Click to read the original article for details In 2020, the entire retail industry, though not ideal, was still a case of a hundred schools of thought contending and surging ahead. The outbreak of the pandemic accelerated the rapid replacement of FMCG channels. O2O platforms represented by Meituan, Ele.me, and JD Daojia; community group buying represented by Xingsheng Youxuan and Duoduo Maicai; and live-stream selling represented by Li Jiaqi and Viya, all expanded one after another. Against this backdrop, FMCG manufacturers have accelerated their layout of new retail channels, seeking new opportunities through innovation and change. Especially the O2O channel, as a new retail channel with a market size of nearly 3 trillion yuan, has become an opportunity for many FMCG manufacturers to deepen their efforts.

Recently, I had the privilege of participating in an O2O workshop organized by the New Distribution consulting team. I was deeply impressed. FMCG brands are increasing their investment in O2O, and it is evident that they are accelerating their layout of this new retail channel.

However, as a channel that has emerged only recently in the internet ecosystem, many brand owners have not yet found a mature system to operate O2O. Most still use traditional e-commerce operating models for O2O. Obviously, this is incorrect. Traditional e-commerce leverages the borderless nature of the internet and is minimally affected by geography, whether in terms of categories or scope. O2O, on the other hand, is highly regional and is local consumption.

So, how should FMCG manufacturers approach O2O? Today, we will start with the first step: how to operate products, to see how brands should handle the O2O channel.

-01- Different product positioning corresponds to different platforms Whether online or offline, product operation is a top priority. For example, early Jiangxiaobai and Genki Forest both achieved precise reach through product operation. Similarly, when brand owners do O2O, different products correspond to different positioning and require different strategies to reach consumer groups more precisely.

1. Core products: maximize platform presence First, define what core products are. As the name suggests, they are the brand's best-selling, most popular head products. For brands, core products contribute more than 80% of sales. Such products must be ensured to have exposure on online platforms, and the best exposure at that. Although theoretically online shelves are unlimited, in practice, platforms have limited SKUs for a single category. In such cases, first ensure that products accounting for 80% of sales are listed on all platforms to reach consumers as broadly as possible.

For example, Genki Forest, as a rising star in recent years, has done relatively well in O2O channel construction. Its mainstream product, Genki Forest sparkling water, can basically be seen on all O2O platforms.

2. New and high-end products: list on mainstream platforms New and high-end products are potential products for development and future core products, such as Bluemoon's Zhizun laundry detergent. Relatively speaking, they are higher priced and less accepted by consumers. For such products, listing on O2O is not only for sales but also serves as a new product test, hoping to build consumer awareness through the brand. Based on this need, the brand's strategy should be to list on mainstream O2O platforms as much as possible, such as Meituan, JD Daojia, and Taoxianda. These mainstream platforms already cover most consumers, and the demand for these products is to expand influence and build consumer awareness. The primary goal is to let consumers see them to the greatest extent, so listing on mainstream platforms is sufficient.

3. Niche products: list on select platforms Niche products are those with a relatively small target audience, aimed at specific groups. For example, Coca-Cola's 100ml mini cans are mainly for people who like Coke but pay attention to health; a 100ml cup is just right. Another example is the meal replacement foods that became popular recently; their target consumer group is very small. These products share the common feature of a small audience, and consumers do not buy these specific items on mainstream platforms. For instance, meal replacement foods might be purchased on a brand's private WeChat mall or a vertical app focused on fitness products. The tactical strategy for these niche products must not be "people looking for goods," but "goods looking for people," similar to e-commerce operations, choosing a platform where the target consumer group is most concentrated.

-02- Different product specifications correspond to different channels Similar to traditional offline channels, brand owners also have different types of channels on O2O platforms, mainly divided into three types: hypermarkets, supermarkets, and convenience stores. For these different channels, differentiated product portfolios are very important.

First, hypermarkets: products in hypermarkets, whether online or offline, are mainly gift boxes, family packs, and large packages. The reason behind this is that consumers shopping in hypermarkets usually have family needs, often buying fresh vegetables and groceries, with larger purchase amounts and quantities, and often stocking up. This can be seen from the free delivery thresholds in hypermarkets; many hypermarkets waive delivery fees only for orders over 79 yuan, such as Yonghui Superstores' 89 yuan for 4 yuan delivery fee reduction. Therefore, the optimal product specifications are large packages and family packs, such as Lay's 135g chips, to meet a family's needs.

Second, supermarkets: these are some super or mini medium and small supermarkets, such as Darunhua mini. The consumer profile of such stores is buying daily consumables, with relatively short purchase cycles and high repurchase frequency. Users mainly buy single items or small packages to meet short-term needs, such as Lay's 30g or 70g packs.

Third, convenience stores: consumers have more immediate needs, and purchase amounts are often relatively small. Describe a consumption scenario: a consumer at the office wants to buy a bottle of ice water, opens a platform, selects a convenience store, picks a Coke, but because the amount is too small for delivery, the consumer then selects a few more low-priced items to make up the order. For such stores, the best approach for brand owners is to offer independent small packages, with low prices and the ability to meet consumers' immediate needs, such as Oreo's 16g single-pack.

Of course, in addition to this, there is a special online shopping scenario—platform promotions, such as Double 11 and Double 12. For such special nodes, brand owners can create special product combinations. For example, bundle regular products with gifts, or offer special packages. This Double 11, Mars Wrigley collaborated with Ele.me to launch an activity: spend 66 yuan and get a Double 11 heart-shaped box, which received a good response.

-03- Product sell-through and distribution depend on attention to detail Everyone knows that offline, to do well in sell-through and distribution, the key is to do well in display. On O2O platforms, it is no exception. The only difference is that one is a static physical shelf with limited space, and the other is a dynamic infinite shelf, theoretically not limited by space. On this static infinite shelf, doing display well is not simple; the intensity of competition and the attention to detail far exceed offline. So, how can brand owners do product display well on O2O?

1. Perfect detail display, product standardization A product is designed to meet consumer needs. Since it meets consumer needs, the product's online exposure must be the information consumers want to see. For example, for a box of imported biscuits, consumers want to know the production place, packaging, taste (salty or sweet), size, quantity, and even color. How to present this information is crucial.

a. Thumbnail Generally refers to small-size images on the platform, appearing on merchant homepages and various activity pages. Usually, it is a photo of the single product, which can include flavor combinations, but it is best not to show other products (except gift packs and activities). As the storefront image, the thumbnail must be clear and beautiful. No description is needed on the photo, but it is best to use a real product photo.

b. Product name A short phrase near the thumbnail, generally containing key information such as brand, packaging specification, sub-category, and flavor. The general naming principle is: brand/sub-brand/flavor/sub-category/specification. Of course, if there are traits that differentiate it from similar products, they can be expressed, but the language should be short and concise.

c. Header image Several images at the top of the product detail page that can be swiped. The first header image is generally the thumbnail. The requirement is simple: product photos should be real and beautiful, and over-beautification is not recommended. If conditions permit, place at least three product photos showing different angles, and one must include the product label and ingredient list.

d. Detail page The page introducing product details, including product images and text descriptions, and even some scene design images. First, product images should ideally be paired with scenes to build a scene-based consumption awareness for consumers. Second, text information should include a detailed introduction of the product, such as product name, specification, shelf life, storage method, etc. It is also best to include the product's selling points and features.

By arranging these four aspects in detail, standardize product details so that consumers know at a glance and can order directly without comparison or thought.

2. Understand platform rules to promote product exposure Platform traffic distribution is based on a complete algorithm logic, which is difficult to know, but we can analyze it at a shallow level based on platform characteristics.

Taking five mainstream O2O platforms as an example, they can be divided into two camps: one is multi-retailer platforms, such as JD Daojia, Meituan, and Ele.me; the other is single-retailer platforms, such as Duodian and Taoxianda. For the first type of platform, with wide store coverage and many customers, brand resources should be prioritized for retailers, then products. For example, JD Daojia has a good relationship with Watsons. When searching for a product, within 5 kilometers, Watsons is prioritized. For instance, if you search for chips, Watsons' products will definitely appear first, not a specific brand.

For the second type of platform, with fewer partner customers, generally regional fixed-point deep cooperation, resources are directly product-oriented. For example, Duodian in Chongqing only has Chongqing New Century, and in Wuhan only Wuhan Zhongbai, with few other customers. For consumers, after entering the app, the first thing is to select a store. No matter how you search, it is all from one store. Similarly, on Duodian in Wuhan, for example, if you search for chips, it is not prioritized display but all Zhongbai Cangchu.

Finally: Of course, this is only a small part of O2O product operation. As the foundation of a brand, there are many ways to play on O2O platforms, but the core must always be to think from the consumer's perspective and consider the value of the product on O2O.

Editor: Asher, Proofreader: Chen Feng

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