How can online and offline APPs complement each other’s strengths?

The specific strategies for enterprises to implement the Internet should be different for different industries and product types. The impact of the Internet on channels will depend on the role of physical stores in the purchasing process and the intensity of information exchange.

In the past few years, I have come into contact with many founders of traditional enterprises, including those in charge of the Internet within traditional enterprises. A common core confusion among them is how to prevent offline and online conflicts. I once had a good entrepreneur friend who didn't have a clear understanding of the offline and online relationship positioning. When he tried Internet business in the first year, he burned tens of millions of dollars due to wrong decisions in less than half a year.

Here, I would like to ask you:

• What should be the offline and online positioning of different industries?
• Does the online channel simply impact physical stores without any benefits?
• Why did Jack Ma 's Taobao have a huge impact on some retail stores?
• Why is he talking about new retail and getting involved in physical stores now?
• What exactly does new retail add to physical stores?

The story of Kidswant’s offline and online integration

Kidswant is a maternal and infant brand that operates based on user relationships. It mainly engages in the retail of maternal and infant products and the provision of value-added services, providing comprehensive solutions for shopping and growth services such as clothing, food, housing, transportation, play, education and learning for expectant mothers and children aged 0-14. It has an omni-channel shopping experience including physical stores, online PC shopping malls, mobile apps, etc. It is reported that its performance growth exceeded expectations, with the number of members reaching 13.79 million, 95% of sales revenue coming from members and 5% from individual customers. The membership conversion rate of users is as high as 76%, and the member repurchase rate is about 80%, of which 50% purchase an average of 3 times in two months.

I have also worked in the maternal and infant industry. Generally speaking, physical maternal and infant stores are greatly impacted by Internet channels. For example, milk powder and diapers are standardized products that are easy to distribute, and the online prices are more favorable than the physical stores. Why can Kidsland still stand out among maternal and infant physical stores? China Europe Business Review has made a special report on Kidswant. Kidswant’s Internet transformation has three characteristics:

1. User digitalization

I talked with a senior executive of Kidswant in mid-2017. He said that Kidswant’s technical team has more than 500 people and can greatly improve data operation capabilities. Based on data-based positioning needs, we can then provide reverse customized solutions to suppliers and optimize supply chain efficiency.

2. Employee Consultation

More than 60% of store employees are nannies, and Kidswant’s more than 2,000 childcare consultants provide users with professional and caring services, focusing on humane care. Kidswant has also hired parenting experts to serve as consultants in every store, such as providing full-time care for customers shopping with babies, setting up special areas for breastfeeding mothers, understanding customer needs before sales, and providing comprehensive product knowledge during sales.

3. People-customer integration model

Every employee is equipped with the “People-Customer Integration” mobile software, which is connected to the CRM system, product library and HR management system. Each member’s information and consumption patterns are recorded in the system so that employees can implement targeted marketing . In the WeChat group established by Kidswant, parenting consultants and members interact frequently.

The biggest feature of Kidswant’s physical stores is its offline user experience . Their physical stores go beyond just shopping functions and become a place for user experience and consumption with opinion leaders, Kidswant’s parenting consultants and partners as the main body. Kidswant is divided into groups according to baby's age and residential area. It provides online parenting exchanges, expert online consultations, categorized parenting knowledge, and a variety of offline activities . Kidswant pioneered the “ Mom Support Group ”, whose members are all mothers aged 25-45. They are responsible for delivery, solving the inconvenience of strangers delivering goods to homes. They also provide professional parenting knowledge and close guidance on a series of problems encountered by mothers.

The case of Kidswant tells us that what traditional corporate physical stores can do to resist the impact of Internet channels is: use the Internet to accurately understand user needs, build an online social communication platform to enhance brand awareness and favorability, enrich and diversify offline and online channels to respond to the purchasing needs of different users or the same user at different times, and spare no effort to increase offline user experience and improve user loyalty .

The impact of the Internet on physical channels should first be considered in two dimensions

The horizontal axis is the " information dimension ", which refers to the amount of information users need during the entire process of investigation, evaluation, purchase and after-sales, and the extent to which this information can be effectively transmitted online. Simply put, it is how much information users need to know when making a decision to buy something. Some industry products such as cars , houses, and fund products require users to spend a long time before making purchasing decisions, while categories such as books, retail, and milk powder have lower information dimensions and users can make decisions quickly without going to physical stores.

The vertical axis is the " physical dimension ", which refers to the interaction between consumers and products, environment, and other people during the purchase and use process, that is, how much this product requires a physical experience. The advantage of the physical dimension is that consumers can see the products (goods), physical stores can better provide a one-stop environmental experience (place), and consumers and salespersons can communicate face to face (people). The current new retail is the reconstruction of the "people, goods, and place" of the physical dimension.

According to the vertical and horizontal axes, products from different industries can be placed in four different quadrants, and the strategic positioning of offline and online integration is different. Specifically, the four quadrants are:

1. Brand Enhancement

The quadrant in the upper left corner of the figure is brand enhancement. In the field of brand enhancement, the user's experience of physical products, salespersons and merchandise atmosphere is very important. The main categories include fast food, convenience products, and home products related to decoration . The in-store experience is a fundamental component of purchase, so the web is not particularly well suited as a sales channel, but it can still be a good tool for communication and increasing brand equity.

For example, a company that sells French condiments can set up a website where users can take French cooking courses that include condiments that housewives will need. The website can also talk about French art and architecture, etc. This approach is to use the Internet for brand enhancement. Currently, IKEA is also using the Internet for brand enhancement.

2. Increased channels

The upper right corner of the picture shows the increase in channels. Most B2B products such as industrial products, real estate, automobiles, and non-standard construction products are the main categories. The single purchase price of these categories is relatively expensive. The digital focus of this quadrant is not online transactions . In this case, companies need to combine offline and online channels as much as possible to provide services to meet customer needs. No single channel can do well alone, so the Internet is just a new online channel supplement.

It is pointed out here that with the increase in channels, traditional sales personnel need to reposition their job responsibilities. Sales personnel should free themselves from providing information on order status and answering routine questions in the past, and start providing consulting services to customers. For example, in the B2B industry, sales personnel should help merchants provide better pre-sales and after-sales services.

3. Channel Diffusion

The lower left corner of the figure is channel diffusion. Most low-priced goods belong to this area. Many retail industry products belong to this quadrant, such as books, music, toys, office supplies, clothes, etc. When the product categories are composed of only a small number of physical and information dimensions, the Internet can be a separate sales channel . Consumers can choose to buy in physical stores or online. This is also the case for most product categories on Taobao and JD.com . Offline physical stores of these categories often find it difficult to resist the natural online low-price model of JD.com and Taobao. Jack Ma's initial Taobao and current Tmall are the ones most likely to have an impact on categories in this field.

4. Channel Analysis

The lower right corner is the channel analysis, which mainly includes general retail categories such as travel, financial management , prescription drugs, etc. The prices are often relatively high, and it takes a long time for users to make purchasing decisions . The future of this quadrant lies in the transformation of brands from channel dealers to consulting consultants. For example, some travel agencies (tourism agents) that you see on the streets now will find it difficult to survive in the future if they do not change their positioning, because they are just middlemen. In the past, they only transmitted information and made money by taking advantage of the information asymmetry between buyers and sellers.

The specific strategies for enterprises to implement the Internet should be different for different industries and product types. The impact of the Internet on channels will depend on the role of physical stores in the purchasing process and the intensity of information exchange . In most cases, online channels cannot completely replace physical channels.

The correct approach for traditional enterprises is to identify the natural advantages and shortcomings of online and physical channels, and to establish an offline and online integrated service combination that can provide the most suitable service combination for different customers based on their own industry and product categories.

Remember, selling goods online is just an electronic transaction and cannot represent the entire e-commerce . In addition to electronic transactions such as online sales, corporate Internet transformation must also be planned in dimensions such as enhancing the brand, increasing experience, and optimizing operating costs. Don't think that just because you sell goods online, you can proudly say that you are an Internet company.

Baby King's milk powder, diapers and other categories belong to the lower left corner, while baby carriages and other categories basically belong to the upper right corner. Baby King has extended its consulting services to brand enhancement in the upper left corner and channel analysis in the lower right corner, thereby resisting the impact of online retail platforms such as Tmall.

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

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