Marketing strategy: How should social e-commerce platforms deal with the “mass exodus of promoters” during the “big reshuffle”?

There are currently four mainstream tracks in the social economy: low-price group buying, membership-based social e-commerce, community fresh food group buying and community marketing . Currently, Pinduoduo is the only one dominating the "low-price group buying" market. After Taojiji is thwarted, there will not be much impact. Of course, there is no certainty, because users are typical "buy where it's cheaper", and there is no stickiness at all. In addition, membership-based social e-commerce has become the main track, and it is the core track that all e-commerce giants are striving for.

In the absence of a new model that can "help mothers make money part-time or full-time" to replace it, membership-based social e-commerce will always maintain an upward trend. Because of the massive injection of micro-businesses, there are already nearly 48 million practitioners in this track. This is a huge track with unlimited potential. In the future, a unicorn similar to Meituan will definitely appear.

Therefore, this is a track that all e-commerce giants will not give up easily no matter what.

After several years of rapid development, membership-based social e-commerce has begun to take shape. Now it is time for the "giants to reap the benefits". So when Taobao, Youpin Youyu and JD Fenxiang have had enough of the excitement and decide to reap the benefits, other small and medium-sized social e-commerce platforms are really trying to survive in the cracks. Platforms including Yunji, Huasheng Diary, Fenxiang Life, Zebra Club, Darling Home and even some smaller social e-commerce platforms will all suffer "indiscriminate attacks".

Recently, the CEO of a small or medium-sized social e-commerce platform came to me to chat and seek a way out. He revealed his vicissitudes and helplessness. The core problem was that in just two or three months, the team of promoters had grown from more than 10,000 people to only a thousand active people left. In two months, there may be only a few hundred people left. Currently, the platform's gross profit is 30%, of which 20% is given to the promotion team, and the remaining money is used to support marketing red envelopes and operating costs, leaving almost no profit. Of course, we have tried various methods over the years, including canceling the membership threshold, receiving 3.88 yuan red envelopes every day, focusing on other platforms and not wanting to do clothing business, opening physical stores, doing short video live broadcasts, etc., but we have not found a particularly good way out.

To be honest, because there is really no particularly good way out, the fate of these large platforms will definitely be indiscriminate crackdowns.

I talked to a very experienced promoter. Before 2017, social e-commerce was particularly easy to do. The small and medium-sized e-commerce platforms grew very quickly. But after 2017, they basically could not grow in volume. The current market situation will only become more severe. Therefore, for those social e-commerce platforms that are just starting out, they have already missed the bonus stage and it is too late to start.

If you want to understand the competitive situation of membership-based social e-commerce, you must first understand the core driving force of this track. In fact, the simplest points are: having money for marketing; supply chain management to ensure low prices; commissions to stimulate the promotion team; and brand trust endorsement and building. Or to put it more clearly, the money will be distributed to the driving team, and the money will be used for subsidy wars to enter the market at low prices. Ultimately, it is still a game of "capital". Without strong backing, the road will only become smaller and smaller.

Pinduoduo raised 5 billion US dollars in financing before it took root in the lower-tier markets. After its listing, it continued to subsidize the market with tens of billions of dollars. It even lost 2.3 billion in the third quarter of this year but was unable to stop. Taojiji spent more than 1 billion yuan a year to reach 100 million users, but its dream of raising funds was shattered. Those that can survive until the IPO will be like Pinduoduo, and those that cannot will suffer the same miserable fate as Taojiji. The same principle applies to the membership-based social e-commerce sector. When it comes to competing in capital reserves, supply chain management, commission policies and even brand influence, small and medium-sized platforms are not even close. This is the reality, and it is not something that can be solved in one go by any operational strategy.

It is basically an established fact that valuable teams of promoters will focus on Taobao Xiaopu, Youpin Youyu, and Jingdong Fenxiang. Of course, they will not give up small and medium-sized platforms, especially some top promoters, who can easily maintain their income by just sitting back and waiting for death. But for the platforms, life will only get harder.

Therefore, when it comes to the future prospects of small and medium-sized membership-based social e-commerce, especially third-tier platforms, there is no particularly good way out in the face of this reality. This is really the general trend.

The transformation of small and medium-sized membership-based social e-commerce platforms is imperative:

1. The best strategy: Don’t hesitate, sell it directly if you can, and raise funds as much as possible.

For many startups, this may be a bit cruel, and they may also criticize me for suppressing entrepreneurship in disguise, but the reality is that it is basically irreversible.

All business models based on makers and old customers are basically unstable, because they are all "easy businesses" and the overall volume will not be that high. If you want to do well in this area, you must rely on a professional team of promoters, but what they value more are actually two aspects: commission and whether it is easy to sell. Regarding the question of whether the product is easy to sell, it mainly depends on the trust that the platform's influence gives to customers, the budget investment in attracting new customers, the low-price strategy of supply chain management, the commission ratio of downstream consumption, etc. In the competition at these levels, I really can't see any advantages of small and medium-sized platforms.

Therefore, while the user data is still good, sell what you can quickly, and raise as much financing as possible. There is no need to hesitate. It is worth a little money now, and if you delay it for another two months, the value will only be lower.

2. Middle strategy: Continue to improve operational policies and attack opponents at a lower level.

Judging from the current trends in the industry, membership-based social e-commerce has incomparable advantages, because even if you can't "make money by sharing", you can still "save money by purchasing on your own". This is the argument that a very senior promoter of Taobao Store shared with me during a conversation, and he used it to motivate users. Being an online Costco is the ideal state for a membership-based social e-commerce platform.

If you want to break through, you can only attack with dimensionality reduction in operational strategy:

① Membership fees must be collected. Where does the money come from to pay the promoters’ high-income commissions and even the cost of attracting new customers? It can only be membership fees. Although it will damage the possibility of increasing volume to a certain extent, customers will be relatively stable.

② Reduce the dimensions of membership fees and membership gift packages. When membership-based social e-commerce companies compete in the future, they will encounter two marketing methods: lowering the threshold of membership fees and increasing the sense of discount of membership gift packages. Therefore, small and medium-sized platforms must secure their position as early as possible. The current mainstream membership fee threshold is 399 yuan, so it can only be reduced to 99 yuan, or 199 yuan. This membership fee has two functions. One is to distribute the highest profits to the promotion team. The other is to provide the most favorable and more selected membership gift packages. Small and medium-sized platforms have basically no profit, what they want is volume and subsequent consumer conversion.

③ Attract a team of high-quality promoters and turn them into shareholders. Shares are valuable only for profitable companies. Otherwise, even if you keep 100% of the profits to yourself, what use will the shares be if the promoters are lost? So don't hesitate, just use them to turn your high-quality promoter team into your shareholders. In this way, you can be firmly tied to them, invite some senior promoter teams from other platforms, and use this thing to directly enter the market. There are already countless companies that have grown up by using this method. Now is not the time to “harvest users”, but rather to “harvest promoters”.

3. The worst option: social marketing + content e-commerce.

Originally, social marketing is the best strategy, but unfortunately, at present, almost all customer resources of small and medium-sized social e-commerce platforms are in the hands of promoters. The platforms basically have no chance to directly contact consumers and rely more on the initiative of the promoter team. Before there is a clear agreement, it is really difficult to effectively ask them to contribute their customer resources.

Because their little thoughts are very clear. I still keep them to run Taobao Shop. How can they contribute to the platform?

Therefore, once you get involved in social media marketing, it means breaking up with the promotion team to some extent. Of course, a direct break is not advisable, but there are some roundabout strategies. No matter how roundabout they are, the sensitive promotion team will definitely notice them. This is the most critical point of social marketing. Whoever controls customer resources and community resources will have a strong voice and can completely break free from your constraints to create a new platform.

In this game, small and medium-sized enterprises basically have to depend on the pusher team for their survival.

Therefore, community marketing + content e-commerce has become a good strategy for the transformation of membership-based social e-commerce. It is similar to the community marketing model of Hua Jie Shiyang, which builds a fan community of more than three million, and then uses live broadcasts, short videos, and grass-planting copywriting to directly sell goods in order to win a little voice. Of course, it requires the determination to change and more roundabout strategies to support it.

For membership-based social e-commerce, the current competitive landscape is very clear. The first level: Taobao Shop, Youpin Youyu and JD Fenxiang; the second level: Yunji, Zebra Club, Huasheng Diary, Future Market, Fenxiang Life, etc. The third level is smaller social e-commerce platforms. Whether it is competing in capital reserves or supply chain management, it is really a general trend that neither of them has an advantage or even has a huge gap in starting points.

When the big platforms go out of business, there really is a feeling of being left with nothing.

The sustainable development of small and medium-sized membership-based social e-commerce companies does not rely on luck or ingenious policies to push people, but requires innovation, transformation and change.

Author: PR Home

Source: PR Home