Original link: https://www.latepost.com/news/dj_detail?id=1351
Entrepreneurs who are prepared for danger in times of peace will call on employees to prepare for the winter every few years, but when Ali CEO Zhang Yong said at the earnings conference in August this year, “It’s time to find Chaoyang Industry”, the changes seemed to be much more specific.
In the first half of this year, Alibaba’s revenue grew at zero for two consecutive quarters. Since the launch of Taobao in 2003, China’s largest e-commerce platform has stopped for the first time. JD.com has lost money in three of the past four quarters. Pinduoduo’s sales and profits are growing, but it has also begun to cut marketing expenses and adjust its expectations for the future.
When the environment is particularly good, everyone in an ecosystem lives well. China’s online retail channels sell 13 trillion yuan of goods a year. From the e-commerce platform to the large and small merchants on the platform to the factories that produce goods, from the employees at all levels of the platform to the various companies that provide services for the merchants, almost everyone can make money, but some people earn more and others earn more few. The number of agency operating companies that help big brands operate e-commerce flagship stores has grown from more than 2,000 to more than 100,000 in the past 9 years; according to iiMedia Research, as of 2019, the market size of e-commerce agency operations has exceeded 200 billion yuan.
When e-commerce growth slowed down, people saw how the chill was unevenly distributed. This year’s 618 promotion, the most famous and best products can still maintain a growth of dozens of percentage points. Platforms and brands can still maintain profits, but downstream players may not. The operating company felt the chill most directly.
Alibaba still has a profit of tens of billions of yuan every quarter. Baozun E-commerce, the largest agency operating company, had a net profit of 150 million yuan in the first half of last year, and lost 190 million yuan in the first half of this year. International beauty brands have continued to grow in China this year. Lirenli, which mainly operates beauty brands, saw a 97% year-on-year decrease in profit in the first half of the year.
Most operating companies need to purchase branded goods in advance. When people’s consumption desires are cold, the goods become heavy inventory pressure, and the operating companies will meet the impact before the brand.
The experience of entrepreneurs in the agency operation industry is almost the epitome of the combination of the Internet and the real economy in China. They participated in building and perfecting a new sales channel at a speed that they could never imagine, helping the Chinese to unleash their enthusiasm for consumption. Success came so quickly that the business could grow from nothing to a multi-hundred-billion-dollar industry in 14 years.
In just a few years, they have experienced hot and cold switching again. The previous model no longer has market space, they must face reality and find a way to transform.
An industry that has been rewarded by the times
It only takes ten years for the generation operation industry to transform from scratch to the key node, and this is precisely the key ten years for China’s e-commerce to take off from brewing to complete take-off.
Almost every founder of a top-ranking agency operating company has a story of the early days of the business: fertile market soil, a group of capable and motivated young people poured in.
It was an era of “heroes don’t ask where they came from.” A witness described that time: “Two people, three computers, and one company opened.” Their diligence was rewarded by the market.
A general manager of an acting operating company graduated from college in 2011 and started e-commerce operations. One year later, he managed three stores and more than a dozen people; he has managed regional branches by himself in the third year of graduation; now he is the management of a listed company. “In the first two years, we couldn’t find a few undergraduates in the whole company. I really realized what choice is greater than hard work.” He said.
That startup boom started in 2008. That year, when the global financial crisis broke out, Jack Ma wrote an article “Winter’s Mission” and went to Japan to discuss with Kazuo Inamori how to survive the difficult environment. At that time, Taobao had been online for five years, but it did not charge fees and was still losing money.
A month later, Ali announced the “big Taobao strategy”, merging Taobao with the advertising platform Alimama. Soon, the predecessor of Tmall, Taobao Mall, was launched. Ali shifted the focus of online retail from white label to brand.
At first, it was not very smooth. The store was used to free, and they had to pay more to enter Taobao mall. They were reluctant. Big brands question the unclear white-label products on Taobao and worry that e-commerce promotions will disrupt their offline price system. It was at this time that a group of small companies that provided services for brands were either attracted by Ali, or saw opportunities for themselves, and gradually pulled brands into Taobao and Tmall.
There are a large number of industrial parks and industrial bases in Guangdong. Around 2013, the sales staff of many operating companies were there to sweep the buildings floor by floor, handing over business cards one by one, saying that they only needed a monthly service fee of 10,000 to 30,000 yuan to help It operates an online store and is responsible for sales operations.
The most well-known building sweeping company in the industry has more than 800 employees, 700 of which are sales staff, and earns tens of millions a year through the method of “making a fortune and taking a fortune”.
The first cooperation between an agency operating company and an international brand is to sell a men’s serum. Around 2010, the concept of men’s care had not yet emerged. The products were distributed in Watsons stores across the country, and several bottles could not be sold within a week.
After the cooperation, the company held a promotion and sold more than 10,000 bottles of essence, which was the amount of offline for a year at that time. “When the traffic is growing the fastest, as long as you have hands and feet, the products can be active and basic user analysis can be done, so you don’t have to worry about not being able to sell.” Wang Liqian (pseudonym), a senior executive of the agency operating company involved in this project recalled.
That cooperation reflected the mentality of many brands at that time. They did not regard e-commerce as an important channel. Some wanted to clear inventory, some wanted to test consumer feedback, and some wanted to collect data – selling in supermarkets, very It is difficult to know exactly who and when they bought their goods.
“In fact, the agency operation is only a little faster than the brand. When the brand learns to open a store, the agency operator will be able to create a page; when the brand is more able to create a page, the agency operator will first master the streaming skills.” Wang Liqian said, “This The core of the industry is to run ‘two steps’ faster than the brand.”
Tmall users and growth momentum have grown rapidly in the following years, almost doubling every once in a while. From fiscal year 2012 to fiscal year 2018, Alibaba’s GMV has risen from 663.4 billion yuan to 4,820 billion yuan.
Zheng Zepeng and Zhang Miaomiao, the two founders of Maihe, the acting operation company, both worked in the marketing department of Willay Group, the parent company of the Jiaqing daily chemical brand Willows. Zheng Zepeng was the channel marketing manager, and Zhang Miaomiao was the brand manager.
In 2009, Willus ushered in an unconventional opponent: Blue Moon, a new player valued by Hillhouse Capital, who invested heavily in promoting the brand, and invited Guo Jingjing as its spokesperson, which almost occupied the TV commercials and outdoor advertising at that time. advertise. The “Detergent Detergent War” comes along with the upgrade of Chinese household consumption.
Willay Group also sees laundry detergent as the next most important market. In 2011, Zheng Zepeng, who had just joined the company, was tasked with creating an official website for Willows. He also opened a store in No. 1 store, but just wanted to be a display page and had no expectations for sales.
After going online, the store sold more than 200,000 yuan of laundry detergent in a single month. “Very surprised,” Zheng Zepeng sighed. At that time, the best-selling store of Willows was the Carrefour supermarket in Gubei, Shanghai, whose monthly sales peaked only at over 150,000 yuan.
The sales volume of No. 1 store increased to 300,000 in the second month, and exceeded 700,000 in the third month, a 100% increase from the previous month. “It’s shocking. 700,000 to 800,000 sales can only be achieved by our entire chain supermarket system, and a virtual store online can do it.” Zheng Zepeng said.
Zheng Zepeng and Zhang Miaomiao, who have been working on marketing and advertising for many years, have the same feeling: E-commerce not only has the function of publicity, but can also be directly converted into sales. The efficiency of the previous advertising business is completely incomparable.
After that, they had a bold decision.
The birth of a new industry helps the e-commerce platform to improve the system
Just like digging into a new continent, Zheng Zepeng is eager to promote e-commerce within the group, and even faster.
He also opened a Willows store on Tmall. Tmall does not have a warehouse, so he has to handle the warehousing and delivery by himself. The marketing department is not a sales channel and cannot purchase goods directly from the factory, so Zheng Zepeng applied for the transfer of goods in the name of samples and sold them to customers on Tmall.
When the goods arrived, Zheng Zepeng and his colleagues went to the parking lot and moved them upstairs, piled them up in the marketing office, filled in the form and sent them to express. A bottle of laundry detergent is often 3-4L, and customers often buy several bottles at a time. Zheng Zepeng sends more than 100 orders a day – this is also the limit that one person can deliver.
After insisting on it alone for nearly half a year, Zheng Zepeng proposed to the Willay Group that he should set up an agency operation company himself and become the agency operator of Willows, and Willows would supply him with the lowest price for retailers. As a result, Maihe, one of the earliest generation operating companies in the Jiaqing category, was born.
When Maihe was established, Zheng Zepeng and Zhang Miaomiao only recruited two employees, one for customer service and one for design. In addition to taking into account the new, operation, delivery, unloading and other matters, after get off work, the two people also incarnate as customer service “Xiaowei” and “Xiao Shi” to handle customer consultation and after-sales needs.
Unable to find the design, Zheng Zepeng brought in a college classmate who was already a design director in an advertising company to cut out the products one by one, and was busy for two nights. “It feels like I went back to when I graduated from college, helping those clients in Foshan to cut out the crystal lamps.” University classmates sighed to Zheng Zepeng. They started a business in a commercial and residential building, and they always encountered difficulties when crossing the river by feeling the stones. They often ran to the balcony to feel melancholy.
The instant traffic brought by the activities on Juhuasuan and Gold Rush Coins makes the sales very impressive. That’s when Taobao’s traffic is the cheapest, and there is no need for promotion. As long as you can participate in activities, you can guarantee sales that exceed the delivery capacity of a brand. Compared with the shelf restrictions of offline supermarkets, there is almost no upper limit on the scale of online sales. Zheng Zepeng and the others are crazy to sign up, participate in platform activities, and grab traffic resources.
Since I don’t know the specific selection criteria, I can only change the category report. And the process is completely manual. The merchant needs to fill in the description, where is this good, and how is the lowest price. Samples have to be sent to Hangzhou, and Taobao’s “Xiao Er” will manually review them. After a process is completed, it may take half a month, and the merchant gets a reply, yes or no, there is no reason. Mai and the current director of operations were in charge of registering for the event at the time. He joked that he would always check his blood pressure before opening the event registration results.
Online channels show different characteristics from offline stores, which once confused participating merchants. Sometimes, products such as laundry detergent, hand sanitizer, and disinfectant that sell best offline cannot be included in the event list, but the marginal product washing machine tank cleaner is unexpectedly selected. At that event, Mai He prepared a total of 3,000 boxes of washing machine tank cleaner, which were sold out as soon as they went online.
Although they have not experienced a complete Internet business model training before starting a business, Zheng Zepeng and the others have understood the so-called “scale effect” and “long tail effect” in this industry in practice.
Air conditioner cleaners and washing machine tank cleaners that cannot be sold offline have become the core products online. In the first year after the establishment of the company, Maihe’s GMV reached 20 million yuan.
Because it started almost at the same time as the e-commerce platform, the operating companies have also witnessed the continuous improvement of the platform. The agency operating companies that participated in the annual big promotion in the early years were deeply touched by the imperfection of the platform system, because on the day of the big promotion, various problems would always break out.
Double 11 was launched for the first time in 2009. Only 27 brands participated and sold about 52 million yuan of goods. In the second year, it exceeded 900 million yuan, an increase of 18 times. That was the beginning of Double 11 becoming a festival, and it was also Ali An important step in the complete acceptance of the brand’s e-commerce.
In 2010, Wang Liqian, who participated in the Tmall Double Eleven Shopping Festival for the first time, still remembers it very well. This is their first time participating in Double Eleven and selling L’Oreal products. L’Oreal’s store goes online at 12:00 a.m. and sells out at 4:00 a.m. Due to lack of preparation, there is no way to restock at 8:00 the next day. The orders that had already been placed could not be delivered. At that time, they used a dot-type printer to print out the invoice, and more than a dozen machines continued to print, until they overheated and smoked.
“I’ve been posting, I’ve been posting, and I can’t finish it.” It took more than 40 days to send out all of them.
In the first few years of Double Eleven, Taobao, Tmall, logistics companies, brands and their operators continued to stay up late to work overtime, hire extra staff, improve processes, and upgrade technology platforms to catch up with consumers’ expectations.
By 2014, when Alibaba went public, the number of participating brands in Double Eleven had reached more than 27,000, and the GMV of one day had reached 57.1 billion yuan. With the efforts of all participants, the platform has established a more complete operating system. Now the big promotions on multiple platforms are in the scale of hundreds of billions of yuan, but consumers will never see the system crash again, and it is unlikely that there will be brands that cannot send out the goods within 72 hours.
The glorious beginning of the agency operating company is also the beginning of the end of the company’s good days
2014 is the second spring encountered by the agency operation industry. That year, Alibaba went public in the United States, creating the largest IPO since the establishment of the New York Stock Exchange. That year, the transaction volume on Tmall’s Double Eleven exceeded 57.1 billion yuan, setting two Guinness World Records.
Foreign brands have poured into Tmall since that year, spawning and feeding more acting companies. At that time, the Chinese departments of these foreign-funded enterprises did not have the authority to recruit a large number of people and invested in e-commerce channels where the headquarters were not so sure. At that time, the competition of e-commerce was not so fierce. The brand accumulation and product power of these enterprises ensured huge profits for a long time, and they were willing to share part of it with downstream distributors and agents.
However, there is no solid friendship between brands and generation operators. The beginning of the prosperity of the e-commerce platform is also the beginning of the crisis in the agency operation industry.
In mature offline channels, beauty cosmetics and luxury goods have firmly controlled the sales links in stores facing customers. L’Oreal’s counters in shopping malls are handled by its own employees. Burberry employs nearly 10,000 people, mostly store salespeople.
The better the performance of the online channel, the more the brand side attaches importance to it, and the more inclined it is to take back the agency operation right. Proxy operation is an industry with a limited shelf life.
From 2017 to 2019, L’Oreal, the world’s largest beauty group, took back ten brands including L’Oreal Paris, Kiehl’s, Lancome, Biotherm, Shu Uemura, Maybelline, Vichy, La Roche-Posay, and Serico from the two acting companies of Beauty and Beauty and Youke Makeup. The management rights of the remaining brands have been acquired by the acquisition of Guangzhou Baiku, an agency operating company, to become the L’Oreal e-commerce operation center and become self-operated. In the past two years, L’Oreal has withdrawn the rights to operate all brands.
One.net Yichuang used to be the largest agency operator of Pechoin, a domestic beauty brand. From 2015 to 2017, the smash hit Pechoin accounted for 70% to 80% of One.net’s total revenue. In 2020, the cooperation between Pechoin and Yiwang Yichuang changed from a distribution model to a commission-based service provider model, resulting in a 48.64% year-on-year decline in the latter’s distribution revenue in 2020.
As brands settle in faster, the traffic on the platform is not enough. The cost of making products visible to consumers is increasing day by day. “It has to be doubled every year, which is not only expensive, but also the efficiency is not as good as before,” said a practitioner in the agency operation industry.
Industries with low profit margins felt the chill earlier. As early as 2012, after operating the GMV of the Willows Tmall store to 20 million yuan, Willay Group took back the brand’s online store from Maihe and operated it by itself. Brands no longer need to make profits, and the online store base has been built, which can save a lot of costs.
Mai He, who didn’t earn much money from Willows, immediately encountered an existential crisis after being terminated. With the accumulated word of mouth, Mai He got the operation right of Liby Group, but “it is still shipping a lot of goods and making very little money.”
After realizing the limitations of the traditional home cleaning category, they tried to find a breakthrough from the small category.
Zheng Zepeng and his partners worked together to find products with high customer unit prices that have not yet been online, preferably light in weight, in order to save logistics costs. For example, oil presses, coffee machines – but they are easily damaged during distribution and storage; watches – are difficult to scale; finally, they have a chance to get in touch with the German pharmaceutical company Bayer.
With a history dating back to 1863, Bayer is a world-renowned pharmaceutical company ranked among the world’s top 500. Bayer’s best-known product is the non-opioid painkiller “aspirin” that has had no rivals for more than half a century. Initially, it was Bayer’s environmental science business that established the link with Maihe.
The person in charge of Bayer China’s environmental department found Maihe, discussed the opportunities in the e-commerce market, and commissioned Maihe to distribute some insecticidal products. The efficacy of these products is unquestionable, but Bayer usually sells it to professional insecticide companies in the form of original drugs, not for home users. At that time, the domestic deworming industry was considered mature, and Chaowei, Radar, and Lanju each had their own place. However, these brands were all aimed at mosquitoes, and few brands promoted cockroach medicines sold to ordinary consumers.
Cockroach killing products have not yet been branded online, and Zheng Zepeng speculates that this may be a breakthrough for Maihe. They purchased the original medicine from Bayer, re-planned the product, launched a small-dose insecticidal product for household use and designed the packaging, and named the main cockroach medicine among them “Baidex”.
An insecticidal raw material from overseas and aimed at companies has become a consumer brand. Although the unit price per customer was three times that of similar products at that time, through combined sales and Bayer brand endorsement, it was still the most sold among its peers, increasing for 4 consecutive years, with annual sales from 40 million yuan to 250 million yuan. By 2021, “Bai Mo Shi” will bring 380 million yuan in revenue to Maihe in one year.
From being a distributor for Welsh, to purchasing raw materials from Bayer, and polishing the Bayer brand, a small team completed the initial accumulation of product capabilities. For an agency operator, the safest position is to operate a brand’s non-core business that can bring profits at the same time. But this kind of opportunity is rare, and the cooperation between Maihe and Bayer happens to be in such a relationship.
The brand transformation road of the operating companies
Mai and Qing, the symbiotic relationship formed with Bayer, is not easy to replicate. Long-term survival requires the ability to create a brand. In 2016, Maihe stopped all the agency operations other than Bayer’s deworming business and began to fully transform its own brand.
The two decided to start in the pet field, incubate their own brands, and founded the pet brand LORDE. At that time, there were not so many pet cats in China, and the owners who were willing to spend more for cats were no more than 6 million. However, what Zheng Zepeng and Zhang Miaomiao saw was the booming foreign pet market. Considered as a member of the family, according to the American Pet Products Association (APPA), the market size of the pet industry in the United States has reached 48.35 billion US dollars in 2010, and the Chinese market must also have opportunities.
They decided to start with the areas they were good at. Cat and dog deodorants and bath shampoos were the earliest products in Lidou, with sales of only 8 million yuan in the first year. This made them realize that in the field of pet cleaning, no matter how good they are, they cannot break out. They must find mainstream categories with higher repurchase frequency and larger scale, such as cat food or cat litter.
At the end of 2017, Zheng Zepeng visited a small production workshop and saw a cat litter that was different from the most common earth sand and wood sand on the market. This cat litter made from waste bean dregs not only has better water absorption and agglomeration performance, but also greatly reduces dust. Because of its white color, workers call it “tofu cat litter”, and the products are mainly exported.
Zheng Zepeng had a hunch at the time that this might attract consumers. They re-adjusted the formula to optimize the performance of the cat litter, and used the workers’ name, “tofu cat litter” when it was launched. The cat litter multiplied Lidou’s sales next year by 10 times to 80 million yuan, and doubled in 2019. That small workshop has now become one of the main domestic cat litter factories.
The success of Lidou also gave Maihe a new discovery: after creating his own brand, he can decide the product form by himself, and as long as he keeps a sense of smell to the needs of consumers, he can find room to play in every sub-scenario. Pet scenes, cleaning, kitchen and bathroom, bedroom, air, etc. can all find cleaning-related subdivisions, which also means that there is the possibility of branding.
Affordable products have limited profits and fierce competition. Consumers, faced with a product that solves the same problem, usually pay more for two reasons, more effective or superior.
Continuing the search for high-repurchase clean tracks in life scenarios, Maihe created a second private brand, Air Funk, which focuses on air purification. In 2017, when the industry still continued to use the form of carbon packs, they launched the first formaldehyde paste developed on the market based on the principle of photocatalyst, which was the first in the category of that year. Later, the personal care brand “Litou” founded by Maihe achieved an average monthly GMV of more than 3 million yuan.
The success of three consecutive brands has made Mai He feel that he has chosen the right track and category, and with certain product capabilities, the road to the brand seems to be smooth sailing.
The hottest window period for new consumption is also coming.
Mai He did not hold back the impulse. At most, 14 private brands were created at the same time, including oral, dietary health, pet food, pet health care, etc.
At that time, the whole company entered a state of enthusiasm, and everyone felt like they were walking on the road of “China’s Procter & Gamble”, which is also a common idea of the same generation of nascent consumer goods companies. The executives are responsible for choosing the industry and betting on the delivery expectations of the product on the ability to find a Jobs-esque product manager.
Transformation of Beauty Makeup on behalf of Operations: A Seemingly Beautiful Business
Beauty used to be the most chosen field for operating companies seeking brand transformation.
China revised its taxation of cosmetics in 2016, abolishing the consumption tax on ordinary beauty products and only levying a 15% consumption tax on “high-end cosmetics”. Previously, all beauty products were subject to a 30% consumption tax. The tax rate adjustment has given Chinese makeup brands a living space.
Domestic beauty brands such as Perfect Diary, Tangerine, and Huaxizi all registered companies and prepared products this year. The fastest-growing Perfect Diary had insufficient funds at the beginning of its establishment, and even did business for a period of time. In 2017, Perfect Diary began to sell self-developed products. In 2019, its sales exceeded 3.5 billion yuan. In 2020, it went on the market in the United States and became a new consumption model for a while.
The beauty industry looks very good, with high profits and a very ideal consumption environment. Chinese people never wear makeup very much, and it has become common for even middle school students, and people are willing to spend time researching makeup. This has allowed the average annual growth rate of China’s beauty market sales to exceed 18% in the past decade, far exceeding the overall growth rate of the consumer market.
The production of beauty products is not difficult. First of all, the raw materials are simple, and even the annual R&D expenses of L’Oréal Group, which is ahead of the industry, only account for over 3% of the total expenditure; secondly, international brands have been produced in China for many years, and the foundry has a complete set of complete products. When the growth of international brands cannot meet consumption, factories naturally need new customers.
The market is big, the supply chain is not a problem, and the operating company knows how to sell goods, which creates an illusion that anyone can make a brand.
Mai He also jumped into it. L’Oreal sold one of its beauty brands, created in 1992, to an Israeli company. In late 2018, Maihe bought the brand from the Israeli company for more than 20 million yuan as the first step into the beauty market.
Maihe wants to make high unit price products. In order to find talent, they moved to Shanghai to build a team and hired Unilever’s brand manager. The raw materials are all custom developed, the patented technology comes from Spain, and the foundry only uses overseas big factories. Everything adopts high specifications. The goal is to make products that are priced three times higher than domestic brands.
Maihe chose a cream with a mature market system and high technical barriers as the first product, and it took a year to develop it. When the new product came out, the beauty market was already very crowded. Other operating companies have launched Meiyitang, Yurongchu, momoup and other brands; the best-selling category on the market has changed from cream to mask. Adjusting the product line has lengthened the R&D cycle by another year.
By the time the mask hits shelves, it will be 2021. At this time, the traffic cost in Taobao station has risen from 5 yuan that year to a maximum of 110 yuan. If you want to rush out among countless similar products, you need to smash traffic. When the project was called off, Mai He had already lost tens of millions of yuan on the beauty brand.
In 2021, domestic beauty cosmetics will also be stopped in batches. More than a dozen brands such as Apinkbaby, Two space, Paiji, Tang Shiyayun, Tuxiongji, CROXX, etc. have announced the closure and clearance one after another, and many of them have received financing. There are also well-known beauty bloggers who have started their own businesses, and most of the affordable brands incubated on behalf of operating companies have suffered heavy losses.
Traffic becomes more expensive and consumption becomes slower. It is clear at a glance who is selling at a loss and who has brand appeal.
On 618 in 2022, the sales of Perfect Diary will be less than half of that of the previous year, and the company’s market value has dropped by nearly 98% from its post-IPO high. Except for a few domestic brands that have been in business for many years, almost all of the top 20 Tmall beauty and skin care sales are big foreign brands, and the more expensive the sales, the better.
The times no longer reward the lucky ones, and consumer goods companies have to take their products seriously
Like most of the generation operating companies of the same generation who rashly entered new fields, Maihe also paid a price. In addition to money, incubating too many brands also distracts the team and reduces efficiency. After the success of tofu cat litter, many pet food and pet supplies companies with R&D capabilities also began to make their own cat litter. In the past two years, mixed cat litter has replaced tofu cat litter as a new hot spot, and the inside pocket is no longer the leader.
“We got the best timing when we went in, but after winning one, we turned to another depression and missed more opportunities,” said an executive at Maihe. The multi-brand parallel also prevented them from continuously accumulating product capabilities.
Last year, Maihe shrank the brand’s radiation range, refocused on pets, fresh air and other fields, and began to continuously invest in research and development. “It’s not difficult to shut down a project. What’s difficult is to do a good job of what’s left. The front line has been shrunk, but the business has to grow, and the resources are focused to be more efficient.” Talking about the biggest change after the business adjustment, Zheng Zepeng said.
It turns out that the development of products is fast, because new opportunities are fleeting. This year, in order to make a cat litter with better deodorization and dust removal, Maihe found more than 30 kinds of materials and did hundreds of tests. This is just the first step. When it was put into production, a vacuum negative pressure dust removal node was added, and self-developed multi-layer deodorant particles were used, “running all factories across the country”, and the new cat litter was successfully first produced.
The first quarter of this year was the most difficult time for Maihe since its establishment. The project was shut down but a lot of inventory was left. A large number of suppliers had to pay back their arrears. The imported raw materials could not be delivered due to the impact of the epidemic. The list of cities where express delivery is prohibited is updated every day. Almost every management team took on the task of clearing and collecting payments outside of their jobs, but no one left. In the first two years, the company’s turnover rate was above 70%.
In May of this year, Maihe ushered in the first simultaneous increase in profit and income; by the end of August, the goal of making a profit of 30 million yuan this year was completed ahead of schedule, and the supplier’s arrears were fully paid off.
The “depression” of products is the same as the “depression” of traffic. For categories that no one pays attention to, the first company to do it can always get high returns. Maihe, who has gone through the whole era of operation from glory to end, has embarked on the road of branding again.
Looking back, the historical mission of this industry is to accompany e-commerce platforms through their rapid growth period. Since then, although there have been big channels such as Pinduoduo and Douyin, there is no such opportunity as Taobao and Tmall. Pinduoduo advocates selling a large number of products at ultra-low prices. Brands are more willing to make profits and clear their warehouses on Pinduoduo, and seldom launch new products, so as not to impact other profitable retail channels. Douyin completely controls the flow of the platform and absorbs marketing expenses into the platform more efficiently.
In the 14 years since its establishment, the agency operation industry has played a pivotal role in accompanying Chinese e-commerce from its inception to maturity.
The gift of the age will come to an end, and it will come when there is no shortcut. But this may be a normal market, and companies that focus on products, operate more carefully, and build brands slowly are more successful.
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