How do lifestyle apps make money? Duitang, RiRiZhu, and Oxygen have something to say

Share a private recipe, help people choose a suitable high-end underwear, teach your boyfriend how to take beautiful photos...

KOLs (opinion leaders) who start businesses around lifestyle earn their first pot of gold on various app platforms. Compared with these individual entrepreneurs with relatively stable sources of income, the platforms that provide them with space to display their talents obviously face more problems and pressures: profit model, financing pressure, product tone, and business depth.

Since the entrepreneurial threshold in terms of technology and model is relatively low, mobile products centered around lifestyle entrepreneurship have appeared in large numbers in mobile app stores in the past two years. When capital had not yet focused on this field, these founders, mostly women, tried to find their own differentiated ways of playing between the two profit models of "selling advertisements" and "selling goods" and conducted commercial exploration.

Lifestyle is more difficult to promote than general entertainment and the market is more niche. After chatting with several founders in this field, the following article attempts to give a rough outline of lifestyle entrepreneurship from the perspective of three "left or right" questions.

Graphics or short video

This week, Zhang Juan, the founder of interest community and lifestyle App Duitang, made a relatively large adjustment to the company's business, expanding from the original graphic and text presentation format to the short video field, and providing large amounts of funds to support KOLs to contribute various short videos on food, travel, photography, home, personal belongings, etc. to the platform, with the aim of developing e-commerce by enriching the platform content.

This was not an easy decision.

Internally, the threshold for short video UGC (user-generated content) is higher than that for pictures and texts. Content quality requirements, bandwidth and storage requirements are all new problems. Before this, Duitang was a picture and interest sharing community similar to Pinterest.

Externally, from giants to grassroots entrepreneurs, short videos have been turned into a "red ocean" in the past year. Industry newcomer "Li Video" uploads 500 short videos a day; after Weibo added a short video entrance, WeChat also recently opened up the permission to upload and share short videos in local albums in Moments. Is choosing this time to enter the short video industry a window of opportunity or fierce competition?

Wang Xiaoxiao, co-founder and general manager of the food recipe sharing short video and kitchen e-commerce app "RiRiZhu", is optimistic that when more lifestyle entrepreneurs enter this field in the form of short videos, it can provide KOLs with more vertical opportunities and make it easier to attract the attention of capital.

Founded in Hong Kong in 2013, Ririzhu has received RMB 35 million in B+ round of financing. In the entire lifestyle app field, it is not easy to gain capital favor.

Zhang Juan gave a reason for expanding short videos. She analyzed that the conversion rate of video content for product purchases is on average four times that of graphic content, and is easier to commercialize than simple text + pictures. Duitang, which was established six years ago, only started its real commercialization last year, transforming from its previous e-commerce shopping guide to content e-commerce + brand advertising. In this direction, the conversion rate of content marketing is an important indicator.

In addition to comprehensive lifestyle short videos, some more vertical short video startup projects have appeared on the market, such as "Moment Video" which focuses on knowledge short videos, "Kitchen Stories" which focuses on sharing Western food recipes, and "One Person's Food" which shares lonely meals. Comprehensive platforms such as Duitang have also begun to welcome entrepreneurs from these vertical institutions, but the competitive relationship between them is a delicate issue that both parties have to face.

E-commerce or advertising

Content entrepreneurship has been talked about for two or three years, but entrepreneurs have never found a mature third profit path other than advertising and e-commerce. Whether selling advertisements or selling products, it tests whether entrepreneurs can implement a profitable model.

The starting point for a large number of lifestyle entrepreneurs is to register an account on the WeChat public platform and accumulate fans through content operations . When the number of fans is sufficient to negotiate prices with advertisers, advertising placement and brand advertising become the source of revenue for these entrepreneurs.

For grassroots entrepreneurs, starting a business with the help of the WeChat platform rather than developing an app independently can better absorb the initial cost issues. However, when there are too many people and too little resources, most of them are still in the trial and error stage as to what to do next. If you want to play big, you still have to rely on e-commerce to reach the product level. Luo Zhenyu, the founder of Luoji Siwei, holds this view.

Xu Daini, founder and CEO of high-end underwear recommendation app Oxygen, initially selected e-commerce as the revenue direction for the company, and the sharing of underwear testers serves the conversion rate. In order to improve the quality and tone, she did not open the consumer evaluation function on the product page. Since most of the underwear she chooses are from foreign mid- to high-end brands, the premium of the products in design and brand must be demonstrated by the experiencers on the platform. Therefore, she is very strict in selecting experiencers. "Before, one was approved out of 25 resumes, but now one is approved out of 10."

In Duitang’s current revenue structure, content e-commerce and brand advertising each account for approximately 50%, and the company has basically achieved a break-even. The number of monthly active users it announced is 35 million, more than 90% of whom are women. Judging from the recent transformation direction, content e-commerce will be expected to play a larger role in Duitang's revenue.

For content entrepreneurs, the gross profit margin of the advertising model is very high, while the gross profit margin of the e-commerce model is low, which requires completely different thinking systems from entrepreneurs. If both modes are taken into account, it depends on whether the entrepreneurial team can switch between the two modes freely. Wei Wuhui, partner of Tianqi Amiba Investment Company, focuses on this factor when looking at such projects.

Specifically, adopting the advertising model requires ensuring that the team is lightweight and has a small number of staff. If the Internet content startup is still based on the staff scale of traditional media, the salary costs alone will overwhelm the company. If e-commerce is the main focus, it is necessary to find ways to explore the warehousing and supply chain links upstream of the industrial chain. If it is limited to simple e-commerce shopping guides, this is essentially still an advertising model rather than e-commerce.

Consignment or own brand

Creating a lifestyle brand of one's own is the ultimate goal of many content entrepreneurs who want to maintain their original tone and quality, but this may be the most difficult path.

In Duitang’s online store, most of the best-selling items are imported standard products such as Japanese Job’s tears lotion and innisfree facial masks. The average customer spending is only around RMB 100, and the gross profit margin is relatively low, at most between 5% and 8%.

This is not the advantage of content e-commerce. This should be the world of cross-border e-commerce such as NetEase Kaola and Xiaohongshu that can purchase in large quantities to reduce purchase costs. The way out for content e-commerce is to focus on non-standard products with large premium space.

Zhang Juan positioned the company's future e-commerce business in a category similar to Muji's household products, including household items, daily necessities, cultural and creative products and other non-standard products. The gross profit of these products is expected to reach around 50%. She plans to combine the designer resources in this field, test the waters upstream of the industry chain, and try to create her own brand.

Gross profit margin is a baton that allows content e-commerce to gradually fade out the agency sales model and develop independent brands. Oxygen App's main model now is to purchase overseas underwear brands for domestic distribution. The gross profit margin of this model is 50%. If it moves upstream and develops its own brand, the gross profit margin is expected to reach 80% or even higher. This is the transformation direction of the founder Xu Daini, who built her own team to turn the plans of external lingerie designers into ready-made garments.

In terms of independent brands, Feng Min, the founder of Ruhan E-Commerce, has provided the industry with a relatively successful model. Ruohan's model is to drive the sales of its own brand clothing through the personal charm of internet celebrities. In addition to outsourcing the production to surrounding clothing OEM factories, it controls all aspects such as design, pattern making, fabrics, sales, and user management in its own hands. In this way, it also controls the pricing power of the goods and has the opportunity to try C2B customization services. The premium of the product above the basic attributes such as material is mainly driven by content marketing by internet celebrities.

However, Feng Min also faces operational pressures such as the rising cost of acquiring new fans.

As lifestyle startups develop in the direction of own brands, it is inevitable that the company's business will become more cumbersome. Cost pressure is a realistic problem that these content e-commerce entrepreneurs will face next.

Mobile application product promotion service: APP promotion service Qinggua Media information flow

The author of this article @KeyKey7 compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting!