Last night (April 26) at 8 PM, New Distribution invited Zhang Chi, editor-in-chief of Social E-commerce Review, to give an online sharing session titled "What Traditional FMCG Companies Should Know About WeChat Business" in the New Distribution public class community, which received enthusiastic responses. At the request of many friends, the content has been organized for readers. Friends who missed the session or are interested in this topic can review the main content with us.
Hello everyone, good evening! I'm very glad, at the invitation of Editor-in-Chief Zhao Bo, to have this opportunity to share and communicate with everyone in the group. First, let me introduce myself: I am Zhang Chi, editor-in-chief of Social E-commerce Review.
Before starting today's sharing, I'd like to do a survey in the group. How many people are currently doing WeChat business?
It seems there are quite a few. I believe everyone has different feelings after doing WeChat business. I've always held this view: what you hear or learn can never compare to what you experience yourself.
After the Spring Festival this year, I visited a traditional enterprise. This enterprise produces meat products, and because it's located in a coastal area, it also has a good seafood supply chain. Since the boss is an old friend, we had a great conversation. He told me something: last year, he considered hiring a popular first-line celebrity to endorse his products. I won't say who the celebrity is, but he is very, very famous. However, after contacting them, he felt the price was too high and gave up. But when I heard this, I was very excited. I asked, "What's the price?" He said it was about 8-10 million. I said, "If you can get this celebrity, I'll do the project. 8-10 million is not expensive." Why did I say that? It's simple: this celebrity is extremely, extremely famous. If you launch a product with social e-commerce, it's very easy to recruit many agents. If you set a threshold of 20,000 yuan, there would probably be a rush. If a product costs 200 yuan, for each person, that's 100 items, which is easy to digest. With the resources I currently have, I could easily recruit 5,000 agents, bringing in 100 million yuan. Is 10 million in endorsement fees still expensive? The boss was shocked and said, "Is this how you play now?" I said, "This is routine." The point of this story is that from traditional retail to WeChat business to social new retail, the first change is in mindset. If your mindset doesn't change, you can't do social new retail. To change, you need to change your thinking first. You can't look at this with traditional eyes anymore.
Today I'll share three main points:
1. Current status of WeChat business
2. Why WeChat business works
3. From WeChat business to social new retail
Part 1: Current status of WeChat business WeChat business began in 2013 with WeChat Pay, after the integration of four flows, giving people better opportunities to do business, significantly lowering the threshold for entrepreneurship, coupled with the dividend of connections, leading to the emergence of this business model.
But over the past five years, WeChat business has had ups and downs. I won't go into details, but I want to tell you why WeChat business was chaotic: when the trend came, the first entrants were not business elites but some bottom-level businessmen. So, without professional support, WeChat business initially went astray. But after 2018, more and more traditional enterprises and business elites began entering this field.
This has become very interesting. WeChat business has gradually formed methodologies and operational models. Many principles proven in traditional marketing still apply to WeChat business, because WeChat business itself is sales, following the basic logic of sales.
This year, companies like Yanghe, Wuliangye, Beikang, Qizhi, Hengan, and Wahaha have all laid out plans in the WeChat business field. Yanghe's performance has approached 100 million in half a year; Qizhi has over 30,000 agents nationwide; Wuliangye sold 1 million bottles of wine from August last year to March this year. These are impressive achievements and highly efficient marketing results. Later, I'll share why they achieved such performance.
Currently, I personally divide WeChat business into four categories: First: Hierarchical WeChat business, which is the most common type, prevalent in beauty and health products. It usually has 6 levels, with a layer-by-layer agency system. Second: Direct sales WeChat business, which has many hidden champions. This type mostly uses keyword advertising to attract traffic to personal WeChat accounts for transactions, often with thousands of customer service staff. Third: Platform WeChat business, also called platform socialization, represented by companies like Yunji, Dejia, and Chuchu Tui, typical of explosive product traffic thinking. Finally, other forms of mobile social e-commerce, such as crowdfunding, B2C, etc.
That's the first part of my sharing.
Part 2: Why WeChat business works? I'll share two viewpoints: First, why can WeChat business achieve such rapid and efficient growth? You should know that behind any major business change is a huge change in cost structure. Why can't traditional mobile phone manufacturers compete with Xiaomi? The core reason is that Xiaomi changed the cost composition of the industry. Xiaomi has zero channel costs, so many manufacturers lag behind in competition.
WeChat business is the same. It builds channels through person-to-person connections. Compared to traditional enterprises that spend thousands or even millions on marketing and have sales teams of dozens or hundreds, the advantage is huge. With near-zero costs, if WeChat business just gets this logic right, traditional enterprises basically can't resist.
Although old hierarchical WeChat business has low channel construction costs, because there are too many levels, channel costs are high, which is another matter. But overall, WeChat business survived because of extremely convenient channel construction and the traffic dividend from 2013 to 2015.
There's a second deep reason why WeChat business works. China is a typical acquaintance social ecosystem. When we buy things, we want to ask someone who knows about it for their opinion.
In fact, this asking creates added value. When you ask, someone understands, and that understanding creates added value. Compared to the open competition of traditional e-commerce, WeChat business operates in a closed environment. Open e-commerce must compare prices because there's no trust endorsement, leading to bad money driving out good. WeChat business, on the other hand, is a typical closed environment where good money drives out bad. WeChat business operators are entrepreneurs running their own business, so they can provide 24-hour customer service, which is something employed e-commerce can't match.
Back to today's context, partners from New Distribution, can FMCG do WeChat business? My answer is yes, and definitely yes! As long as you design the model well, there's nothing that can't be done with WeChat business. Previously, the final node of our business was the store; now, the final node is the person. As long as you start from this perspective, the questions that puzzle you will be answered. Many FMCG companies are already doing very well. Teaching terminal store owners to do WeChat business is also an important form of FMCG doing WeChat business. I emphasize that WeChat business is a mindset, not limited to any particular business model.
Part 3: The evolution of WeChat business Actually, I haven't used the term "WeChat business" in public for a long time. Not because I want to avoid it, but because WeChat business is a description of a state, not a business model. Describing this state as social new retail might be more accurate. So now, I basically say social retail. I hope everyone can forget WeChat business now; it's social retail.
What is social retail? It's essentially a socialized retail method. Over the past five years, WeChat business has accumulated many good techniques, such as posting on Moments, building communities, attracting followers, and creating links. These can all serve as good operational tools for social retail. The future development trend should be to consider how to add social retail wings to your existing business model. Because grassroots WeChat business has many natural disadvantages. For example, the WeChat business channels brought by the connection dividend are not structured. As long as commodity circulation exists, distributors will exist. As market environments change, technology advances, and transaction methods evolve, the role and even status of distributors may change, and their cooperation with manufacturers and relationships with terminals may also change. But this doesn't mean this group will "disappear." Even the currently "bustling" e-commerce is actually another form of distribution. Look at Taobao; many online stores are run by distributors, not just manufacturers. Structured marketing is a required course for traditional enterprises. If you can combine structured marketing with mobile social retail tools, it will be a remarkable achievement. So, social new retail will be a very important topic, at least for the next 3-5 years. The development of Yunji, Dejia, and Pinduoduo has strongly proven this. What I mean doesn't matter; understanding social retail thinking is key. Yunji, Dejia, and Pinduoduo are all platform socialization, which proves another point: the future of platform socialization will be far stronger than single-product WeChat business.
Finally, I want to talk about the communication value of WeChat business. This is very important for traditional enterprises. How did we do communication before? Through advertising, display, and PR—all of which cost a lot of money. We never relied on people before. Now, we can rely on people. If you have 1,000 agents, these 1,000 people are seeders; if you have 2,000 agents, these 2,000 people are a propaganda team; if you have 5,000 people, their power can rival a provincial TV station; if you have 100,000 people, even CCTV can't compare. Importantly, they will tirelessly spread your message every day, and you don't spend a penny, and it's very precise communication! That's the key point.
This year, I served a diaper brand that didn't sell much, only over 30 million in the first year. But the boss understood very well. He told me, "Don't look at the small sales; this product contributed brand value to our company last year that can't be measured in money." So, I especially recommend that traditional enterprise bosses find a way to do social e-commerce. Get in first, then discuss gradual development. That's all for my sharing today. I hope my content can help you.
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