Ten years of promotion, two years of entrepreneurship: From unicorn to the altar, all the experiences and gains and losses are here!

The O2O concept became popular two years ago. Whether it is a traditional company or an Internet company, there is a lot of story to tell when the word "O2O" is mentioned. However, since the second half of last year, many companies have had a hard time. Bankruptcy, layoffs, and acquisition have become words that follow O2O companies. I also experienced the entire process of a fresh food O2O company from its start in 2014 to its glory in 2015 and then to its decline in 2016. Looking back on these two years, I have mixed feelings and am overwhelmed with emotion.

The community fresh food O2O company where I worked before positioned itself as a mobile convenience store. Its main model was to cooperate with small stores around the community to provide online consumers with a one-hour delivery service for fresh food, dairy products, braised food, snacks, beverages and other food and general merchandise. Users placed orders on the APP, and small stores near the user's location completed the corresponding order delivery. From the perspective of the supply chain, we purchase goods from upstream manufacturers/distributors and earn the difference between purchase and sale prices. The cooperative stores are responsible for goods storage and consumer order fulfillment and delivery, and participate in the profit sharing of the difference.

The company has a relatively clear business model, but under the money-burning war in the entire industry, it only started to generate healthy revenue in the third stage. When it encountered the capital winter, it was too late. My biggest feeling during this process is:

1. Even when the company has sufficient cash flow and is developing rapidly, it must have a deep sense of crisis and must understand and comply with the characteristics of the industry and the essence of business;

2. From the very beginning, companies need to think about the problem from the user's perspective: What do users really need? What are users paying for? What needs of users do you meet? What is the value of your existence to users? This value ultimately determines what you are;

3. We must focus on endogenous growth rather than simply spending money to “force growth”, otherwise the model will not work. At the same time, the cost of user experience must be reasonable, and user experience must be able to bring relevant benefits, otherwise it will only be a beautiful "mirage".

The experience of these two years is extremely valuable and may be something that can never be experienced in other industries. So, I summarized the development process that I have experienced with the company in the past two years, as well as the pitfalls that have been avoided and not avoided, and shared them with you. You are also welcome to leave a message to discuss with me. (Since I am directly responsible for online promotion and belong to the large operation center, I am closely integrated with operations in terms of job functions and business cooperation, so the following will mainly focus on online promotion and operations.)

From the launch in April 2014 to the end of 2014, the company focused on setting up outlets to cover small offline cooperative stores. In general, the focus of work at this stage is to integrate resources and build various early layouts, with only Beijing as the only city involved in the urban layout.

At that time, there were not many product categories and SKUs, mainly dozens of kinds of fruit-flavored yogurt. Online orders are mainly completed through WeChat official accounts , with the average daily orders increasing from hundreds to thousands. The promotion method for C-end consumers mainly relies on ground promotion .

In September and October of that year, the company completed a tens of millions of dollars in Series A financing, which laid a financial foundation for its subsequent rapid development with APP as the main carrier.

By January 2015, the APP had been developed and launched on some application markets . However, due to the limited variety of products, including out-of-stock, product quality and timely service have not yet reached a certain level, and the product experience of the APP itself is not very smooth, it is judged that large-scale online promotion cannot be carried out yet.

But first of all, the basic work of promotion was done as follows:

1. Enter the application market. Accounts have been opened in all app markets, and the image introductions and text descriptions of the app markets have been refined to highlight key points and attract consumers. The original APP introduction picture was a cut-out of the APP software, which did not allow consumers to immediately understand what the APP was about.

2. Promote data system. Design and coordinate the technical department to build a promotion data statistics system. This is very critical for future promotion, and large-scale promotion requires judgment based on various data.

3. Start to contact relevant BDs extensively and make preliminary business preparations for a large number of BD cooperation in the future. Before the Spring Festival, we conducted the first joint activity with the mobile assistant of the application market. We provided the products and the other party provided the traffic location. The significance of this activity for the APP to be promoted was that we obtained valuable data.

4. Building a human resources team. Carry out organizational structure design and start building a promotion team. Human resources must be matched according to the scale of business. In the first stage, 1-2 people are sufficient.

During this period, the main tasks of online promotion are building a data system, recruiting a basic team, establishing traffic channels, and conducting early small-scale online promotion ROI tests.

The company's main promotion method is still to conduct ground promotion in office buildings, using product scanning codes to acquire new customers, such as scanning the code to register and giving away an orange. The concept of one-hour delivery played a big role in promotion. A user in an office building returned to his desk and placed another order, which was delivered in 30 minutes. The whole office was amazed, and everyone downloaded and registered, thus accumulating the first batch of seed users .

From a macro-environmental perspective, O2O began to become a trend during this period, and the company was also full of vitality. Everyone felt that they had caught the trend and had a bright future. In addition, it has gained the favor of well-known venture capitalists and began to introduce a large number of personnel to prepare for rapid development.

However, due to the lack of industry experience and the lack of professionalism and maturity in talent introduction and team configuration, we took some detours. For example, we did not pay much attention to operations at the time and there was no operations team. In fact, operations should have come before promotion.

The most notable feature of this period is expansion, the frantic pursuit of orders and new customers, and urban expansion. At that time, the number of cities covered rapidly expanded to 14, and the number of employees in the company peaked at nearly 2,000.

After the 2015 Spring Festival, an event was needed to quickly increase the number of orders, and as the overall market was hot, competition also became fierce. Therefore, we took the 3.8 festival as the background and launched a promotion that allowed users to buy products worth more than 200 yuan for only 0.37 yuan, and at the same time, it was strongly promoted by Focus Media Building Advertising.

This rough promotion led to an explosive increase in the number of users, with the average daily orders exceeding 10,000 that month. However, the subsidy investment for this activity is too large, and the ROI (return on investment ) of the activity alone is relatively low.

The company started to build an online operation department in March. With the arrival of an operations VP with experience as the head of a well-known group buying website and the formation of an operations team, online operations have been initially formalized and refined, and have begun to have functions such as category operations, user operations , event operations, and city operations. With the takeover of online operations, the promotion team has begun to take shape and online promotion can be carried out in an orderly manner.

Online promotion starts with comprehensive BD, especially application market BD (mainly joint activities), because the quality of the online user base of the application market is relatively high. Judging from the activity data, there are more users in first-tier cities in the major mainstream application markets. At the same time, we also started to use other channels for promotion and customer acquisition, including SEM , DSP, Guangdiantong , Toutiao , Fenmintong , etc.

In the later stage of this stage, the number of new customers placing orders per month through online promotion alone exceeded 150,000.

While acquiring customers online, we are also carrying out a large number of offline marketing activities. However, since the target group of ground marketing is not very precise, the acquisition cost of ground marketing seems to be low, but the average order value and repurchase rate are also very low. This was significantly improved after the optimization and adjustment of methods and approaches were made in the third stage.

From a company perspective, in order to attract users at this stage, the company began to implement a buy-one-get-one-free subsidy for all products, regardless of whether they are new or old. At the same time, the offline promotion part mainly focuses on acquiring new customers through the 1 yuan snap-up method.

According to the data, the average daily order volume reached 100,000, and there were a lot of orders from new customers (most of which came from offline promotions). The subsidies were high but the transaction volume was not high. The total online ROI is as low as 2.X, and the total marketing cost rate (online and offline customer acquisition subsidy costs/total transaction amount) exceeds 50%.

Amid fierce competition and the pursuit of capital, we have no time to think about what kind of users and orders we really want? Can the average order value cover the fulfillment costs? Is the quality of new customers high enough? Are the expenses subsidized on the products or on marketing? How to subsidize and design activities specifically? There was a lack of consideration for the strategic approach. The only thing we saw was the increasing order volume every month, and the atmosphere in the entire company was as enthusiastic as if it had been injected with chicken blood.

As the scale reached a certain stage and the continuous large amount of subsidies became unbearable, the company invited a senior e-commerce person in the industry who had worked at JD.com to serve as the company's COO in order to further strengthen its refined operations. After he took office, the company began to make strategic adjustments based on data, mainly in the following aspects:

1. Gradually reduce subsidies and replace product subsidies with discount coupons and coupon packages to increase average order value and retain repeat purchases.

2. Optimize various online scenario activities to support the implementation of promotion with richer product combinations and demand scenarios to improve order conversion rates .

3. Change the previous promotion evaluation method that only considers the number of new customers and the cost of acquiring customers, and instead evaluates the sales volume of new customers and the ROI of new customers including repeat purchases. Increase online promotion, pay attention to the ROI of new customers, new customer retention, the frequency of repurchase of old customers and the contribution value of the user life cycle.

4. Use data to prove that with ROI as the upper limit and retention and repurchase as the lower limit, optimize the crude and imprecise offline marketing, and only conduct targeted in-depth marketing and customer acquisition for white-collar enterprises in high-intensity work and long-term overtime, such as the Internet and finance industries. In terms of form, change the 1-yuan grab of products that are easy to attract users to take advantage of the situation into coupon packages that increase retention and repurchase.

5. Operations represent users to raise demands to purchasing, promote procurement based on sales, strengthen commodities and weaken subsidies, organize a whole batch of goods that meet consumption scenarios, subdivide and combine them into traffic-generating products, volume-generating products, profit products, clearance products, etc., and cooperate with lean adjustments in coupon strategies to design category coupons with different ROIs based on different gross profit margins.

6. Based on evaluation and measurement of labor efficiency and output, we began to optimize and eliminate a large number of redundant personnel and uneconomical cities.

7. Propose to maintain reasonable and high-speed growth, use reasonable growth to optimize costs and expenses, and use high-speed growth to offset the decline in internal morale caused by optimization of personnel and city cuts.

These strategies quickly produced results, resulting in a gradual decline in the proportion of fees while the online transaction volume maintained a monthly compound growth rate of 10% during this period. The total marketing expense ratio was eventually reduced to less than 20%. Since we maintained growth while reducing subsidies, the overall work spirit and atmosphere of the online operation center are very good. Everyone feels that they are beginning to create real value. The core of everything we do revolves around the company's goal of "increasing revenue and reducing costs." An operations colleague lamented at a company meeting that "we are finally starting to look like an e-commerce company."

As the goals are clearer, the product and operation capacity are constantly increasing, and online promotion has also begun to be promoted freely:

In the application market BD cooperation, the ROI of new customers is the highest, and the retention and repurchase are also good. The number of new customers is constant and will be maintained at a certain stage, so it is necessary to continuously cooperate with various application markets at the same time.

Paid promotion mainly relies on attracting users through landing pages to obtain user registration and send new customer coupon packages. Fine-tune the layout of the delivered materials, as well as the products and copywriting on the landing page to improve the conversion rate. Thanks to the refinement of promotion, improvement of product power and operational capabilities, the monthly ROI of new customers from all online paid promotions was optimized from 1.X to 2.X. Since the volume of online paid promotion is scalable, it can be gradually expanded while maintaining stable optimization.

Carry out extensive BD cooperation, conduct joint activities or distribute welfare packages with other online cross-industry APPs and payment tools such as QQ Pay/ Alipay, etc. The absolute number of new customers directly brought in by this is not large, but due to its great role in communication and publicity, it can indirectly increase the number of orders and ROI in other promotion channels.

The entry of third-party platforms, including Meituan Waimai , Ele.me, Baidu Nuomi, etc., directly generates order volume and transaction volume through the targeted operation of the operation department based on the characteristics of each platform, accounting for up to 20% of the company's total transaction volume.

In terms of local marketing, we have learned from the previous problems of simple and crude local marketing. Led by operations and promotion, we have concentrated the local marketing on large and medium-sized Internet companies, such as Baidu, 360, Tencent, Dangdang, etc., as well as financial companies with a relatively high concentration of white-collar workers, and have entered into joint welfare activities to attract new customers. The quality of new customers is very high, and the average order value and next-month retention rate also meet the standards (previously, the next-month retention rate of customers acquired through field marketing was 2/3 lower than that of customers acquired through online marketing, and the average order value was also half as low).

The data improvement in this stage is quite gratifying. The total transaction volume increased by nearly 100% compared with the same period of the previous stage, while online costs such as subsidies decreased by 70%. The overall ROI has increased from 2.X in the previous stage to around 7, and the average order value and monthly average order value have both doubled. The company has been moving in a positive direction towards "healthy growth and cost reduction".

However, this good stage did not last long. Things did not go as planned and the company encountered a capital winter. Venture capitalists began to demand profitability in the short term. Although the company had begun to adjust its strategy to pursue healthy growth in the third stage and was gradually improving, it was unable to achieve profitability in the short term due to the brutal expansion in the first two stages. Faced with the pressure of funds and financing, the company had to reluctantly choose to make drastic measures, continue to lay off employees, close cities, stop promotion, and give up growth, and had to enter a state of contraction for survival and suspended development.

All I can say is that everything has started to change for the better, but it would have been better if this change had come earlier. But the business world is like a battlefield, there is no such thing as if.

Having gone through these three stages, I would like to share my views on some key issues:

Online promotion of O2O

The most core primary indicator of online promotion in online retail is new customer sales that meet ROI and subsequent retention and repurchase, because all the company's strategies and decisions should be made around revenue. Compared with the revenue from new customers and the revenue from old customers who are retained and continue to repurchase, don't be superstitious about the number of new customers without quality.

Having good products, a good supply chain, and good operations are the prerequisites for online promotion. These factors have a decisive impact on your promotion indicators. Don’t promote for the sake of promotion, or you may attract new customers but fail to retain them.

In terms of details such as materials, landing pages, and promotional activities, the starting point must be the real needs of the company's target audience, rather than being disconnected from customer acquisition and supply. We need to really think about what these can bring to users? Why do users come? What needs and interests of users are met? Why do users click to download and place orders? From the promotion perspective, while utilizing various resources for integrated marketing, it is important to clearly analyze the different characteristics of each channel and resource.

Close integration of promotion and operation

In the pan-online retail industry, promotion and operation are closely integrated. Promotion is completed from 0 to 1, and operation is completed from 1 to N. Without well-run activities and well-organized products, promotion work will be very difficult, like sifting sand here and leaking gold there. If the operational capabilities are strong, then promotion can be more effective with less effort, using operational leverage to acquire new customers.

Vice versa, the quality of promotion and customer acquisition is also very important to operations. Good user quality enables operations to smoothly organize various activities, increase user average order value and continuous repurchase. This is why the sales of new customers and repeat purchases should be used as evaluation indicators for promotion. This is the only way to obtain the basic quality of users and activate the operation in the future.

The relationship between subsidies and consumers

Subsidies for consumers should focus on subsidies for new customers and gradually reduce subsidies for old customers. For old customers, they are mainly satisfied by the products themselves and operational activities. If there are too many subsidies for old customers, it means that the company's product and operational capabilities are not enough to attract users. During events and big promotions, subsidies can be provided to old customers based on the situation, but it is worth noting that subsidies for both new and old customers must be provided under an overall reasonable ROI.

Any business model cannot be separated from the essence of business. Whether it is e-commerce, group buying, or O2O, they are all online retail companies, and ultimately they must return to the commercial essence of retail: cost and efficiency. For pan-online retail companies, the ultimate core is still to compete on the competitiveness of your products; your supply chain management level; your internal management efficiency; your labor output; and your cost control capabilities.

This career journey makes me feel both regretful and gratified.

Unfortunately, by the third stage, our operational and promotion capabilities had improved greatly compared to the past, were better than our peers, and had great potential for the future. The situation was originally very good, but in the end, we failed. Moreover, judging from the data and word of mouth, we have indeed created and met certain consumer demand scenarios. The company's business model itself is still very valuable, but it just didn't last long.

I am glad that as a veteran in Internet promotion for ten years, I have been able to step out of my professional role of promotion through personal participation and practice in the past two years. I understand the characteristics of the industry and business operations from a global perspective, rather than being confused about success or failure, not knowing what is good or bad. It has been worth the trip. From these two points of view, I would like to thank the company and wish it the best.