Analysis of Perfect Diary’s private domain traffic operations!

This article explains why Perfect Diary’s private domain operation experience cannot be replicated from the perspectives of capital, product segmentation and supply chain, and brand public relations capabilities.

Recently, when I was communicating with e-commerce merchants about "why we pay attention to private domains", I found that many merchants are actually quite passive and blind.

I haven’t figured out why and how to do private domain. Usually, I just see that the entire industry is hyping this concept, and my colleagues around me are paying attention to this, as if I will miss something if I don’t pay attention to it.

Merchants in the beauty field, in particular, pay great attention to private domains, which is influenced by the "Perfect Diary" case (annual sales exceeded 100 million through private domain operations).

As a result, e-commerce merchants have begun to study and even copy the private domain model of "Perfect Diary". But in fact, Perfect Diary's private domain model cannot be copied at all, and is not suitable for other e-commerce merchants.

1. Why is Perfect Diary’s private domain success experience not worth learning?

Perfect Diary was founded in 2016. In the early days, it achieved phenomenal sales growth by placing a large number of mid-level KOLs on Xiaohongshu and operating private domain traffic on WeChat, becoming a star startup in the consumer goods industry. A big reason why everyone pays attention to Perfect Diary is that Perfect Diary generates approximately 20 million in sales every month through its private domain traffic operations of hundreds of thousands.

You may have only looked at the surface data and thought there was a lot of potential. As a result, training institutions began to disassemble and study its community operations, event planning, product selection strategies, content delivery, circle of friends operations, KOC personality creation and other operational strategies, using Perfect Diary's data to stimulate and induce companies to imitate and learn, or even directly copy Perfect Diary's private domain operation model.

I think this is extremely irresponsible. There are actually many essential things behind the Perfect Diary case. Few people tell the truth and only blindly encourage the company.

2. The essence behind the Perfect Diary case

1. 99% of merchants do not have the capital strength of Perfect Diary

Perfect Diary has gone through four rounds of financing since its establishment. The most recently disclosed round of financing took place on April 1, 2020, with a strategic financing of US$100 million and a company valuation of US$2 billion.

Behind the capital is the Internet industry's top operations team, who understand content, users, technology, and marketing. Such a professional team is very good at integrating high-quality resources from different platforms and leveraging the leverage of the Tmall platform to quickly grow into a consumer goods company with annual sales of billions. I think their operation team behind them is indeed very professional, even comparable to that of Luckin Coffee.

It is not difficult to find that the new consumer product companies that have emerged on the Tmall platform in recent years, such as Wang Baobao and HFP, have actually risen rapidly with the help of capital leverage. The founders are young and energetic, have a strong ability to understand new things, and have clear business ideas. In the future, more and more new generation founders will enter the consumer goods industry, and more and more capital will be introduced. E-commerce capitalization will be a major trend in the next few years.

2. 90% of merchants do not have Perfect Diary’s product segmentation and supply chain capabilities

If you enter the Perfect Diary community, you will find that all their operating models are very simple and crude, that is, cheap and cost-effective: buy one get n free, and then there are various coupons, second item at half price and other promotional methods. He can implement this model because he has huge capital support and strong supply chain capabilities.

Perfect Diary’s product positioning is very precise. It has basically carved out the market for college students’ cosmetics by leveraging its capital advantage. Originally, the gross profit margin of cosmetics made by other companies might be ten times, but Perfect Diary’s is only three times or even lower.

Therefore, he can use low-cost strategies with high-quality products to activate private domains of hundreds of thousands in the private domain.

The vast majority of sellers do not have such supply chain integration capabilities, nor do they have that much financial strength behind them. They cannot afford to lose hundreds of thousands or even millions of dollars a month operating a private domain.

3. 95% of merchants do not have the brand public relations capabilities of Perfect Diary

I believe everyone is familiar with the virtual character "Xiao Wanzi" created by Perfect Diary. In the eyes of many people, "Xiao Wanzi" is positioned as a personal beauty consultant. She often shares beauty reviews, a lot of beauty tips, and is also very fond of her fans. The Moments often offer low-price, limited-time flash sales, such as “second item for 1 yuan” or something like that.

Perfect Diary’s “fan-loving” persona is established because it has the support of the brand. For companies without brand power that operate in the private domain, the concept of "pampering fans" does not hold true, and Perfect Diary's "beauty consultant" persona is actually not valid.

For companies without brand support, conventional marketing methods such as discounts and promotions are difficult to stimulate consumers to make impulse purchases. Once a consumer product creates a brand effect, the value and price of the product will become a measurement standard in the minds of consumers. So you will find that when these companies with brand power operate in the private domain, they can use this kind of discount method to stimulate the activity of their users and make users feel that they will lose out if they don’t buy.

"Xiao Wanzi" releases various attractive marketing activities in the community every day, and gradually community users will think that as long as Xiao Wanzi appears, he is giving us benefits. It’s cheaper than buying on Tmall and has more gifts. Xiao Wanzi’s “fan-pampering” personality is established in users’ minds.

Many companies lack brand power. Consumers just think that your products are good and are not so sensitive to prices. If you learn from Perfect Diary and adopt a low-price operation strategy, you will find that it is effective in the short term but not in the long term. Sometimes, even if you don’t make money or even lose money on an event, users will still think that you have made money from them and will not recognize your good deeds. The “fan-pampering” persona arranged in the community does not hold true in the minds of users.

When discussing the creation of personalities for private domain operations, we need to think about it in conjunction with the application scenarios of the product. Do users really need external help in one or more application scenarios of the product? If not, or if there are other simpler and faster solutions, then the deliberately created "consultant-type" persona is often not valid.

Perfect Diary's beauty products are targeted at college students. These college students have had a foundation in makeup since childhood and can constantly update their makeup skills through content channels such as Xiaohongshu. Their friends are also constantly influencing them. In fact, they do not need a "beauty consultant". This role is redundant in the minds of users and has little value.

So I said that Perfect Diary’s “beauty consultant” persona is not valid. Even if you occasionally encounter a problem, it is simpler and more direct to ask your best friends around you.

The situation is different in another scenario. If a skin care product has whitening effect, the user must follow certain operating procedures and persist for 10 to 15 days to see the effect. The consultant reminds users to use the products on time and according to the dosage every day, and provides real-time guidance and online Q&A - product extended services are irreplaceable, and this is when the existence of a "beauty consultant" becomes valuable.

In other words, Xiao Wanzi herself is a real person with "dark yellow skin". She has accumulated a lot of experience in beauty and makeup. She has established such a persona in the community and outputs professional beauty knowledge for people with dark yellow skin. This persona is valid in the minds of some consumers, and they will be highly dependent on it.

3. Conclusion

All the top cases in the industry are actually of no learning value. Because for these top cases to be successful, not only do they need the right time, right place, and right people, but sometimes they also need the blessing of "luck".

For example, Perfect Diary’s large-scale traffic diversion occurred between 2016 and 2018.

At that time, WeChat was basically unregulated, and they had their own technical team and Internet product team. By developing exclusive tools and applying them to the traffic generation process, we can generate thousands of traffic every day and quickly form economies of scale.

Warm reminder: If your professional knowledge is weak or your thinking ability is not strong, please do not easily look at the success stories packaged by commercial self-media or training institutions. Look at more failed cases, otherwise it is easy to get obsessed and go astray.

Author: Sun Yonghui

Source: Sun Yonghui