In-depth long article: Why is MINISO so popular?

Friends who go shopping frequently must have been to a physical store called MINISO. This "Japanese casual department store brand " with a logo similar to Uniqlo has opened 2,000 stores around the world in just four years, with annual sales exceeding 10 billion yuan.

Why is MINISO so popular? Some people say it is a mixture of Z AR A + Uniqlo, others say it is a copycat version of MUJI, an upgraded version of the ten-yuan store... These statements are too superficial! It's like saying a company's success is because its "products are cheap" or "they're great at marketing ."

Dear readers, if you want to understand MINISO, you must understand its core logic. Today, Nanbei will dissect MINISO from several angles, including positioning, value curve, value chain, profit model, and cost structure.

First, let’s think about the positioning of MINISO, that is, which type of people is it targeting? What products do you offer?

Miniso sells small daily commodities, such as cosmetics, small accessories, snacks, luggage, daily necessities, small electronic products, etc. It is not difficult to find that the core group targeted by MINISO is "young people in first- and second-tier cities, especially women". Women, fast-moving consumer goods, and small department stores are its core positioning.

This choice alone involves a lot of knowledge.

Daily necessities are a very unique category collection. Imagine if you want to buy an umbrella, a mouthwash cup, or a pillow now, where would you go? If you buy online, you will have to wait, and the shipping fee may be more expensive than the product itself. If you go to a supermarket, you may have to look for a long time just to buy these few things, and the products are not unique or exquisite enough. The most important thing is that you have to wait in a long line to check out. If you go to a convenience store, you will find that many small items may not be available in convenience stores, and the prices are definitely not cheap.

What MINISO does is to aggregate these long-tail small commodities. Therefore, it is easy to buy a cup when passing by Miniso after get off work, or buy an eyebrow pencil when going shopping at Miniso on weekends, etc.

Do you understand after seeing this? The small commodity business field chosen by MINISO effectively avoids the fierce competition of e-commerce and other retail formats, and is a very unique field.

So we have to say that in business, choice is more important than hard work - if you choose a business with a small user scale, low profit margin and repurchase rate, you will soon hit the ceiling. Of course, you can also say proudly, "I just want to run a small and beautiful business," but others can do bigger business than you with the same effort.

After analyzing MINISO’s positioning, let’s take a look at its value curve.

The so-called value curve, in other words, what kind of specific value has Miniso created? Translated into human language, it can be understood as: What are the unique features of MINISO?

Some people may say, "MINISO is just an upgraded version of a 10-yuan store." But in fact, the value curve of MINISO is very different from that of an ordinary 10-yuan store. On the value curve, MINISO has the following outstanding features: low price, imported from Japan, strong sense of product design, exquisite packaging, rich product variety, extremely fast speed of new product launch, high-end and fashionable decoration, located in a commercial center, self-service shopping, etc.

Let's analyze several important points on MINISO's value curve:

• Low price

At MINISO, products priced at 10 yuan are everywhere, and the highest is only a few dozen yuan. You can hardly see any products priced over 100 yuan. There are two benefits of low prices: one is to reduce competition. You know, low price is a particularly key factor in e-commerce 's ability to sweep through physical retail. "The more standard the product, the more thoroughly it will be disrupted." By maintaining low prices, Miniso has the confidence to compete head-on with e-commerce. The second benefit is that it can radiate to a large enough group to stimulate sales.

• Imported from Japan, good-looking products, expensive decoration

But low prices also have disadvantages. “You get what you pay for” is a typical consumer psychology. Miniso’s products are low-priced, which can easily make consumers think that low-priced products are of poor quality. How can we avoid this?

Miniso’s boss Ye Guofu cleverly registered his company in Japan. Japanese words are written on all the products, and he even uses “Imported from Japan, low price and high quality” as his core selling point and directly marks it on the shelves.

The domestic public generally has a favorable impression of Japanese products. In this way, MINISO has also invisibly planted an impression of high quality in the minds of consumers. In order to strengthen this impression, MINISO's official information always deliberately promotes a Japanese designer named "Junya Miyake" and regards him as the initiator of the MINISO concept. In fact, insiders can tell at a glance that MINISO’s products are all Made in China, and this is intentional packaging.

Furthermore, MINISO ensures that its products have a strong sense of design and exquisite packaging by building its own team of designers and imitating the designs of international brands, which can also give people a sense of good quality. In addition to strong product design, store decoration is also very important, especially now that consumers have a wide range of choices. If the store is ugly, they will not even want to go shopping. Miniso’s strategy is to have small stores with fine decoration. The general area is about 200 square meters, and the decoration cost can be as high as 400,000 yuan.

• Rich categories and fast new products

MINISO has around 3,000 SKUs, and provides a sufficiently rich variety of merchandise to ensure that consumers visit the store frequently. In addition, MINISO also focuses on rapid product launches, with new products coming online almost every week, which in turn increases the frequency of consumers visiting stores. We can try to understand it this way: the store is the product, and the merchandise is the content. Only when the content is rich enough and constantly updated, will users be happy to use the product (visit the store) and stay (repeat purchases).

• Choose a location in a shopping mall with high traffic volume

The location of a physical store is extremely important. Location means traffic. Let’s take a look at Miniso’s location strategy.

In order to reduce costs, general 10-yuan stores are opened in inconspicuous places such as streets and alleys, which is in line with their value chain. However, MINISO does the opposite. Instead of saving money, it strives to locate in core areas of first- and second-tier cities, usually choosing places with very high traffic such as shopping malls, subway entrances, and bustling commercial streets. Although the rent is high, there are many benefits . First, it can obtain large traffic to increase sales. Second, it can enhance the brand image and save a lot of marketing costs.

In fact, ZARA and Uniqlo are already familiar with this strategy. They never spend money on advertising, but instead spend money on site selection and decoration, because they know that monopolizing high traffic areas and adding store packaging is the most brilliant advertising.

• Self-service shopping

Let’s take a look at its services. Miniso learns from first-tier brands and advocates self-service shopping. There are no salesmen in the store. There are only cashiers and waiters who are always tidying up the shelves. They will only serve you when you need service.

The benefit of doing this is, on the one hand, it creates a relaxed shopping experience; on the other hand , it saves labor costs. You should know that in many shopping guide-style physical stores, the labor costs of the store can account for 10% of sales.

Well, the above are the most prominent points that users perceive on Miniso’s value curve.

We always talk about consumption upgrading. In fact, consumption upgrading is essentially an upgrading of consumer concepts. It does not mean that buying expensive things is good, but buying good things. Consumers are actually very emotional when judging whether your products are good or not. The product design, packaging, store decoration, geographical location, and even whether it is imported will affect consumers' perception. Miniso has invisibly influenced consumers' minds by adding and subtracting on the value curve. Consumers will not dig deep into Miniso’s background, nor will they conduct detailed research like we did. They will just think that it is a Japanese fashion department store with low prices and high quality, and they will go in for a look when they have nothing to do.

I browsed a lot of community forums and studied everyone's feedback on Miniso, and found that most people are relatively supportive of it. Of course, there are also many consumers who think that some of Miniso's products are very counterfeit and look similar to many big brands. In terms of product quality, electronic products received more complaints, while other products received better responses.

In general, Miniso’s value curve is designed to fit in with people’s current shopping habits, which is the core reason for its popularity.

So the question is, in order to achieve such a value curve, how should Miniso design its supply chain, terminal control, franchise strategy, operation system and even brand marketing ? This is what we often call the value chain.

• Large-scale procurement, eliminating middlemen

How can we make products of high quality and low price at the same time?

The vast majority of high-quality Japanese and Korean products we see are actually produced by Chinese foreign trade suppliers. However, domestic companies have poor credibility and high risks of cooperation. "Running away with the sister-in-law" incidents occur frequently. After falling into the trap repeatedly, these foreign trade merchants are unwilling to do domestic sales. Every year at the Canton Fair, Chinese companies are turned away.

By registering as a Japanese company, Miniso not only improves its brand profile for the C-end, but also naturally benefits the supply chain. It can connect with high-quality suppliers and reach good cooperation with them, which is also a guarantee of product quality.

Specifically, MINISO finds high-quality manufacturers and purchases directly from them, eliminating middlemen. It then improves its bargaining power through policies such as large-scale buyouts and shortened settlement periods. Suppliers are willing to lower prices, which provides cost support for the low-price strategy while achieving low prices and high quality.

• Monitor data and make quick adjustments

The supplier problem has been solved, but how do you ensure that the products you sell are what consumers need, and how do you ensure that new products are added every week to stimulate consumers to shop frequently?

As we mentioned before, MINISO's SKU remains at around 3,000, and what products to sell is determined based on the ever-changing needs of consumers. MINISO’s team of designers will pay close attention to the store’s dynamic sales data and network data to select and design products. Whether a product can sell well is a very important criterion.

Not long ago, I noticed that the sales volume of a pair of headphones on JD.com was growing rapidly. Unexpectedly, a few days later, I saw similar-looking headphones on MINISO. It is easy to understand that in order to ensure speed and low cost, the design was imitated.

What’s more important is that since MINISO has 2,000 stores, it can develop a flexible merchandising model. For example, if the cups in region A are not selling well, while the cups in region B are out of stock, the cups in region A can be immediately transferred there to increase the turnover rate of goods. Ultimately, it comes down to designing your own business model so that it can adapt to rapidly changing needs.

• LP joins, fast replication

Let’s look at it again. Miniso was able to open 2,000 stores in four years. With such a high capital turnover rate, it must develop franchising. However, if it wants to respond quickly to consumer demand, it needs to firmly control the terminals. This leads to Miniso’s unique franchising policy. Similar to the LP model, franchisees pay money but do not participate in daily operations. Miniso will have a firm control over store personnel management and daily operations, thus turning the 2,000 stores into a network to monitor data and make flexible adjustments.

In terms of specific franchise policies, franchisees need to pay a brand usage fee of 150,000 yuan and a product deposit of 750,000 yuan, plus decoration fees, store rent, employee salaries, water, electricity, industrial and commercial expenses, etc. The general investment is around 2 million yuan, and the threshold can be said to be very high. In terms of distribution, 38% of daily turnover (33% for food) will be used as franchisee income, and will be paid in cash. In the context of physical stores surviving the winter, Miniso first made the cash flow of its directly-operated stores very impressive, and then attracted many investment franchisees with store resources and funds.

• Criticizing the giants and leveraging marketing momentum

Let’s take a look at brand promotion. In the early days, Miniso was actually quite low-key. After the data gradually improved, the boss of Miniso began to frequently appear in major financial programs and industry activities to promote Miniso’s philosophy and model. In order to be more topical, Ye Guofu often refutes mainstream opinions, criticizes e-commerce giants, and never stops making shocking remarks, which earned him the nickname "Ye Cannon".

It is actually a common tactic for small companies to take advantage of big companies for marketing. During this period, Miniso's biggest marketing goal is to strengthen its attraction to franchisees and encourage them to pay money to join.

Since 2016, Miniso has started to focus on marketing to consumers, frequently publishing articles in the media, doing advertising placements , and relying on celebrity hype. Its WeChat platform has also attracted about 20 million fans by sending shopping bags by scanning codes . However, in terms of C-end marketing, Miniso has not done a good job and is more of a self-talking game.

• IT Systems

We have talked so much about the back-end design of MINISO. Some people may be smart enough to realize that with such a fast expansion speed, management is definitely a big problem. In fact, there is a powerful IT system supporting MINISO.

From market research, product development, to logistics distribution, product inventory management, store planning, sales data analysis , marketing planning and other aspects, all rely on this IT system for management. For this reason, Miniso has also invested tens of millions in IT automation.

Miniso’s approach has been recognized by consumers, but with product prices so low and costs so high, can it make money? In fact, there are hidden secrets in Miniso’s profit model.

The first is economies of scale. In each specific category, MINISO will select products that are most likely to sell well. If the products are good in appearance, quality and price, it will be easy to increase sales. Miniso expanded its scale by opening stores on a large scale and promoting hot-selling products. For example, one of its eyeliner products is a hot-selling product, and its sales volume is said to have reached 1 billion.

When doing business, you either have low frequency and high prices, or high frequency and low prices. Since it is a low price, you must find ways to increase the purchase frequency and form good repeat purchases. Mingchuang also put a lot of thought into this:

1. The number of SKUs is kept at around 3,000, and the rich product categories increase the chances of customers visiting the store to buy;

2. Launch 2-3 new products every week, keep frequent updates, and stimulate you to shop frequently for fresh products;

3. When selling products that have the nature of repeat purchases, such as cosmetics and snacks, Miniso will deliberately place these products in a conspicuous position at the entrance to allow them to play the role of traffic-generating products.

There is another factor that is easily overlooked, that is, the price elasticity of demand. The price elasticity of demand for small department stores is very large. When the price is low enough, you may buy more goods that you didn't originally want to buy. Miniso may have the lowest unit price in the shopping mall, which can give you enough sense of security and release people's shopping desire, so it is easy for you to buy, thinking that you have got a bargain, but in fact you have spent more and invisibly increased the customer order.

The combination of economies of scale, high-frequency consumption, and price elasticity of demand naturally makes Miniso's cash flow very good.

In addition, the franchisee's brand franchise fee and product guarantee deposit are not a small amount. There is also a hidden industrial chain here, which is the relationship between MINISO and the P2P platform Fenlibao. Ye Guofu is also the founder of Fenlibao. If franchisees do not have money to open a store, they can come to Fenlibao for a loan, and then pay the franchise fee and security deposit after the loan. In fact, anyone with a discerning eye can see that the money has come back, and with the left hand engaged in industry and the right hand in finance, most of the risks have been transferred out, so Miniso can ensure a stable income.

After analyzing the profitability issue, let's take a look at its cost structure. If you do the math on franchising, you'll find that MINISO has passed on a lot of risks to franchisees, and the remaining costs are mainly concentrated in design and development, inventory logistics, and company labor costs (not store employees).

In terms of design and development, although it has its own team of designers, many of its products actually have obvious signs of counterfeiting, which also reduces the design costs to a certain extent.

Furthermore , the fast sales speed at terminal stores, coupled with the goods adjustment model, results in a very short merchandise turnover time, said to be only 21 days, which reduces inventory costs. So if we look at the entire value chain, although Miniso has opened 2,000 stores, it is not actually an asset-heavy company, which is why it has expanded so rapidly.

Any business model must ultimately be implemented on an organizational structure, so let’s talk about the issue of “people”.

First of all, the founder Ye Guofu , this is not his first time in retail. He is actually the founder of "Aiyaya" . Speaking of this "Aiyaya" is quite interesting. The categories of products sold are somewhat similar to those of Miniso. Both are businesses targeting young women. However, the main stores are in third- and fourth-tier cities, and the core model is also the traditional franchise model.

It is not difficult to imagine that Ye Guofu has been in the small department store and women's business for so long. Seeing the changes in consumption upgrading and the popularity of e-commerce, as well as the ceiling of Aiyaya in the past, he must have thought about it for a long time and visited various parts of the world for a long time before he figured out the Miniso model.

In fact, many of Miniso's expansion team members are local employees of Aiyaya. In other words, this is a team with many years of practical experience in the small commodity market. What’s more interesting is that Seeman Holdings founded by Ye Guofu has also jointly launched an upgraded version of Aiyaya with South Korea’s BBP Co., Ltd. – Aiyaya Lifestyle Store. Its model is exactly the same as that of Miniso, but this time it is called a “Korean brand”, hahahaha…

For Miniso, the favorable factor is that people care more and more about the quality of life, and there will be more and more small items in the home, and the market for long-tail categories will gradually open up. At the same time, consumers care more about the quality and appearance of goods, as well as the shopping experience, store environment, service, brand, etc. This is the general environment for its rapid rise.

Of course, the Miniso model also has challenges. In terms of business sustainability, if MINISO wants to ensure the long-term health of store sales data, it must ensure the frequency of consumer purchases and customer orders. Most small commodities are durable goods with a very low repurchase rate. The sudden emergence of MINISO has led to the release of consumer demand in the short term. After a rush of buying, the sales amount was pushed up in the early stage, but how many people will be able to stay for a long time and repurchase frequently? This needs to be questioned.

Although MINISO launches new products quickly, which can constantly stimulate consumers' appetite for new things and increase purchase frequency, MINISO is not the only one engaged in lifestyle products. No matter how ferocious a tiger is, it cannot withstand the food shared by a pack of wolves. In addition, for categories with relatively high consumption frequency, such as cosmetics and snacks and beverages, Miniso needs to withstand competition from other brands and other channels , which cannot be solved by low prices.

Let’s take Wudaokou as an example. There are three stores within a hundred meters. As the center of the universe, Wudaokou is surrounded by many universities and has a large population. The group is close to each other and the demand is strong. And there is also a very important factor, which is the high population mobility. In other words, a new wave of students comes every year, and another wave comes after another. I estimate that the turnover of these stores will be relatively good.

However, locations like this are limited. If a store serves a relatively fixed population, after demand is released in the short term, it is worth considering how to ensure that sales do not drop in the long term. Therefore, those who feel that Miniso is very popular and want to join immediately should pay attention. Whether you can make money still depends on carefully analyzing many factors such as your geographical location, target population, purchasing power, competitive environment, etc.

According to Miniso's plan, by 2020, it will open 6,000 stores worldwide and its revenue will exceed 60 billion. If you do the math carefully, you will find that its growth rate is declining, and 60 billion means that the average annual revenue of each store will reach 10 million, and the daily turnover will reach nearly 28,000. This figure is much higher than Miniso's current average daily sales of 15,000 per store.

In fact, in the business world, there is never copying, only reference and adapting to local conditions. Because objectively, there will definitely be multi-dimensional differences such as industry differences, category differences, group differences, regional differences, etc.

The inspiration of MINISO lies in choosing a good business field, keeping up with consumer demand, creating a unique value curve, working hard from product design and supply chain management, firmly controlling the entire chain, and ensuring design, cost-effectiveness, and shopping experience. But if you think about it carefully, if you want to do retail, shouldn’t you think about these things? So it’s a secret, but there really is no secret…

The author of this article @南北商業笔记 is compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting!

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