Taking stock of the 4 business models of private domain traffic!

All business marketing models are ultimately for sales! Private domain traffic operations are no exception!

Business models that have no ability to make money are basically unreliable, except that some models are more difficult to make money from, some are more risky, or some simply don't work. Here are a few common business examples:

1. Taojiji’s “financing dream is broken”: The current way to obtain traffic is very simple. Taojiji has taught us a vivid lesson. Through red envelope fission and low-price subsidies, it has attracted hundreds of millions of users in just one year. The development speed is even slightly inferior to Pinduoduo. Of course, the price is the misappropriation of sales funds from small B companies. The financing model that hopes to attract large-scale users is too risky. The only company that can go public is Pinduoduo, but if there is even the slightest risk, it will end up like Taojiji.

2. Ofo’s “dream of taking over”: The twin brother of the trend is capital, but ofo tells us that capital is likely to be a poison. The cost of a single ofo bike is more than 2,000 yuan, and a single ride costs 1 yuan. Regardless of how long it will take to recover the cost, the valuation of unicorns can only get bigger and bigger, otherwise early investors will not allow it. WeWork is a lesson learned. When the valuation reaches a certain level, who is able to take over? Without financing, all that is left is to hold on. A business model that does not have strong self-generating capabilities will ultimately have this fate.

3. Web English’s “calculation failed”: Web English collapsed during the National Day holiday. It was a horrible business event. It seemed incredible. As one of the three major adult English training brands, with training fees of tens of thousands a year and super high gross profit, it collapsed unexpectedly, and even its “Happy Beans Children’s English” was basically bankrupt. The physical stores were really struggling. The core reason was that they did not calculate the accounts well. Insiders revealed: the rent alone was 30%, and the marketing expenses were 50%, not to mention the high decoration and personnel expenses. It was hard not to collapse when they couldn’t even control the basic accounts and costs and had no financing gimmicks.

Of course, there are also some commercial entities that have stood up from these fields, such as Pinduoduo, which successfully attempted to go public, Meituan, which crawled out of the pile of corpses in the war of thousands of groups, and Didi, the originator of the subsidy war. These unicorns have already landed on the shore, but they pursue different goals. Meituan's commission has soared from only 8% five years ago to 22% now. Merchants are complaining but they still have to use it; Didi now has no subsidies, and the cost of taking a taxi is 20%-30% more expensive than that of a taxi, which is the core profit point. Except for Pinduoduo, which is still fighting hard to sink into the market to protect its business barriers, the other unicorns that have landed on the shore have adjusted their goals to the sales profit level, and are not hesitating to bear the infamy to exert their strong hematopoietic ability.

Therefore, the road for unicorns is very narrow and even full of dangers, and only a few can reach the shore.

It is very important for any enterprise to choose the right track and a business model with strong self-generating capabilities. The same is true when it comes to private domain traffic operations.

In this issue, we will review some common business models and gameplays in the current private domain traffic operation camp. Each business model has its own advantages, but there are also some risks. For companies that want to do a good job in private domain traffic, they must first understand their underlying business architecture:

1. The low-price social group buying model represented by Pinduoduo.

Pinduoduo is a benchmark enterprise in social e-commerce, and it is unique in this low-price group-buying track. After dragging down Taojiji, it has become the only dominant player. The pattern has been set, and its competitors have been forced to switch to membership-based social e-commerce. Why can Pinduoduo survive to the end? Many people say that group buying is indeed beneficial because of social fission, but it is best not to use some successful cases to infer the truth. In my opinion, the core of Pinduoduo’s success is still one point: it can afford to lose money.

The money spent on financing before IPO (the four rounds of large-scale financing were close to 5 billion US dollars), and the money spent on the stock market after IPO, even if the loss in Q3 exceeded 2.3 billion and the stock price fluctuated and fell by 10%, it could not stop Pinduoduo's dream of making 10 billion subsidies. Because it is really not time to make a profit yet, Pinduoduo is following JD.com's old path, but even more ruthless. Where did all this financing go? In fact, all of it is used for user subsidies. Let’s take the simplest example. When Pinduoduo just started, there was no fee to join. But there was a condition: something that sold for 10 yuan on other platforms could only be sold for 5 yuan on Pinduoduo. Any loss would be considered as an entry fee. So many times we joked, what would the effect be if Pinduoduo used LV bags to engage in social fission at the beginning? Therefore, there may still be opportunities in the low-price group-buying model, because users are the typical "buy where it's cheaper", but if we really compete on subsidy intensity and supply chain management capabilities, the current starting point is already too far behind.

2. Membership-based social e-commerce represented by Taobao and Youpin Youyu.

Pinduoduo's former rivals have all transformed into membership-based social e-commerce platforms, which goes like the classic saying: save money by purchasing yourself and make money by sharing. Traditional micro-businesses have basically all engaged in membership-based social e-commerce, because the zero-inventory business model is indeed popular. According to incomplete statistics, there are approximately 48 million people in this group. This is a huge track, and there will definitely be a unicorn similar to Meituan, repeating the battle between thousands of groups.

But on this track, there has never been a lack of questioning voices. The core is "pyramid selling". Because so far, the core interest point in this field is "recruiting people to get commissions", with layers of exploitation. It doesn't matter whether the products are sold or not. The most core task now is to recruit people, so in many cases "selling qualifications" has become the core product of membership-based social e-commerce. This goes against the original intention of e-commerce. On the one hand, policies have begun to be strictly controlled, and on the other hand, various sky-high fines have been issued one after another, the most representative of which is the sky-high fine of 74.56 million yuan for Huasheng Diary.

Of course, in addition to concerns about product quality, the most core flaw of social e-commerce is the "lack of sales capabilities of the WeChat business agent team." After purchasing a basic membership package for 399 yuan (a very inhumane product), and becoming a member, the next step is to circle your own friends and family. This marketing model itself is a pyramid scheme, but it has physical support to avoid landmines. However, this is the essential operating model. Therefore, these leading membership-based social manufacturers will fall into an endless and crazy marketing mentality of circling people. After all, the bonus period is still objectively there. Jingxi of JD.com has contributed more than half of the GMV; although Taobao Xiaopu was shortlisted a little late, it still relies on strong supply chain management, resource accumulation, and the blessing of brand power, and it is also possible to break through in the future; Youpin Youyu is backed by the blessing of Xiaomi brand, with high quality and low price, it can occupy a certain market, so when the big manufacturers have seen enough of the excitement and join the competition, the space for small platforms is narrower than the gap.

The membership-based social e-commerce will certainly update a series of gameplays in the future. It is foreseeable that the 399 yuan membership gift package will be made more affordable; the 399 yuan threshold is likely to continue to be lowered; saving money by purchasing by yourself and making money by distributing may become making money by sharing, etc. The gameplay will change in thousands of ways, but suspicion is still difficult to wash away.

3. Community fresh food group purchasing represented by Xingsheng Youxuan.

Community fresh food group buying is an emerging path for private domain traffic, and it is also a track with great potential. However, due to the industry attributes of fresh food, its development has not been smooth. For example, Dailuobo, which just received 630 million yuan in financing, collapsed overnight. There has never been a trend like community fresh food group buying. Under the promotion of the trend, the market has reshuffled so quickly. After all, it is because the fresh food e-commerce has smashed its foundation in the past few years.

To give another example, the "dark horse in the community group buying industry" Songshu Pinpin, which went bankrupt in September, saw its employees shrunk from 2,000 to only 600 overnight. Although the founder relied on the "group leader model" to promote the high-profile motto of "from last in the industry to leading the industry six months later", the actual operation was not optimistic. Of course, the core reason was "lack of money". On the one hand, it is because Songshu Pinpin has too few SKUs, giving customers limited consumption choices; on the other hand, the marketing strategy of full refunds has cost risks; of course, it has not been able to recognize the value of its own expansion, and the "Niwo Ni" acquired at a high price has become a quagmire of losses. In the case of unfavorable financing, the current GMV data of Songshu Pinpin and Niwo Ni is less than one-third of Xingsheng Youxuan, and the subsequent growth is weak, and it has already lost the right to speak in financing.

This is the most thrilling track. Negligence in any link may very likely result in all previous efforts being wasted. After all, the market for fresh food in e-commerce is huge, but there are countless cases of bankruptcies. The lessons of the past are still there. Meituan, which stood up from the pile of corpses in the battle of thousands of groups, should really become a model business case to learn from in this track. Currently, many people may choose to "pursue growth rate", but "surviving in the end" may be the best way to become a unicorn.

4. Community marketing represented by private domain gameplay of small and medium-sized enterprises.

The above three paths, low-price group buying, membership-based social e-commerce and even community fresh food group buying, are all ways of playing for large platforms. Although some marketing and customer acquisition techniques can be used as reference, the overall operating model is not suitable for small and medium-sized enterprises because there are essential differences between community marketing and social e-commerce. On the one hand, there is no rich SKU support, and the supply chain and resource integration capabilities are not that strong. On the other hand, there is not sufficient funds for marketing and promotion. Therefore, community marketing is the path for all small and medium-sized enterprises.

Regardless of the business model in the community economy, the community marketing concept of small and medium-sized enterprises only needs to remember one thing: continuously obtain potential customers from the public traffic pool and inject them into their own private traffic pool. In layman's terms, obtain customers from the public platform and inject them into their own WeChat, and then stimulate community fission and transactions through community operations (content marketing, service marketing, event marketing, etc.), thereby achieving business goals. Because the business opportunities of social marketing lie in grasping future needs, which are beyond the control of all public traffic platforms and are also opportunities for all small and medium-sized enterprises.

There are many typical cases in the field of community marketing, such as Qiuye PPT, Huajie Food and Health, various skill training communities, etc., which are all very successful examples. Of course, the most core principle is to serve the needs of community members well, which is actually half the success. Although there are many problems in community operation and management, the fourth business model of private domain traffic - community marketing, represents the future marketing and customer acquisition model.

Private domain traffic is more of a concept. It just tells us the future business logic and ideas. The core is to tell us that our future customers should control it in their own hands and build their own private domain traffic pool as much as possible, because the model of traffic acquisition and traffic monetization is a thing of the past.

Of course, private domain gameplay and specific operating models are varied, but choosing the right track is the first step to success.

Author: Social Marketing Fission Practice

Source: PR Home