Editor’s note:
In the third year of the epidemic, business has moved from offline to online, but business operations still face life and death problems.
How to do business in the post-pandemic era? How can brand merchants shape their own “vitality” in the process of digitalization? We launched the special topic “Digital Vitality”, hoping to explore the nature of digital business operations for businesses.
The rise of mobile data technology enabled digitization to develop in 2016-2018; the 3-4 years of the epidemic from 2020 to 2022 directly accelerated the “digitization” process of all enterprises. Whether it is a large, medium-sized, or start-up enterprise, they are all engaged in “digitization”, investing a lot of money to build APPs, buy traffic, and attract groups, and the whole family bucket package will not fall. It can be said that it is “going hard and fast”, and a good one is making great progress.
In the early days of digitalization, companies did taste the sweetness. However, as online traffic becomes more and more expensive, the epidemic and the slowdown caused by the new economic cycle make it more and more difficult to do business, and digitalization is not a panacea. Businesses that blindly follow the trend are stuck in a dead end. Failed attempts abound. For example, a leading beer brand has carefully created a code scanning activity: inviting Wang Yibo to endorse, increasing the bonus by 3 times, using 20% of the bottle to promote, and inviting a public relations company to do marketing planning… However, after some operations, the code was finally scanned. rate is extremely low. During the entire activity, they focused on technology and tools, but ignored the most critical issue – the interests of the executive layer, and they were not closely connected with the terminal stores; for example, small and medium-sized enterprises blindly built APPs, but they could not support enough installations The volume and download volume have been losing money year after year; in addition, some catering companies have pulled a lot of communities to shout every day.
The key that is overlooked by many people is that the original intention of enterprises to do digitalization is to reduce costs and increase efficiency. However, many companies have fallen into the misunderstanding that digitalization is simply equivalent to playing with traffic, or that digitalization is a private domain. Such blindly following the trend and cookie-cutter operations will even lead companies to a point of no return and “die faster.”
In fact, digitization is essentially just a tool, and the test behind the tool is the change of enterprise organizational capabilities, etc., and the core is to return to customer value. The digitalization of enterprises has entered a deep-water area from online transportation to building groups, attracting people, and refined management of user assets. However, we found that the business book dogma cannot actually solve the problem. The digital adaptation solutions required by enterprises at different stages of development are very different. Therefore, the era of a set of SOPs has passed.
It’s time to revisit digitization.
In the post-epidemic era, extensive management has come to an end
The epidemic has entered its third year, and the impact on consumers’ consumption concepts and consumption patterns is irreversible. The frequency of consumption has decreased, and the money in their pockets has become tighter. The result of this change is that the business environment of merchants has undergone tremendous changes. The most obvious point is that the cost control of merchants has become stricter. Therefore, every budget must be spent on the cutting edge, and the mode of saving food and clothing is turned on.
“One of our lactic acid bacteria customers said that this year’s budget is very hard,” Zhou Cong, co-founder of Juhui Technology, a service provider that provides small program development and agency operation solutions for brand owners, told Geek Park (ID: geekpark) that under normal circumstances, FMCG companies make budgets twice a year, one is a large budget for the future at the end of the year, and the other is a small budget for the whole year at the beginning of the year. “It’s difficult for me to make budgets and plans now,” the client told Zhou Cong frankly, “If I write a 10% increase this year, I don’t believe it myself.”
In the past, the marketing department in the enterprise obtained the budget through planning, but now every penny spent needs to be linked to the income.
Zhou Cong pointed out that 85% of the fast-moving consumer goods in the market currently have “one code for one item” (Editor’s note: One code for one item refers to the expectation that anti-counterfeiting, traceability, marketing, and digital operation can be achieved by assigning codes to products. Wait). Three or four years ago, when Juhui Technology provided brands with one-item-one-code service of smart packaging, few brands paid attention to the sales conversion brought about by it. However, since last year, the brand side has gradually put forward new requirements. The original one item and one code can only be considered a success if it can drive physical sales, and can also make plans within the enterprise and get the relevant budget.
“ If you can’t, you won’t get the budget , “ Zhou Cong said.
In addition, he observed, “Many companies will put 10% of their business in emerging channels. If the threshold is low and significant results can be achieved, then companies will continue to pay attention to this emerging channel, but if the 10% If the business affects 90% of the core business, it will be cut off immediately.”
After all, in a very difficult operating environment, the first consideration for companies is how to survive.
The second change is that cookie-cutter, stereotyped digital operations no longer work.
At the beginning, enterprises wanted to reduce costs and increase efficiency. Some enterprises thought that all sales link problems could be solved through private domains, small programs or communities, avoiding the need for traditional e-commerce platforms. deduction points paid. However, many companies have gone into a misunderstanding, interpreting digitalization as simply playing traffic or making private domains, and simply interpreting private domains as making APPs and pulling groups.
In terms of the community, some leading companies with abundant funds and resources will issue a large number of coupons to attract customers through the community, which is still effective, but most start-up companies have not so high gross profit, and the discount they can give to consumers is not strong. high. In this case, enterprises need to spend a lot of manpower to operate the community, interact in the group, and often pay attention to the group chat information , which not only wastes manpower, but also adds trouble to consumers. The founder of a company said bluntly, “ I don’t recommend catering companies to do pure community operations! The input-output ratio is too low! “
In fact, the life cycle of a community is quite short. In the days when the group was just established, users were relatively active, but gradually the “Do Not Disturb” mode was turned on. Therefore, it is easy to pull the community, but it is more difficult to really operate well.
Moreover, we calculated an account and found that the cost of private domains is much higher than expected. According to statistics, the initial investment cost of a big brand to make an APP private domain may cost about 5 to 10 million. In addition to the initial development and construction costs, operations are also not a small expense. In addition, the conversion rate of private domains is not higher than that of e-commerce platforms. According to the level of 10% profit margin of the e-commerce platform, if a brand invests 2 million in the early stage, the sales need to reach at least 20 million before it can be recovered. Because the user needs of the C-side are more dispersed, it also brings higher operating costs. For example, according to media reports, a community of seesaw coffee needs 5 customer service personnel to maintain, and the cost is not low.
In addition, each user’s needs are different. Some consumers need discounts, while some consumers want to show off in addition to discounts. For example, after purchasing a product, send a circle of friends or a small red book to share with friends .
Therefore, private domains are not one size fits all, and merchants spend a lot of money to move users from offline to online, and then they don’t think about how to continue to operate, and the sunk costs are huge. “ Each different enterprise has to choose the most suitable methods and tools in different life cycles. Some things are very good, but they are not suitable for you. They will only reverse you and lead you to the road of no return . “ Zhao Liang, COO of the tea brand Tashanji, pointed out.
Therefore, as merchants begin to frugal and pursue a higher input-output ratio, this also means that the era of extensive operations such as digitization = traffic or digitization = private domain or group pull is completely over.
Digital “ don’t wait to die “ , how to refine “ make a living “
The end of the era of extensive operations does not mean the silence of digital operations. On the contrary, the era of refined operations has officially opened, making digitalization more important, which can be said to be “must do”.
“ The growth of the epidemic has strengthened the willingness of enterprises to digitize. 90% of enterprises have deployed Alipay and WeChat at the same time. Our business growth rate this year has increased by 200% year-on-year.” Wang Youyun, founder of Qimai Technology, which mainly serves the digital transformation of offline stores, told Geek Park, the willingness of enterprises to digitally transform is getting stronger and stronger, and everyone gradually realizes that digitalization is a must-do, whether it is to create conventional products or popular products.
At this stage, in many traditional FMCG companies, the proportion of online business is very low. The online business of a FMCG company accounts for less than 1%. However, even if the business volume of online business is small, it is a plate that enterprises have to do. In fact, whether it is O2O or private domain, as long as it is a capable enterprise, it has already begun to deploy online business, testing the waters on various platforms, and looking for new business increments.
“We have a saying internally that if we don’t do digitalization, we can live for 20 years, but if we do digitalization, we can live for about 25 years.” A relevant person in charge of a leading fast-moving consumer company said. In fact, enterprises already know that digitalization will not bring about radical changes, and the introduction of digitalization will bring more complex management difficulties to enterprises .
Especially for small and medium-sized enterprises, digitalization is more about life cycle and survival.
“ From the perspective of grassroots entrepreneurship, digitalization is not essentially a high-rise building, but a necessity for survival, and there is no other possibility . “ Kan Oli , founder of 8 Bit Coffee, took a Yunnan restaurant as an example: This restaurant has never been worried about Attendance, always have guests. However, when the epidemic suddenly hit, they couldn’t find the customer, and they had no choice but to look for the mobile phone number left by the customer when they applied for the stored-value membership card. “This is a typical case of trying to digitize because of ‘survival’.”
As far as Obit Coffee itself is concerned, digitalization is also the bottom line of survival. This is a tens of millions of coffee brands. It imports coffee beans from abroad to make coffee products and sells them in an e-commerce model. However, no factories can be built near Beijing. Once there is smog, production will be forced to stop for a week. In addition, if the warehouse is located in Beijing, the cost is also very high. Therefore, Babit Coffee must achieve zero inventory management, complete production within 5 days, and do a good job of pre-judging the supply chain, customers placing orders in advance, and problems in transit.
Therefore, they built factories and warehouses in Yunnan, Handan, Hebei and other places. They adopted the ERP system from the warehousing of coffee beans to the production, and adopted the OA system from the scanning code of the finished coffee products to the internal use of the OA system, and used CRM to manage customers. The system connects all factories and warehouses through digital means, and manages users through CRM, Tmall Taobao and other channels. “These are all things that can’t be calculated by fingers, this is unrealistic.”
At the same time, with the deepening of digitalization, brands need to have a clearer understanding of digitalization. First, digitization is not simply equivalent to the private domain, but must consider the whole domain ; in addition, enterprises need to comprehensively refine their operations. The test is how to recognize the differences between different fields and platforms, and how to deal with users with different portraits and behavior habits. Conduct differentiated operations, how to achieve the unification of online and offline experience, and reduce costs and increase efficiency for enterprise operations.
If digitization is regarded as a sphere, then the private domain is a point in the sphere, and the relationship between the two is the relationship of containment and inclusion. The private domain is only one’s own courtyard, not the whole world. In the past, everyone focused on the private domain, but now, we can’t just focus on the private domain. After all, users are scattered on various platforms, and companies must serve consumers and users on various platforms well and create connections in order to run their business well. That is to say, what an enterprise needs to do is “ global “ , using all channels, resources, public domain and private domain, online and offline, even domestic and foreign, within the scope of the enterprise’s reach.
“After the epidemic, every enterprise needs to think about how to find auxiliary positions or future positions while operating the main position. This is the whole area.” Heshanji COO Zhao Liang analyzed.
Of course, ” The universe is bounded, not an infinite universe. Where there are people is my market, which is not realistic. The boundary of the universe is when you see a hedge between compound interest and costs, and if the increased cost is more If it is high, it must be the limit.” Kan Ouli said, “In the process of digitalization, we will consider the operating cost of the platform, the cost of listing the goods, the maintenance cost in the later period, and the cost of overall traffic, and finally look at compound interest. effect.”
In addition, how to improve refined management is also an issue faced by enterprises. Although a tea drink brand laid off staff during the epidemic, it increased staff in the growth department and digital department, with the purpose of strengthening refined management.
“In the past, we were in the era of traffic growth, but after the epidemic, extensive management is no longer applicable, and it has entered a stage of refined growth ,” Zhao Liang said. The dividends of traditional e-commerce, official accounts, Weibo, etc. are slowly disappearing, and the cost is gradually disappearing. The rise requires more refined operations. Wang Youyun also found that “after the epidemic, the operation efficiency of all stores, and even the operation efficiency of the entire enterprise, needs to be further refined.”
It is even said that digitalization has entered the deep-water area. For those companies that are determined to face this long road of self-remodeling, what consensus will they achieve in this round of turmoil, so as to promote the digitalization of the industry further?
Epilogue
The three-year epidemic has forced companies to quickly deploy digitalization. Digitization is not just a technology or a tool, its essence is to change the genes, from the thinking of the enterprise to the organization, to the actions, to the genes, and finally to the formation of vitality. As the genes become stronger, the vitality also becomes stronger.
“Digital vitality” is something that enterprises can control by themselves. The ultimate goal is to allow organizations to embrace changes more freely, which is equivalent to forming long-term and ultimate competitiveness. After all, if an enterprise wants to survive in the long term, agility and flexibility are very important, and digital operation can help these enterprises to be more agile and flexible against various risks.
Compared with the previous “digital competitiveness”, more and more enterprises need to obtain real vitality through digitization, so that they can live with stronger vitality and go further.
How do those companies that are rising against the trend do digital and refined operations? Stay tuned for the next article.
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