Click to read the original text for details Small brands imitating big names have been wiped out The rural market was once a paradise for small brands and "Kangshuai Fu" (a knockoff of Master Kong). This market is characterized by remote mountains, dense forests, inconvenient transportation, and blocked information, which served as a natural barrier for big brands, but it was once the domain of low-quality, low-price but high-margin small brands, fake brands, and generic products. They did not advertise, build teams, or promote; they imitated the packaging of best-selling big brand products, skirted the edges, reduced product quality to the minimum, and lowered production costs to the extreme, while offering channels and terminals several times the profit of big brands. They recruited small distributors from various regions through trade fairs like the Sugar and Wine Fair, who then sold the goods to remote county and village retail shops in fourth- and fifth-tier markets. The business model of imitating big brands once supported thousands of small FMCG factories, but today it no longer works. Roads have been built to villages, and big brand goods can now be delivered; farmers' incomes have risen significantly, so they can afford big brands; television and the internet are widespread, so rural consumers know what big brands are. Recently, the author conducted market research in county-level markets in North China, Southwest China, and Central China, and found that even in remote township and village retail shops, counterfeit products like Kangshuai Fu, Seven Walnuts, and Wangzai Milk have almost disappeared. Moreover, the main categories sold in these small shops have basically become branded goods: Milk is mainly Yili and Mengniu; beer is Tsingtao, Snow, Budweiser, Yanjing, and Carlsberg; instant noodles are Uni-President, Master Kong, Jinmailang, and Baixiang; beverages are Nongfu, Uni-President, Master Kong, and Mizone; water is C'estbon, Ganten, Nongfu, and Wahaha; grain and oil are Fulinmen and Arawana; condiments are Haitian and Shinho... To increase volume, over the past decade, big brands have continuously moved down market and expanded channels, pressing forward step by step. Small brands retreated again and again, from second-tier to third-tier, unable to hold fourth-tier and retreating to fifth-tier, finally moving to towns and villages. When big brands capture village shops and wipe out small brands, can they dominate the world and rest easy? In fact, while big brands are aggressively entering village shops and "exterminating" traditional small brands, they are also facing headaches of their own. Big Brands' Headaches and the Rise of Niche Brands When big brands are attacking small brands offline in village shops, they are simultaneously facing increasingly strong attacks in urban markets and online. These attacks mainly come from innovative emerging niche brands. They also carry the label of new consumer brands. In the past six months, New Distribution has reported on many niche brands that are doing well, such as "Egg Full", "Zhong Xue Gao", "AKOKO", "Single Grain", "Genki Forest", and so on. These niche brands have not been established for long, but they are doing well and have received favor from consumers and capital. Offline, the main attacks on big brands come from products like "Genki Forest" that sell on product and design innovation. Such brands are not just one "Genki Forest". For example, in the beer sector, brands like Taishan Beer, Master Gao, Panda Craft Brewery, and Ubrew have boldly innovated in product taste, packaging design, and price positioning, cutting into the gaps of big brands and thus growing stronger. In the Beijing market, Taishan Beer achieved a miracle of 30,000 tons in annual sales without spending a penny on market expenses. Online, brands like "Egg Full", "Zhong Xue Gao", and "Single Grain" have successfully carved out markets worth hundreds of millions from sectors like ice cream and convenience food through product and design innovation, and even brand IP innovation. The impact of such frequent and increasing attacks on big brands is enormous. Although in terms of scale, big brands are still behemoths and even growing, in terms of market share, the head effect of big brands has been rapidly weakening in recent years. Take daily chemical products as an example: ten years ago, the top 5 brands held about 50% market share, but today it has dropped to only 27%, and industry concentration is shifting toward fragmentation. G Capital once estimated that in the next 10 years, most existing brands will be replaced by new brands, possibly by more than 50%. Tmall data also shows that the lifecycle of FMCG products on the platform has halved compared to three years ago, and it continues to shorten. The niche brands attacking big brands often have unique and highly focused innovations, and their playbooks are fundamentally different from the paths and logic of traditional small brands. 1. Different Entrepreneurial Paths In terms of entrepreneurial path, niche brands no longer imitate the packaging of big brands and then penetrate lower-tier markets that big brands do not cover, using low prices to fill gaps. Niche brands also cut into areas where giants are weak, but their path is completely different from the low-quality, low-price approach of traditional small brands. Their typical approach is to first incubate in channels with stable traffic, such as e-commerce platforms, communities, official accounts, or certain types of terminals, and after operating for a period, gradually penetrate other channels. 2. Different Innovation Capabilities Not only are the paths different, but they are highly innovative and basically original. From product quality, packaging aesthetics, brand marketing, content dissemination, sales models, and even team organization, they are completely different from traditional big brands. They even do better than big brands. New consumer brands gain consumers' organic traffic and word-of-mouth through high quality, high aesthetics, and high standards, and consumers are willing to pay a premium for this. Perhaps entrepreneurs and their consumers share a common view: an interesting soul may be more important than a good-looking appearance. The paths and models of niche brands may not be mainstream in terms of sales volume yet, but they are the direction for future brand innovation and development. Supporters of Niche Brands and the Disenchantment of Big Brands Many traditional marketers cannot understand why big brands suddenly seem less popular overnight. Why do those niche brands, with little brand credibility and high prices, still have buyers? One reason is that when the rural market is just forming awareness of big brands, first- and second-tier markets and the internet are beginning to disenchant big brands. The so-called disenchantment means that in the eyes of consumers, big brands are no longer mysterious and have lost the halo that made famous brands objects of admiration. In the eyes of the post-90s and post-00s generations, big brands, apart from providing safety, are too mainstream and mediocre. Even often, big brands are becoming targets of mockery. The second reason is that after fragmentation, consumers no longer rely on big brands, but they still need to find brands and products that suit their own ideals. Once they encounter niche brands whose personality, design, and brand proposition match their preferences, consumers become their supporters and are willing to pay a higher premium. This is the soil for the survival and development of niche brands. The more severe consumer fragmentation, the greater the impact on big brands. Because big brands are often inherently opposed to fragmented needs. The result of this opposition is that the scale of so-called big single products is shrinking. In the past, only products with sales over 10 billion could be called big single products; today, over 1 billion is enough to be called a big single product. After understanding the trend of disenchantment of big brands, we can begin to understand the following phenomena:
In the social e-commerce sector, Natural Workshop seems to have suddenly grown right under the noses of Hengan and ABC;
You may never have heard of the Zhihu brand, but on Pinduoduo, it easily achieves tens of millions of orders a year, which is astonishing;
In the micro-business sector, a large number of unheard-of brands like Aifeimao and Kaierdele are growing wildly in social circles. Also, recently popular new plays like community crowdfunding, influencer带货, and private domain traffic are constantly emerging and changing. The faster the changes, the more fragmented the traffic forms, and the more complex the transaction scenarios, the more it is a disaster for big brands, but for niche brands, it may be an opportunity. As long as you leverage trends, seize dividends, and use the gap markets that big brands cannot see, a single needle inserted may grow into a towering tree. Niche products can exist because the Chinese market is large enough and fragmented; niche products are becoming more popular, proving that this fragmentation is intensifying. Using Fragmentation to Do Niche Well Is the Most Effective Way to Fight Big Brands Some once thought that with smooth information flow, cognitive differences would shrink, but in fact, the opposite is true: it is the internet that has exacerbated this fragmentation. A friend born in the 1960s asked the author, "What is the app 'Poison'?" I was stunned. How could I possibly describe to him the following: the users of this app are a group of post-90s and post-00s kids whose hobby is to go hungry but spend tens of thousands of yuan to hoard a pair of second-hand shoes worn by someone else? After the deep fragmentation of the Chinese market, consumers can no longer be simply analyzed by geographical hierarchy; the market is no longer a block market but a layered market. This layering is user-centric. Dividing users is no longer simply by gender, age, income, or industry, but also by interests, hobbies, and behavioral habits. Many internet platforms have extended user tags to hundreds or thousands. After division, users are characterized by "birds of a feather flock together." The entire consumer group is cut into communities and tribes. Consumers' herd mentality still exists, and they can still be influenced by authority. It's just that the "herd" they follow and the "authority" that can influence them have changed. The strong带货 effect brought by KOLs and influencers proves that the rule still works, but the forms, objects, and content are completely different from the past. Therefore, the biggest crisis facing big brands comes from increasingly severe fragmentation. The organization and operation models of big brands are inherently incompatible with niche demands. In the past, big brands also played imitation and follow strategies, but now they find it impossible to satisfy such fragmented needs. The biggest headache for big brands is precisely the biggest opportunity for niche brands. Should you do mass or niche products? Teacher Niu Enkun said: Today it may be a niche product, but in the future it has hope of becoming a mass product, representing a trend. The inevitable result of consumption upgrading/grading is that the era of one product satisfying everyone's needs has ended. Big brand products can and must be big single products; they can talk about categories, positioning, commonalities, and imitation. Niche products need to talk about people, definitions, personality, and creation. Today, the competitive logic that niche brands use to fight big brands is fundamentally different from before. Small brands doing niche products is both an inevitable choice for entrepreneurs and a natural barrier.