Taking "Suning Store" as an example, a three-dimensional analysis of the O2O online operation of community convenience stores

According to the statistics bureau, in 2015, the total retail sales of consumer goods exceeded 30 trillion yuan, of which online retail sales amounted to 387.73 billion yuan, accounting for 12.8%. The "new retail" mentioned by Jack Ma at the Yunqi Conference is to use the ideas and technologies of the Internet to improve the efficiency and meet the needs of the remaining 87.2% of the offline retail market worth more than 26 trillion yuan. The O2O project based on community convenience stores is the practice point of "new retail" closest to consumers.

Last year, Suning Group tried out the community O2O project "Suning Store". The app was launched in February 2016 and the first physical store opened in April. It is expected that the project will be fully rolled out this year. This article will take Suning Store as an example and try to analyze the online operation of community convenience store O2O from the dimensions of business logic, user characteristics, product features, etc. (Note: This article is not limited to "what" Suning Store has done in its operation, but takes it as an example and focuses on "what can be done").

1. The business logic of community convenience store O2O

The O2O we are talking about can be roughly divided into commodity type and service type, and the core business revolves around the sale of commodities or services. The commodity-based O2O model focuses more on the price, category, quality and supply chain capabilities of the commodity, while the service-based O2O model focuses more on the service itself. The O2O service based on community convenience stores attempts to improve the efficiency of existing convenience stores and reduce inventory, site, labor and other costs by combining online and offline operations and reversing orders and supplies. At the same time, it covers the surrounding consumers more comprehensively and provides corresponding services based on the consumption needs of community residents.

Taking Suning Store app as an example, its business logic is: based on convenience stores, it directly faces surrounding C-end consumers and makes profits by selling goods and services . The core here is "commodities", including commodity category selection, supply channel expansion, commodity packaging and marketing , and the ability to integrate the entire supply chain. The focus of operations should also revolve around these areas. The goal is to provide enough, good enough and cheap enough goods, and to optimize the entire process from ordering to delivery, which includes warehousing, distribution, and services.

Category selection

Category operations solve the problem of "good enough and enough". Traditional convenience stores mainly operate fast-moving consumer goods with low average order values ​​and high consumption frequency, which are also the main consumer demand of community residents. During the product exploration stage, the categories displayed on the app should mainly be fast-moving consumer goods, with low-priced, high-quality goods as the core to connect with users. During this period, some life service products can be used to increase user stickiness and cultivate user habits, such as financial services, phone recharge, water, electricity and property payment, etc. After the transition to the mature stage, when user habits have been formed and trust has been established, some high-priced, low-frequency goods or services are then grafted in to increase overall sales and profits, such as home appliances, travel, insurance and other categories.

Take the Suning Store app as an example: the product is still in the exploration stage. The products on the app are divided into two parts. One part is mainly fast-moving consumer goods and fresh food sold in physical stores. One part is mainly composed of Suning.com’s online products. The module for paying daily expenses is also displayed, but it seems that the port has not been opened yet. After the exploration period, Suning’s electrical appliances can be integrated in the future, including connecting to Suning Financial’s Renxing Pay and other products and services. In short, the core logic of category selection is: to retain users with high-frequency, low-unit-price products, and to generate profits with low-frequency, high-unit-price products. It is also integrated into Suning Financial Services to provide a traffic entrance for online finance.

Packaging and Marketing

The purpose of packaging marketing is to sell goods at a low enough price. The marketing of community O2O should be centered on offline physical stores, and carry out regional targeted marketing, taking into account the characteristics of the consumer groups in the covered communities. In addition to traditional festival marketing such as Double 11 and Double 12, more emphasis is placed on daily activity arrangements. In the early stages of product marketing, the purpose is not to generate more sales, but to cultivate user habits and improve the retention rate of the app through subsidies, red envelopes, lotteries, sharing, etc. Product packaging and marketing integration should all be centered around user retention . After entering the mature stage, when the user scale reaches a certain level, the marketing strategy should also be adjusted according to the purpose of the operation.

Supply Chain Integration

Regarding user experience issues solved by the supply chain, Suning’s electrical appliances have a natural channel advantage. However, the characteristics of electrical appliances are not suitable for Suning stores which are still in the exploration stage. In the early days, Suning stores still had to rely on traditional fast-moving consumer goods channels for their product categories, but Suning’s supply chain advantages were concentrated in the middle and lower reaches, including warehousing, distribution, store operations, personnel management and other aspects. The whole process control from order placement to delivery is where operations staff have the greatest room for effort, including attracting traffic to physical stores, distributing online orders, opening up logistics, delivering goods by store staff, and other processes. When a consumer in the community places an order on the app, there is only one thing he cares about: time. Therefore, the focus of supply chain operations is on logistics and store personnel management. It is difficult for general franchised convenience stores to achieve full integration of the supply chain, as there are obstacles in personnel management, regional characteristics, supply channels, online tools , etc.

2. User Characteristics

The user consumption characteristics of community convenience store apps are generally high frequency and low unit price, and are more concentrated on the consumption of fast-moving consumer goods. The characteristic of high-frequency app products is that it may take some time for users to accept the app, but once they form a habit, it is difficult for them to leave. On the other hand, high frequency of use is more likely to lead to word-of-mouth communication and viral marketing .

Taking Suning Store as an example, from the perspective of user and product characteristics, the operation should focus on two aspects:

1. Cultivate user usage habits through subsidies, activities, user guidance and other means.
2. Consider how to leverage existing users and open up sharing scenarios to create word-of-mouth communication and viral marketing.

Subsidies and Activities

On the one hand, the store is used as the entrance to guide consumers who come to the store to download and use the app, and users are enabled to register and convert through subsidy incentives or activities. On the other hand, we use the community as the entry point to acquire users through offline promotion and BD expansion. The purpose of subsidies is not to generate sales, and it is even more impossible to create a demand out of thin air through subsidies. The significance of subsidies and activities is to educate and guide users to form usage habits.

Scenes and sharing

Based on the user's behavioral characteristics, we can find the scenarios in which the users are located, and then we can acquire the users by connecting these scenarios. For example, users who place orders late at night are likely to appear on food delivery apps or video websites, and users whose order address is an office building may appear on Maimai Weibo, and so on. Especially in the operation of community O2O apps, other platforms can be combined to open up scenarios. For example, by combining with food delivery platforms, sharing and dissemination can be driven by providing red envelope draws and other methods. For example: When you complete payment and share with Ele.me, you will not only get red envelopes from Ele.me, but also from Didi. When you use Weibo Radar, there will also be entrances to Didi and catering services in your area. This is the connection of scenarios. Specifically, in the Suning Store app, online, we can use the Weibo platform to do more sharing and dissemination based on LBS, and offline, we can use the food delivery and express delivery platforms to reach users more accurately.

User Classification

Community O2O has different user characteristics depending on the attributes of the communities it covers. Whether you can grasp these differences and operate in a targeted manner is the key factor in the success or failure of your operations.

Taking Suning stores as an example, different attributes of the communities they cover should also correspond to different operating strategies. CBD, new urban area, old urban area, school cluster area and other areas have consumers with different attributes. This places high demands on the meticulousness of operations. During the product exploration period, we should focus on and collect store consumption data, and profile and classify and grade C-end users in different regions based on dimensions such as average customer spending, activity level, consumption time period, etc. At the same time, stores are classified and graded based on housing prices, regions, demographic attributes and other dimensions. In this way, we can meet the characteristics of community users in terms of product and service delivery, activity resources, and operational strategies, and truly retain consumers in the store coverage area.

Big Taboos in Community O2O Operations

Generally speaking, the evaluation indicators and operation goals of app operators must include the "number of registered users", which accounts for a large proportion. However, in the operation of community convenience store apps, blindly pursuing user scale may be a very dangerous behavior. We all know that product operations require different strategies based on the different stages of the product, and a sense of rhythm is a very important basic quality for an operator. Products in the exploration stage should be operated around building word of mouth. Once a product is given a boost, the user base will increase, but the service will not keep up. When users have a bad experience, they will immediately uninstall your app and make negative judgments and spread negative opinions about your services.

To be more specific about the Suning Store app, its core is: the goal of attracting new users must be the service scope that the store can cover. Because the business logic is clearly defined, this is an app that uses community convenience stores as a base to serve the surrounding C-end users. Once a large number of users outside the service range download the app and cannot use the service, they will definitely uninstall it and never pay attention to it again.

Take Didi as an analogy. In the early stages of operations, Didi did most to fill the platform with taxi driver resources so that enough taxi drivers could use the app to accept orders. Then find passengers to use the app to call a ride. We can imagine taxi drivers as Suning convenience stores and passengers as community consumers. When there are more passengers than drivers on the platform, passengers cannot call a car using the app, so passengers will definitely uninstall Didi because of the bad experience. The same is true for Suning stores. Once a large number of consumers download the app but find that there is no Suning store nearby that can provide services, they will definitely uninstall the app. Therefore, the promotion of Suning Store app must be based on store coverage. Of course, there is a lot more he can do, such as connecting with Suning.com users, matching the delivery addresses of Suning.com users with the addresses covered by Suning stores, screening out Suning.com users within the scope of Suning stores, and pushing information to them (for information on Didi’s operations, please refer to my previous article "Didi is not a "pill", but continuously optimizing user experience").

3. Product Features

All Internet products can be roughly divided into two categories. One category is one-way service products, such as alarm clocks, calendars, and dictionaries. One type is products that allow users to create links, such as Didi, WeChat , Zhihu, etc.

The community convenience store app is between the two types. For Suning stores, users may only have a relationship with Suning, which is a simple purchasing behavior. However, the nature of community services also makes it possible for social factors to exist. So when it comes to the app's operational planning, there are two essential modules:

1. The creation of product personality or the tone of the product. People who live in the same area or community must have certain characteristics in common. There is a lot of room for operation in terms of how product operations can best meet the habits and needs of the majority of users.
2. The store-based o2o service must have the potential for LBS-based social networking. If this is used well and a community is operated and planned well, it may also help boost the product itself. But the basic premise is not to interfere with the main business, to clearly define boundaries and rules, and to enter the community in a hierarchical and rhythmic manner.

4. Final Thoughts

In the above, we have roughly explained the O2O operation logic of community convenience stores through business logic analysis, user characteristics analysis and product feature exploration.

"New retail" is not the same as e-commerce , nor is it the same as traditional store operations. As mentioned at the beginning of this article, the core of "new retail" is to apply the ideas and technologies of the Internet to improve the efficiency of traditional retail. Apps and physical stores are just a form of display. To improve the efficiency and profitability of physical stores and increase the scale and activity of apps, it is necessary to organically combine the two.

For Suning Stores, there is only one core business goal: to enable users covered by the stores to fully enjoy the services and convenience brought by the app. Suning Mini Stores will be fully rolled out in 2017. Its significance is not limited to the success or failure of this project, but also the actual practice of what Jack Ma calls "new retail". We will have to wait and see whether the convenience store industry, which has been rising against the economic trend in the past two years, can take off again with the help of Internet ideas and technologies.

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