Click image for more info 1 To understand WeChat business, we must start with the entire business ecosystem. "How far you can see into the past, how far you can see into the future." Whether it's traditional offline "store commerce" (Wanda, Suning) or PC-era "e-commerce" (Taobao, JD), the logic is the same. A store without foot traffic is like an e-commerce site without traffic: water without a source. Offline commerce relies on location, and location carries foot traffic. Foot traffic cannot exist without location, so location becomes very valuable. Therefore, in the early 21st century, among the top ten on China's rich list, real estate always had the most "domineering CEOs," sometimes even occupying 7 seats—real estate developers connected businesses and consumers, and as "connectors," they amassed great wealth. In the PC era, Taobao still sold traffic, which could be called "online commercial real estate." Taobao used a platform model to capture users' minds and continuously attract foot traffic. Then, through Taobao's direct traffic, advertising, etc., it sold traffic to various merchants. Bid ranking inevitably raises prices to the limit merchants can bear, just like prime locations in offline commercial real estate command high prices. But the all-powerful Taobao faced challenges from WeChat. People spend a lot of time on smartphones, and the biggest traffic entry point on phones is WeChat. At this point, the mobile internet trend was unstoppable. Thus, WeChat business, targeting WeChat Moments marketing, rose accordingly. So, what is the essence of WeChat business? In the past, marketing incurred huge costs just to connect with touchpoints in consumers' psychological cognition. The essence of WeChat business is turning people into touchpoints, reducing distribution channels, and turning Moments into a touchpoint between people to sell products. This is the true essence of WeChat business. Trust relationships based on acquaintances can instantly break through psychological defenses, because word-of-mouth among friends becomes increasingly important and is key to solving product trust issues. At this point, WeChat business practitioners are both agents and consumers, and this trust relationship includes trust between individual WeChat business and brands, between WeChat business and end consumers, and among WeChat business groups. Supporting this dynamic system is China's huge population base and complex multi-layered market structure. But for WeChat business to survive and develop better in the future, it must remain vigilant and continuously iterate and improve. Because WeChat business's biggest advantage is also its biggest weakness. 2 WeChat business's advantage lies in its "self-expanding" incentive mechanism. Because this can be addictive, amplifying people's desires, making it particularly easy to cross boundaries. What does crossing boundaries mean? It means it easily incentivizes some people to do illegal or non-compliant things. Its underlying business logic fits too well with human greed and desire. When the entry barrier seems low, everyone can do it, and management's reach did not extend to the ecosystem's boundaries early on, it leads to chaos and disorder. The story's ending has already followed a predetermined path, hitting human weaknesses and bringing tears. In the end, too many people are brainwashed by the myth of overnight wealth, which is simply making money without effort. Just obey, follow, and execute, and you too can have a Maserati on the left and a photo with a celebrity on the right. Just invest and get high returns. Do you think that's possible? Deep in human nature, greed always grows. When everyone finds that recruiting agents makes money faster than selling goods, stocking up makes money faster than recruiting agents, and meetings with brainwashing and card swiping can close deals in millions in minutes, who would still work hard to sell goods? So, judging whether a WeChat business is reliable depends on whether it aims to profit by actually selling goods to end consumers or by developing downlines for profit. However, the low-threshold agent admission model, with unlimited fission potential, uses different story scripts to repeatedly tell tales of ordinary individuals achieving wealth and turning their lives around under the same sky. This is fatally attractive to groups whose lives are not going well. For a time, everyone harbored dreams of changing their destiny and standing at the top of the pyramid. The final outcome, however, is that WeChat business sales are very unstable, often with follow-up sales falling short of expectations. Junior agents have inventory pile-ups, and products cannot reach end consumers. Under inventory pressure, overwhelmed agents start clearing goods at low prices. The long, layered agency system, agents' frantic recruitment of downlines to earn price differences, low-price cross-selling leading to vicious competition, and severe market price chaos eventually cause the entire sales market to collapse. When the avalanche comes, no snowflake is innocent. 3 Let me ask you a question. Is the WeChat business model more suitable for selling one product to an infinite number of people, or for selling more products to the same person? You might think, of course, sell one product to an infinite number of people! Wrong! The logic of WeChat business is to sell more products to the same person. What does that mean? Think about it: what is the profile of a WeChat business person? It might be an ordinary person, today's label mainly being a new mother who just had a baby. After giving birth, she has time, wants to earn some money for the family, but doesn't want to go back to work; she's busy at home and has to take care of the child. They have a strong desire to find a good opportunity, to return to society and the business world, and WeChat business is a very important tool for them. This group is the most mainstream in WeChat business. This mainstream group adds many people to their Moments. How many can they add? A person who can actually sell goods adds 5,000 friends. A WeChat business's main opportunity to sell is in Moments. How many posts can a WeChat business post per day? At most, only three posts. Why? If you post too many, people get annoyed. If you post too few, you lose marketing value. So a real WeChat business needs to restrain themselves. They post about three product-related posts and seven about their personal life, just like a normal person. That's what a normal WeChat business does. Okay. If they only have three Moments posts, think of them as ad slots. That is, a WeChat business has three ad slots a day, and their ultimate goal is to have up to 5,000 friends see them. For these three ad slots, do they have to say every morning, "This morning I used that mask, it's so hydrating"? The next day, they say again, "I used the mask, it's so hydrating." They can't say that for a year. If they say it every day, users already know; the information is repetitive, and those who would buy have already bought. That means if they sell this product, they are selling the same product to a group of people, and they will eventually exhaust that group. But they only have these friends. If they want to sell more, they need to develop more friends, which is not easy for them. They are acquaintances. What can they do? Their only way is to sell something else to the same 5,000 people. For example, after selling masks, sell face cream. After selling face cream, sell a facial cleansing device, sell all kinds of things. So selling more categories of products to the same group of people, facing each end consumer, is the direction of WeChat business. Not selling to more people; that's for those at the top. So in this case, it means that each individual WeChat business brand cannot grow big. If a single brand wants to support a large group of WeChat business practitioners, those practitioners will eventually turn to selling others' products, otherwise their users cannot be sufficiently satisfied. So models like Yunji have a future. What did Yunji do? Yunji actually maintains a system of WeChat business practitioners; everyone is its WeChat business. But Yunji, at the front end, is responsible for curated procurement and comprehensive platform-based business support. It helps the entire WeChat business system select products. "I'll verify this product for you; is it good?" It doesn't make products; it selects truly good products and then brings them into the WeChat business system. Once in the system, if the product is good, they take it and sell it to their users. So the same person facing 5,000 people has an infinite number of products to sell. This is the essence of social e-commerce: using people as channels. But good WeChat business and good social e-commerce, when using people as channels, have people who genuinely want to sell good products and help those around them. This requires you to have the ability to control the supply chain and the promotional ability to sell goods. Bad social e-commerce and bad WeChat business aim not to sell goods but to recruit people. When temptation comes, remember this life-saving phrase to stop losses in time: "Good social e-commerce logic is to use people as channels; bad social e-commerce logic is to recruit people." 4 Models like Yunji might be the future of WeChat business. Not that WeChat business is the future of all retail, but it is an efficient business model in itself. Its strength lies in countless ant-like soldiers helping you sell. But what does WeChat business lack? WeChat business lacks the ability to filter products and channels upfront. So, platforms like Yunji that uniformly provide curated procurement and platform support will have huge development potential. This could be a future trend. Once this develops, similar to Yunji—not necessarily this company, but similar models—might give birth to the fourth pole of Chinese e-commerce besides Alibaba and JD. Here, there is also a group of people who don't believe in fate. Source: Liu Run (ID: runliu-pub)