Private Domain Traffic in 2021 is in Crisis

As we all know, traffic can be divided into public domain and private domain, and private domain traffic is what many businesses and brands want to strive for. Merchants and brands all hope to have their own traffic pool that can enable multiple conversions and repeat purchases.

In 2021, when we look back at the private domain, we increasingly believe that, whether for retail channels or brands, the private domain is the core position for reaching the peak of current traffic growth, refining the operation of existing traffic, and reducing costs and increasing efficiency.

Taking Luckin Coffee as an example, it achieved cost reduction and efficiency improvement by cultivating a private user pool. In Luckin Coffee's recently released financial report, its net revenue in the first half of the year was US$492.9 million, a year-on-year increase of 106%, while marketing expenses (advertising and free product promotion) decreased by 11.0% year-on-year.

A similar case is that the private domain repurchase rate of Daily Black Chocolate has exceeded 38%...

Why must the private domain be the core position for reducing costs and increasing efficiency?

Because when there is not enough traffic, everyone will treat people as human beings...

At the beginning of 2021, the core of the brand has changed from the era of "large-scale penetration sales" that is product-centered and uses public domains to gain volume, to the era of "people-oriented" that is people-centered and uses a mixed public and private domain to operate inventory.

1. The essence of private domain is DTC

In essence, the rise of private domains is exactly the same as the rise of overseas DTC consumer product startups.

What is DTC? Representatives of overseas DTC brands include Glossier (Internet beauty brand), The Ordinary (Internet beauty brand), and Casper (Internet mattress sales). Their core concept is: no middlemen to make a profit from the price difference, and direct access to consumers. These brands do not go through intermediary platforms or channels, but instead build their own official websites to sell products directly to consumers, thereby lowering the selling price and returning the price difference in intermediary channels to users.

But these are all superficial manifestations of the DTC concept. Its core feature is that compared to the past, brands have the conditions and user data to directly reach users.

The essence of DTC does not lie in eliminating the middleman’s share of the revenue, but in direct user “reach” and “data” acquisition.

Let’s look back at the rise of private domains in China: doing private domains in China is like building an independent website for your own brand, which is no longer controlled by the platform’s traffic costs.

If you look closely, don’t the establishment of private domains and DTC have the same goal?

Isn’t the rise of China’s private domain precisely to get rid of the middle platform and hope to have the means to directly reach users and digitize user assets?

China’s private domain ≈ overseas DTC.

The essence of private domain is to further directly reach and refine operations of users.

2. How to fine-tune user operations?

Refined user operations are also the main theme of brand private domain this year.

To put it simply, it is no longer a simple logic of selling goods, but about managing user relationships. Many cases in the past have shown us that if the private domain is only regarded as a sales venue for selling goods and harvesting profits, the private domain can easily become a dead domain.

Therefore, the construction of a brand’s private domain needs to be guided by user thinking and return to the user value itself to build a private domain user pool, so as to manage the interactive experience and relationship cultivation between the brand and users.

Recently, the China Chain Store & Franchise Association (CCFA) and Tencent jointly launched the "China Retail Industry Public and Private Domain Operation Manual and Implementation Guidelines" (hereinafter referred to as the "Guidelines"), which also pointed out that based on the form and depth of reaching users, the brand's private domain user pool is now mainly divided into three types: weak connection, medium connection, and strong connection. They correspond to the private user pool operations of brands/enterprises in different categories.

For example, the "1→n" form in which brands mainly communicate with consumers in a one-way manner through official micro-accounts (WeChat public accounts, video accounts, corporate blue V accounts, and Tmall brand zones, etc.) is a weak connection.

The "weak" here does not mean that the relationship is weak, but that the form of reach is lighter, so that users can know the brand's latest actions and activities most quickly; and the brand wants to circle users and retain them so that they can be reached repeatedly.

For example, the official account of "Nayuki's Tea" transfers the traffic of offline stores to online, and then retains it as brand user assets. Through the sedimentation of store traffic, it can add millions of followers every month. Currently, the number of official account users has reached nearly 8 million.

At the same time, Naixue's growth team will also carefully combine the in-store traffic with labels, and then distribute different rights and benefits packages to different consumers through the official account, so as to achieve personalized reach operations for thousands of people and improve conversion rates.

This method is essentially the brand helping users "save time". It is suitable for brands trying to build stickiness and high frequency of repurchase in private domain user pools in categories such as food and beverages, and fresh produce, where the average order value is relatively low, the user decision chain is short, rapid conversion is required, and transaction frequency is high.

Chinese connection refers to the "1⇄n" form of two-way communication between brands and users through WeChat groups and corporate WeChat communities.

The double arrow is the main theme in this relationship chain, so it is more suitable for fast-moving consumer goods, clothing, beauty, mother and baby, shoes and bags, fashion jewelry accessories, etc., categories in which users have a natural desire to plant grass and express their desire. At the same time, their corresponding average order value is medium, and the user's decision-making chain is also relatively medium.

For example, the imported cosmetics direct-operated chain brand "Yanli" initially established its private domain community through store shopping guides and WeChat, and each store had only one community. But as the number of users continues to increase, one store and one community seems insufficient. In addition, with more people, the topics of discussion become more diverse.

In order to communicate more efficiently with private domain users, they began to build regional brand groups to carry out tiered community operations based on consumer demand for brands from different countries such as Switzerland, Japan, and France, to ensure that user needs in the community are similar and everyone has common topics to talk about. At the same time, brands can also provide more targeted services, thereby driving user repurchases.

In this type of private user pool, brands and users are more like "killing time" with each other, so they need to constantly plan topics for communication and maintain a sense of communication atmosphere.

As for strong connection, it is a 1V1 or N→1 communication mode between the brand and the user.

"Strong" means that the brand must have a strong understanding of user preferences and habits and provide personalized services. This approach is more suitable for categories with high unit prices, such as 3C, home appliances, automobiles, real estate, home building materials, home decoration services, high-end jewelry and luxury goods. When users purchase these products, the purchase decision cycle and links are usually longer, and the factors involved in the decision-making are also more complex. At this time, a strongly connected private domain can help users build trust in the brand.

From January to March this year, Chow Tai Fook used corporate WeChat as the hub to plan a shopping guide strategy of "one person, one day, one item", encouraging employees to proactively recommend suitable products to customers and strengthen interaction with customers. Ultimately, the number of sales in the mini program mall exceeded 50,000, the amount was nearly 200 million, and the number of new users was nearly one million.

In this type of private user pool, in-depth communication between brands and users requires understanding and trust.

As user value becomes clear, brands can use a combination of measures based on different user value relationships during the actual construction of private domains.

Taking the private domain of "Nayuki's Tea" as an example, in addition to achieving user retention and direct reach through official accounts, it also covers mini programs and communities. In its prospectus, it is mentioned that in order to run the private domain, Naixue has specially developed a "self-developed system" - the Teacore information platform, which includes online and offline operational data, as well as C-endpoint single mini-programs.

In addition to basic transaction functions, the Naixue ordering mini program also allows you to see daily member operations such as attracting new members, increasing the frequency of deposits, and promoting activation in the points mall. Currently, Naixue's average monthly membership growth in the mini program is in the millions. As of May 2021, the number of members has reached 35 million. In addition, through this mini program, users can also enter a dedicated community to learn about the brand’s latest activities and benefits.

In the social section, Naixue is also constantly planning stratified operations for users. It will invite active members in the group to join the Naixue City Friends group based on membership level, group activity performance, user stickiness and other dimensions, and provide more unique and differentiated gameplay and benefits. At the same time, a micro-mall retail product sales strategy has been set up in the community to further open up private domain links and promote GMV growth.

Once the private domain link is opened, the user's value is not a one-time transaction, but can continue to extend outward.

For example, by improving its private domain layout, Naixue has maintained its sensitivity to consumer demand. This is reflected in the supply chain and production ends, which helps with the research and development of new products and sales forecasts, and increases the possibility of creating explosive products; reflected in brand operations, it can make reasonable resource allocations for various product structures such as dine-in, take-out, and retail, and at the same time, it can also make faster brand responses to industry hotspots, thereby feeding back the brand's influence in the public domain.

The better you do in the refined operation of the private user pool, the more it will boost the brand in the public domain.

3. From private domain to public domain, the secret of global operation

Different from overseas markets, all major delivery platforms have public APIs, and user information can be accessed. Therefore, DTC brands can quickly and efficiently acquire accurate users and obtain data (email) on public platforms in the United States (Google, Facebook, and Twitter) through digital precision delivery, and then operate and reach them, deposit them on the brand's official website, and turn them into their own users.

But China's public domain environment is quite complex. First of all, the public domain includes larger e-commerce platforms such as Tmall and Taobao, as well as content platforms such as Douyin, Xiaohongshu, and Kuaishou, plus various offline channels. It takes a lot of effort for a brand to attract traffic from the public domain. Sometimes, the users converted from the public domain with great difficulty may not be real users.

Because the data between platforms are closed, brands have no way to completely connect user data.

For example, if a user orders a brand’s products on Tmall, Douyin, and Xiaohongshu at the same time, the brand may think that these are four independent users.

Therefore, in order to avoid such situations, brands also need to use operational means to effectively identify user information, then deposit it into the private domain to complete commercial monetization.

In fact, in actual operations, full-domain operations with coordination between public and private domains are the norm. This is also mentioned in the "Guidelines". From an operational perspective, for a brand to establish a core link for the coordinated operation of the public and private domains, it needs to include three key steps: privatization of public domain traffic - operation of private domain user pools - commercialization of private domains.

Simply put, for a brand to gain volume in the public domain is like renting a house, where the landlord has the final say on the price. Although rents are getting more and more expensive, brands have no choice but to rent because they need users and will not have business if they are not in places with high traffic.

The private domain is like buying a house. You don’t have to pay the landlord every time you reach a user. By spending money on traffic, you can at least own your own assets, but there is no guarantee that these assets will last forever.

The public domain and the private domain need to connect and empower each other. Take the "Lipstick King" Li Jiaqi as an example. He has a positioning of "global internet celebrity": expand his influence on various other platforms, and finally settle users in his own private domain for continuous activation. For example, in Li Jiaqi's official WeChat member group, users can not only get live broadcast content previews and broadcast reminders every day, but also accumulate points and redeem benefits by checking in through mini-programs. At the same time, there is daily demand collection in the group, as well as regular membership benefit purchases.

Through private domain operations, help him further expand his influence in the public domain. For example, when encountering a crisis public relations event, the private domain has the most authentic and fastest public opinion monitoring; the loyal fans accumulated in the private domain are also the most valuable "super users", helping Li Jiaqi and his team to refine the live broadcast product operation strategy and grasp market demand, while also contributing to the establishment of "Li Jiaqi"'s personal IP.

As major Internet platforms become interconnected, brands also need to expand their influence in the public domain first, and then bring traffic back to corporate WeChat/WeChat/Mini Programs for monetization, and the private domain will also feed back to the public domain.

For example, in order to better mobilize the group's resources and control the brand's tone, Bestseller has focused on the "Video Account" because compared with other live streaming platforms, the Video Account has a higher average order value and a very low return rate.

Therefore, the brand chose to use it as a platform to build the minds of fans. Each of its four brands established a separate live broadcast team, and all of them are broadcast by the internal team with a fixed live broadcast frequency, two to three daily live broadcasts per week, and one large live broadcast per month.

Its brand ONLY achieved 650,000 viewers in its daily live broadcast on the video account on June 10 this year, attracting more than 1 million visitors to the mini program and driving a 70% increase in GMV on the same day.

At the same time, in order to gain maximum exposure in the huge public domain traffic of the WeChat ecosystem, it has arranged many traffic hooks. For example, when users enter the brand's official area through "Search", they can see the live broadcast content display of Esprit's video account, including obvious prompts such as "Live broadcast appointment is now open" or "Live broadcast in progress".

In addition, Esprit also uses bidding advertisements on video accounts to attract WeChat users to enter the live broadcast room, achieving an ROI of more than 1 at a low cost. In addition, Esprit’s stores and shopping guide resources across the country also constitute an important part of the video account traffic system.

Finally, after each video live broadcast, Esprit will review the day's sales items, user purchases, categories, average order value, matching combinations and other dimensions, and adjust the product ratio in real time. On the one hand, it helps to increase the GMV of Esprit's live broadcast, and on the other hand, it also provides a more accurate insight into consumer preferences.

In short, whether it is private or public domain, the essence is to focus on and explore user needs. Where the consumers are, the service is there, and do a good job of [people-oriented] full-domain operation.

This also goes back to the original intention of branding. Branding is to discover the unchanging things in people's hearts and present them in new forms; it is to grasp the psychological state behind the users, seize every opportunity for communication, continuously reach out and interact to influence and occupy the minds of users.

After all, a brand is the "algorithm" of people's hearts. In this algorithm, traffic is not precious, but users are precious.