How can the fashion retail industry achieve global growth in 2024?

This article discusses how the fashion retail industry can promote sales through omni-marketing in 2024, and explains how to use the concepts and tools of omni-marketing to effectively attract customers and facilitate transactions. At the same time, the article emphasizes the importance and implementation details of private domain operations, as well as how to use various new media platforms, such as Xiaohongshu and short videos, to implement a comprehensive growth strategy.

Some time ago, we studied Nike's growth and transformation over the years, and also deepened our attention to the fashion retail industry. Seeing that everyone was having a difficult and confusing time during the 618 shopping festival, we wanted to use the fashion retail industry as an example to find a "new paradigm for global business growth."

The reason why this methodology is so effective in the fashion retail industry is that no matter how e-commerce develops, it cannot completely replace the offline experience and services necessary for the fashion retail industry, but its growth mainly comes from online. Therefore, how to better combine online and offline is a proposition that this industry has been thinking about and exploring.

Although this article discusses growth methodology around the fashion retail sector, I believe that many common solutions can also be replicated in other industries, providing inspiration for brands in more different industries that are seeking growth breakthroughs.

This article involves many professional terms. We first extract some important terms and put them at the beginning:

• Brand OneID: Usually composed of brand ID + mobile phone number + private domain ID.
• Domain rate = valid members of Jiaqiwei/total number of valid members (valid members: members with purchase records within 2 years).
• Marketing Automation: A marketing canvas system that automatically performs tasks based on user behavior.
• KOS (Key Opinion Sales): Key opinion sales refers to online shopping guides with professional capabilities and brand knowledge reserves.

The whole content is very dry and down-to-earth, so be prepared to learn and grow!

1. What are the growth pain points in the fashion retail industry?

When it comes to fashion retail, it seems that everyone will subconsciously think of the clothing industry, but in fact, this category covers a wide range of purposes, including clothing, beauty and personal care, trendy toys, mother and baby products, etc. Specifically, we can understand this industry from three perspectives:

• Relatively non-standard, with many SPUs and SKUs, high requirements for supply chain coordination: Not all products related to "fashion" are considered fashion retail. For example, some mobile phones have a fashionable appearance but do not belong to this category.
• The fashion retail industry is a large industry in the general retail sector: China’s current GDP is close to 50 trillion, of which the fashion retail industry contributes 20 trillion to the market.
• There are requirements for store experience and shopping guide services: There are many leading chain brands with tens of thousands of stores in the industry, and the importance of store experience to fashion retail brands is self-evident. At the same time, this industry also pays attention to private domain operations and has high requirements for shopping guides.

Before understanding the trends in the fashion retail industry, let’s first look at the platform development trends. GroupM uses “vertical and horizontal alliances” to express this trend, which we think is very accurate. The so-called “vertical and horizontal alliances” means using content to connect e-commerce platforms and offline stores, that is, to achieve the transformation from content platforms to offline stores, and from content platforms to e-commerce platforms.

To be more specific, brands today have no shortage of sales channels, but they lack the touchpoints that can generate interest, trust, and buying impulse in consumers, and these touchpoints are content. For consumers, how to define a good product is not about low price or cost performance, but about a comprehensive feeling, which also comes from content.

Therefore, good content is becoming more and more important in transaction conversion. On the one hand, e-commerce platforms such as Tmall and JD.com have directly reached a data "alliance" with Xiaohongshu, a content platform, to connect the data of Xiaohongshu's notes and Tmall and JD.com's store transactions, and launched the Xiaohongxing and Xiaohongmeng projects. For example, during last year's 618, many of EZR's customers have achieved an average store entry rate of more than 5% from Xiaohongshu to Tmall.

On the other hand, online traffic can be directed to offline stores through content, or directly conduct transactions, that is, localization, or be directed to the private domain of the enterprise WeChat, so as to achieve the connection of online and offline traffic and operations.

These new changes have also forced the fashion retail industry to transform its operations across the board. Through a survey of more than 20 fashion retail brands, it was found that after the digitalization and onlineization of retail, the brands experienced data changes in two dimensions:

• Spatial dimension: The transaction volume of spatial retail (offline store retail) has declined, and offline customer flow transactions only account for 50%-60% of the full channel performance.
• Time dimension: The business hours of offline physical retail stores are usually from 10 am to 10 pm, but now consumers can complete purchases through online private channels such as mini programs, corporate WeChat, store live broadcast rooms, etc. anytime and anywhere 24 hours a day. The prime trading time is from 11 pm to 1 am, and this part of the transaction accounts for 15%-20%.

In addition, transaction volume achieved through traditional e-commerce and content e-commerce media accounts for 20%-30%.

This shows the growth pain points of the fashion retail industry:

• The proportion of organic sales in stores has declined: This is mainly due to the lack of new customers entering offline stores, while the loss rate of old customers is increasing. Interestingly, after the epidemic, as some people chose to return to their hometowns from first-tier cities, the ROI performance of many brands' stores in new first-tier cities is better than that in Beijing, Shanghai, Guangzhou and Shenzhen.
• Out-store transactions increased: while the proportion of store transactions declined, out-store transactions increased. Among them, brand mini-program transactions were also declining, but this does not mean a decrease in traffic, but rather a diversion to various channels such as video accounts, corporate WeChat, and Douyin store broadcasts.
• Decline in online customer orders: Platforms are always competing for the lowest price, and search traffic on major platforms is becoming more and more expensive, resulting in a continuous decline in online customer orders.
• Private domain is a must after the epidemic: Although private domain was once a solution that brands had to "have to" do during the epidemic, after the epidemic, private domain operation or full domain alliance has become a must for brands to take the initiative. One obvious point is that after collecting members of e-commerce platforms on WeChat, the reach of WeChat information is higher than that of information prompts from JD.com and Tmall.
• Content can bring sales: Just like Dianping in the past, where real user reviews affect consumers’ choice of stores, real content in Xiaohongshu, Douyin and other content media will inevitably improve online conversions, especially after being superimposed with accurate algorithm recommendations, the effect of content will be more obvious. Xiaohongshu’s connection with Tmall’s Xiaohongxing and Xiaohongshu’s connection with JD.com’s Xiaohongmeng are both verifying and promoting this trend.

2. Combining public content and private brand domains in 2024

After clarifying the above pain points, the general direction of the brand's efforts will also be clear, that is, to carry out off-store content marketing in the public domain, import the traffic of the public domain content into the brand's private domain, and carry out continuous operations on the enterprise WeChat.

Before we analyze the specific operations, we must first understand the underlying logic. Why do we need to connect the public domain of content with the private domain of brands? This can be summarized into five points:

• Make performance predictable: Predict single-store performance through the average unit price of first orders from new customers and the average unit price of repeat purchases from old customers.
• Make traffic operational: Through private domain data, we can strengthen the 1v1 service for high-price customers in stores. At the same time, we can use AI smart outbound calls to automatically reach some customers who have not purchased or have only purchased once within 180 days.
• Make new additions more stable: By promoting connections with shopping malls, banks and external partners, we can achieve goals such as crowd exchange and brand breakthrough.
• Make users reachable: Convert group text messages into enterprise WeChat messages to achieve more effective reach. It can be seen that in this 618, many brands have changed the preheating in the site to the preheating in the private domain.
• Make delivery more accurate: Brands can upload first-hand data to the platform to improve the effective exposure of the platform algorithm and thus increase the ROI of delivery.

1. Global integration

The global transaction system includes WeChat ecosystem, e-commerce platform, localization platform, content platform, etc. Brands should build their own tag platform and integrate it with the tag system of external transaction system, thereby forming a global user operation map and perceiving consumers' interactive behavior and transaction behavior through data.

To achieve this result, just as all platforms have their own encrypted OneID, the brand must first build its own global membership OneID system, which is usually composed of the brand ID + mobile phone number + private domain ID.

OneID is the basis for tag collection. With OneID, brands can identify their own audience in the public domain, and can also treat all e-commerce platforms as their own delivery media, based on crowd selection and tag analysis, to achieve more effective exposure and more accurate delivery. In other words, only with the OneID system can brands achieve data interoperability and alliances with platforms, and achieve effective operations for users across the entire domain.

Although OneID is a new term under new trends and new channels, what it reflects is the essence of retail - just like the co-branded membership cards used in shopping malls in the past, today's e-commerce platforms such as Douyin and JD.com are the online Wanda and Intime, and brands also need to issue the same membership card for accumulating points to members of each platform.

2. Private Domain Operation

Today's consumers have "cross-domain" behavior characteristics. That is, when they see brand exposure content on social media, they will not only go to e-commerce platforms to complete the purchase, but also go to offline stores to make purchases.

Therefore, in the past, when we talked about private domain operations, we were referring more to the connection from the store private domain to the enterprise WeChat private domain. But today, when we talk about private domain operations again, we also need to consider how to directly introduce online public domain traffic into the enterprise WeChat private domain. At the same time, based on what logic to allocate online shopping guides, for example, by geographic location, by service relationship, by first order, by mobile phone number, etc.

After the users are imported into the private domain, the role of WeChat is no longer limited to attracting new users. It is also a place that provides shopping guide, cashier and service experience. Therefore, warm and differentiated services are also a key point for brands to continuously improve the customer life cycle value.

Regarding private domain operations, there is another important concept, “domain rate”, which is the number of valid members who have joined the enterprise microblog/total number of valid members (valid members: members who have a purchase record within 2 years).

When effective members join WeChat, it means that the brand has introduced members to the most effective contact channel in the WeChat domain, which can greatly replace the previous public account template messages and mini-program service notifications. Therefore, the level of domain rate can reflect the ability of a brand to reach users, and it is also the biggest opportunity to turn stock into incremental, or turn stock loss into transaction increment.

In fact, under the guidance of the platform's user growth logic, the up-value of members of the same level who "have added WeChat for Business" and "have not added WeChat for Business" on the e-commerce platform has shown a significant difference. Therefore, the indicator that the fashion retail team needs to focus on in 2024 is to improve effective reach. When it comes to shopping guide performance, it means that in addition to attracting new members, shopping guides should also pay attention to the completion rate of historical members adding WeChat for Business.

Through the birthday marketing case of a certain brand, we may better understand the conversion value brought by precise private domain operations - the specific operation is: select members whose birthdays are this month in the private domain, and issue coupons to them → send SMS reminders 7 hours after issuing coupons → 15 days later, make intelligent outbound calls to members who have not consumed within 15 days, and AI will identify the number of effective connections. After going through this whole process, the ROI of the brand's entire birthday marketing activity is as high as 61.5%.

It can be seen that at each stage, if the user completes the current task, the next task will not be unlocked, but if the task is not completed, an automated reminder will be received at the key node. This is how AI-led automated marketing is properly integrated into user operations and reach.

Marketing Automation is a marketing canvas system that automatically executes tasks based on user behavior. To put it simply, it is to set the rules of the game based on the user's OneID, and at certain time points, the marketing canvas will automatically run.

3. Content Operation

Many brands in the fashion retail industry have revealed that the content media they will pay the most attention to in 2024 is Xiaohongshu. In fact, Xiaohongshu was not included in the promotion data reports of previous years. This year's 618 is the first time that Xiaohongshu officially appeared in the domestic e-commerce promotion activities. In fact, as content media, Douyin has a strong e-commerce closed-loop capability, but Xiaohongshu's system is more open and more suitable for full-domain linkage.

For fashion retail categories, Xiaohongshu has the following characteristics:

• The platform users are all over 20 years old, and more than 50% of them are from first- and second-tier cities, which is very similar to the user group in the apparel industry in terms of structure;
• From Xiaohongshu, you can get a glimpse of the industry's hot spots, development trends, product directions, etc.
• Evaluation content and expert content are often spread by "neighborhood girls" and "neighborhood boys". This type of personality is more likely to develop a light social relationship with users, thereby helping brands to achieve more efficient promotion and conversion.

A common and effective strategy for fashion retail brands on Xiaohongshu is to create KOS shopping guide content. KOS stands for Key Opinion Sales, which can be understood as the "recruitment" of offline shopping guide accounts on Xiaohongshu. The "recruitment" method is to open a Dandelion account and establish a connection with the industry's Xiaoer, that is, to bind the account to the Xiaohongshu backend.

Xiaohongshu's marketing model is AIPS, which corresponds to awareness, interest, purchase, and share. KOS is a key link in deciding purchases. It can guide users to the private domain and use the already perfect digital infrastructure in the WeChat domain, such as appointments and coupons, to encourage users to complete the final purchase in the store. Therefore, the operation of KOS is crucial.

Moreover, developing shopping guides into KOS is a win-win situation. For brands, they can track the content of shopping guides’ notes, traffic data, and product purchase data; for shopping guides themselves, these notes also have the opportunity to receive official traffic from brands, thereby increasing the influence of their personal IP and improving their personal performance.

The transaction conversion capability of KOS content lies not in the site, but outside the site. A brand owner of a buyer store effectively directs online traffic to offline stores or joins WeChat accounts through KOS content + private messages on Xiaohongshu backend + group chats on Xiaohongshu, bringing nearly a thousand WeChat friends to the store every week.

Some friends may be curious about how this data is obtained, that is, how to determine whether these new members are traffic brought by Xiaohongshu? - In fact, it can be identified by some passwords or other methods. For example, some brands will release weekly promotional products in group chats, and then send a "pass code". If consumers use this pass code to enter offline stores to buy or join WeChat, they will receive an extra gift.

This "pass code" is very similar to the Promotion Code overseas, and we can also be inspired by it. Xiaohongshu is ultimately positioned as a content platform, so it is necessary to use interesting ways to promote the content.

In the process of playing content, the headquarters and the terminals need to work together to operate the KOS content. As a KOS, the following are some points to pay attention to in operation:

1. Establishing a personal image: It can be found that the social media accounts of many brand managers are more influential than the official accounts of the brands, which proves the value of a real personal image. Similarly, when it comes to KOS content, it is important to establish a good personal image for shopping guides to avoid being the same as everyone else.
2. Continuously optimize accounts: KOS should proactively explore account optimization solutions.
3. Analysis of hot-selling notes: Xiaohongshu’s hot-selling notes are not the result of training, but are obtained through “comparison”. The hot-selling notes are unraveled to reveal a replicable hot-selling methodology.
4. Lower the entry threshold of KOS: some creative templates can be summarized to assist the shopping guides in their creative notes based on their personalities.

As for the headquarters, they need to focus on data collection and analysis of KOS content.

In addition to creating good KOS content, we can also seize the "cross-domain" behavior of consumers - since users become interested in Xiaohongshu and then go to e-commerce platforms to complete transactions, it means that Xiaohongshu's search terms will spill over to JD.com and Tmall, so the brand's search terms on e-commerce platforms can be optimized based on Xiaohongshu's search terms.

However, the premise for this measure to be realized is that the Xiaohongshu team must maintain close interaction with the e-commerce team. If the operation of Xiaohongshu is purely attributed to the brand marketing department, it will lead to a waste of some long-tail traffic and long-tail keywords because the team has no conversion goals.

3. New model of global user operation - ASPL model

Alibaba proposed the AIPL model for crowd asset operations on e-commerce platforms, and ran through the conversion link from content platforms to e-commerce platforms. However, with the diversification of consumer demand, the original single-link conversion model is no longer applicable. What we have to think about today is a more effective conversion link - from content platforms to private domains.

Therefore, we proposed a new model for global user operations – the ASPL model, where S (Study) stands for content strategy and P (Private) stands for continuous private domain interaction. This global strategy positions content media such as Xiaohongshu as a new user acquisition platform, integrating multiple online and offline scenarios with the ultimate goal of continuous private domain operations.

In actual operation - many brands will do light interaction in Xiaohongshu group chats to guide users to shop in stores, and then introduce the company's WeChat private domain for continuous interaction after building trust. It is worth noting that Xiaohongshu also has private domain operations. Some bloggers' Xiaohongshu group chats have been operating quite well, and they have smoothly completed the harvest through the link of "group chat warm-up-live broadcast-conversion".

We also have some specific cases to help you better understand the practical operation of this model. For example, after members place an order, JD.com's self-operated flagship store guides these members to join the company's WeChat account through outbound calls, thereby forming private domain conversions.

This is a direct conversion from the e-commerce platform to the private domain. For those who do business on JD.com or are about to enter JD.com, it should be noted that JD.com’s mini program is allowed to circulate in WeChat, but stores on other e-commerce platforms can only send H5 links in WeChat. In other words, JD.com has stronger connectivity with the WeChat domain, and the data closed-loop capability between the platforms is stronger, which is JD.com’s unique advantage over its competitors.

For example, after a women's clothing store opened a new store on JD.com, it recalled lost members on other platforms through text messages and found that 92% of them were registered users of JD.com and 50% were active users of JD.com. Behind this operation is the idea of ​​omni-domain integration, which is to activate the existing customers of the whole domain into new customers of the store. In other words, in the era of omni-domain management, "your old customers are my new customers."

If we use this mindset to do things, although a large number of brands have faced store closures, loss of shopping guides, and the subsequent loss of private domain users since the beginning of the epidemic, if we look up and outward, when the giants say that new customers have peaked, it is actually an opportunity, because each giant has hundreds of millions of existing members, and activating these members is like going to a newly opened super shopping mall to find new customers.

Finally, we would like to remind you not to simply pursue the total number of members, but to pursue the number of active members. Once a member is not recalled for two or three years, it will be like the inventory of fashion clothing, and it will inevitably be devalued and unsalable. What brands need to do is to form a closed loop of online public domain delivery, and at the same time form a closed loop of continuous operation in the internal private domain to ensure that customers will never lose contact with the brand.