Xiaomi Youpin Product Analysis Report

Boutique e-commerce is different from traditional B2C e-commerce. Boutique e-commerce touches the industrial chain, and the platform controls product quality to a certain extent. Among them, Xiaomi Youpin is a boutique e-commerce platform. In this article, the author made a product analysis report on Xiaomi Youpin, analyzing the operation of Xiaomi Youpin and the development of boutique e-commerce. Let’s take a look.

In April this year, Xiaomi Youpin announced its brand upgrade and proposed a dual-engine driven strategy of "technology intelligence + consumer products".

As a latecomer in the boutique e-commerce industry, how did it grow to its current scale, eliminating NetEase Yanxuan's first-mover advantage and becoming one of the largest boutique e-commerce companies in China?

This article will give you an in-depth understanding of the operating logic of this company and the boutique e-commerce industry.

1. Industry Analysis

Definition of boutique e-commerce

The prerequisite for industry analysis is to be able to define the industry.

Boutique e-commerce usually refers to in-depth cooperation between retailers and supply chains , opening factory stores that are directly integrated with the supply chain to maximize the cost-effectiveness of products. The most popular model among these is ODM, which means original equipment manufacturer (ODM), also commonly known as OEM. It means that the purchaser entrusts the manufacturer to take charge of everything from design to production, and the final product is labeled with the purchaser's trademark and the purchaser is responsible for sales.

This is quite different from B2C e-commerce platforms such as Tmall. B2C e-commerce provides a platform for merchants to settle in. After settling in, merchants sell their own brand products. The platform will not interfere with the brand's production and manufacturing and other aspects.

Through the above, we can understand the difference between boutique e-commerce and traditional B2C e-commerce.

2. Multi-dimensional Analysis

2016 was the “first year” of boutique e-commerce, as NetEase Yanxuan was established that year. The following year, Xiaomi Youpin was established. Why did boutique e-commerce come into being and why did it develop? I will combine the PEST model and analyze from four perspectives.

1. Politics

On September 20, 2018, the "Several Opinions of the CPC Central Committee and the State Council on Improving the System and Mechanism for Promoting Consumption and Further Stimulating the Consumption Potential of Residents" was announced, drawing a "blueprint" for promoting the quality and upgrading of consumption.

The opinions propose to accelerate the establishment and improvement of high-level, wide-coverage, and strongly binding quality standards and post-consumption evaluation systems, strengthen the construction of corporate and personal credit systems in the consumer field, enhance consumers' awareness of their rights and ability to protect their rights, and create a safe and secure consumption environment.

This policy fits the positioning of “selected e-commerce” perfectly.

2. Economy

China's per capita GDP growth rate maintained positive growth between 2010 and 2020, which means that people's income levels are increasing and there is a demand for consumption upgrades, thus providing a market for boutique e-commerce.

Data source: World Bank

3. Society and culture

1) Adequate market education

Taobao was founded in May 2003, and JD.com was founded in January 2004. By 2016, more than ten years had passed.

One of the most important events during this period was the “Double Eleven Shopping Festival” held by Taobao on November 11, 2009, in which Taobao and other brands jointly held promotions to attract consumers to consume on its platform. As this festival generated extremely high sales, other e-commerce platforms followed suit and created their own "Double Eleven" in the hope of getting a piece of the pie.

Since then, major e-commerce platforms have created various festivals to distribute coupons to stimulate consumer consumption, which has greatly increased consumer stickiness on e-commerce platforms and made consumers accustomed to shopping on e-commerce platforms.

2) Changes in consumption concepts

With economic development and the increase in personal income, some consumers in the new consumption era have begun to change their consumption concepts and pursue quality life: this group of people has a relatively stable and considerable income, so their demand for life is no longer limited to the pursuit of material things in the past. The consumption concept has changed from "the cheaper the better" to "reflecting one's unique personality" (accounting for 30.8%), and they increasingly ignore the value of luxury brands when shopping, and prefer cost-effective and high-quality products.

Data source: iiMedia Research Report丨2018 China New Consumption Research Report

Data source: iiMedia Research Report丨2018 China New Consumption Research Report

4. Technology

1) AI matures

The business model of boutique e-commerce requires the platform to be able to know the user's preferences, and then work with the upstream industry chain to create products that can meet user needs and carry out targeted marketing.

Artificial intelligence plays an important role in this field. For example, Taobao launched its "Thousand Faces for Thousands of People" recommendation algorithm in 2013.

In addition, several important events occurred in 2017:

1. "Artificial intelligence" was written into the government work report for the first time: On March 5, Premier Li Keqiang delivered the 2017 Government Work Report, pointing out the need to accelerate the cultivation and development of emerging industries including artificial intelligence.
2. Technology giants such as BAT have all made plans for artificial intelligence: for example, Alibaba announced the establishment of the DAMO Academy, which will invest 100 billion yuan in three years, and its research areas include quantum computing and machine learning.

With the rapid development of artificial intelligence, e-commerce platforms can easily obtain user portraits and preference data, helping the platforms to produce products that meet user needs and promoting the development of the industry.

2) Mature logistics system

By 2015, the national express delivery market business volume maintained a high growth rate of over 50% for five years. Since 2011, the express delivery industry has entered a period of rapid development, with the national express delivery business volume growing at a rate of more than 50%.

From 2007 to 2015, the national express delivery business volume grew at a compound annual growth rate of 42.7%, and the express delivery business revenue grew at a compound annual growth rate of 29.9%.

Data source: Industry Information Network

Since consumers' satisfaction with e-commerce platforms is directly proportional to the speed of delivery, e-commerce only makes sense if express delivery is faster than consumers buying offline. Therefore, the rapid development of the express delivery industry allows consumers to receive goods faster, which supports the overall development of the e-commerce industry.

3. Competitive Product Analysis

In the field of boutique e-commerce, Xiaomi Youpin and NetEase Yanxuan are far ahead in market share and user scale, and are in the first echelon. Other platforms such as Taobao Xinxuan, JD Jingzao, and Suning Jiwu have a smaller market share and influence, and are in the second and third tiers.

Xiaomi Youpin and NetEase Yanxuan are direct competitors and belong to the same tier in the industry, so they are representative of the industry. We will conduct a multi-dimensional analysis of the two companies to gain a deeper understanding of the differences between them.

1. Xiaomi Youpin

1) Development History

Xiaomi Youpin is a sub-product of Xiaomi, and its predecessor is Xiaomi Smart Home.

1. In October 2014, Xiaomi Smart Home was launched.
2. In March 2016, Lei Jun announced the Mijia brand at the Xiaomi Ecosystem 2016 Spring Communication Conference, and Xiaomi Smart Home was renamed Mijia.
3. On April 6, 2017, Mijia Youpin was officially launched. In August of the same year, the official Weibo account of Mijia Youpin officially announced that "Mijia Youpin" was renamed "Youpin".
4. In May 2018, "Youpin" was officially changed to "Xiaomi Youpin".
5. Xiaomi’s third-quarter financial report in 2019 showed that Xiaomi’s total revenue was 53.7 billion, of which nearly a quarter came from Xiaomi Youpin. In December of the same year, it reached a cooperation with Indiegogo, a well-known foreign crowdfunding website.
6. In 2020, business revenue increased by 8.6% year-on-year.

2) User scale

Since there is no public market research data, we used Qimai data to obtain the download volume of Xiaomi Youpin in the past year to indirectly prove the ranking of Xiaomi Youpin in the first echelon.

Xiaomi Youpin’s total historical downloads are over 20 million.

The number of downloads in the past year was approximately 4.31 million.

3) Business model

Since Xiaomi has been deeply involved in IOT, it hopes that Youpin can also serve this strategic goal. Therefore, Xiaomi has taken a differentiated path that is different from ODM (original design manufacturer):

1. Youpin is willing to export concepts and models so that everyone can do it while retaining the brand .
2. The cooperation models are diversified, in addition to investing in ecological chain enterprises, brands also enter the platform for commercial cooperation.
3. Providing a crowdfunding platform has become a driving force for the rapid growth of enterprises. Some enterprises have quickly obtained various resources such as financing and exposure after the crowdfunding projects were launched. Therefore, I believe that Xiaomi Youpin has the function of a startup incubation base.

4) Sales categories

It covers more than ten categories of consumer goods including home furnishings, daily necessities, kitchen and dining, home appliances, smart, audio and video, and clothing.

5) Sales channels

• Online: Xiaomi Youpin App, Tmall, JD.com and other third-party e-commerce platforms.
• Offline: Xiaomi Youpin and Xiaomi Home offline stores across the country. The total number of Xiaomi Home stores has exceeded 2,000 this year.

2. NetEase Yanxuan

1) Development History

NetEase Yanxuan is a product incubated by NetEase and belongs to NetEase's e-commerce business together with Kaola.

1. In April 2016, NetEase Yanxuan was officially launched, and its GMV exceeded 30 million yuan in the first month. Throughout the year, it drove NetEase's e-commerce, email and other service revenues to soar to 8 billion yuan, a year-on-year increase of 117.52%.
2. Encouraged by the impressive performance, Ding Lei said that he would rebuild NetEase within 3-5 years, making e-commerce the new engine of NetEase, and set a goal of achieving a GMV of 20 billion yuan in 2018.
3. However, with the increase in product categories and the improvement in performance, NetEase Yanxuan gradually began to lose control in terms of cost control, quality control, and supply chain efficiency. Its self-operated warehousing model resulted in high operating costs and a significant increase in inventory. In terms of capital turnover, Yanxuan, which had stockpiled a large amount of inventory, was gradually unable to cope. The 20 billion yuan target was not achieved in the end.
4. In 2018, Yanxuan experienced its deputy general manager leaving to start his own business, and the following year it was also caught up in a layoff storm.
5. In 2019, after the new CEO Liang Jun joined, NetEase Yanxuan began to transform into a brand.
6. After Kaola was sold to Alibaba, it is now the only e-commerce product under NetEase.

2) User scale

NetEase Yanxuan’s historical download volume is comparable to that of Xiaomi Youpin, with more than 20 million downloads, which is about 45,000 less than Xiaomi Youpin.

In addition, the number of downloads of NetEase Yanxuan in the past year was about 2.9 million, which is about 1.3 million less than Xiaomi Youpin.

Combining the business development history of the two companies, NetEase Yanxuan, as an industry pioneer, has not opened up a huge gap with Xiaomi Youpin. In the past year, its download volume has lagged behind Xiaomi Youpin. Therefore, I believe that NetEase Yanxuan is currently lagging behind.

3) Business model

Unlike the asset-light model of traditional e-commerce platforms, NetEase Yanxuan adopts the ODM (original design manufacturer) model, which provides consumers with high-quality and cost-effective products by directly connecting with upstream supply chain companies and then putting its own brand on them.

4) Sales categories

It covers 8 major categories: home life, clothing, shoes and bags, food and beverages, personal care and cleaning, mother-child, sports and outdoor, digital appliances, and strict global selection.

5) Sales channels

• Online: NetEase Yanxuan App, Tmall, JD.com and other third-party e-commerce platforms.
• Offline: 7 stores in Beijing, Shanghai, Hangzhou and other places.

3. Conclusion

In summary, NetEase Yanxuan fell into a slump after the crisis, which provided latecomer Xiaomi Youpin with an opportunity to overtake. At present, the strategies of the two companies have begun to differentiate. Xiaomi still insists on building an ecological chain; while NetEase Yanxuan is no longer sticking to its original business model and has begun to transform into a brand.

In the long run, I believe that the ODM business model adopted by NetEase Yanxuan has certain risks: upstream companies in the supply chain will not be satisfied with the cooperation model of providing products to boutique e-commerce and letting boutique e-commerce companies label their products.

According to the smile curve model, the supply chain is at the bottom of the product added value. Only by owning brands and channels can more added value be obtained to increase the company's revenue and gross profit.

Therefore, I believe that in the long run, once supply chain companies have achieved their revenue targets or have become well-known in the industry, they may no longer cooperate with boutique e-commerce companies and start to build their own brands and channels, and the entire business model will be at risk of unsustainable cooperation.

In summary, I believe that Xiaomi Youpin's business model has more advantages in boutique e-commerce, because by creating an ecosystem, this model provides the industry chain with opportunities to build its own brand and own R&D technology, which are all high value-added links. Compared with the simple "strict selection" model, this business model is more friendly to B-side partners and has the potential to create a win-win situation.

4. User Value Analysis

There are three main players in the boutique e-commerce market:

1. platform
2. consumer
3. Upstream manufacturers

If a platform hopes to develop, it must be able to meet the needs of suppliers and users. We will explore their needs and how Xiaomi Youpin meets their needs.

1. Upstream suppliers

Because Xiaomi Youpin has three types of cooperation models:

1. Self-operated;
2. Joint research and development by supply chain companies;
3. Brands move in.

We will analyze the needs of the supply chain and brands separately.

1) Supply chain companies

① Lack of funds

One of the biggest challenges for a startup is the lack of funds. Money is needed everywhere in the process of running a business, such as employee salaries, social security, and office rent. If it is a hardware company, material costs, warehousing costs, etc. are also involved.

If a company runs out of funds before its product is launched on the market, it will most likely go bankrupt.

② Production without supply chain

When the company manufactures the first sample and wants to find a supply chain for production, it will encounter the following problems:

Large supply chain companies are reluctant to accept orders from startups because:

1. Small order volume;
2. Startup companies are risky and will suffer financial losses if they go bankrupt.

The yield rate of products manufactured by small supply chain companies may not meet the requirements. For example, the yield rate of Hammer mobile phones had always been a problem at the time, which became one of the problems restricting its development.

Because the company cannot purchase parts at a lower price due to the small order quantity, this will:

1. The unchanged selling price squeezes profit margins;
2. If we want to ensure profits, we will have to raise prices and lose our price advantage.

2) Brand

① Reduce marketing expenses

When users shop on e-commerce platforms such as Taobao, JD.com and Pinduoduo, they need to rely on search and then select the products they want from the search results. This means that the chances of users purchasing top-ranked products are higher than those of lower-ranked products. In order to improve this ranking, companies can purchase traffic or advertisements to advance their rankings in order to gain higher exposure.

Raise your ranking to the top through advertising

The number of people who bought the products displayed on the first and second screens fluctuated greatly, so it is speculated that the merchants with fewer buyers may have purchased more traffic.

A large portion of Pinduoduo and Alibaba's revenue comes from advertising revenue, proving that many companies are placing advertisements on the platform in order to gain more traffic.

Once a company starts investing more and more marketing expenses in advertising, it will compress the company's profit margin and lay hidden dangers for the company's long-term development. Therefore, the company has a demand to reduce marketing expenses and improve marketing ROI.

② Difficult to break through brand barriers

For newly established brands, competing with established brands in the market is a huge challenge. Well-known brands have the following advantages:

1. With a large amount of funds, you can place more ads and even start a price war;
2. It has occupied the minds of consumers. Consumers trust it and think of it first when making a purchase.

But a new brand may not have an advantage in either of these two aspects.

If this new brand has huge amounts of money, it can indeed increase its influence through massive advertising, but if the product does not receive good market feedback, such an approach will instead accelerate the company’s demise.

2. Consumers

1) Difficulty in making choices

Consumers will have "difficulty in choosing" when choosing products in the red ocean market. The reasons are:

1. Little differentiation between products
2. The prices are close to each other, so consumers lose their judgment when faced with almost identical products, causing great trouble to consumers. The final possible outcome is to just buy one at random.

These socks all look similar, and the prices of different types of socks are similar.

2) Pursue cost-effectiveness

As mentioned above, consumers are beginning to pursue cost-effective, high-quality products.

3. Xiaomi Youpin

In order to solve the above pain points, Xiaomi Youpin has adopted the following strategies and measures.

1) Invest and cooperate in R&D

Xiaomi invests in companies and provides them with funds and technology, allowing these companies to jointly develop using Xiaomi's systems and, in part, use Xiaomi's brand.

for example:

1. Because of its successful bracelet, Huami Technology was listed on the New York Stock Exchange;
2. Because of its water purifier, Yunmi Technology was listed on Nasdaq;
3. Because of its successful sweeping robot, Stone Technology was listed on the Science and Technology Innovation Board.

In this way, the problems of insufficient funds and weak technology for start-ups are solved. In addition, they can also use Xiaomi's mature supply chain to produce their own products, obtain cheap and quality-assured parts, and increase profits and yield rates.

2) Targeted marketing improves corporate ROI

Because there are only a few SKUs for each product of the same type, there is no bidding ranking. Companies can reduce this part of marketing expenses to increase their profits.

In addition, Xiaomi Youpin is not a platform with large traffic. In relevant interviews, they said that what they want to do most is to serve a group of people well and "penetrate the daily lives of urban white-collar workers and the middle class." "We don't envy Pinduoduo for having one billion users. We hope to radiate from urban white-collar workers and the middle class to their surroundings gradually."

Therefore, Xiaomi will provide companies with targeted marketing channels and marketing plans to help them achieve higher ROI, such as the feature of Xiaomi Youpin: Xiaomi Youpin crowdfunding. In June 2017, the Xiaoji retro refrigerator was launched on Xiaomi Youpin crowdfunding and completed 300% of the crowdfunding target in two hours.

In this way:

1. Reduce corporate marketing expenses;
2. Targeted marketing plans can improve the ROI of a company's marketing investment, thus meeting the company's long-term development needs.

3) Eliminate brand barriers

Because Xiaomi Youpin has erased the brand, consumers do not consider the brand when purchasing, but focus more on the product itself, which provides a more favorable living environment for start-up companies.

4) Eliminate the brand to improve cost performance

Since cost-effectiveness = value/price, according to the strategic clock model, one way to improve cost-effectiveness is the low-price strategy: lower the price while keeping the value unchanged to meet consumers' pursuit of cost-effectiveness.

Combined with the smile curve model, since the brand in a product has more added value and reducing this part will not affect the quality of the product itself, its impact on the price can be reduced to reduce the price and improve the cost performance of the product.

Xiaomi Youpin has replaced all brands with a single brand, "Xiaomi Youpin," by cooperating with upstream supply chain companies through ODM, thereby reducing brand bargaining power.

5) Create “hot products” to shorten the consumer decision-making chain

Xiaomi Youpin emphasizes that it only produces 2-3 SKUs in one category and all of them are high-quality, good-looking products that exceed consumers' expectations.

Based on this understanding, we invest marketing funds in advertising promotion and brand building to make consumers trust Xiaomi Youpin's products. By providing consumers with limited choices through very few SKUs, consumers can place orders directly without hesitation, thus shortening their decision-making chain.

5. Commercial Value Analysis

Xiaomi Youpin’s core business is its e-commerce business.

An important indicator for judging whether a business can develop healthily is revenue. GMV = number of users * conversion rate * average order value. Therefore, we will analyze how Xiaomi Youpin affects these data.

1. Increase the number of platform users

1) Free channels

By pre-installing the App into MIUI, all Xiaomi phone users have installed the App and become potential platform users.

2) Payment channels

① Online and offline sales channels:

1. Selling products offline in Xiaomi stores;
2. In addition to the app, we also have stores on Tmall and JD.com.

② Use advertising promotion channels to guide users to download: Purchase advertisements such as Today’s Headlines news feed to guide users to download the App.

③ Advertising sponsorship increased brand awareness: sponsored the movie "Find You" and also promoted products to inFace's target users.

2. Improve conversion rate

1) Home page

The homepage has two core functions:

1. Exhibition of various activities;
2. Personalized recommendations.

Through these two types of modules, consumers' purchasing desire can be promoted and conversion rate can be improved.

① First screen

Attract consumers to click through activities on the carousel page, Youpin flash sale columns, and limited-time promotions.

② Second screen

Youpin headlines, event columns, and Youpin crowdfunding attract consumers to click.

③ The third screen

Set up limited-time flash sales to encourage users to quickly participate in the purchase.

④ Fourth screen

When sliding to the fourth screen, it means that the consumer is most likely not interested in all the activities above . Therefore, personalized recommendations are used to take over the consumer's traffic and recommend products to them based on their preferences.

2) Product details page

① Create scarcity

The platform will create scarcity through limited-time events and limited products to encourage consumers to place orders as soon as possible.

② Word of mouth effect

The product details page in the picture below shows that the product is ranked xth on the word-of-mouth list. This utilizes the word-of-mouth effect to make consumers identify with the product, believe that this product is a good product, and guide consumers to place orders.

③ Exclusive limited-time coupons

Use exclusive, time-limited coupons to create a sense of urgency and guide consumers to place orders.

④ Interest-free installment

It allows consumers to make impulse purchases and prepay future money.

⑤ Shaping consumption scenarios

The example in the picture below shows a scenario where a TV can be used for gaming.

⑥ Personalized recommendations

In order to prevent consumers from being uninterested in the product, personalized recommendations are set up at the bottom to attract consumers' traffic and prevent consumers from exiting the current page.

3) Shopping cart page

The shopping cart is set up with:

1. Get the coupon;
2. Information about limited-time discount activities;
3. Special offer sign.

These are all aimed at encouraging users to consume, and they also tell users "Place your order quickly because the price is favorable now, there won't be such a favorable price later."

4) Order page

① Seven days no reason return

Let consumers place orders with confidence without worrying about after-sales service, and they can return the products if they are not satisfied.

② Discounts and red envelopes

Stimulate users to place orders again by showing discounts and checking available red envelopes.

3. Increase average order value

1) Increase the amount of single consumption

Set free shipping threshold

Taking advantage of consumers' aversion to losing money on express delivery, a free shipping threshold is set to induce users to buy up to this amount, thereby increasing the amount of single consumption.

The add-on-buy button guides consumers to the add-on-buy page in order to speed up their decision-making and provide them with choices rather than asking them to think for themselves. Consumers may give up placing an order during the thinking process.

2) Increase consumption frequency

① Discount Calendar

The discount calendar lets consumers know what discounts will be available in the future, prompting them to shop on the platform on that day.

② Cashback red envelope

Launch cashback activities for new users to encourage users to return to the platform to place orders again, thereby increasing user consumption frequency.

6. Product Iteration Analysis

In order to deeply analyze the version iteration rhythm of Xiaomi Youpin and explore the product iteration logic, I have summarized all the core version iterations of Xiaomi Youpin from V1.0.7 to V4.18.0 as follows:

Based on the data of Xiaomi Youpin's historical downloads in the App Store on Qimai, we can see that the downloads of Xiaomi Youpin are continuing to rise, and the number of new downloads has not caused the curve to flatten, which is a "J-shaped" curve.

Therefore, it can be concluded that Xiaomi Youpin is still in the growth stage, and we can analyze the product in two stages.

1. Phase 1: Start-up

Since Xiaomi Youpin was formerly a module in the Xiaomi App and was an incubation project, it already had basic functions before it became independent. After becoming independent, as an app whose core business is e-commerce, it mainly fulfills the expected needs in the KANO model to improve customer satisfaction .

From the version iteration in the figure below, we can see that Xiaomi Youpin's versions from V1.0.7 to V2.0 have been serving this goal, for example:

1. One-click registration and login on mobile phones can meet users' needs for quick login instead of complicated operations such as entering account passwords;
2. Increase e-commerce promotion activities such as Double 11, Double 12, and 618;
3. Add functions closely related to product purchasing experience, such as user reviews and after-sales service.

In addition, the new user incentives and old user acquisition functions can help the platform obtain the first batch of seed users.

2. The second stage: growth stage

During the growth stage, the primary goal of the product is to attract new customers and occupy the market through operational activities .

Therefore, starting from V2.0, the iteration of core functions is significantly less than before, and more new users are attracted to register through various promotional activities and increasing new user incentives. From the iteration history, we can infer that the product's KPI is attracting new customers and conversions, which echoes the primary goal of the product in the growth stage mentioned above.

For example:

The new user reward has been increased from 150 yuan to 1,000 yuan, which means:

1. The cost of acquiring new users is increasing;
2. The company is willing to invest more resources in attracting new customers.

New users could buy Moutai at the original price, which was in line with the social hot spots at the time.

Xiaomi Youpin's marketing activities also serve the strategic goals of this stage. The emotional movie "Find You" sponsored by Xiaomi in 2018 was released on September 30th during the National Day holiday, after the launch of version V2.0, which is in line with the strategic goals of attracting new customers and occupying the market at this stage.

In addition, products have begun to focus on refined operations, such as launching personalized homepages and recommending different products based on different user preferences, which helps to increase average order value.

As shown in the figure above, Xiaomi Youpin carries the traffic of users who have not yet decided to order specific products through personalized recommendations.

To sum up: I think Xiaomi Youpin has a good grasp of its product development strategy, and the product iteration and operation strategies at each stage are closely linked to the strategy of that stage.

Startup phase:

1. Focus on the construction of basic functions, and complete the core functions of e-commerce such as comments and returns;
2. We have set up operational activities and their corresponding tools, such as Double Eleven, Double Twelve and other marketing activities.

Growth stage:

1. Increase the efforts to attract new users: focus on operations and increase the efforts to attract new users to increase the number of users and occupy market share; then combine brand activities such as sponsorship to increase brand exposure, let more users know about the products, and guide them to place orders on the platform.
2. Focus on retention: Personalized homepage recommendations and other functions to meet consumer needs and increase average order value.

After completing the first phase of laying a solid foundation, Xiaomi Youpin began to use the tools created in the first phase to attract new users and improve retention. This is its overall iterative step.

7. Product structure analysis

In the iterative analysis, we analyzed the iterative steps of Xiaomi Youpin’s product functions. Next, let’s take a look at what user needs these functions meet and how they are distributed throughout the app. This is mainly analyzed through product structure. The figure below is the product structure mind map of Xiaomi Youpin V4.18.0.

For the convenience of analysis, I reorganized Xiaomi Youpin's product structure according to users, scenarios, needs and functions and obtained the following table:

1. Overall analysis

The main target group of the App is consumers, so it needs to focus on meeting the needs of consumers.

Consumers may experience the following three scenarios during consumption:

1. Before placing an order, you may be concerned about what to buy, whether there are any discounts, etc.
2. During the ordering process, you need to pay attention to the free shipping, delivery address, invoice and other related information;
3. After placing an order, I will mainly pay attention to the delivery progress and apply for after-sales service.

1) Scenario 1: How does Xiaomi Youpin meet consumers’ needs before placing an order?

When a consumer places an order in an App, they can be divided into two categories:

① Clear goals

1. Consumers know exactly which product to buy, such as the Xiaomi Air Purifier Pro;
2. Consumers only know the direction of purchase, but have not yet decided which specific product to buy.

② Ambiguous goal: Open the app and browse around

For the first type of consumers:

1. The search bar at the top of the homepage can meet their needs very well. Consumers can directly search to find the products they want and then place an order.
2. If the search bar fails to meet the needs of consumers, for example, if consumers want to buy pens, they can also find the products they want more accurately in the secondary category "Pens" under "Daily Cultural and Creative Products" on the category page.

For the second type of consumers: the "Guess What You Like" on the homepage will recommend products based on the consumer's behavior, making the shopping experience more "shoppable" for consumers. During the shopping process, they may develop a desire to consume, which can meet consumer needs while increasing the platform's average order value.

Most consumers hope to get discounts when making purchases, so the promotional carousel page, Youpin flash sale entrance, and activity column designed on the homepage can meet the needs of this part of consumers, allowing them to quickly find discounted products and place orders.

2) Scenario 2: How does Xiaomi Youpin meet consumers’ needs during ordering?

Consumers have two important demands when placing an order:

1. Xiaomi Youpin does not have store coupons like Tmall, so consumers will pay attention to whether they can get a discount when placing an order.
2. Since Xiaomi Youpin’s express delivery fee is 10 yuan, which is on the more expensive side, consumers will have a strong demand for free shipping if they place a large order.

For demand one: There is a coupon redemption button in the upper right corner of the shopping cart. Clicking on the coupon redemption button will pop up a coupon that can be used for items in the shopping cart . This provides convenience for consumers and meets their desire for discounts.

For demand 2: There is also a "Add to cart" button in the upper right corner of the shopping cart, which guides consumers to the "Add to cart" page. The page is classified by amount range to facilitate consumers to choose products to add to the cart.

Meeting consumers' needs when placing orders through conspicuous and easy-to-operate buttons can not only improve consumer satisfaction but also increase the platform's average order value.

3) Scenario 3: How does Xiaomi Youpin meet consumers’ needs after they place an order?

After placing an order, consumers mainly have the following needs:

1. Check the logistics progress;
2. Apply for after-sales service.

To meet these needs, Xiaomi has integrated them into the "My Orders" module and placed them on the "My" page at the bottom bar to facilitate user queries and operations.

2. Summary

Through the above analysis, we can find that the functional design of Xiaomi Youpin can well meet the needs of users in three scenarios: before, during and after placing an order. At the same time, the high-frequency functions required by different users are highlighted and reasonably distributed in the product structure, so it can be considered a product with relatively excellent design.

8. Operational Path Analysis

The saying "Products are responsible for giving birth, and operations are responsible for raising them" also indirectly reflects the close relationship between products and operations. So how did Xiaomi Youpin operate this product and achieve rapid growth in a short period of time? According to the AARRR model, the author has sorted out the main operational activities of Xiaomi Youpin since its establishment as follows.

1. Attract new customers (A)

Method 1: Convert Xiaomi users

1. The predecessor of Xiaomi Youpin was Xiaomi Smart Home, which was a module in the Xiaomi App. It was later evolved into Xiaomi Youpin. At that time, the users of Smart Home were the first batch of seed users of Xiaomi Youpin.
2. By pre-installing the App into the MIUI system, all Xiaomi mobile phone users become potential users.

Method 2: Operational activities

1. Red envelopes for new users: Attract new users through red envelopes for new users, old users recommending new users to get red envelopes, etc.
2. Newcomer privilege: you can buy Moutai at original price.

Method 3: Multi-channel sales

1. Online: It is not only sold in the Xiaomi Youpin App, but also on Tmall and JD.com.
2. Offline: Use Xiaomi Home stores to sell products.

Method 4: Celebrity endorsement and title sponsorship

1. In 2017, it sponsored the movie "Finding You".
2. Use the spokespersons of the cooperating brands to attract traffic to the platform: for example, bring the Stone sweeping and mopping robot into the platform and start pre-sale at the same time, and use its brand spokesperson Xiao Zhan to attract traffic to the platform.

2. Stimulate activity (A)

After users download and register the app, they need to be activated to open the app, thereby increasing the daily and monthly activity of the app. Xiaomi Youpin’s method of increasing user activity is mainly through message push:

1. Xiaomi’s shopping festivals: such as the 816 Thanksgiving season, which uses promotions to guide consumers to open the app to shop;
2. Xiaomi crowdfunding: attracting consumers to place orders through novel and good products;
3. Youpin Toutiao: informs users of the most discounted products at the moment;
4. SMS notification campaigns guide users to click.

3. Improve retention (R)

1. Daily sign-in to receive red envelopes guides users to open the App every day;
2. In the game interaction module, the daily lucky draw guides users to open the App to participate in the lucky draw. If they win a coupon, they will have the opportunity to place an order again to increase the average order value.
3. After a new user places an order, there will be a cashback red envelope to guide the user to place an order again.

4. Share and spread (R)

1. Support charity: Xiaomi Youpin donated flood prevention supplies on July 21, 2021 to help Henan fight the disaster. Enhance product brand image through public welfare and trigger word-of-mouth communication among users.
2. The Weibo forwarding lucky draw event guides users to forward Weibo to expand the platform's influence.

5. Increase income (R)

We have introduced in detail the methods to increase revenue in the business value analysis section, so we will not repeat them here.

IX. Future Outlook/Optimization Suggestions

Through the above analysis, we understand the reasons for the rapid rise of Xiaomi Youpin. Where will it go in the future? Next, I will use the SWOT model to conduct a system analysis, hoping to draw effective conclusions from it.

In addition, you can also combine Porter's Five Forces Model to analyze the industry landscape:

Based on the above analysis, I believe that Xiaomi Youpin should take the following measures to achieve sustainable development:

1) Build an ecological chain around Xiaomi Automobile and occupy the traffic entrance of future driverless cars

Because Xiaomi has started making cars, the industry chain companies invested by Xiaomi Youpin have the opportunity to generate synergy with Xiaomi Auto and create a closed ecological loop.

For example: The user can say to the Xiaomi smart speaker: "Xiao Ai, help me start the car", and the Xiaomi car in the user's garage will start and turn on the air conditioner to wait for the user. This will not only be convenient for consumers, but also increase consumer stickiness.

2) Refined operations

A huge advantage of Xiaomi Youpin over other competitors is that its parent company Xiaomi Group has its own Android operating system MIUI, which is the entry point for all user operations, from which a large amount of user behavior data can be obtained for big data analysis.

Xiaomi Youpin can seek support from Xiaomi Group and, if user privacy permits, request the group to provide user data or portraits to help it conduct targeted marketing for Xiaomi mobile phone users. As Xiaomi mobile phones become the second largest in the world, a huge number of Xiaomi mobile phone users are the potential customer group of Xiaomi Youpin.

In addition, Xiaomi Youpin also has its own stores on Tmall and JD.com. When consumers of Tmall and JD.com become users of the Xiaomi Youpin App, Xiaomi Youpin should synchronize their background historical data to allow consumers to receive personalized recommendations when they log in for the first time.

3) Increase the weight of live e-commerce

Given that live streaming e-commerce is a major trend and that Douyin and Kuaishou are focusing on their business, I believe Xiaomi Youpin should also actively explore this business.

Author:Leon

Source: Leon Renren