Yuanqi Forest Private Domain Dismantling

This article analyzes the industry background and brand background of Yuanqi Forest , and disassembles Yuanqi Forest's traffic diversion strategy and private domain operation strategy. It is suitable for friends who are interested in private domain operations~

Case name: [Yuanqi Forest] Private domain strategy analysis

Case industry: E-commerce

Case objectives: attract new customers, promote retention, and convert to cash

Case tags: attracting more followers, increasing GMV

1. Background Research

1. Industry Background

Since 2018, the beer and beverage sector has shown a clear trend towards high-end development , with the rise of high-end freshly brewed tea drinks including Nayuki and Heytea. Mid-to-high-priced beverage brands represented by Yuanqi Forest have gained rapid recognition from consumers; high-end beer has risen, craft beer has grown rapidly, and low-alcohol beverages represented by RIO Weixun have expanded rapidly.

Even when mass consumer goods were collectively under pressure during the epidemic, the high-end trend of the beer and beverage sector remained unchanged and maintained a good growth momentum. The reason is that the main consumers of these high-end beers and beverages, young people aged 20-35, are more willing to pay higher prices for high-quality products to meet their own needs.

Data source: Discovery Report ([Everbright Securities] Beer and Beverage Industry Tracking Report: High-end trend is coming, price increase is rising)

(1) Driven by beverage costs, high-end products open up new opportunities

The price increase is mainly affected by cost factors. The prices of PET and corrugated paper have risen significantly. The leading companies have taken the lead in raising prices, starting an industry-wide price increase trend. However, consumer purchasing power was relatively low before, and there were no high-end categories with good sales performance. The mainstream price range was relatively low, and there was limited room for price increases.

With the rise of high-end products represented by Yuanqi Forest's sugar-free sparkling water, consumers' actual spending on beverages has increased, and the mainstream price range has moved up, opening up space for price increases for mid- and low-end products. Corporate concerns have been alleviated, making price increases less difficult.

The costs of the beverage industry mainly consist of raw materials such as white sugar and packaging materials such as PET and corrugated paper. According to the prospectus of Dongpeng Beverage, in 2020, the proportion of white sugar/bottle preforms (PET slices)/corrugated boxes in the cost were 30.8%/18.9%/7.7% respectively, accounting for a total of 57.4%.

According to the prospectus of Nongfu Spring, PET accounted for 31.6% of the cost in 2019, and the cost of raw materials + packaging materials accounted for 74.7%. From 2017 to 2018, the price of PET showed a continuous upward trend. The average spot price of PET in 2017/2018 increased by 19.7%/15.3% year-on-year respectively. On September 6, 2018, the spot price of PET reached the highest level in recent years at 10,980 yuan/ton.

The price of corrugated paper also showed an upward trend. In 2017/2018, the average market price of corrugated paper increased by +52.0%/+5.5% year-on-year respectively. It can be seen that beverage companies are facing certain pressure on the cost side, and price increases are natural.

Source: Everbright Securities Research Institute

(2) The trend of high-end consumption is obvious, laying the foundation for price increases

In the past, the price of mainstream products was less than 5 yuan. In recent years, with the background of consumption upgrading and the rise of convenience stores, high-end products have been launched one after another. For example, Yuanqi Forest launched sugar-free sparkling water in 2018 and the milk tea series in 2020.

Consumers are beginning to pursue quality and healthy diets. Coupled with the continued deepening of consumer education by major companies , the actual amount of expenditure on beverages has increased, consumers' acceptance of high-priced products has increased, the mainstream price range has moved up, and the high-end trend is obvious.

High-end products have opened up price space that is acceptable to consumers, which has reduced the difficulty of raising prices to a certain extent. Companies’ concerns about raising prices have been alleviated, and price increases have been implemented more smoothly.

2. Brand Background

Yuanqi Forest, founded in 2016, is an innovative beverage company with independent research and development and design. The brand adheres to the mission of "user first" and the concept of "global serving the world", breaks down taste barriers based on health needs, conveys the concept of healthy living, and provides a more considerate user experience.

At present, Yuanqi Forest's series of products have covered more than 30 provinces, cities, and autonomous regions across the country, and have been exported to many countries including the United States, New Zealand, and Singapore. Since its establishment, Yuanqi Forest has launched a series of sugar-free, low-calorie healthy drinks that are popular among consumers.

In 5 years, the company's valuation has increased from 0 to 30 billion RMB, and has become one of the top companies in the industry. During the 618 e-commerce festival in 2019 and 2020, Yuanqi Forest won the first place in sales of beverages on Tmall. In 2020, Yuanqi Forest's sales were close to 3 billion RMB.

Tang Binsen actually invested in a company that is very similar to Yuanqi Forest, and it started operating as early as 2015. In Challenger Capital's portfolio, we can see a beverage company called "Youxuan Guben", whose business model and positioning for the post-90s and post-95s people are exactly the same as Yuanqi Forest.

Image source: Business card compilation

Let’s take a look at its flagship product “Add a Little”. Its “three-no” concept of “rejecting high sugar, rejecting high calories, and rejecting increased fat” is highly similar to Yuanqi Forest’s current selling point positioning of “0 sugar, 0 calories, 0 fat”.

If the above two points are just coincidences, the following information can fully confirm them:

From the equity structure, we can see that Tang Binsen’s wife Xu Xiao was actually arranged to be a shareholder of this company, holding 6% of the shares. This is unprecedented in Challenger Capital's historical record. The time when this brand disappeared from the market was when Yuanqi Forest was established.

Financing:

According to Qichacha, Yuanqi Forest completed its angel round in May 2018, its Pre-A round in August 2018, its A round in March 2019, its B round of financing of RMB 150 million in October 2019, its strategic financing of RMB 14 billion in early March 2020, its strategic financing of US$500 million at the end of March 2020, and its strategic investment of US$200 million in November 2021.

3. User portrait

Judging from the age distribution, the majority of customers are women under 24 years old. Compared with men, women pay more attention to healthy living and care more about their figure. This is also in line with Yuanqi Forest’s slogan of 0 sugar, 0 calories, and 0 fat.

Data source: Entdata

From the perspective of geographical distribution, they are mainly concentrated in the eastern coastal areas and first- and second-tier cities . This is closely related to the convenient and smooth transportation network in big cities, and is also to a greater extent affected by the large group of young people.

4. User scale

Yuanqi Forest’s sales in the first half of 2020 exceeded 800 million yuan, and it ranked first in the beverage category on the Tmall platform for two consecutive years in Double Eleven and 618 sales in 2019 and 2020.

5. Product Overview

Its products mainly include sparkling water, milk tea, burning tea and Jianqingmei.

2. Traffic diversion strategy

In recent years, Yuanqi Forest has continued to build its brand and increase its marketing efforts. In addition to joining forces with popular film and television variety shows, Yuanqi Forest has also placed corresponding advertisements on popular channels such as short videos, social platforms, popular variety show platforms, and outdoor places such as elevators, acquiring customers through multiple channels.

1. Advertising

Advertising situation: popular variety shows

We-media platforms: Weibo, Xiaohongshu, WeChat official accounts, Douyin

(1) Information APP placement, mainly in Tencent News and Tiantian Kuaibao

(2) SEM search advertising

(3) Moments Advertising

(4) Tik Tok short video

(5) Variety shows

During the popular variety shows such as "Full of Energy Brothers", "Our Band", "Full of Energy Brothers", "Let's Go, Youngsters" and many other variety shows were on the air.

Judging from the contribution of Genki Forest’s variety shows to public opinion in 2020, the high popularity of the show "Full of Energy Brothers" has driven Genki Forest to win high attention from the media and users.

With diversified marketing methods such as high integration of brand and content, IP linkage, and social interaction, "Brothers with Energy" is highly consistent with the brand tone of Genki Forest, and has a high level of brand communication and user interaction. "Brothers with Energy" ranks first in its contribution to Genki Forest's brand media voice and user voice.

(6) Celebrity endorsements

Summarize:

Yuanqi Forest's investment is mainly in Douyin short videos and variety shows, among which "Full of Energy Brothers" has the greatest impact. It uses leveraged marketing and the influence of celebrity KOLs to attract new users and explore the monetization model of celebrity-led sales. Most of the people who watch popular movies and variety shows are young girls who pursue to be as beautiful as stars and improve their appearance. This is also the target audience of Yuanqi Forest. The short video platform mainly focuses on Douyin, sinking into third- and fourth-tier cities to enhance brand awareness and awaken demand.

2. Public domain traffic

(1) Taobao flagship store 868w

In 2017, Yuanqi Forest entered Taobao and currently has 868w fans;

(2) JD flagship store 1137.3w

(3) Pinduoduo flagship store 208,000

(4) Douyin: 578,000 followers

The search results include Yuanqi Forest, with traffic layout: the main account has 578,000 followers, the first post was on July 18, 2018, and 215 works. I have never posted any products on Douyin.

Content: Sparkling water production + daily love life (real life situations) + celebrity endorsements.

(5) Kuaishou 15,000

A total of 61 videos were released, the earliest of which was on January 14, 2020. The early content was mainly Yuanqi Small Theater + Yuanqi Office Daily, and the recent content overlapped with Douyin content.

(6) Weibo: 161.2w

Mainly focus on daily life.

Content: pampering fans, activities, daily chats, topic discussions.

(7) Xiaohongshu 88,000

There are more than 80,000 notes, which are mainly posted by KOLs. Traffic layout: KOL+main account has 88,000 followers.

KOL account: publishes recommendation notes, and evaluation notes have the highest number of likes;

Official account content: mainly publishes regular Fuli activities, sparkling water reviews, daily recommendations, and daily interactions.

(8) Station B: 729,000

Most of them are posted by KOLs. Traffic distribution: KOL + main account 729,000 followers;

KOL: evaluation, Yuanqi Forest apology comments, corporate analysis;

Official account: spooky adaptation, dream linkage, and beautiful advertisement.

Summarize:

In terms of public domain traffic, the order of Yuanqi Forest's traffic from high to low is JD flagship store 1137.3w>Taobao flagship store 868w>Weibo 161.2w>Bilibili 72.9w>Douyin 57.8w>Pinduoduo flagship store 20.8w>Xiaohongshu 8.8w>Kuaishou 1.5w.

It can be seen that public domain traffic is mainly in JD flagship store and Taobao flagship store, and self-media is mainly in Weibo, Bilibili, and Douyin. It can be said that it is a comprehensive layout that also caters to the mainstream platform for young people to obtain information.

3. Private domain traffic

Public account matrix: service account + subscription account + other accounts;

Mini Program: Membership Number + Marketplace Number + Dealer Number + Campus Welfare Number;

Enterprise WeChat & Community: Activity Group;

Video account: official account.

(1) Official Account: Service Account + Subscription Account + Other Accounts

Drainage path:

Users can follow the official account, use the automatic script set by the official account, add the company’s WeChat to join the FL group, or receive new member benefits through the mini program, and then place an order.

Summarize:

The official account is a service account, with 2-4 posts per month, mainly focusing on new products and welfare activities.

Highlights:

Through large coupons, users are guided to add the company’s WeChat account, and then invited to join the group chat. The large coupons say that there are only 11 copies left, which gives people a sense of scarcity. If you don’t buy it, it will seem like you are losing out.

The official account menu bar also has an entrance for receiving large-value coupons, which increases the probability of users receiving large-value coupons and making purchases.

(2) Mini Program: Membership Number + Marketplace Number + Dealer Number + Campus Welfare Number

The main operating stores at present are the Yuanqi Forest official store and the Yuanqijia membership store, and no other signs of operation are seen.

Official store traffic diversion path:

Member home applet drainage path:

Highlights:

There is a guidance page for users to join the group on the homepage of the mini program, which makes it convenient for users to add corporate WeChat to join the group chat and receive benefits.

(3) Community: activity group

The path is to follow the Yuanqi Forest service account, add Yuanqijia Xiaofei’s corporate WeChat, and Xiaofei invites you to join the welfare group.

Highlights:

By adding corporate WeChat to join the welfare group, you can participate in daily draws to increase the possibility of user repurchase.

Points to be optimized:

There is no other content in the group except the daily lucky draw. Every time a new person joins the group, the group will automatically reply to the message.

No benefits were announced in the group on Friday, the community welfare day. After asking in the group, the company’s WeChat privately sent the details of the welfare day. You can send it once at noon and once at night on Friday so that all users in the group can see the event.

(4) Video Account

Summarize:

The WeChat ecological layout is relatively complete, with entrances to mini-programs and official accounts, allowing new users to be added to the private domain experience in a timely manner. From the perspective of Yuanqi Forest's entire private domain positioning, the functions currently used by each module are shown in the following table. Through such an organizational design, a 4-in-1 private domain service system is formed .

Offline channels:

80,000 smart freezers were put into use in channels. In Yuanqi Forest’s total revenue, e-commerce accounts for less than 30%, and 60% to 70% comes from offline channels, among which convenience store channels account for the majority.

In first-tier cities, Yuanqi Forest’s primary target is convenience store chains that are more favored by young users. Taking Beijing as an example, Yuanqi Forest’s products were first sold in 711 and Convenience Bee. The latest milk tea series also appeared first in 711’s freezers.

The new generation of convenience stores is highly compatible with the consumption habits and needs of young users. Statistics from 711 show that consumers aged 20 to 40 account for 88% of the convenience store consumer population, which is highly consistent with the user groups of new consumer brands such as Yuanqi Forest.

In addition to the user base, convenience stores are also an important promotional base for new consumer brands. 711 has more advantages in Beijing, with nearly 300 stores in total, and more than 100 stores in Shanghai; FamilyMart has an overwhelming advantage in Shanghai, with more than 2,000 stores, and Lawson also has more than 1,000 stores. As instant drinks, beverages must provide consumers with convenient purchasing conditions, and convenience stores can best meet this demand.

Summarize:

Yuanqi Forest has achieved user growth and traffic by fully expanding its offline and online channels, and has enabled users to purchase products in any scenario by setting up convenience stores.

In general, Yuanqi Forest’s private domain conversion is relatively successful, and it can leave drainage entrances in both the official account and the mini program. However, the corporate WeChat is relatively mechanical, and there are only automatic reply messages in the group, and the operation of the group is relatively monotonous.

3. Private Domain Operation Strategy

1. Enterprise Micro

(1) WeChat nickname : Yuanqijia-Xiaofei

(2) WeChat avatar : The avatar uses a flower-shaped heart, which gives people a cute feeling. The flower gives people a vibrant feeling and is consistent with the brand name.

(3) WeChat background : A small flower, introducing the message “Come to Yuanqi’s to eat something delicious.”

(4) Personal introduction : When adding WeChat, [Friends Circle] will be displayed in the personal introduction, allowing strangers to quickly understand the Yuanqi Forest brand image.

(5) Personal introduction : When adding WeChat, the personal introduction will display [Friends Circle], allowing strangers to quickly understand the brand image of Adopt a Cow.

(6) Automatic welcome message : The automatic welcome message mainly includes giving large coupons, inviting people to join the group, and other content in the group.

(7) Moments content

One post every day, mainly recommending delicious food of the day. There will be new products on Wednesdays and flash sales on Fridays.

Summarize:

One advertisement per day will not disturb users. New products on Wednesdays and flash sales on Fridays can gradually cultivate user habits and encourage them to check Moments regularly. But there is not much interaction with users. To users, it is just an advertising account, not a real person, which can easily cause traffic loss.

Points to be optimized:

The content of the Moments is also relatively simple, and other content can be added, such as values, corporate life, etc. Each copy is relatively long, and you can't tell what the Moments is about at a glance. The advantage is that the copy is relatively neat and the Moments looks more comfortable.

2. Community

(1) Community name : Yuanqijia Official Welfare Group

(2) Welcome message for joining the group :

(3) Community type : general welfare group;

(4) Community size : about 300 people;

( 5) Community personality and positioning :

The group mainly includes Yuanqijia-Xiaofei, Welfare Xiaoyuanzi-Leilei, Yuanzi Chaotian, and member Xiaoyuanzi Dandan.

What we see now is Yuanqijia Xiaofei posting a welcome message to the group. The WeChat account and mini program account are also Yuanqijia Xiaofei. Member Xiaoyuanzi Dandan should be mainly responsible for answering user questions, and welfare Xiaoyuanzi Leilei sends delicious food every day. We haven’t seen Yuanqi Chaotian speaking in the group yet.

Summarize:

After staying in the group for a few days, I feel that the overall operation of the group is weak. There is only an automatic welcome when joining the group, and the presence of other small members is weakened. It feels like there is only an automatic welcome every day. The new products mentioned in the welcome message on Wednesday and Friday did not appear. The user experience is not very good, and it feels like the words are not kept.

Points to be optimized:

Publish benefits according to the welcome message, and other small Yuanzi need to be more active in the group to improve the overall group chat atmosphere and bring users closer.

3. Membership system

(1) How to obtain membership

It can be obtained by purchasing a membership card, which is divided into monthly card and annual card. The monthly card is 18 months and the annual card is 198 yuan.

(2) Membership Rights

There are 8 membership benefits in total, namely: 20% off on all items, save 70 every month, buy more and earn more, capital guarantee for opening a card, Friday carnival day, weekly tasting, be the first to buy new products, and double the points.

Highlights:

① The page is concise and the benefits are highlighted. Users can see what the benefits are as soon as they enter the page.

② Save 70 yuan every month, which is distributed in a tiered manner. This can increase the user's repurchase rate and stickiness, while also preventing the wool party from taking advantage of the wool.

Similarly, the form of direct cash back by buying more and earning more makes users feel that they are getting a bargain, and the mentality of "less meat is meat" is also better. At the same time, the higher the amount, the more cash back. For users, it is a waste if they don't use the coupons. With this mentality, users will consume again next month.

③ The card guarantees principal upon opening, which eliminates the user’s mentality of not being able to use up all the money. It also considers the user’s perspective and dispels the user’s concerns.

(3) Membership levels and privileges

There are 5 levels of membership. Each upgrade requires a certain growth value. The growth value is the user value score calculated based on the user's consumption behavior.

New members can enjoy four benefits: 100 points, membership vouchers, birthday gifts, and exclusive membership days. With each level up, member points change: level 2 points are 1.3 times, level 3 points are 1.5 times, level 4 points are 2 times, and level 5 points are 3 times. Points can be used to redeem physical items in the points mall.

(4) Points Mall

①How to earn points:

Users can earn points based on their actual consumption at a 1:1 ratio, and members can earn points at a 1:2 ratio.

②Use of points:

Users can use cash to deduct points at a ratio of 100:1. 100 points or more can be used to deduct cash, and the deduction amount shall not exceed 50% of the order amount; it can be used to redeem peripheral products.

Highlights:

1. Points are redeemable for a variety of users, and users can choose what they want to redeem, which can be redeemed for peripherals or actually offset against payments;
2. The threshold is low and it is easy to exchange in the surrounding area.

suggestion:

There are fewer types of redemption products, but some daily necessities can be added to expand user options.

4. Conversion Strategy

1. Traffic diversion strategy

Traffic is mainly directed through JD.com, Taobao flagship stores, Xiaohongshu, Weibo, official accounts, mini programs, and video accounts.

2. First order conversion path

(1) Official Account - Mini Program - New User Zone - Place an Order

(2) Add the company coupon app to the official account and place an order

(3) Add WeChat to the official account - enter the Fuli group - daily lucky draw - place an order

(4) Official Account Menu - Mini Program Order

Highlights:

① Large coupons guide users to place orders, making them feel that they will lose out if they don’t use the coupons. In addition, there is a threshold for using large coupons, which also avoids the wool party;

② Repeatedly stimulate and reach users. Large coupons can be seen from official accounts, mini-programs, and welfare groups. Repeatedly reach users and let them repeatedly deepen their impressions, thereby invisibly prompting users to place orders.

3. Repeat purchase conversion

(1) Welfare Group

Highlights:

Daily lucky draw interactions and coupon distribution guide re-conversion. Users can draw once a day, which can help users develop a habit and feel that prizes are hard to get.

I haven’t won a prize yet, but someone in the group has won a VIP coupon. By letting users experience the VIP coupons and enjoy membership benefits, we can increase user repurchases.

suggestion:

The form of the game can be richer. If possible, you can make a small development game to increase user stickiness and increase repurchase rate through browsing pages, signing in, completing tasks, etc.

(2) Membership system

Those who can become members are loyal users. By guiding them to become paying users, the repurchase rate of users can be increased.

Yuanqi Forest allows users to become members by purchasing monthly/annual cards, drawing for membership experience cards, etc., to obtain membership benefits and stimulate user conversions. As members, users can have special identity badges and medals to achieve a sense of accomplishment. Honorary rewards are also an indispensable part of the membership system.

(3) Group buying

Through group buying, users can buy their favorite items at a relatively low price. The cost to users is relatively low, and they only need to invite friends to join the group.

If group buying can provide certain benefits to the invited persons or provide discounts on first orders for new users, it should increase the order rate of the invited users.

1. Highlights and reusable points

Highlight 1: Private domain

Public domain:

The layout of private domain operations is wide enough. Basically, all the self-media platforms that Yuanqi Forest's target audience will use have been reached and operated. The main focus will be on Weibo, Douyin, and Bilibili, which are the main channels for young people to obtain information and have obtained a large amount of traffic.

Private domain:

There are entrances for adding corporate WeChat accounts in official accounts, mini-programs, and video accounts, which can add users in a timely manner and proceed to private chats to better provide operational services.

Highlight 2: Repeated promotion of first-order discounts

The large gift money for the first order is repeatedly reached to users and sent to users through official accounts, mini programs, and welfare groups, so that users can see the discounts at any time and place orders on the mini program.

Highlight 3: Strong business model

Yuanqi Forest has captured a large number of users by opening a large number of stores, adding freezers, and using its Japanese anime style. Users are likely to buy Yuanqi Forest in different scenarios, which are then converted online and diverted to its own private domain. Then, a strong group of repeat buyers is gradually screened out through the membership system, forming a closed loop.

2. Points to be optimized

Point 1 to be optimized: Referral activities did not trigger motivation

The only referral activities we see so far are group buying activities. These products are not in urgent need of users and it is generally difficult to motivate them to place an order.

Just by giving benefits to users through group buying, it seems that users are getting an advantage, but for the invited persons, there is no hook to prompt them to complete the first order conversion. Just like ordinary users can use large coupons to repeatedly reach out to new users to encourage them to place orders, the invited persons can get small discounts or other benefits on the basis of group buying, so as to encourage the invited persons to place orders.

Point 2 to be optimized: Operations are not refined enough

The operation of the group is relatively simple. There is only one daily draw. New items are added every Wednesday and the welfare day on Friday is not seen in the group. In addition, a welcome message will be sent every time a new person joins the group. It has no real value for users who have already joined the group.

You can increase the operation of the group, for example, by asking questions about Yuanqi Forest to increase the activity of the group. The group's welcome message can be made every 1-2 hours. The new products and benefits mentioned in the group will be released in the group on time.

The group can be subdivided into member groups and non-member groups, and further refined operations can be carried out for members.

3. Extended thinking

Private domain operations are ultimately human operations. If you treat every user attentively and sincerely and solve their needs, especially for retail products, users will naturally repurchase.

The wider the layout of the private domain, the more users may be attracted. For individuals, they need to consider which channel is more suitable for them and how much experience they can allocate every day. Secondly, for enterprises, how to more efficiently convert the endless stream of new users into repeat customers, or how to allow these users to undergo self-fission, is a question that needs to be considered.

Author: Flowing Years

Source: Daily Operation Case Library