Self-operated and non-standard products are the growth trough of brands

Is the combination of self-operation and non-standard products a growth trough for brands? After communicating with some foreign merchants during market research, the author learned some business concepts that are different from the past.

Let me tell you about my experience: shopping malls now like to organize some bakery festivals, coffee festivals, spring garden parties and other activities to attract people to consume and give small and medium-sized brands a chance to show their faces.

On the eve of Qingming Festival, I visited several markets and did some market research. After chatting with some out-of-town merchants, I found that more and more laid-off young people have started to independently create niche brands.

However, the business principles are somewhat different from before. They are becoming more and more sober and no longer invest money in online platforms to grab traffic and pursue expansion as in the past. Instead, they tend to adopt the small and beautiful business logic.

For example: to open a coffee shop without joining a franchise, you can learn how to do it online, then find an ecological niche in the local area like a sparrow, use small business thinking as your goal, establish a set of methods for new product research and development, sales, and maintaining old customers, and bypass competition from big brands.

In addition, I have learned a lot from them about business models, non-standard products, self-operated operations, etc. Perhaps these are opportunities to tap into growth in the future.

01

Do you know how many money-making models there are for brands? There are three:

1. Platform business
2. Franchise business
3. Self-employed business

While drinking coffee, a young businessman said: "In today's Internet age, if you go to the APP store and browse around, you can hardly find small and beautiful software. Except for games and tools, the ones who can survive the rapid development of mobile Internet are basically the big platform players.

Why is this so? Because the law of Internet competition is winner-takes-all, the market concentration is high, and there is no room for platforms with small homogeneous businesses.

Large platforms use technology to connect the supply and demand sides and develop a variety of business models in the middle. They are the easiest money printing machines. As long as they occupy the core monopoly position in the upstream and continue to maintain the prosperity of the downstream ecology, they can make money once and for all and sit back and relax.

When it comes to domestic Internet platforms, they are roughly divided into e-commerce (such as Taobao, Pinduoduo, and Meituan), information flow (Tik Tok, Toutiao, and Baidu), and local services (Meituan and Dianping).

I used to work as a technical developer in a large company. Later, I left home to work there when the company laid off some employees. Now it seems that no matter what I do, I can’t avoid the platform curse, and I am trying to get rid of this model.

I asked: Why?

The other party said that asset-light entrepreneurship sounds good, but in reality it is stepping into a preset finite game.

Among the domestic e-commerce platforms, no one can say that they have a deep moat. What consumers pursue is nothing more than "more, faster, better, and cheaper". Taobao represents "more", JD.com represents "faster", and Pinduoduo represents "cheaper". There is no uniform standard as to which one is better.

This competition has forced platforms to engage in price wars and continuously optimize services to please consumers and prevent their market share from declining.

I wanted to sell "espresso" online, but when I searched online, I found a lot of them. If I wanted to attract more users, I had to lower the price and spend more money on advertising. In this environment, if there is no platform to support merchants, there will always be competition between the big fish eating the small fish and the small fish eating the shrimp, and it will be difficult to escape.

Foreign markets are different from overseas markets.

Overseas, Apple and Google have accumulated a large amount of resources on the supply side (software developers) and almost occupy a monopoly position in the global market on the demand side (i.e. end users).

This means that if they want to launch a new operating system, they need to consider whether they can migrate software vendors and users around the world to the new system; this is relatively easy for users, after all, they are always looking for new things.

However, the supply side (merchants) and demand side (users) of domestic e-commerce platforms are different. Merchants (most merchants) always want to seek sales channels with lower traffic costs.

For users, they pay more attention to where the price is cheaper and the service is better. Therefore, the moat of e-commerce platforms is not as deep as that of Apple and Google . "Value for money" will always be the survival rule of the retail industry.

As a new entrepreneur, opening a store online is not sexy. You will always be involved in endless price wars. It seems that you have the right to raise prices, but in fact, the user's mind has been anchored and it is difficult to change.

02‍

I then asked: Wouldn’t it be nice to join a store in a second-tier city and be a hands-off manager?

The other party said: There are two ways to join coffee, beverage, and ice cream brands. The first is to operate according to the brand's standardized process and earn money from labor costs.

If you were asked to open a Mixue Bingcheng franchise store in any of Lijiang, Gansu, and Chengdu, do you think you could make money? The answer is, not necessarily.

If you calculate carefully, you will find that it may take two years to get your investment back, considering the brand management fees, franchise fees, equipment fees, rent and necessary working capital.

Although big brands will provide operating subsidies, overall, even after the investment is recovered, based on the inherent customer flow around the store, the maximum amount of money that can be earned in a month is the salary of one to two people. Remember, the salary of one to two people is two years later.

Therefore, from a business perspective, for individual business operators, joining a brand has a greater risk tolerance. After investing a sum of money, it takes a longer time to invest. Once the investment is withdrawn, the sunk cost will be greater.

The second type is that you help other people standardize their brands, and the headquarters makes the money.

What does it mean?

Let's think about this question: Why would a brand that is in its growth stage suddenly choose to open up franchise opportunities at a certain moment? On the one hand, because a certain hot event or a specific product suddenly became popular, business opportunities are more expensive than traffic.

Similar to Gansu Malatang and Zibo Kebab, how much money can a kebab shop make in a day? If it is open for franchising, one quota can be sold for 30,000 to 50,000 yuan, isn’t it very attractive? Merchants with strong awareness can make money quickly by opening up franchising immediately after obtaining trademark copyrights.

On the other hand, some franchise brand operations actually involve capital operations. However, this situation is more like a "capital bureau" that attracts you to join through incompletely transparent and misleading information.

Some time ago, a friend of mine joined a coffee shop brand in the south. He opened a store in Shaanxi. When he visited the store before joining, he found that the business was quite good. Later, after investing 500,000 yuan and opening the store for half a year, he found that the headquarters used the franchise fees collected to maintain the operation of several model stores.

Is this a huge lie?

In other words, this kind of "game" is not really about good business, but it is about showing you a beautified model store at the beginning, which makes the brand operation seem very successful, but it is actually for the purpose of getting franchisees to pay money.

There is another type that has a chance but is less likely to exist, similar to the food snack "Kuafu Fried Skewers".

The brand entrepreneur did not intend to go the franchise route at the beginning. After discovering an opportunity in the market, he decided to operate independently. It happened that the business model matched the overall consumption trend of the market, and the business grew.

At this time, capital sees the opportunity to intervene and push the brand towards standardization and scale; in this case, franchisees who join early can usually make a profit, everyone wants to try something new, so the business is naturally booming and the costs can be recovered quickly.

But as the brand moves towards standardization, franchise stores begin to face some difficulties.

For example: all raw materials must be purchased from the headquarters. Although this ensures that the food in each store tastes the same and is of the same quality, it also means that franchisees cannot find cheap sources of goods, and their flexibility is reduced.

Take squid as an example: you can’t buy it from the local market. If there is a problem with food safety, you have to bear all the responsibilities. It may seem that the cost of importing dozens of kilograms of squid each time is not high, but the goods are updated quickly, plus the cold chain transportation costs, the actual cost is much higher than you think.

It is worth mentioning that some franchise brands will notice that if your store has good business every day and high gross profit, they will take a portion of it as commission.

Therefore, franchising is essentially a standardized business model.

Store operation standards and product standards are fixed. This comprehensive standard makes profits very transparent, leaving little room for franchisees to make money, so it is difficult for franchisees to do business.

03‍

What should we do? "We must do self-operation, and self-operation means establishing non-standard processes," said a merchant. I didn't understand, so I asked curiously: Isn't self-operation just doing it yourself? What does self-operation mean establishing non-standard processes?

What's the difference?

He said patiently: "We need to understand two concepts first.

Self-operation means I open my own store and create my own brand (Private Brand, PB for short). I have the final say on how to decorate the store, how to buy goods, and how to sell them . The advantage of this is that I can control costs, ensure the quality of goods, and set prices freely, which is very flexible.

Our investment in opening a store is very small. Some of us have houses at home and do not have to bear the store rent. The decoration styles are different. Some are more like internet celebrities' check-in styles, and some have a small courtyard as soon as the entrance, which can be used for friends to gather and hold parties.

As for non-standard products, they refer to specially customized products and services that do not follow the routine. They are tailored to customer needs and are not restricted to standardized specifications. But you may not have thought that the real secret to making money lies in non-standard products.

Take coffee for example: In Guizhou, a cup of coffee is considered a non-standard product. Compared with big brands like Luckin Coffee, it seems to have no advantages on the surface, but many coffee shops will try their best to innovate their menus in order to attract customers.

For example: There is a coffee shop at the foot of Fanjing Mountain in Jiangkouxian. Their signature coffee is 'Zhe Er Gen Americano', which is very popular. It was very popular last year. Many people came from Ningbo to taste it. You may rarely see it in Beijing.

We will update the menu at any time and replace items that are not selling well. Franchise stores cannot do this. Except for a few fixed items, all other items in the store are best-sellers.

At night, we will transform the trunk of our car into a small cafe, equip it with a coffee machine, cup washer, etc., and hang the store name and menu board on the outside of the car, so that we have a mobile coffee cart. Even if we don’t have a car, we can transform a tricycle and sell coffee near home. If we are lucky, we can earn 1,000 yuan a night.

Therefore, although big brands also have seasonal special products, the update speed and profit margin cannot be compared with private brands, not to mention mobility.

Another point is: the issue of regional adaptability.

Mixue Bingcheng lemon tea sells very well in Beijing, Shanghai, Guangzhou and Shenzhen. It is priced at 4 yuan, which can attract many customers, but it may not be that attractive here.

Our store has several special drinks, including a tea made with the local specialty chrysanthemum, which may not be common outside the province; and the cup of sea buckthorn iced American coffee you are drinking now. Sea buckthorn is a wild fruit that grows in bushes and is rich in vitamin C. Paired with Ethiopian cold brew coffee, pineapple and passion fruit, it has a unique Guizhou flavor.

The cup of "Wumeng Mountain Outside the Mountain" just now is a spiced drink made from the local Litsea cubeba in Guizhou. It tastes like Alpine candy and has a very popular taste. You may not be used to it in Beijing.

Hearing this, I realized that maintaining market insight is the key to doing business. This cannot be felt by sitting in the office, but requires personal experience and feeling, and at the same time, a perceptual understanding of new things.

After all, for self-operated stores driven by creativity, a more flexible operating mechanism means higher money-making efficiency.

04‍

So, is the combination of self-operated and non-standard products a growth trough for brands? I haven’t figured it out yet. However, I have observed some interesting things: I went to Chaoyang Joy City some time ago and when I went up to the eighth floor, I noticed many niche brands, such as Aichao Yogurt, Chicha Sanqian, Gulugulu Coconut Water, Chalixiong, and Mei Ni Bu Ke.

Usually, we classify brands quite simply, dividing them into luxury, light luxury and mass consumption according to their grade, and into leisure and entertainment, learning, beauty care, etc. according to the functions they provide.

When we dig deeper into the expertise of a field, we will find that there are more subdivisions between each category and level. Take the retail industry as an example, the trend has become more and more obvious in recent years.

In the field of sports brands, brands like DESCENTE, ON, and Lululemon have emerged; in the catering industry, both taste and function are constantly deepening. For example, there are restaurants specializing in grilled fish and oysters.

In the development of competition in any industry, professional segmentation and deepening are inevitable trends. It is the optimization and upgrading of industrial structure and also reflects the inherent law of economic and social development. Behind this law, there are two more obvious points:

1. Segmentation of population groups

In modern life, people play two roles: the existence of natural life and a node in the social network. If a person's behavior is only to meet basic survival needs, then life is just the basic pulse of life.

However, once behavior begins to build interpersonal relationships and influence others, it will be sublimated into a part of urban life and become a way of social interaction.

Many urban complexes and shopping centers are now promoting this kind of concept, which is actually an interpretation of the function of commercial space; for example, trendy bars, escape rooms, party halls, etc.

2. Subdivision of transformation efficiency

In the past, business operations were focused on batch operations, which improved overall efficiency. For example, if a brand opened 1,000 chain stores, its fulfillment and standardization capabilities would be higher. Now it is different. Opening many chain stores does not mean that customers can be converted efficiently.

There are many chain fruit stores near my home, such as Baiguoyuan, Guoduomei, Yilixianguo, etc., but the extent to which they attract customers is similar to that of the small fruit vendors at the entrance of the vegetable market next door.

You might think that street stalls are popular because they are cheap. In fact, many people value the quality assurance of chain stores and are willing to spend more for a better shopping experience.

In other words, consumer demands are more diversified. They care not only about price, but also about quality, experience and other factors. This means that conversion efficiency is becoming diversified and not just a test of price competition.

You see, people want more and more things, and the methods of attracting customers are also becoming more and more diverse. And what about non-standard business? It happens to be a part of the process of satisfying diversity.

In summary, business segmentation is intensifying.

If consumption was driven by a single unique selling point in the past, then in the future, any field will become a jack of all trades; everyone will start to go deeper and deeper, demonstrating outstanding capabilities in all dimensions.

Author: Wang Zhiyuan

Source: WeChat public account: Wang Zhiyuan (ID: Z201440)