Today, I'd like to share our complete thinking on O2O. First, let me introduce myself: I'm Bei Nianjun, founder of Heyin Network. Our company focuses on innovative new retail, and we currently collaborate with many large companies and platforms on new retail co-creation projects.

In corporate marketing, O2O is a crucial business segment. Over the past three to four years, we've engaged in extensive discussions and co-creation on O2O with numerous brands and platforms. Today, I'll share our overall thoughts and some underlying considerations from our practical experience.

In today's environment, we suddenly realize that O2O operations have become vastly different and more complex than when O2O first launched three years ago. It's evident that O2O operations are not just about platform management; they involve a larger system, even encompassing more connected operations. We're all grappling with these challenges and urgently seeking answers.

You might be familiar with the term "entropy reduction." Why use it as an introduction? The evolution of O2O from simple to complex follows the law of increasing entropy—a simple matter becoming increasingly intricate. When we first started O2O, we could complete the entire process on a single platform with simple coupons, basic designs, and even basic data services. But now, O2O operations have become a massive system, involving coordination of extensive internal resources, co-creation and linkage with many platforms, and even omnichannel thinking across departments.

"I want to talk about long-term trends; these inevitable trends are intertwined and interdependent, but ultimately move in the same direction—Kevin Kelly."

This quote resonates deeply with me. Although O2O is a very new phenomenon, many aspects interact with our past experiences. It's not about creating a completely new model in a closed environment; rather, it's a combination of past offline and online experiences, interwoven to form something new.

Kevin Kelly proposed 12 trends, each with a key word: Becoming, Cognifying, Screening, Using, Sharing, Filtering, Remixing, Interacting, Flowing, Questioning, Beginning, and Disrupting.

You might still be puzzled—these seem unrelated to O2O. But when I saw these words, I mapped them against all the co-creation work we've done with numerous brands and platforms. I reshaped these 12 words and the 12 core trends into what you see now.

You'll still see 12 words, but I've summarized O2O precision operations into 12 capabilities across front-end, mid-end, and back-end: Activation Power, Product Power, Channel Power, Coverage Power, Customer Acquisition Power, Marketing Power, Regional Power, Traffic Power, Data Power, Organizational Power, Intelligence Power, and Extension Power.

I'll walk you through them from front to back.

Activation Power

Let's look at Becoming—Activation Power. O2O is a relatively new phenomenon. From 2017 to 2021, over four years, many brands have participated in O2O operations at different times, but each brand's starting point and understanding of O2O differ, leading to varied concepts of O2O operations. However, in actual operations, we still see significant differences among brands. What constitutes the best brand-platform stickiness? I specifically use "Activation Power."

Is the brand active on the platform? What does "active" mean? First, has the brand secured the best strategic resources? O2O platforms are online operations platforms; all the pages above are our partner brands, showcasing their best exposure on major platforms. If we enter a physical store, the best resources are those where major brands actively engage with the platform. Soon, in October, major platforms like Meituan and JD Daojia will sign annual GDP and annual framework agreements with brands—this is a prime opportunity for brands to gain better visibility on the platform.

But better visibility isn't enough. O2O is a constantly evolving system, so do you know the latest platform playbooks? Each platform creates new playbooks based on its characteristics. I've listed some of the latest playbooks from JD Daojia, Meituan, and Duodian. Is everyone participating in these new playbooks? Has each brand actively engaged with them?

Therefore, Activation Power, as I define it, is whether a brand has a strong connection with the platform, actively participates in platform development, interacts better with the platform, and forms a strategic partnership, creating strong stickiness between platform and brand.

Product Power

Once a brand is active on the platform, the next step is Product Power. At the start of O2O, many companies weren't clear about how many SKUs to list or which products to offer; some just listed core bestsellers. I believe many brands do this—I've seen companies with "online perfect store" plans, completing online distribution for top 20 products, and teams executing product listings. Core bestsellers are stable points that satisfy consumers' daily restocking mindset.

Now, we see more brands thinking deeply about product selection, distinguishing between "potential new products" and "trial new products." Potential new products might be high-awareness products that have evolved. These brands, because their products are popular, are called potential new products—they can drive stock-up behavior.

Beyond new products, we also see "trial new products"—brand-new concepts or ideas, like Nongfu Spring's soda water or Orion's new brands. We talk about the "restock, stock up, browse, and smart" mindsets; consumers browse these platforms for online shopping experiences. Have we offered fresh or conceptually strong products for consumers to experience on the platform?

Fourth, we see channel-exclusive products—products available only on specific channels to meet the "smart" need. For example, Oreo launched exclusively at Carrefour with price discounts. We find that building Product Power is now completely different from three years ago. We used to find core SKUs and list them for sale. Now, based on consumer mindsets, we need to address restock, stock up, browse, and smart needs. Does each brand have strong Product Power? That's a question for you.

Screening

The third, Screening, is an often-overlooked but crucial capability: Customer Acquisition Power. On new retail platforms, consumers spend very little time on each page—3 seconds to acquire customers. How do you acquire customers in 3 seconds?

Beyond product and brand, we treat creative copy and UI design as the strongest levers for Customer Acquisition Power. Here, we used a design thinking approach, including a Children's Day campaign on Duodian, to offer some ideas. We aim to provide consumers with creative copy and a visual story that highlights product features and fits the operational atmosphere.

So, Screening is directly linked to Customer Acquisition Power. Many brands haven't paid attention, but I can tell you that some brands have already realized this is a vital capability.

Marketing Power

Now, moving to the mid-end: Interaction. Interaction is our linkage with consumers; we call it Marketing Power. In early O2O, a simple coupon could drive significant sales. After four years of consumer accumulation, just like with hypermarkets 20 years ago or e-commerce 10 years ago, after rapid growth, consumers need mindset cultivation and brand interaction.

All promotions are not just simple coupons; they are brand-driven promotions with strong marketing appeal and linkage.

On the left, you can see marketing content we've done with a brand, covering the brand's marketing mechanisms and the platform's promotional and marketing systems. We integrate these three parties' major marketing events. But note a detail: below, there are KPIs. This is quite different from before—it's not just about promotions. We used to do ROI and end with GMV. Now, you can see we're running a traffic business, making many investments. Besides sales KPIs, you'll see marketing department KPIs like total impressions, CPM, and CLV. The entire measurement system becomes a combination of marketing and sales.

Of course, in the marketing calendar, we often do things like operations of people, goods, and scenes. On the left, for people operations, JD Daojia has precise targeting for specific audiences, creating marketing scenarios for special groups at special times. Of course, we combine more goods to create CPs and new scenes.

Because many platforms, especially Meituan and Ele.me, have rich scenes, we do extensive cross-scene marketing. For example, biscuits with fruit cuts, chocolate with flowers, beverages with hotpot. Cross-scene marketing is a crucial marketing method in O2O operations, especially in fully open systems like Meituan and Ele.me. When O2O is part of brand operations, how high does marketing reach? It's about having a comprehensive people-goods-scene operation system, creating strong interactive experiences with consumers—that's Marketing Power.

Data Power

Speaking of Data Power, operations staff found the first three years painful because platform data was still being refined. But now, with Data Power, all service systems provide brands with BI-based digital reports, greatly reducing manual work and basic Excel reporting, improving operational efficiency.

Efficiency alone isn't enough, as people aren't satisfied with just backend numbers; they want deeper data research and more category and consumer data insights. So, we've co-created with some platforms. Duodian is the first platform to open category captain API data service interfaces. What's API? It's clear: all category data, channel data, and consumer data on the platform will be open. If interested, you can co-create with us.

We have very large brands already using Duodian's category captain API data services. This is similar to Costco, where a company helps Costco run all in-store data operations. In the future, for more refined data services, we'll use API as a breakthrough point, offering API data interface services to more brands to improve data service quality.

Flowing originally means all business is data, so we define it as Data Power.

Organizational Power

Continuing with Sharing—Organizational Power. O2O has developed to the point where we operate nearly 40-50 brands. In the O2O system, companies define O2O teams very differently; we see three models.

Some brands place O2O under e-commerce. O2O operations share similarities with e-commerce—both are online platforms—so e-commerce teams have rich online operations experience, including advertising and platform operations. Major brands' EC departments naturally have an EC Marketing function that fits O2O development, requiring sales and marketing resources to scale, so they have marketing resources to run O2O.

But I see other brands placing it under KA, which also makes sense. KA is about strong offline channel linkage. As we know, O2O is like e-commerce but different because its supply isn't from central warehouses but from offline front-end warehouses. Without strong linkage with offline store front-end warehouses, you might look good on the surface but suffer in actual conversion.

It's clear that all O2O requires excellent regional execution. When O2O runs a promotion or marketing campaign, it needs a large regional team to execute.

Imagine an O2O campaign: how many stores need to participate? So, the real implementation relies on regional teams. KA teams have strong linkage with regional teams, so this structure works too.

There's a third model: an independent team. I think an independent team is interesting because it can coordinate resources across departments—whether with sales, marketing, or even R&D to discuss O2O products—and has ample room for cross-departmental coordination. Being a small independent team offers greater flexibility for innovation and model breakthroughs on the platform. Each company's situation and overall model differ. My advice: use customer-centric thinking and team configuration to form an omnichannel organizational system.

With a customer-centric approach, you can combine these three systems into a more complex or systematic organizational structure, forming shared Organizational Power. Why do we view Organizational Power as a core platform capability for O2O operations? Because it truly requires different teams to collaborate and share to achieve the best results—that's our shared Organizational Power.

Channel Power

Remixing—Channel Power. Why tightly couple Remixing with Channel Power? Because O2O is offline-to-online. What we used to discuss with KA stores has changed. Although we still talk about how much stock to take and what promotions to run, we now discuss separately: what exposure will our brand get on private domain platforms? What promotional activities and displays during O2O big promotions? We need to combine online and offline.

In-store promoters can help drive O2O traffic, including in-store activity promotion, and increasingly smart shopping devices are key for consumer traffic.

Remixing means the original pure offline KA operation system will closely integrate with O2O, forming a new KA operation system that strengthens KA linkage in channel private domains, including offline traffic, to achieve perfect results in every O2O campaign.

So, Channel Power is a capability not proposed in early O2O; this is the first time it's been introduced. O2O requires strong KA linkage to support it. For example, Meituan and Ele.me have KA accounting for 50% of products, JD Daojia possibly 85%, and Duodian and Taoxianda almost exclusively use KA as the main battlefield for O2O home delivery.

How to achieve strong linkage with each KA is a question every brand should consider. I define this as Remixing—Channel Power.

Coverage Power

Disrupting. For example, we once operated a platform and saw a very interesting case during a major promotion review. The entire offline coverage exceeded one million stores, but during that major platform event, the so-called active offline stores were 34,000, meaning only about 4% of stores participated or engaged in O2O interaction.

The question arises: how to get more stores involved in the O2O operation system? On the platform side, we see tools like Meituan's supply-side tools. We also use platform brand B2B private domains. This is a brand's B2B private domain, connecting 600,000 small stores. We believe two things need to be done:

First, disseminate information to more stores; second, get more stores to participate. We might need to offer small incentives to enhance their sense of participation, achieving multi-touch and incentives for stores, and improving campaign coverage.

If an O2O campaign could achieve 50% upload in a 1-million-store distribution activity, that brand's volume could potentially triple. And there's a simple point: many offline hypermarket KAs are not performing well; the growth is in regional chain stores and even local small stores. Better use O2O as an enabler to elevate O2O to a higher level.

So, it's disruptive—different from traditional coverage and store visits. One uses platform tools, the other uses brand B2B private domains for cloud coverage.

Regional Power

Filtering—Regional Power. Why is Filtering related to Regional Power? This relates to O2O operational thinking. I believe most brands have independent teams for O2O, whether under KA or e-commerce. Last year, all activities were national; few brands did regional activities. We saw two interesting pie charts. For one brand's O2O investment, nearly 75% went to marketing discounts. Marketing and advertising accounted for 25%, but that's not a normal system. Regions have many O2O needs and offline resources; linking their needs and resources strongly can improve regional operational efficiency and save headquarters resources for traffic and marketing to acquire new customers.

Some brands are experimenting. Many big brands are no longer doing national campaigns; the brand on the left is running a southern campaign, and the one on the right is running a Jiangsu province campaign. Through deeper regional investment, they gain stronger participation and precise campaign execution. This improves investment efficiency. After filtering, it focuses on products or regions that deserve investment, making overall campaign efficiency higher.

We interpret Filtering as Regional Power.

Traffic Power

Beginning—Traffic Power. This is a great era. If you follow hot news, you'll notice significant changes: all traffic is now linked across the board. Previously, there were barriers; now we're doing omnichannel traffic operations. I think this is the beginning of a full-funnel traffic era.

Through on-platform and off-platform advertising, we integrate traffic. JD Daojia has been promoting its precision targeting for brand advertising; Meituan has Meituan Review resources. Off-platform advertising includes familiar channels like Xiaohongshu, Douyin, Weibo, and Kuaishou. The images here are cases where we've run traffic linkage campaigns alongside O2O for brands.

Offline traffic is also crucial. At a recent JD Daojia conference, a partner shared a number: O2O new retail's new customer rate is 7%, meaning 93% of operations might come from offline traffic conversion. Or from existing store shoppers. But now, only 7% are new customers. In the full-funnel traffic era, we'll bring more new customers. Young people aged 25-35 on social and traffic platforms will become key supports for O2O traffic and omnichannel traffic in the future.

Traffic Power will be an important metric for evaluating brand operations in the future, bringing more new customers to brands.

Intelligence Power

Intelligence Power is different from Data Power. Earlier we talked about data; now it's data intelligence. We have a large area—we've mentioned BI data development and API data integration, but that's not enough; some brands can't open APIs. How to get data? We've partnered with Habu Data. Imagine when we get channel data, we can see which comes from Meituan, Ele.me, or JD Daojia. When we strongly link with channel data, many problems are solved.

All data is still in the analysis stage; we're also researching and developing new projects with Habu Data. We hope all data isn't just for analyzing the past; we want to predict the future—sales forecasts, operational insight predictions, digital marketing and precision targeting predictions. In this process, we'll co-create Intelligence Power with partners.

Extension Power

Usage—Extension Power. You might find this image confusing: "I don't know what you're talking about." This is a regional map of a provincial capital city. If you've attended JD Daojia or Meituan conferences, you've heard about warehouses—JD Daojia talks about certain warehouses, Meituan talks about cloud warehouses. This is a brand's network layout; future store layouts will extend to warehouse layouts.

O2O has great extension power, with significant layout into warehousing—possibly cloud warehouses or small store warehouses. We call this concept "small store three-dimensionalization." It could be community group buying leaders or O2O front-end warehouses. In the future, we'll build grid maps with many brands, seeing which warehouses and stores cover each city. So, it's not just store-network-warehouse extension but also model extension. Community group buying is also O2O, linking online and offline.

Why do I put Usage under Extension Power? In warehouses, there's no concept of goods ownership; in stores, goods belong to the store. But in warehouses, especially some, it's just usage rights. So, Usage is a breakthrough for Extension Power. We give the last capability to Extension Power.

After discussing 12 capabilities, what do we form? A 12-capability model with inner and outer circles. We'll clearly define each capability, what to achieve in what environment, and score it. We'll also conduct internal tests with some brands to see where they stand and how to develop next.

In the 12-capability model, we'll transform the original ISV cooperation model into an OP cooperation model. ISV serves the linkage between brands and platforms, but OP is the outer ring, a broader concept covering co-creation and co-building of the 12 capabilities with brands.

What is OP? When Tmall emerged, there was TP. But O2O requires innovation in Channel Power, Regional Power, and even Extension Power, so we hope to engage with many brands not just as ISV but as OP partners.

Finally, I'll summarize with a sentence that is also our company's mission: "Make omni happen." Omnichannel isn't just a simple omnichannel channel; it includes omnichannel channels, omnichannel traffic, omnichannel systems, and omnichannel digital platforms.

Omnichannel operations is a massive system, requiring reshaping and organizational structure definition, including integrated thinking about platforms and all future new retail formats. Therefore, I hope to have the privilege of co-creating with some brands to make "omni" a key trend and term in the future retail industry.

** Note: This article is from a keynote speech by Bei Nianjun, founder of Heyin Network, at the 2021 (4th) China FMCG Conference, edited and authorized for publication after his review. **

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