Startup products: How to scale up offline?

Recently, I have been learning how startups can scale up (online and offline), and I am quite interested in the issue of "conquering cities and territories" for startups. In this article, I will sort out my thoughts.

Regarding conquering cities and territories, it can be defined as the second stage after the startup product has been verified by MVP. That is, after the startup product goes through cold start and seed user testing, it enters the scale expansion stage. At this stage, there are still many uncertain issues with start-up products, but the core functions are basically passed, and the details of the core functions will be quickly iterated and updated. Other marginal and uncertain issues will be temporarily covered up during the expansion stage. Only when the scale expands to a certain extent, such as exceeding 100,000, one million or even tens of millions of users, will it enter the stage of focusing on solving other problems, that is, optimizing and improving the product experience.

The large-scale expansion mentioned here includes offline layout in various cities and online multi-/omni -channel coverage. The purpose of layout is to increase the influence of products. Among them, this article understands offline expansion as being related to the initial entry into the city and subsequent expansion choices, and online is related to marketing techniques (this article focuses on offline, and online will be completed in the next article).

As a premise, startup products can be divided into many categories, including social products, content products, tool products, etc. The development paths of each category are different. Originally, this article should only sort out tool-type startup products (which I am currently paying more attention to). However, my current understanding is that the basic paths to large-scale expansion of these different categories of products are common. When sorting out, the article will focus on products with relatively efficient expansion paths (that is, regardless of whether they are tool-type products).

After 6 months of offline expansion, the number of stores has jumped to Luckin Coffee, the second largest coffee shop brand in China

First, let’s start with Luckin Coffee and look at the rapid expansion path of startup products. Why Luckin Coffee? Luckin Coffee opened its first store in January this year. In the six months since then, it has opened more than 500 offline stores across the country. In terms of the number of stores, Luckin Coffee has become the second largest coffee brand in China, second only to Starbucks .

This can be defined as a sudden increase in the number of stores, which is the third step in Luckin Coffee's offline store expansion. Correspondingly, the first phase of Luckin Coffee's offline layout is to start with a pilot in Beijing, testing the implementation effect in three stores: Wangjing Soho, Galaxy Soho and Lenovo Bridge (where the Luckin Coffee brand headquarters is located), respectively from the perspectives of App fission marketing, WeChat LBS store advertising , and employee consumption frequency/repurchase rate/price sensitivity. After the three-store test was completed, we selected the best marketing method and began to quickly expand stores across the country, supporting coffee takeaway delivery and in-store consumption, while providing consumers with subsidies such as 10% off (for example, for a unit price of 20 yuan, consumers only need to spend 2 yuan). The second phase was the relatively rapid entry into Beijing, Shanghai, Guangzhou and Shenzhen in February this year, with the establishment of nearly 60 stores.

From UCAR to coffee shops, common paths for rapid offline expansion

While understanding the pace of Luckin Coffee's offline expansion, we cannot ignore the founder of Luckin Coffee, Qian Zhiya, the former COO of UCAR. Among the four major businesses of UCAR, CAR, CAR Private Car , CAR Buy and CAR Flash Loan, all have achieved large-scale layout across the country in a short period of time. Qian Zhiya's heavy asset operation experience of thousands of stores has been grafted into the new retail consumer brand Luckin Coffee. A basic inference can be made here: an offline operation idea of ​​rapid national layout can be borrowed and even directly grafted into new product operations , although there are large differences in product attributes.

Comparing the offline deployment paths of lifestyle service consumer products such as Luckin Coffee and UCAR, the common expansion paths are: single-point testing, further site selection, and rapid national deployment after the test is confirmed to be feasible. Typical choices for single points are first-tier cities, especially Beijing and Shanghai.

Similar to this are ride-hailing startups. When Didi was competing with Kuaidi and Bumblebee in 2013, the former two focused on first-tier cities and stabilized core cities, then attacked more vigorously in cities where strong rivals had an advantage, and took a slow approach if the rivals did not move in. Bumblebee’s strategy is to deepen and improve a single city - Shanghai.

Path selection for expanding cities

What is different is the offline layout path of group buying brands. When competitors such as Lashou.com and WoWotuan focused on Beijing, Shanghai, Guangzhou and Shenzhen, Meituan chose to stake out territory in second-, third- and fourth-tier cities in the offline city battle in 2010, identifying the top 150 cities in the country as its entry targets. Three years later, when other group-buying brands were passively defending more than 20 cities, Meituan had already entered over 100 cities, breaking through the siege and entering the first echelon of group-buying brands.

The difference between group-buying products and the above-mentioned focus on first-tier cities when competing products are expanding is related to product attributes. The preference for purchasing consumer goods at a discount is relatively more universal than that of new service products (such as quick taxi hailing and consumer product upgrades). That is to say, when the product is expanded on a large scale, in addition to entering the typical first-tier cities and concentrating on attacking a few central cities, when the product attributes are targeted at more universal characteristic users, another option is to quickly capture the user minds and markets in non-first-tier cities.

Different groups of people and cities are targeted, and similar products compete and expand in different ways to achieve the same goal

In addition to the offline layout chosen by startup products from launch to large-scale expansion, we also found a certain common phenomenon. For example, Didi and Kuaidi mentioned above entered from Beijing and Hangzhou respectively, and then concentrated on competing in several core first-tier cities. The shared bicycles ofo and Mobike entered the market from Beijing (campus) and Shanghai (white-collar CBD) respectively. Ofo's users tend to be younger, while Mobike's users tend to be workplace-oriented, but they are ultimately competing for market users when deploying in various cities. Unlike the above-mentioned products, the threshold for external expansion of shared bicycle products is relatively low. In addition to competing in the domestic market, ofo and Mobike have also entered Europe, the United States, Japan, Southeast Asia, etc. to expand their market share.

Compared with shared bicycles that expanded from domestic to overseas, the offline preaching path of current blockchain startup projects has a more obvious outward tendency. Decentralized blockchain projects naturally have the attribute of being “not affected by national boundaries”. In addition to preaching in domestic online and offline communities, relatively well-known blockchain projects in China also carry out offline preaching simultaneously in countries such as the United States, Britain, Japan, South Korea, Singapore, etc.

The above cases have achieved relatively large impact/wider population coverage in offline layouts in various cities. If there is a need, you can learn more in depth. Here we only try to outline a basic route for the expansion path. I hope that the basic route will encourage readers to think further: what is the path for large-scale expansion after the launch of a startup product, and which path is more suitable for the products we are making.

Recently, I have been learning how startup products can expand in scale (online and offline), and how tool-based products can transition to commercialization and monetization. Welcome to communicate~

The author of this article @Danbchpk compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting!

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