E-commerce operations: 50 Taobao brand marketing notes

Taobao was born in 2003. The first batch of “Taobao brands” that emerged from it achieved great success driven by the times and the platform: Liebo established a team of 100 people in the second year after its establishment; Han Du Yishe topped the Tmall Double 11 women’s clothing sales list in 2014…

Taobao brands refer to original online brands recommended by Taobao Mall and consumers. They are usually only sold online, especially on Taobao. In addition to Liebo and Handu Yishe, Qigege and Yunifang are also seen as successful players among traditional Taobao brands. With the development of the Internet and the iteration of online channels, new brands are no longer limited to Alibaba. "Taobao brand" is more like a term of the times and has become blurred in the new round of consumption wave.

In 2021, when consumers are accustomed to the "cyber shopping spree", can the Taobao brands that were once at the forefront of the field still keep up with the pace? What impact has the rise of new consumer brands had on them? How should they break through? In this regard, Fang Zhiwei, an e-commerce veteran with many years of operation experience, shared his experience with the Knife Skills Research Institute for nearly 2 hours.

Fang Zhiwei started his e-commerce business in 2009. He is a partner of a meal replacement brand on Taobao and the manager of "Operation Journey". Over the past 12 years, Fang Zhiwei has accumulated many friends in the same industry, and has also witnessed a number of Taobao brands either retreating, emerging, or struggling to persevere in the new consumption wave.

After this year's Double 11, he summarized a "2021 Double 11 Brand Trend Insights", which attracted the attention of e-commerce operators. After obtaining authorization, the Knife Skills Research Institute sorted out the content and his sharing, and summarized "Fang Zhiwei's 50 Taobao Brand Observation Records".

01 Newcomer? Domestic products? Looking for brands?

In recent years, adjectives such as "cutting-edge" and "new domestic products" have appeared frequently on the lists released by Tmall.

1. Many of the "emerging brands" mentioned by Tmall and the media are actually "domestic brands" or even white-label factories in the eyes of us merchants. The difference lies in whether they operate in a capital-based manner. For example, for us, Vino is a domestic brand, VFU, which makes sportswear, started as a Taobao brand, and MAIA ACTIVE is a cutting-edge brand, that is, a new consumer brand.

2. Tmall defines VFU as a cutting-edge brand because, without raising funds, it increases the added value of its products through insights into users, outputs cost-effective products to connect with users, and meets the needs of some consumers in its own category and track.

3. The biggest feature that distinguishes new consumer brands from others is that they are "rich", which is reflected in their channels, that is, their sales channels are wider. Some new consumer brands such as Yongpu and Sandunban have already entered offline channels such as convenience stores such as FamilyMart and 7-11, as well as boutique supermarkets such as Hema and Ole'. In contrast, traditional e-commerce (Taobao brands) basically only rely on the online channel to make profits.

4. The ability to generate revenue through multiple channels and the support of financing enable them to be willing to spend money on advertising and promotion. To give an inappropriate example: if the new consumer brands are the U.S. military in "Changjin Lake", with Van Fleet's ammunition and the courage to "hit directly", then we are the Volunteer Army, driven by financial management and careful with budgeting. I envy them very much, but there is nothing I can do.

02The start of Taobao brand home wear

There are many types of Taobao brands. I personally pay more attention to the homewear industry, so I focus on the inventory and track observation of Taobao brands in the homewear category.

How to develop homewear brands

5. "Gongdie" started out as a pure e-commerce platform. In 2017, it became popular by learning the IP co-branding method of Guokr and leveraging the Winnie the Pooh IP. The reason is that, on the one hand, they quickly attracted fans through the method of "investing in visual style upgrades + spending money on on-site marketing and promotion", which led to an increase in the number of fans. On-site payment accounts for 20%, and the cost is controlled at 10%; on the other hand, their suppliers have strict product quality control, and quality inspection is carried out before products enter the warehouse. They use the same supplier as "Guokr" and "Tongyu", and have a dedicated person to follow up on quality control.

6. Beiyan’s strategy is relatively conservative, with less promotion but high gross profit. It is not so easy to imitate its model nowadays because there are too many SKUs, but we can learn its ideas and way of thinking. However, it also faces risks. Although it has brand potential, due to the weak off-site investment and its slowness in seizing the market, it is easy to be overtaken by latecomers.

7. "Jingyun" is a brand that has changed its style and achieved a great leap forward. It already has a supply chain foundation, and their boss has learned the Bananain model quite thoroughly. Simply put, hot-selling products generate sales, bring in the scale of the crowd and the direction of investment, and then invest in visual optimization to determine the style. Once the crowd becomes richer, we can move away from the blockbuster model by creating IP.

Track Ecological Observation

8. The reason why home wear and underwear can gain popularity among Taobao brands is mainly because there are currently no major foreign brands entering the market, and brand awareness has not yet been fully formed. There is still an opportunity to establish a mental connection through the accumulation of fans.

9. Among the new entrants, Bananain and Ubras have relatively strong capital chains and have invited Zhou Dongyu and Wang Yibo to endorse their products. However, ordinary Taobao merchants cannot learn from them even if they want to. The brands in the Guangdong industrial belt, on the other hand, are taking one step at a time and doing business in a down-to-earth manner. We can learn from them.

10. The difficulty of home wear underwear brands lies in: quality control and product structure. When planning, you need to have a deep understanding of your customers and competition, and refine and optimize your product structure based on the target audience.

11. The opportunity point for homewear underwear brands is: homewear is relatively weak in the off-site Xiaohongshu advertising. We can invest in it, but it also depends on whether we have sufficient energy.

03The current situation and dilemma of Taobao brands

The overall CPC on Tmall continues to rise

CPC, or cost per click, is one of the billing methods for online advertising. It can be used in Alibaba platform sections such as Direct Express, Super Recommendation, Diamond Booth, Pinxiaobao, and Taoke.

12. For example, the CPC of our konjac cake was still 0.8-1.2 in 2020, but it rose to 3.6 in 2021! What causes CPC to rise?

a. Some brands that have received financing continue to increase their promotion, and they have other channels to cover their costs;

b. New entrants increase their paid investments in products that are more attractive to Taobao users (Tmall’s investment promotion policy is relaxed);

c. Promotional traffic tools, the daily report from Business Advisor is consistent with the performance of Business Advisor, but the ones derived from the traffic structure are different! Tmall’s paid tools have a particularly high degree of overlap, which causes our merchants to have an inflated ROI and thus blindly invest in promotions. Except for Tmall’s direct train and super recommendations, the others are out of my control (Pinxiaobao is the result of off-site promotion);

d. Tmall’s e-commerce operations are becoming more and more complicated. It looks good, like a beauty, but in fact, Tmall’s traffic is shrinking, and it must ensure that CPC continues to rise! We merchants must either increase promotion, innovate products (and innovate continuously), or participate in events and continue to make concessions. The outcome of e-commerce is already determined.

Lack of goods drives the mind

13. During the Double 11 period this year, we found that many merchants did not have the pre-sale mentality, which was reflected in two points: first, there was no pre-sale mentality and no rhythm when preparing goods; second, they used hot-selling products to open new links for pre-sale. It seems that it will not affect its daily sales, but such behavior brings trouble to product statistics and inventory tracking. When merchants cannot accurately grasp the inventory data of products, they will not be able to predict and respond to subsequent sales and production situations, and will not be able to stock up and optimize product structure in a rhythmic manner, forming a vicious cycle.

14. Although e-commerce has been operating with data since 2015, only a very small number of businesses can predict inventory and sales to this day.

04 Commonalities of Excellent Taobao Merchants

15. Be "restrained" in marketing and promotion.

16. In terms of operation, "weaken deficiencies and maintain industry standards in terms of vision." Seek stability within your capabilities and "take advantage of opportunities" beyond your capabilities.

17. Profit-oriented, the company’s finances are on the brakes, and it is necessary to be familiar with the e-commerce business; an advantage that cannot be replicated cannot become an advantage.

18. Drive performance growth through product management rather than increasing sales by expanding traffic.

19. Deeply refine and digitize all aspects of operations, improve efficiency, and establish an operational decision-making model.

This set of charts shows how our e-commerce merchants use the store’s daily operating data to drive business decisions. The left picture is the store data (sales and promotion), and the right picture is the traffic analysis of the competitor's store. By recording which stores our users have lost to, and then adding the other party's traffic channel data to the table for visualization, we can find the details that can be optimized.

20. The “Direct Diamond Super Products” on the site have reached their ceiling, and the cost of acquiring customers through off-site marketing and promotion is getting higher and higher. Excellent merchants drive profit growth through financial management, strictly control the cost ratio of promotion, and control the costs of every link in the brand operation process. For example, the following profit model solves the following problems: 1. It can accurately eliminate the overlapping traffic between different channels inside and outside the site, and the entire financial forecast will be more accurate; 2. Control the flow of information (inside and outside the site): TVC, Douyin, Kuaishou, Xiaohongshu, Bilibili, Zhihu, Chaotou, Taoke, and celebrities.

21. Focus on supply chain, channel efficiency optimization, and team management, especially increasing category operations to reduce the store’s reliance on hot-selling products.

22. By streamlining processes, standardizing processes, and making things more efficient, we can save time costs for people in each department. This is mainly to improve efficiency, standardize complicated things, and then free up time to do other thinking-related things.

23. Living healthily and growing with high quality should be the first priority of a brand. Stick to the segmented track, provide value to users, and make long-term accumulation!

05Platform Observation

Tmall is the main battlefield for brands

24. Tik Tok is just an entertainment platform, but it is indeed an incremental growth. This incremental growth is for merchants whose main position on Tmall is stable. If the main position is unstable, they should work hard on their internal strength!

25. Tmall, as the main battlefield for brand growth, will not change in the next five years at least. Tik Tok and Pinduoduo are just supplements to the brand’s sales. How did Alibaba get here? They are indispensable for every step of the way!

Douyin e-commerce VS Alibaba Taobao

26. Traffic is what e-commerce people are most sensitive to and desire. Many people are now doing Douyin e-commerce, and some are even giving up Taobao to do Douyin. The core reason is that Douyin’s traffic pool is larger than Taobao, and traffic is easier to get than Taobao.

27. Taobao's traffic is centralized. It can almost be said that 80% of the traffic is given to 20% of the top merchants, and the remaining 80% of merchants are racking their brains to think about how to grab more of the remaining 20% ​​of traffic.

28. Taobao's pure e-commerce attributes have resulted in its relatively poor self-generating ability, so traffic has become increasingly expensive in recent years, and small and medium-sized businesses are not having a good time.

29. Compared with the centralized traffic of Taobao, the traffic of Douyin is decentralized at this stage. The logic of traffic distribution is that as long as you have good content that can arouse the interest of consumers, the platform will give you traffic, which is the so-called "interest e-commerce". At present, the traffic is still continuous.

30. Douyin’s interest traffic is so easy to obtain that many small and medium-sized sellers who were struggling on Taobao have left Taobao and joined Douyin. There are also many e-commerce companies with weak foundations that cannot keep up with Taobao’s pace, but source merchants with supply chain advantages can easily join Douyin.

Douyin e-commerce has unstable profits, but you can get in early

31. Due to the decentralized traffic distribution logic of Douyin, the traffic of Douyin cannot be sustained and stable. The attribute of interest e-commerce makes the operators never stop, and they are thinking every day about how to create content that can arouse the interest of buyers.

32. This leads to the fact that the profitability of practitioners cannot be guaranteed accordingly. When the popularity comes and the traffic is good, they can make a lot of money; when the popularity goes down, they cannot make money and may even suffer losses.

33. Due to the instability of interest e-commerce traffic, it is very difficult for merchants to develop products, plan ahead and prepare inventory. Therefore, it is observed that the majority of businesses currently developing on Douyin are still centered around personal IP, and there are relatively few brands entering the market.

34. My personal analysis of the reasons is that, on the one hand, traditional brands are not willing to spend too much energy on refined content creation; on the other hand, the brand’s reporting mechanism requires a complete plan to make a decision. After the interim results and output are predicted, a comprehensive evaluation must be made before implementation. The instability of TikTok does not allow brands to make decisions on the spur of the moment.

35. In general, I think Tik Tok is still worth doing now, but before getting started, you need to figure out whether you have the ability to create interest, whether through live broadcast or short videos. If you have the ability, then you can do it. Otherwise, it is better to study the technology in traditional e-commerce. Although the traffic is small, it can be sustainable and stable after all by taking one step at a time.

36. In the future, how far Douyin e-commerce can go depends on how the platform improves the profitability of merchants. In addition to interests, some e-commerce factors are incorporated to improve the sustainability and stability of merchants by optimizing the logic of algorithm recommendations and traffic distribution. If people who create content with their heart can see the prospects for future development, rather than relying on luck, the platform will be able to develop better and more and more people will join in. In fact, Douyin has also been doing this, such as search, product push under personal order pages, and the independent mall that has been circulating.

37. If you have the ability, I think it is better to enter the Douyin e-commerce as early as possible.

Practical feedback on Douyin’s interest-based e-commerce

38. A Douyin e-commerce operator shared with me a 3C personal care small appliance brand he had served. It only entered the Douyin e-commerce market in May. At the company's strategic level, it attaches great importance to and is optimistic about Douyin e-commerce. Therefore, it invested heavily in building a professional live broadcast room and formed a large Douyin live broadcast team.

39. The brand ranked in the top 20 of Douyin e-commerce 3C home appliance brand list in the third quarter, with a single store GMV of nearly 50 million and Qianchuan Live broadcast consumption in the tens of millions. If we only look at sales, this brand is undoubtedly successful, but after calculating gross profit, it is found that it is an overall loss.

40. This is partly due to the problem of goods. Although the company attaches great importance to this channel, the early planning and strategy formulation are not in place, turning Douyin e-commerce into a clearance channel. The advantages of future goods are not obvious, resulting in low overall efficiency.

41. On the other hand, the return rate of live streaming sales is extremely high, and the return rate of 3C products is between 15% and 25%.

42. If you want to do well in Douyin e-commerce, from the perspective of the scene, you need to treat your live broadcast room screen like Tmall’s details page. The most important thing is clarity, clarity, and clarity.

43. From the perspective of content, Douyin’s e-commerce content is too homogeneous, and several sets of templates are copied from each other with no originality.

44. From the perspective of traffic, there are four main trends:

a. The traffic cost of Douyin is getting more and more expensive, and the CPM is rising;

b. If you want to increase the volume, the density of the live broadcast room determines the scale of your delivery;

c. The traffic accuracy is getting worse and worse, and it is not enough to target the precise group of people;

d. Products with high average order value and low repurchase rate will inevitably result in losses if they try to scale up.

45. When planning platform marketing activities, you don’t have to force your way through the platform nodes. The key is to make your own plans.

46. ​​When Douyin live broadcast explodes in a single day, it can have a spillover effect on other platforms. The cross-platform linkage needs to be planned by the brand itself.

47. Personally, I understand that interest-based e-commerce is the explicitization of invisible demands. Categories with shorter decision-making chains are more likely to explode on Douyin.

06What should we do?

48. If the entire industry is not good, then the individual brands within it will not be good either. For example, if the entire beauty industry is in a slump, then it will not be good for us who work in the beauty industry. For example, some time ago, two food and beverage brands were exposed to huge negative news, which directly led to similar brands being unable to appear in the live broadcast rooms of top anchors.

49. If the entire industry is doing well, then we can summarize and review together and do well in our own specific tracks. Everyone has his or her own ecological interest field. Business friends are all around us, so there is no need to make a big fuss over a small matter.

50. Find your own niche, stick to product management to drive performance growth, use financial management to drive the improvement of the efficiency of the entire team, and manage the entire organizational structure well to help businesses go further and become stronger.

Author: Knife Research Institute

Source: Knife Skills Research Institute