delivery parcels—everywhere you touch consumers is where you communicate. No matter where consumers see you or transact, the final consumption data is in your hands. Taobao and JD can fight as they like; their ads can rise as they like. You have consumer data; you can contact them anytime. Even if Taobao or JD closes your store, you have your own official website, can go to Weibo, other sites for marketing, and interact as you wish. Once parasitic on Taobao, you can now stand tall! Former platform points become brand points, and you can walk upright. In the Grand E-commerce landscape, platforms compete and vie; they must lower costs, improve merchant services, and reduce payment cycles to attract you to market on their platforms. Now Taobao and JD are also competing, but they use you as cannon fodder. Being controlled means being cannon fodder; there's no other way! Breaking the Traffic Spell With whole-network marketing and omnichannel marketing, Taobao store traffic is no longer fatal. Though more traffic is better, unless strategically necessary, you don't need to buy expensive traffic. In traditional e-commerce, a new customer on Taobao cost over 100 yuan; off-platform, over 200. After de-platformization, the traffic spell is broken, and costs drop. Previously, brand owners harmed each other; now, they nurture themselves. Of course, during customer accumulation, promotion and traffic are still needed. Return to the Official Website Era This means that in the traditional internet era, when e-commerce platforms were "centralized," the nearly dead official website will revive. This is the magic of mobile internet: breaking the traffic spell gives the official website new life. Combined with CRM, the official website becomes the most important front line for online marketing. In the Grand E-commerce era, the official website is the base camp, and CRM is the nerve center. Under the Grand E-commerce system, the assessment criteria for e-commerce departments change completely. The pursuit of scale is the root of all Chinese business, a necessity of the mass production era. In an industry chain, enterprises must produce on a large scale to keep the chain moving fast, bringing more profit and lower costs; otherwise, the division of labor won't accommodate you. But the pursuit of sales shouldn't be distorted. In traditional e-commerce, online-offline conflicts are severe. The pursuit of sales online is a dead knot: too much is bad, too little is bad. Instead of carefully balancing, liberate yourself from constraints and untie the knot. Treat e-commerce as a service department, not a sales department. A truly smooth business system won't be so twisted, constantly troubled by online-offline conflicts. That's not a normal business state. To straighten out the overall marketing system, you must change e-commerce practices, change the role of the e-commerce department, and change the way money is spent. Sales can no longer be the core assessment indicator for the e-commerce department; service is. As long as you pursue sales, you force the e-commerce department to compete for food. Besides sales, the e-commerce department can do many things: inventory drainage, consumer research, new product testing, CRM marketing management, pre-sales, customization, etc. They can do sales, but sales can no longer be the primary proposition. Grand E-commerce Emphasizes Channel Supremacy The core proposition of full-touchpoint management is maximizing customer touchpoints. To increase touchpoints, you absolutely cannot rely solely on the brand owner; you must rely more on channel distribution. Originally, it was channel supremacy (place); in the future, it's touchpoint supremacy (point). Grand E-commerce creates two fission directions for channels: First, brand owners and channel partners not only push inventory but also jointly manage consumers. In the future, channels will be integrated, not isolated. Second, channel specialization becomes more popular, such as beauty, small appliances, phone accessories, and other category-specific consumer stores. Online vertical category killers have fertile ground. Direct consumer management and direct sales are two different things. You only manage information flow; product flow must be left to the distribution field. Never think about eliminating channels to monopolize profits; that's the stupidest business model! Organizational Structure Adjustment The marketing layout centered on the official website + data center requires changes in the marketing system. To put it bluntly, financial power needs redistribution. For a long time, e-commerce department marketing investments and corporate online marketing investments were executed separately, with divided financial power, naturally wasting communication resources. E-commerce is absolutely not just opening a store and selling goods; it's about fully integrating internet resources. The core spirit of the internet—interaction, efficiency—must also permeate the enterprise to truly complete the e-commerce revolution. Your Possible Questions You might ask, wasn't there CRM before? Does it need to be this important? Of course, CRM existed before. It highlights value now because, first, e-commerce marketing costs are too high for brands to bear. In earlier years, the trend of whole-network marketing + data centers was popular, but it eventually gave way to brand flagship stores and Taobao's big platform. Because the essence of traditional internet is centralization and platformization, Taobao's store aggregation model had lower costs. It wasn't until flagship stores hit a dead end that they realized Ma Yun's call for brand owners to face consumers directly was just to make all brand owners treat Taobao as their only channel. Now, brand owners finally understand: no matter how much you hate channels, you can't do without them, because Taobao makes you more miserable. Only by leaving professional matters to professionals, letting go of the desire to monopolize, and fully utilizing channels is the right way. You just do brand management and consumer communication. Second, before mobile internet, data wasn't integrated and wasn't easy to integrate. Now, through points, you can easily integrate and stick to consumers. Previously, platforms like Taobao and JD had points, but those were platform points, not brand points. Consumer data across platforms was hard to use comprehensively. What you bought on Taobao, JD, Wangfujing, or Watsons was scattered, not accumulated. Mobile internet breaks this barrier. Mobile internet is the nervous system of marketing; only when the nervous system is connected throughout the body is the whole body alive, and an active body has strength. You might also ask, does this mean Taobao is no longer important? Of course not. It just means the cost for brand owners to use Taobao decreases. As the largest entry point for online retail, Taobao still has tens of millions of orders daily. But the way brand owners use Taobao changes: inventory drainage, new product testing, market research, etc., are all valuable. However, everyone should abandon unrealistic fantasies, change sales assessment indicators on Taobao, and reject the scare tactics that without Taobao there's no future. You might ask again: brand owners and channel partners jointly manage consumers—sounds good, but why would channel partners trust brand owners? What motivation do they have? Grand E-commerce thinking requires win-win, but this win-win needs a mechanism, which is to solve the channel attribution of each consumer. Due to space, I won't elaborate, but three indicators can be referenced: contribution, convenience, and habit. You might also ask: Taobao itself has a mobile strategy; Taobao isn't static. Didn't Ma Yun propose that mobile Taobao should kill Taobao.com? That's a great question, perhaps better answered by Ma Huateng. But regardless, Taobao's future direction must be to reduce enterprise marketing costs to find its position in this battle for discourse. The Grand E-commerce strategy solves the long-standing online-offline split problem for traditional enterprises, dismantles the fate of platforms like Taobao, and more importantly, returns business to the essence of serving consumers, not competing on price or advertising. This is a shift in discourse power, from platforms to brand owners; a redistribution of interests, from channel segmentation to channel integration; a major industrial adjustment, re-optimizing the commercial service chain; and a grand game testing the wisdom of all roles in the business system. 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