Offline explosion: Invest 200 yuan and earn 400,000 yuan

Why are online brands moving offline? The author analyzes the new retail concept through two cases: Ziyan Baiwei Chicken and Guolin Fruit.

1. Why go offline?

When we answer this question, we are actually answering the question "Why are online brands moving offline?"

When Zhang Liaoyuan of Three Squirrels planned to open 1,000 stores in 2020, he explained the logic of offline operation:

First, although online virtual shelves can display enough products, users do not browse deeply enough.

They usually only choose those products that are popular, that is, the best-selling products. However, generally speaking, the profit margin of best-selling products is lower and it is not easy to make money.

Second, the express delivery costs for online consumption cannot be covered.

High cost-effectiveness triggers user consumption, but low customer unit price will inevitably increase the proportion of logistics costs. Recharging VIP to waive express delivery fees, and waiving express delivery fees when the order is over 99 yuan have become common practices of major e-commerce platforms.

Third, the consumer experience is difficult to guarantee.

Especially in the beauty industry, offline makeup trial in stores is the most common consumption scenario.

Tmall Beauty, which has been reconstructing the "people, places and goods" strategy, has specially launched AR makeup mirrors for offline beauty stores. And Perfect Diary plans to recruit 3,000 front-line employees, including 500 makeup artists, for its offline stores in 2020.

Offline, Zhang Liaoyuan said that Three Squirrels' gross profit margin can reach 40%.

After all, users can more directly access all SKU products offline, and the effect of low-gross-profit hits will be diluted; the makeup trial experience will be improved, and consumption conversion will inevitably increase; the price comparison atmosphere will be diluted, and users will not have to bear the logistics costs...

This is the common logic for all online consumer brands to move offline.

However, can online brands achieve the same sales explosion when they go offline? How can they truly achieve the ideal product-effect integration with an input-output ratio?

This requires us to discuss the issue in the context of retail.

2. Case 1: Ziyan Baiwei Chicken

Social media = channel: Earn 400,000 yuan with 246 yuan, Ziyan Baiwei Chicken boosts sales by 14% in 10 days

Social marketing is relationship marketing based on social networks. Unlike celebrity endorsements, social marketing leverages the consumers’ friends and family. It achieves marketing goals mainly through sharing group purchase links on social software, participatory advertising, viral fission, etc.

With the help of the new retail model of "offline accumulated traffic + online group buying + in-store pickup", ZiYan Baiwei Chicken has played a unique social marketing game.

First, Ziyan launched the activity of "3 people join for 1 yuan, each person gets 10 chicken wings". It posted group QR code posters in 135 stores in Chongqing and used store loudspeakers to promote it, trying to activate offline traffic and guide it online.

At this point, marketing is in the stage of attracting new customers. At this stage, companies need to reasonably leverage the momentum to add points to marketing, such as the popularity of the word "koi" in the Alipay Koi campaign. With labels that can resonate with consumers or have popular elements, Ziyan was spreading the "sorrow culture" that was popularized by the funeral tea - "sorrow chicken". By combining the brand tone with popular culture in this way, Ziyan can reduce the cost of communication with consumers.

Secondly, Zi Yan organized an employee group of nearly 200 people as a seed group and designed community PK, such as forwarding and collecting likes to get gifts, group singing, group poster design, group acrostic poems and other gameplay to continue to spread the activities online.

There are many details involved in the design of group buying activities.

One is the number of participants.

Big data analysis shows that the highest group formation rate in the retail industry in second-tier cities is between 3 and 5 people. In order to accurately determine the number of people in a group, Ziyan used AB testing in the digital marketing analysis software in the early stage (i.e., control simulation testing, the software simulates AB experimental groups, and compares which limited conditions have the highest group formation rate through data analysis). In the end, it found that the highest group formation rate is 3 people.

The second is group pricing.

When setting up group buying for non-essential products, the average customer price of each item in the activity must be low enough. This will make participants think about reducing costs, thereby maximizing the grassroots traffic.

The third is product selection.

According to traditional retail thinking, group buying products will choose fresh food with high sales and high gross profit. However, the core of social marketing is to generate fission based on traffic. Among the top three products in Ziyan stores, Fuqi Feipian and Tengjiao Chicken are bulk products. One spicy duck head cannot be shared, and the cost of two duck heads is too high. All three products are not easy to share. Chicken wing tips, which ranks 11th in sales, have low costs and can be shared with others as a single product, promoting the generation of social fission.

Fourth, the location of the store. Ziyan stores are located in the community, and the main scene is the dinner scene. Consumers buy braised dishes and add a dish to dinner. This helps to form a sharing circle of social relationships. Being close to the community can form a radiation circle where one person drives one household, one household drives the first floor, and the first floor drives the whole community.

After Zi Yan completed the transfer of online traffic, the key lies in the setting of the "in-store pickup" model.

Social marketing was previously common in Internet e-commerce companies, such as Pinduoduo. Without offline stores, their marketing logic is that users complete the sales chain of "receiving marketing information - placing orders - express delivery to the door" through the Internet. However, traditional companies are different. When they go online, the user path should be "offline activation of inventory - online group sharing - offline in-store consumption", and users will eventually return to store services.

The "in-store pickup" feature is based on ZiYan's location as a "community store", so consumers can pick up their items in the store on their way out or home. It is also similar to the logic of negative-profit promotional items in supermarkets, which aims to boost sales of other items in the store and encourage repeat purchases.

Limited by display costs and user time costs, brands cannot display all categories to consumers in group buying activities. At this time, they should attract consumers to the store with low-priced hot products, supplemented by appropriate store displays, store manager recommendations, health information cards, discount activities, etc., to tap into consumers' secondary needs and thus boost overall store consumption.

Based on the above settings, Ziyan was able to leverage 400,000 yuan in sales in 10 days with a poster printing cost of 246 yuan. Of course, such efficient marketing is not just about the front-end event settings, but the key is the new retail systematization of Ziyan Baiwei Chicken.

3. Case 2: Guolin Fruit

User operation: The annual growth rate of members is 3043%, and the new Guolin store has sales of 600,000 yuan in 3 days since its opening.

Retail has transformed from operating channels and operating traffic to operating users.

You can buy tools, but operational strength cannot be changed overnight. One of the pain points faced by many businesses is that there is no stock of operational talent in the market.

So at this time, if you know how to operate users, you will have a comparative advantage.

Data can provide us with the best evidence and the most powerful persuasion. Here we show Guolin's data from a long time ago, comparing the indicators of fans, sales, and number of stores.

Through this set of data, you will find that Guolin’s stores only increased by 10 in one year. It is not the traditional linear growth retail chain store we imagined.

However, the number of fans increased from 6,680 to 210,000, a year-on-year growth rate of 3,043%; sales increased from 30,000 to 2 million, a 66.67-fold increase. This data is enough to prove why we need to operate users instead of channels.

Every time a customer makes a purchase, the store manager of Guolin will guide the customer to scan the QR code to become a brand member. After the member data is uploaded online, it will all enter the digital system of the retail store and then be used for unified user operations.

Basically, you turn a consumer who only buys something once into your member. Then you turn your member into someone who will help you forward your content to your friends circle, giving him the feelings and benefits, and letting him help you share and spread the word.

This is how the explosive growth in sales came about.

The owner of a large fruit chain retail brand in Chongqing once discussed Guolin with me. At that time, Guolin opened a warehouse store in Jiangbei District, and the owner sent two people to wait there for a month. As a result, in October, which is the off-season for fruits, the new store was full for 21 consecutive days.

The boss was very confused. If you open a new store, hold an event, and distribute flyers, it would be great if you can sell well in two or three days. Where did these people in Guolin store come from?

In fact, it is through the accumulation of offline traffic, online fission, and in-store pickup.

Every time a new store is opened, Guolin will launch online promotions. For example, a blueberry 1 yuan flash sale event sold 20,000 blueberries after members forwarded it on WeChat Moments.

At the same time, Guolin requires users to pick up the products at the store within 3 days after opening.

When users pick up their orders at the store, Guolin employees will guide them to buy other fruits. If they stay for too long, the two streets near the store will often be blocked.

It is said that the Chongqing traffic police were very angry about this kind of business. In three days, Guolin sold about 600,000 pieces, and the traffic police mobilized a lot of manpower to direct traffic.

In fact, e-commerce brings customers to physical stores, and when people enter the physical stores, a new round of consumption is stimulated. All of this stems from the business's operation of users.

The increase in customer acquisition costs means the increase in the value of each customer. It seems urgent to privatize customer assets and tap into the value of each customer.

Customer resources are already in stock, and the traditional business strategy of competing for sales with people is no longer useful. How to increase users' single large-amount consumption or frequent repurchase is the way out for small and medium-sized chain stores and even all businessmen.

There are only two points in crowd operation:

• Or brands choose to upgrade and supplement their own categories and services around consumption scenarios, such as Xiaomi's ecosystem. Successful marketing always becomes a rigid demand of people in a certain circle, thus generating customer loyalty and repeat purchases.
• Either they break their own consumption scenarios and expand or create new scenarios. For example, DeZhuang Hotpot has expanded from traditional hotpot in the catering category to self-heating hotpot in the food category, and ZiYan has tried to move from "dinner dishes" to "casual food".

The rise of social media has shifted traditional purchasing decisions from individuals to small groups. How to better serve small groups and complete the construction of their own supply chain is the key to reflecting marketing results.

4. The New Five Flows Reshape Retail and Consumption

In fact, the concept of new retail is not new. The retail industry has undergone three major changes since its development:

From state-owned to private, from single stores to physical retail chains, and from physical retail chains to e-commerce platforms.

The fourth generation of retail has developed into a retail model that integrates online and offline traffic, uses social media as a channel, and takes user operations as its core competitiveness.

This requires traditional enterprises to be user-centric when carrying out new retail transformation, and to expand the coverage of offline stores by integrating information flow, capital flow and logistics.

1. User Flow

The traditional retail model converts customers through the sales promotion of store salespeople. When new retail adopts social marketing, users are converted into potential consumers in the social fission stage, and consumers finally go to the store to make purchases.

Even if Ziyan stores are well located and have high customer traffic, their reach is limited to a few kilometers, which is why they are limited to stores and have a linear growth ceiling. Therefore, Ziyan uses social marketing to expand its own consumption scenarios.

(1) Traditional scenario:

On the way home from work, customer A suddenly wanted to eat some braised food, so he bought some from Ziyan Baiwei Chicken near his home according to the usual ordering process and finally completed the order.

(2) Social marketing reconstruction scenario:

After customer A places an order, he sees the group purchase poster on the store window and scans the QR code to share the activity on social media to join the group purchase. After inviting friends B and C to join the group purchase, the three of them go to the store to pick up the goods. After B and C make their first purchase at Ziyan, they are likely to invite other friends to participate again, forming a viral spread.

2. Store flow

The viral spread in the social circle means that the store’s promotion is not limited to a certain area or certain specific groups of people. It may even result in activities being carried out only in Chongqing, but people in other provinces and cities will also know about it, making them potential consumers.

Therefore, stores should appropriately expand their location and enhance their exposure within the scope of their supply chain capabilities.

3. Information Flow

There are two levels of information flow transformation. The first level is the display of product information.

When traditional stores occupy a certain area, they can control product exposure through store design, so that customers can see promotional items first, and then high-priced, high-profit items. For small stores like Ziyan, they can select group-buying products through the three principles of hot products in social marketing activities and provide consumers with product displays on demand.

The so-called three principles of hot products:

• First, we must break through Ziyan’s dinner scene and expand the product’s original “dish” label to “casual snacks” so that everyone can participate;
• Second, the price is cost-effective enough;
• Third, the price is low enough to remove the threshold for participating in group buying.

The second layer is the display of marketing information. Ziyan’s core business is always offline stores. In the early days of offline group-buying QR codes, consumers had to stand in front of the store to receive marketing information. If you want to conduct marketing at the lowest cost, the best way is through voice.

Among the five senses of human beings (sight, sound, smell, taste, touch), sound is a low-cost and convenient carrier of information transmission. However, unlike general sales calls, adding creative elements can make consumers more receptive while controlling costs.

Similar to Pinduoduo's brainwash advertising song adapted from the song "I Miss You So Much" "Pinduoduo, Pinduoduo, the more you work, the more you save", Zi Yan adapted her own brainwash advertising song based on the song "Liu Sanjie" and played it on a loop in the store using a small loudspeaker.

4. Fund Flow

Setting up fission red envelopes is a common way of playing in social marketing. In the payment stage, you can perform secondary fission through red envelope sharing. This post-payment reward breaks down the original advertising costs of attracting new customers into the reward costs for old users’ recommendations and the reward costs for new users’ registration, that is, “advertising cost = old users’ new users’ rewards + new users’ registration rewards”.

The fission rules of fission red envelopes are the key. The most reasonable rules should be formulated according to user interests, habits, and the input-output ratio of the enterprise to make fission work well. The main ways to play include: sharing, secondary compound interest, collecting cards (such as Alipay Spring Festival Five Blessings), and registration, downloading, and purchasing to get lucky bags.

5. Logistics

One of the classic examples of the cooked food chain industry transforming to adapt to logistics is Zhou Hei Ya, whose fresh-keeping packaging can break the original distribution range of cooked food products. Whether it is a forward warehouse, central warehouse, warehouse-store integration, etc., it can adapt well.

Under the systematic operation of the "five flows" of new retail, future retail enterprises should transform from operating channels and categories to operating users. This also shows that traditional brands entering e-commerce platforms is not the current new retail, because the operations of platforms such as Tmall or JD.com are still channel and category operations.

Only when brands complete their own efficiency transformation, such as ZiYan’s use of digital marketing tools to approach and manage their own user groups, can they achieve “brand and effect integration” in marketing.

Compiled by Wu Tong, Viewpoint by Li Batian, Editor-in-Chief by Huang Xiaojun

Source: Jingyan Brand Lab (ID: 1085865)