At the recent China FMCG Channel Innovation Conference, New Distribution invited Shi Yonggang, Deputy General Manager of Tsingtao Brewery's Innovation Business Headquarters and E-commerce Director, to give a keynote speech. Mr. Shi has experienced, at Tsingtao Brewery, the journey from being a traditional sales channel manager to gradually establishing Tsingtao's online sales network and executing the overall O2O strategy. So, what practices and experiences does Tsingtao Brewery have in O2O new retail layout? New Distribution has compiled and excerpted the highlights of Mr. Shi's speech at the conference for our readers. -01- The Significance of O2O For brand owners, the true significance of O2O lies in enabling online-offline linkage, effectively connecting and integrating the company's online business with its original offline operations. However, for many traditional large brand owners with sales networks spanning the country and distribution channels covering even the smallest villages in lower-tier markets, these deep-distribution enterprises with large volumes and mature sales networks face significant challenges when venturing into O2O. So, how does Tsingtao Brewery view the O2O business? In the past two years, despite the loud buzz around community and social group store-based businesses, the home delivery business continues to thrive. From 2016 to 2020, the home delivery business maintained a rapid growth rate of over 60%. According to the latest data obtained by Tsingtao Brewery internally, by the end of last year, the home delivery market was estimated at 3 trillion yuan, and the latest data this year shows 3.3 trillion yuan. These figures not only reflect that home delivery is a trillion-yuan track but also indicate its continued rapid growth. In the past, when talking about home delivery, most people's understanding was limited to food delivery, as the most common home delivery scenarios encountered daily are using Meituan and Ele.me. As clearly seen in the chart above, the orange portion, which accounts for the largest share of home delivery business, represents the food delivery business. It should be pointed out here that FMCG and fresh produce are growing at over 60% to 70% annually. That is, on this track, apart from fresh produce, which major platforms use for traffic generation, another rapidly growing category is FMCG. Categories like beer and small bottles of liquor are typical FMCG products and can ride on this fast-growing home delivery track. On this track, some fast-moving leading companies can easily achieve several hundred million yuan in annual sales. Therefore, the O2O market has great potential. So, what dividends can O2O development bring to enterprises, and why are brand owners so interested in O2O channels? First, O2O platforms can drive traffic, ultimately enabling traffic exchange between stores and e-commerce, and also facilitating sales conversion at the consumer level for various sales units. Previously, when doing e-commerce, the limited traffic was only online. Even if the brand covered nearly 4 million outlets offline, the C-end data from these 4 million outlets was completely disconnected from online. With O2O business, online and offline traffic can be exchanged and interconnected. Second, it can build a bridge between consumers and terminal channels. In the past, consumers might only be limited to stores within a one-kilometer radius, such as those near their homes or workplaces. Now, consumers can freely select terminals and brands through O2O terminals. Moreover, brand owners can leverage O2O platforms to interact with consumers and channel terminals, accurately understand market dynamics, and implement joint online-offline marketing. Third, it enables exploration of omnichannel marketing models. Previously, a company's e-commerce sector might only involve JD and Tmall. Now, through Ele.me, offline data can be linked with Tmall, and through JD Daojia, data can be linked with offline store data. This serves as an excellent model for marketing to loyal users and members. -02- How to Do O2O? 1. O2O Business Layout For the specific division of O2O business segments, different brands or platforms may have different interpretations. As a deep-distribution enterprise, these divisions directly affect the company's profit distribution and future sales trade-offs. How does Tsingtao coordinate this? Tsingtao Brewery primarily operates on platforms like Meituan, Ele.me, Taoxianda, JD Daojia, and Duodian, which are collectively categorized under the pure O2O platform segment. The typical characteristic of these platforms is that they have no physical stores and use social resource stores. Platforms like Hema and 7FRESH have their own offline stores and delivery systems serving those stores. These are generally called new retail self-operated platforms, and Tsingtao Brewery categorizes them under the new retail platform segment. The last type of home delivery business is the front-warehouse home delivery platform, which differs from Hema and also from Meituan and Ele.me. Tsingtao Brewery places front-warehouse platforms in the near-2C business segment, under the jurisdiction of e-commerce. Because the front-warehouse model does not go through offline stores, it directly delivers from warehouses to consumers, like Miss Fresh and Dingdong Maicai. It is essentially a genuine 2C business and can be completely separated from offline operations. 2. O2O Business Promotion In fact, judging whether the home delivery business is doing well or not is very simple. Just open Ele.me or Meituan and search. If all the images of the brand carry the company logo and unified image, it indicates that the brand's O2O business in that region is doing well. Doing O2O is like doing e-commerce; once you do it, you must go all in. Besides unifying product images, everything from product names to category names and in-store displays needs to be well designed. Because a good product name and search term can help your brand dominate the entire search category, with a full screen of results upon search. However, if names and specifications are not standardized, consumers may have limited brand exposure during searches. 3. Focus on Head Channels For O2O business, focusing on the head channels is sufficient. If you cover Meituan, Ele.me, JD Daojia, and Duodian, you've likely captured about 80% of the market share. Although there are many smaller platforms, their business volumes are indeed scattered. So, large brands should first focus on doing the head platforms well, because the head platforms serve NKA, RKA, LKA, or CVS behind the scenes, and these channels tend to generate volume. Therefore, Tsingtao Brewery leverages the offline head KA systems corresponding to these major platforms to drive online and offline sales. However, when driving sales, many brands may be calculating ROI, only to find that mixing low-end and mid-range liquor makes it impossible to calculate specific ROI after recovering costs. On these platforms, implement high-end and diversified brand strategies. Since sales on major platforms typically rely on promotions like discounts and coupons, it's essential to estimate brand returns. If you intend to achieve long-term sustainable development on the home delivery track, you should aim for healthy growth rather than price wars. Moreover, investing in mid-to-high-end bottles can better guide consumer consumption and help extend the brand's national positioning toward mid-to-high-end. 1. O2O Seeding Function Most people think that seeding (content marketing) should be done on Xiaohongshu or Douyin. However, by opening Meituan and Ele.me, you'll find that the seeding business is very advanced and developed, covering a far larger audience than Xiaohongshu and similar systems. So, when doing home delivery business, besides focusing on the business itself, you need to pay more attention to content and seeding aspects. First, you can run your own promotions. Second, you can participate in platform category activities. Third, you can do your own brand marketing, such as brand days. Fourth, you can do cross-category marketing. For example, Tsingtao Brewery previously did cross-category marketing with Nongfu Spring, and even extended to cross-marketing with the maternal and infant category. -03- Online-Offline Integration 1. Online-Offline Coordination Previously, when communicating with many head platforms, they mentioned, "Actually, many companies still have unclear division of rights and responsibilities, and it's been a chaotic state. Whether sales belong to the e-commerce department or the ground sales units is still vague for many companies." Once vague, conflicts arise. Tsingtao Brewery's approach is: First, offline provincial business units do not understand O2O and e-commerce operations, but product delivery is completed by provincial business units. Therefore, from the start, Tsingtao Brewery's strategy was to develop rapidly, with the e-commerce department managing operations, but all sales and GMV attributed to offline. The e-commerce department empowers all 31 provincial sales units, making O2O promotion faster because the e-commerce department covers the costs, but the sales from this segment directly belong to offline, so every provincial unit fully cooperates. 2. Online-Offline Linkage Additionally, what is the use of O2O platforms mentioned earlier? They can be used for seeding. For example, Tsingtao Brewery's new product launch with Karl Lagerfeld, a super-high-end brand, was first released on Tmall, while simultaneously creating a themed page and consumer interaction group on Ele.me, holding offline "Night Owl" pop-up stores, and displaying image stacks in all KAs across China. Consumers could scan QR codes, visit offline trend stores to experience, or directly participate in comments and receive coupons on Ele.me. In this way, what was previously disconnected between KA and Tmall flagship store is now connected through Ele.me's content platform, achieving both seeding and consumer interaction. Moreover, users open Tmall far less frequently than Ele.me and Meituan. Many people ask, which home delivery business is better? Why is food delivery good? Why are fruits and fresh produce good? Simply put, it's about purchase frequency. No one says they open an app every day to order beer or Moutai, but they do open an app every day for lunch, dinner, or buying fruits. This is the attribute of Ele.me and Meituan—high frequency. So, while Xiaohongshu requires secondary monetization after seeding, these platforms can monetize immediately after seeding. 3. Online Traffic Conversion, Offline Store Fulfillment In the past, Nongfu Spring had water stations and home delivery, enabling direct delivery. However, although Tsingtao Brewery has 4 million stores selling its products, these 4 million stores do not belong to Tsingtao. Over the past year and a half, Tsingtao has opened 300 bars nationwide, with plans to potentially expand to 2,000 or more in the future. Now, they are also experimenting with bringing city bars onto Meituan and Ele.me for terminal delivery. In the future, orders placed on Tmall and JD may also be delivered directly through offline bars, integrated via O2O platforms. Once a tip is adopted, a reward of 400-2000 yuan will be paid.