Analysis of Taocaicai’s operating methods!

Recently, I have become addicted to shopping for vegetables.

In fact, Alibaba entered the community group buying market relatively late, especially in the sinking market. Pinduoduo and Meituan, as the two leading brands of community group buying, accounted for about 80% of the market share.

Just three months ago, Taocaicai’s predecessor, Taobao Maicai, was just an inconspicuous one among a dozen second-tier brands, and together with other brands, it occupied the remaining 20% ​​of the market share.

Since I received the 3 yuan no-threshold coupon for Taobao last month, I have made purchases on 16 days out of 37 days, and placed a total of 21 orders.

Out of curiosity, I took the initiative to look for some information and suddenly discovered that since its official establishment on September 14 (the merger of the original Hema Market and Taobao Maicai), Taocai has been conquering the market like a hot knife through butter, with an average daily order of 8-9 million, becoming the most powerful competitor in the sinking market that Duoduo Maicai and Meituan Youxuan are proud of.

Such achievements are inseparable from Alibaba's strong supply chain integration capabilities, logistics and differentiated positioning focusing on "quality"...

But in the second half of the Internet today, operation-driven has become a consensus. Previously, there was a consensus in the Internet field: "Baidu focuses on technology, Tencent relies on products, and Alibaba focuses on operations." Alibaba's operations have always been widely praised.

Taocaicai's strong breakthrough and its operation team have provided a textbook case for the entire business world.

Today we will use the model of " GMV (transaction amount) = UV (unique visitors, which can be simply understood as customer flow) × conversion rate × average order value × repurchase rate " to analyze how Taocaicai operates from four dimensions: UV, conversion rate, average order value, and repurchase rate . Community group buying belongs to a category with high frequency, low customer orders, and low awareness, but the underlying logic is not only of great help to the online industry, but also to some practitioners who want to transform physical stores with Internet thinking.

1. UV

In layman's terms, optimizing UV means traffic diversion. There are two ways to divert traffic: external channels and fission. Let's talk about them one by one.

1. External channels

In 2021, Taobao's monthly active users exceeded 800 million. Taobao Special (Alibaba's "Pinduoduo"), which was launched last year, has made rapid progress. It only took 18 months from its launch to 240 million users.

Alibaba directly used its "nuclear weapon" to leverage the platform's in-site traffic to divert and empower traffic. Users can find the entrance to Taocaicai in the central position of the Taobao app and Taote app homepage. Users do not need to download a new app, which greatly reduces decision-making costs. The link is extremely short, which directly brings super high CTR (click-through rate).

I have always believed that you have to find the right pond to divert traffic. Not all traffic is in line with your strategy and positioning. Blindly diverting traffic is like selling down jackets on the beach in Sanya.

Taobao has a huge number of users, so its traffic-generating effect is naturally unparalleled. But among the many apps under Alibaba, why do they choose Taobao Special to generate traffic? Let me share my own thoughts.

Community group buying was born and developed in first- and second-tier cities. A group of veteran players such as Xingsheng Youxuan dominated these places in the past and enjoyed huge dividends in the early stages of the market.

However, these industries that originated in first- and second-tier cities must explore new markets as traffic reaches its peak and new competitors enter the market. Market penetration becomes an inevitable trend for them , and the same is true for community group buying.

We have an old saying in Shandong: "Those who get rich first are not rich." China has a huge sinking market. The victory of our War of Liberation was built on Chairman Mao’s strategic policy of "surrounding the cities from the countryside." The same is true in the business world.

The real giants in many industries are often born in the sinking markets. "If you own the sinking markets, you own the world." Meituan, Pinduoduo, Mixue Bingcheng and many other giants are successful practitioners of this theory. This includes Douyin, which became popular with its high-end short videos. Later, it seized the sinking markets through a series of measures such as sponsoring the CCTV Spring Festival Gala and supporting grassroots Internet celebrities, surpassing its predecessor Kuaishou, which entered the short video market several years earlier, and became the industry leader. (Pictures from Tik Tok and Kuaishou)

Duoduo Maicai surpassed the old community group buying platforms and came from behind, thanks to its huge traffic advantage in the sinking market, becoming the industry leader and occupying half of the community group buying market share.

As one of the dominant players in China's Internet, Taobao has already completed its expansion into lower-tier cities. Taobao Special, launched last year, is a product that is completely targeted at the county-level market. By directing traffic to these two apps, we can clearly see Taobao Caicai's strategy: based on Taobao's original users, use Taobao Special to penetrate deeper into lower-tier cities and compete with Pinduoduo and Meituan for traffic, with a full layout from first- and second-tier cities to fifth- and sixth-tier cities.

As community group buying sinks into the market, it indicates that the industry has entered the second half. Any industry will move towards differentiated competition in the second half, and the same is true for community group buying. It has shifted from simply competing on low prices at the beginning to competing on services, efficiency, technology, and supply chain... At this stage, Alibaba's advantages in traffic, supply chain, organizational management capabilities, etc. have begun to emerge. We will discuss this in detail when we talk about the repurchase rate below.

2. Fission

With strong external traffic, Taocaicai has also made a full-link multi-touchpoint design for user fission. The main five touchpoints are distributed in pre-sales, sales, after-sales and a game where you can get eggs every day.

Sharing cannot be separated from incentives. Taocaicai offers the following: as long as new users place an order of ≥ 3 yuan through the activity link sent by the sharer (or scan the QR code in person), the sharer can get 10 yuan in cash, and the person being shared can also get a red envelope. The activity is indeed very strong. Let's look at the five fission touch points one by one.

(1) Main navigation bar on Taocaicai homepage

When you enter the Taocaicai homepage, the first item in the main navigation bar has a super good location. The four words "Share and Earn Money" plus the icon of a 10 yuan red envelope present the content of the activity concisely and clearly. (Can anyone think of a more concise way to put it?) This touchpoint is in the pre-sales stage of the user's entire purchasing process.

(2) Next to the product page title

There is also a "Share and Earn Money" button here. Clicking it will display two options: "Share this product" and "Invite new users to receive a 10 yuan red envelope."

Let’s talk about “Share this product” first. The purpose of setting it is: when users see attractive products (such as discounted eggs, cheap pork...), they can share them with relatives and friends in need through WeChat with just one click.

Note: Sharing is done through WeChat, the national social software (some time ago, Tencent announced that it would open its ecosystem to Alibaba. The shortening of the link after the opening will bring higher CTR, conversion rate, and new users from the WeChat ecosystem).

In addition, if you share attractive products with friends and family, and the person you share with is a completely new user and completes the purchase, then you will also earn a 10 yuan cash red packet for attracting the new user. This is a two-birds-with-one-stone approach without any unnecessary operations. In addition, sharing products also creates a reasonable motivation for users to share with new users: recommending high-quality products to relatives and friends. It avoids the embarrassment of making recommendations purely for the purpose of earning a 10 yuan red envelope.

(3) Payment success page

A “Share and Earn Money” feature is also set up on this page. This touchpoint is in the after-sales stage of the user’s entire purchasing process.

(4) “My” personal homepage

At the visual center of the entire page, a "Share and Earn Money" button is set, and the subtitle is changed to "Guaranteed Cash" to dispel users' doubts and reduce decision-making costs.

(5) Mini game - "Get eggs every day"

The third position in the main navigation bar on the home page and the middle column of the "My" page are both very conspicuous positions. You don’t need to click in to read the title to know that this is an event to give out free eggs. It is still very tempting for some middle-aged wool-gathering parties (those who were keen on stealing vegetables back then).

The game is not difficult, it is simple and straightforward. You just complete tasks to earn feed to feed the chickens and let them lay eggs. Then the eggs harvested in the game can be exchanged for real eggs. The task system is also very simple, including signing in (stickiness), browsing popular products (user usage time), inviting friends (fission), and completing an order (transaction conversion rate).

Overall, Taocaicai increases the probability of users responding and sharing through continuous and repeated stimulation of multiple touchpoints throughout the entire shopping process.

2. Conversion Rate

The conversion rate mentioned here refers to the designs that Taocaicai has made to promote the first order from new customers.

I think there are two aspects to increasing the first order from new customers. One is a minimalist shopping process, or a short link, which is the foundation; the other is motivation and temptation. Both aspects are indispensable.

1. Short link

Let’s take Taocaicai’s product sharing as an example. If your friend shares a product link with you on WeChat, one way is that you click on the link, and then you will be prompted to download a Taocaicai app to browse and purchase.

Another way is that you click on the link to directly enter Taocaicai’s WeChat applet, or copy the link and open Taobao to jump directly to the product page. If you have to choose between the two methods, which one would you choose? The answer is self-evident. The second method is short link.

Not only the access method, but also the convenience of registration and input of the delivery address... all directly affect the user's behavior cost. Which one would you choose: spending 1 minute to register a new account or logging in directly with a Taobao account? Which one would you choose: re-entering the address or directly importing it into Taobao's address book? ...It can be said that every extra behavioral cost you make users pay will become a stumbling block on the road to user transaction conversion ; if you do not reduce the user's behavioral cost, you will have to pay a huge cost to make up for it.

Therefore, Taocaicai does not have an independent app. Instead, it is opened through WeChat mini-programs, Taobao, and Taote. This short link lays a good foundation for user conversion.

2. Motivation

Taocaicai has two incentives to encourage new users to place orders: discounts (vouchers) and product power (the comprehensive strength of factors such as the product's brand, quality, and price), allowing users to complete their first complete shopping experience at a very low cost (or even for free). This allows users to truly experience the platform's high-quality products, convenient operations, fast logistics, etc., and thus develop initial trust in the platform.

When a new user enters Taocaicai for the first time, a voucher window will pop up that almost covers the entire screen. You will receive a 40-3 grain and oil voucher (this is basically to make up the number), a 15-3 fresh food voucher, and a 3 yuan voucher that can be used when you spend 3.01 or more (no threshold). The latter two vouchers have a huge effect on promoting the first order of new customers, especially the one with no threshold. If only 100 million people claim it, Taobao will have to subsidize 300 million yuan, not to mention other logistics, labor and other costs. It's really a show of sincerity.

Close the pop-up window, Taocaicai has also designed a homepage specifically for new users. What distinguishes it from old users is that a new user exclusive section is set up in the most conspicuous position, which contains three gifts:

One is to return a 3 yuan voucher for orders over 8 yuan. This is not very effective for new customers' first orders, but mainly targets the repurchase rate.

The second one is the 3 yuan no-threshold voucher given in the pop-up window above;

The third is special products exclusively for new users, all of which are popular products with great product power, and the prices are more favorable than those for old users.

3. Average Order Value

Taocaicai’s methods of increasing average order value are exactly the same as those of physical supermarkets, mainly through two methods: discount coupons and related recommendations .

1. Full discount vouchers

As mentioned above, new users will be given two coupons for discounts. In addition, Taocaicai will frequently give users some coupons for discounts at this stage. The thresholds are very low, and the discount amount is not small relative to the threshold (mostly 15-3 or 20-3).

When users enter the Taocaicai homepage, a card and coupon package is set up next to the search bar at the top of the screen, allowing users with search intentions to directly see the coupons they hold.

In addition, the platform directly displays all the vouchers currently held by the user below the price of the product page where the vouchers can be used.

Taocaicai will also display all the user’s coupons at the bottom of the screen throughout the entire process , remind users of the progress of coupon usage (“Buy xx again to enjoy xx coupons off for purchases over xx”), and thoughtfully provide a special area for group buying, which is quite user-friendly. (Picture 7)

For the category of fast-moving consumer goods, as long as the amount of the discount voucher is set appropriately, it can have a great incentive effect on consumers. This is because the high frequency of purchases means that consumers don’t mind buying more, as they feel they can always use it. Even if the product is not originally in demand, the price will be greatly reduced after the discount, so they would rather take it than miss it. Therefore, the willingness to make up the threshold amount is still very high.

For example, when I went to the supermarket, I didn't want to buy sausages before I went, but today the supermarket had a discount of 8 yuan off for purchases over 50 yuan. At this time, I had already spent about 35 yuan, so I took a pack of sausages for 18 yuan to complete the bill, thinking that it would not be wasted anyway, and after the discount, this pack of sausages would be half price, so why not do it. So my average customer spending today has increased from 35 yuan to 45 yuan.

As for vouchers, Taocaicai has designed many touch points throughout the entire chain, just like sharing, which can be said to be pervasive.

2. Related recommendations

Taocaicai’s related recommendations are equally pervasive and subtle.

First of all, at the bottom of the first screen of each product page, there is a column called "Neighbors who have seen it also bought it", and it recommends more than a dozen other products that are related to the currently browsed product and have higher product power. It is like a supermarket putting hot pot base next to the lamb rolls, and it also uses the purchases of nearby neighbors as endorsement for recommendations, adding some social attributes.

Below the detailed description, intelligent recommendations will also be made based on the user’s purchasing habits.

Secondly, in the shopping cart, below the product list is an “I often buy” column, which makes recommendations based on the user’s purchase history. Below “I often buy” are also some smart recommendations. It's like the gum and other small items next to the supermarket checkout counter, except that it can display a richer range of products.

Don’t underestimate mediocre related recommendations, but many of the products I purchased were indeed put into the shopping cart from these recommendation columns.

4. Repurchase Rate

Repeat purchases are the most important source of profit for most businesses (except for those extremely low-frequency products, such as cemeteries). Almost all industries are not one-time deals, but instead value the lifetime value of users. In recent years, public domain traffic has peaked, and the crazy internal competition has caused the cost of acquiring customers to gradually increase. For example, Alibaba’s customer acquisition cost was as high as 822 yuan per person, which means that the platform needs to pay 822 yuan for each new user. This is also the reason why private domain operations have become so popular in recent years. Simply put, the two most important purposes of private domain operations are to reduce customer acquisition costs and increase repurchase rates.

In fact, the Taobao app is a private traffic pool, and Taocaicai’s design for increasing repurchase rate is also remarkable, mainly relying on three aspects : discounts, increased stickiness, and product power .

1. Offers

As mentioned above, Taocaicai currently frequently gives users some discount coupons. Its function is not only to increase the average order value, but also to lock in users' next purchase.

2. Improve stickiness

For a platform, stickiness means attention, and the important indicators directly related to attention are usage duration and frequency.

Just like finding a partner, the more you like him (her), the more you like to be with him (her), and the more time you spend together, the more you can’t do without him (her). This is stickiness.

Good stickiness will deepen users' understanding and trust in the platform and brand, and can also increase the sunk costs invested by users in the platform. The more sunk costs invested, the more attention users will pay to this thing, resulting in more sunk costs. The two promote each other, thus forming a reinforcing loop.

Taocaicai’s optimization of stickiness mainly focuses on sign-in, task system and floating prices .

(1) Sign-in and task system

The second icon on the navigation bar of Taocaicai’s homepage is a sign-in and money-collecting icon. When you click on it, a small red envelope will pop up. After closing the pop-up red envelope, your accumulated bonus will be prominently displayed at the top.

You can withdraw cash after signing in for three consecutive days. Unlike other sign-in systems, the Taocaicai sign-in system is extremely simple in design. Such a simple design directly reduces the difficulty of the task to a very low level and is very easy to achieve. This is very user-friendly and has a direct help in increasing user engagement.

Then below is the daily task system. You can also get bonuses by completing tasks. It is divided into three tasks: browsing products, placing orders and getting cash back, and inviting friends. The corresponding indicators are user usage time, conversion rate, and UV.

There is also the mini-game of getting eggs every day, which is also designed to increase user stickiness, just like the principle of grabbing parking spaces and stealing vegetables back then (friends born after 1995 can search for it themselves if they don’t know). It has been mentioned above, so I won’t elaborate on it here.

2. Floating price

Careful users (especially those who are sensitive to prices) may find that the prices of all products on Taocaicai change every day, basically fluctuating within a range. I have no way of knowing whether it is random or an intelligent and refined pricing system tailored to individuals.

But I personally guess that such a design has two main purposes. One is to enhance the user's browsing pleasure, especially for price-sensitive users. For categories like fast-moving consumer goods, which mainly target the sinking market, the number of such users is still quite huge.

Take myself as an example. My son likes to drink milk powder. Since I buy it frequently, I discovered the floating price design of Taocaicai. Then I would go in to check the price of that milk powder every day and buy a lot when it was low. The money saved relative to the high price is like picking it up for free. This is what we often say, consumers either get something cheap, or feel like they are getting a bargain.

Although I got a bargain on this milk powder, when I looked at the price of milk powder every day, I also saw many very tempting products, and then added them to my shopping cart and placed an order. Compared with the rational consumption of milk powder, this part was impulsive consumption after being stimulated, and I was not very sensitive to the price for this part of consumption. This is also an important reason why I placed 21 orders in 37 days.

Through my example, I believe you can see some clues. Another function of floating prices is to stabilize the overall profit margin of orders, attract customers with low-priced and low-profit goods, and make up for losses with high-profit goods. In simple terms, this is the principle.

3. Product power

I mentioned product power when talking about conversion rate. I won’t go into the professional and obscure economic definition here. What I think of product power is actually the comprehensive competitiveness brought to the product by all the relevant attributes of the product. In the last century, it referred to high-quality and low-priced goods, but in the Internet era, consumers have higher requirements for products. Take the products on Taocaicai as an example. The requirements are the brand, quality, price, logistics speed, after-sales service... It can be said that product power is the basis for users to trust and repurchase a brand, which is "1", and all the rest are icing on the cake, which is "0".

Thanks to Alibaba's many years of e-commerce experience, coupled with its strong supply chain integration capabilities, logistics, and financial resources... Taocaicai, which focuses on "quality" as its differentiated positioning, has higher prices for fruits and vegetables than Pinduoduo and Meituan, but its quality is completely value for money. Coupled with the frequent issuance of coupons, fast logistics, and high-quality after-sales service, its product power is still quite high.

Okay, I have basically disassembled what I have seen about Taocaicai's operations. Finally, if you ask me what else can drive growth, I think the standardization of community operations and the membership system are two points that can be focused on in the future.

Author: Official Operations-Damen

Source: Official Operations-Damen