As the app dividend fades, will female players support the second half of Internet traffic?

Although Liang Yongan, associate professor of the Chinese Department of Fudan University, shared the topic of "How do we face love in the golden age of singleness" at a forum, his views actually explain many current Internet phenomena from a more fundamental dimension.

"In the next 30 years, I think that with the development of middle-classization and urbanization, our survival and human situation will become unprecedentedly complex. In these 30 years, one or two generations, as individuals, will grow up with an independent consciousness."

Sometimes sociological or demographic insights are more acute than the Internet's responses. As Leung Wing-on said, the middle class is growing steadily. This trend is also reshaping China's consumer market. Among them, women have become more economically independent due to the increase in the overall employment ratio and the improvement of their social status. Their strong consumer demand has become a new highlight in promoting economic growth.

Sacrificing for the family has long been an outdated concept. Women in the new era love themselves more, are willing to invest in themselves, and are happy to buy things they like to please themselves. A unique economic circle and economic phenomenon known as "her economy" has formed around women's consumption.

Some studies have shown that women are more active than men on both social platforms and e-commerce platforms. In the PC era, China also gave birth to several women's vertical portals or forums of a certain scale, such as PClady, YOKA, Onlylady, 55bbs, etc.

In the era of mobile Internet where the "she economy" is prevalent, vertical apps for women have always been the focus of entrepreneurs . Moreover, this market is very easy to segment. For example, there are products from the Meitu series for beauty selfie tools , and the recently emerging B612; there are products for menstrual tools such as Dayima and Mayu ; there is the merged Mogujie and Meilishuo in the vertical e-commerce market; there is Meila Beauty and Beauty Experience in the beauty market, and NetEase has incubated NetEase Aesthetics; there are Show Beauty and Beaver Home in the nail art market; there is SoYoung Plastic Surgery in the plastic surgery market; there are Yucheng and Happy Pregnancy in the pregnancy market...

The current situation is that, on the one hand, the "she economy" pie is very tempting, and too many companies want to share it, but on the other hand, the dividends of mobile Internet have faded. Not to mention that female entrepreneurs with pseudo- O2O needs have failed or are on the verge of failure, many established e-commerce products are also struggling to break through under the pressure of giants such as Tmall and Taobao .

It is not difficult to find out by searching the top 1000 products on the market that players who can continue to grow and develop in the women's vertical field basically have relatively high barriers in their respective categories. Although many products started out as tools and then sought community-based operations , e-commerce ultimately became one of the main ways to monetize. They have some overlap with each other, but in terms of genes and focus, the products in this field can still be roughly divided into three types: tools, e-commerce and community.

Tools Products

In the early days, tool products seized the demographic and traffic dividends and quickly acquired a large number of users. Moreover, the characteristic of tool products is to solve specific and concrete needs. However, the common problems faced by tool-type applications are: relatively low development threshold, numerous competitors, and too strong substitutability. The biggest embarrassment is that their monetization capabilities are completely disproportionate to their user base.

Among tool products, camera (photo taking, photo editing) tools are the most common. The Meitu product matrix that has been listed in Hong Kong includes Meitu XiuXiu , Beauty Camera, Meipai , Beauty Camera, Chao Selfie, BeautyPlus, etc. These products themselves have certain monetization capabilities. However, Meitu's current revenue does not come from software traffic monetization, but mainly relies on hardware such as Meitu phones.

Except for the Meitu product matrix that formed a monopoly advantage in the early days, other camera tool products mostly rely on advertising revenue to survive. But they also want to seek innovation and change. Socializing tools is one direction. However, products that currently want to enter the social field through camera tools can never get rid of the shadow of tools, such as in, which has been listed on the New Third Board, and Zuji, which became an overnight sensation.

Tool products have been transforming one after another, and the passage of time has proved that if a popular tool app wants to realize a business model , it must go through several thresholds: the first is to have a large number of users; the second is to have a good product experience; the third is to meet the personalized needs of users; and the fourth is to keep users staying longer.

Take camera360 as an example. This app was launched in June 2010. It is one of the photo-taking apps that is earlier than Instagram, and it had 30 million users in early 2012. Camera360’s user base has been comparable to Instagram’s for a long time. However, camera360 has always found it difficult to cross the fourth threshold.

In 2012, Instagram was acquired by Facebook. At the time, some commentators believed that this gave Camera360 and similar apps a mixed bag of information. The good news is that the acquisition price of Instagram has proved its value to a certain extent. The bad news is that Instagram has given up on independently exploring the path to profitability. This is undoubtedly a hint that these photo-taking apps, which once had ambitious goals and still have considerable users, are drifting further and further away from their ideals. Today, Instagram and video have become Facebook's most critical growth engines, but there seems to be no photo-taking and photo-editing tool as popular as Instagram in China.

In addition to camera tools, menstrual tools are one of the largest categories in the female vertical. Currently, the main ones that can survive in the market are Mayu and Dayima. In the past two or three years, the women's health management market has received increasing attention. Physical health, pregnancy and infant care, weight loss, and health care have gradually become popular sub-sectors. In the field of physical health, Dayima and Mayu form a duopoly.

The basic model of both Dayima and Mayu is to provide management tools as core services to attract users, and to increase user stickiness through community and content services. Both Dayima and Mayu have reached the E round of public financing . Both have encountered the problem of having a large user base but being unable to achieve large-scale profitability. This is also the embarrassment of many Internet products. The female user group is a gold mine, but how to develop it depends on the exploration of entrepreneurs.

Women's e-commerce products

According to the analysis reports released on the market, it can be concluded that the consumption behavior of women in the new era of "buy, buy, buy" shows four new trends.

1. Female consumers attach great importance to the appearance and shape of products, especially the emotional factors expressed therein. Products and designs that focus on personalized emotional marketing can easily induce women's "emotional impulse consumption."

2. 70% of Alibaba’s online e-commerce sales are contributed by women. Online shopping has become an important lifestyle for Chinese women. The Internet has amplified and fully released women’s love of communication and showing off.

3. The consumption demand of women in third- and fourth-tier cities who have not yet been brainwashed by big brands is underestimated. In the future, small and medium-sized consumer companies that represent new consumption trends will enter third- and fourth-tier cities with high-quality local products and are expected to achieve a counterattack here.

4. Modern women are more interested in enjoyment in their consumption, and light luxury consumption is becoming increasingly mainstream.

Against the backdrop of consumption upgrading, vertical e-commerce for women has flourished, and at one point had the potential to challenge Tmall and Taobao. Cross-border e-commerce is also in full swing. However, after several ups and downs, coupled with the dual adjustments in policy and market environments, these vertical e-commerce platforms are not having an easy time.

Mogujie and Meilishuo, the "sisters", joined hands in last year's merger wave, and caused a lot of controversy because of their full stock exchange transaction model. Whether in terms of early growth experience, business model or consumer positioning, the two e-commerce websites are exactly the same.

Although Mogujie and Meilishuo have expanded in scale after the merger, the overlap rate of their user base is very high. Public data shows that before the merger, the total transaction volume of the two companies was nearly 20 billion yuan in 2015, but after the merger in 2016, the transaction volume was only 9 billion yuan. 1+1 is not greater than 2. In addition, over the past year or so, they have been plagued by rumors of layoffs and acquisitions.

In addition, Taobao, the huge mountain that they find difficult to climb, has publicly stated that "Taobao is no longer an e-commerce platform, but the largest consumer media platform in the wireless era, and also the largest consumer community." There are not many opportunities left for Mogujie and Meilishuo.

Cross-border e-commerce companies are another story, but they are also facing encroachment from giants.

Cross-border e-commerce originated from the grassroots. With the rise of studying abroad, doing business, and traveling abroad, purchasing agents and overseas shoppers appeared one after another. In 2014, with the release of Customs Documents No. 56 and No. 57, the government recognized the cross-border e-commerce model for the first time, and China officially entered a period of explosive growth and rapid growth in cross-border e-commerce. It was also in that year that Tmall International was launched, Xiaohongshu received its A round of financing, and Miya Baby received its C round of financing of 60 million.

2015 was a major turning point for the vertical e-commerce industry, and the following two years saw a rapid reshuffle. MiTao went bankrupt, and after the 48 new policies, cross-border e-commerce companies gradually began to go bankrupt. Vipshop ’s share price was cut in half. Jumei’s initial IPO price was 22 yuan, and it was later privatized at 7 yuan. Among them, Xiaohongshu started as a community, which is different from several other pure e-commerce companies. Xiaohongshu also has good user retention due to the development of the community.

For today's women's vertical e-commerce, especially cross-border e-commerce, it is necessary to solve at least three problems: front-end traffic, disrupted logistics, and back-end supply chain. Although policies are constantly changing, relatively large cross-border e-commerce companies such as Tmall Global, Xiaohongshu, and Ymatou still have the strength to plan their business models and main businesses in advance. However, small and medium-sized enterprises that lack both funds and channels are likely to be squeezed out of the market.

Women's Community

Since the capital winter in 2015, which has permeated the entire venture capital circle , the once highly sought-after maternal and infant e-commerce has also been struggling. Looking at social e-commerce platforms, many of them have died due to the money-burning expansion of the community + e-commerce model. But Babytree has made a comeback in the seemingly red ocean of maternal and infant e-commerce.

Babytree's approach is to accumulate user content through the community, making the community a natural entrance for its moms, and then monetize it through e-commerce. For Babytree, the foundation is actually the community. It focuses on the characteristics of "exclusive services for mothers and babies and diversified needs" and provides quality control and user services around the needs of "safety" and "trust". In this way, it has a set of paths of "knowledge, recording, sharing and purchasing".

The first step on Babytree's road to profitability is to build content channels on the e-commerce side to maximize word-of-mouth communication among users. Brands and KOLs jointly present the lifestyle of maternal and infant products to users, and the platform does not improve the accuracy of users' portraits while guiding them to subscribe on their own. BabyTree adopts a streamlined and strict selection model; they choose brand owners rather than OEM manufacturers. Babytree believes that brands with long-term accumulation and market verification are the most critical link in ensuring quality.

Babytree, which has opened up a closed loop of maternal and child care, e-commerce and social networking, announced in June this year that its e-commerce platform Meitunmama has made profits of over 10 million yuan for several consecutive months. In April this year, Babytree packaged maternal and child health knowledge at the turning point of content payment and launched the "Kaijiang" product service for big health. This is the first step in their big health derivative service products.

Another representative of the pan-women's lifestyle community, Duitang, is also taking the steady route of "building a good infrastructure" like Babytree. In addition to the social experience, an important reason why interest community products can gain a long-term foothold in the fragmented era is that they can find unique usage scenarios and give young people who focus on personalized lifestyles a sense of belonging. After gradually improving the community's basic infrastructure such as collection, publishing, liking and commenting, Duitang has also moved from just sharing pictures to multiple content media forms such as pictures, texts and videos.

Based on the accumulation of community content, Duitang analyzes user subscriptions and browsing behavior tracks to understand their product and service preferences, and improve the accuracy of big data marketing and content services. The second half of the Internet requires companies to have profitability that extends to the industry. At present, Duitang has gathered hundreds of thousands of lifestyle creators in categories such as home, food, beauty and fashion, travel photography, painting and handcrafts, among which there are more than 10,000 opinion leaders.

Based on a large amount of social sharing data, Duitang can judge consumer demand and trends, and thus select products, recruit merchants, and eliminate goods. Therefore, only after having a high density of users and accurate services can business models such as e-commerce, brand advertising and even content payment come into being.

Like Babytree, Duitang also chose to sign contracts and cooperate with brands, and launched Duitang Class at the turning point of knowledge payment this year. Different from paid "success studies" content , Duitang cooperates with various types of lifestyle experts and industry experts. Through their experiences, thoughts and achievements, the courses focus on external shaping, the cultivation of interests such as illustration and flower arrangement, as well as interpersonal relationship development, emotional management, etc.

Duitang, which once looked small and beautiful, has taken a path different from Mogujie. Its traffic logic and revenue structure are similar to those of BabyTree. The data announced by Duitang is that it has signed cooperation agreements with nearly 80 brands and agents, and the number of product SKUs has reached 2,000. Without external traffic purchases, it has achieved a high conversion rate of 6% and a high repurchase rate of 70%, achieving scaled revenue and break-even.

Last year was the first year of content entrepreneurship , and Babytree and Duitang have both been working hard on the content economy. The venture capital circle and ordinary users have continued to pay attention to the content to this day. All kinds of products are trying to open the content information portal and get involved in short videos , but the key is how to use the content to serve their users well. Stickiness for the sake of stickiness is not a long-term solution. In terms of scenario-based content accumulation, Babytree, Duitang and other companies that have already started to make profits can serve as a reference for the path.

Final Thoughts

Even something as simple as a photo can be broken down into information such as time, scene, location, people, weather, posture, and whitening. Can this information serve modern photography needs? If women’s vertical products want to create value, they cannot just be tools and provide shopping services, but must also provide services with barriers.

The challenge of tool-type products is substitutability. There is currently almost no successful path to transforming tools into communities. How to continuously innovate in tools and attract users is the core of the core; the core of e-commerce is the supply chain. Whether it can continuously strengthen the supply chain capabilities after waves of battles and squeezes from large platforms is the focus of the focus; the key to community products is content accumulation and dense coverage of user demand scenarios. Women's communities in the form of Zhihu and Douban will be more vital in the future.