Lu Ban, you'd better give up!

Luban ’s business is not suitable at all for small-asset e-commerce players. The author has a client who invested 10 million yuan and made a net profit of 130 million yuan; he has also met someone who invested 1 million yuan and made a net profit of 4 million yuan; but he has never heard of anyone making money with an investment of 20,000 yuan!

Luban is an e-commerce platform that sells popular products. Thousands of orders a day, do you have the goods? Can you ship? Do you have a team to handle after-sales? If you don’t have an after-sales team, a stable supply chain, and sufficient working capital. Lu Ban, you'd better give up!

The above is intended to dissuade 80% of the second-tier e-commerce newbies on the market.

1. Luban Merchants

Next, let me talk about what kind of merchants are suitable for Lu Ban?

1. Source manufacturers: low product cost, sufficient goods, low logistics costs, and good cash flow. But the disadvantage is that his ability to replace products is very poor, and it is very likely that he has no e-commerce team foundation.

2. Traditional e-commerce: The supply chain advantages are obvious, the company is able to acquire almost all products in the same industry, and it has strong capabilities in art design, operations, and customer service. The disadvantage is that the cost of goods may be high and it is difficult to accept the operating logic of second-tier e-commerce.

Both types of customers mentioned above can try to contact the second-tier e-commerce companies.

The most recommended customer: If you can meet the following points, then the second category e-commerce is definitely your first choice now.

1) Strong supply chain and excellent product replacement capabilities.

2) Have good cash flow strength to meet the advertising payback period.

3) There are customer service team and art operation team.

4) Most importantly, you need to have a keen eye for selecting hot-selling products. (This is the most valuable)

Generally, you only need to meet the above 3 points, and the Luban platform will be your first choice for making money .

Luban's real sales volume:

Many people say that second-category e-commerce is so difficult. Nothing is easy. There are explosive orders every day in the market. Many people understand the current second-category e-commerce as the old hype, where you can get rich overnight by spending money on promotion. What the current second-category e-commerce is competing for is refined operation. Every step must be paid attention to. For the same product, from plan formulation to matrix construction to the final trial of sub-accounts, it is definitely not possible to generalize. Let me show you the recent market. Refined operation is not as difficult as imagined!

To sum up in one sentence: Luban’s products receive thousands or tens of thousands of orders every day. There is absolutely no fraud. If you have played Lu Ban, you will know how difficult it is to fake orders. The cost is too high. Moreover, Luban’s fake orders are actually of little help in promoting the product.

2. Common pitfalls of Lu Ban

• The product has no sales at all

Based on our experience in dealing with so many customers and having so much product operation, we know that some products are not naturally suitable for the Luban platform , such as accessories, customized products, niche products, etc. Some products have inherent advantages , such as household products (mildew removers), cosmetics (various facial masks), food (self-heating pots), automotive supplies, clothing, etc. Popular products, products that everyone has demand for, are very suitable for operation on Luban (I’ll tell you a secret, the best products to run on Luban right now are actually plant seeds, small potted plants, etc.).

In fact, the lack of sales is mostly related to the product itself. The underlying logic of the Luban platform is very simple. The system will direct more traffic to products with high monetization capabilities based on what kind of products can make customers pay for them. To the point that some products may have no sales at all. According to our operational experience, if a product does not sell out in about 3 days, you can consider changing the product. If it doesn't explode in 7 days, it will be completely dead.

So what should customers and operations do during this promotion period? Product advertising promotion videos should be updated every day. How to update this video? If you don’t have any good ideas, it’s very simple. Just shoot and edit them based on the popular product videos of your peers. Three days of testing is enough. During this testing period, you may spend 1,000-2,000 in advertising fees to try to promote it. Of course, if the product is really not good, you may only be able to spend 200+. The system will not give any flow at all.

• System traffic distribution mechanism

The system provides traffic, which is usually based on two dimensions in our company. Product historical performance, bids .

How to understand the historical performance of products? You can understand it as the overall click-through rate and overall conversion rate of similar products in the past promotion history . If the conversion effect of similar products on the platform is relatively high, the system will give a higher evaluation score. This evaluation score is related to the originality of the product materials, product price, etc. (there are a lot of things to consider, so I won’t go into details).

Another factor is the bid . As a salesperson, I tell clients that the conversion cost of an ad is between 30% and 50% of the selling price. In fact, this is the average conversion cost ratio of the overall market. However, when a new product is first promoted, the conversion cost may even be higher than the selling price.

I met a customer who sold two pairs of slippers for 29.9 yuan. On the first day, when sales started to pick up, he sold more than 400 orders. The average conversion cost in the background was around 32 yuan, which meant that he made a pure loss for every order. All the expenses are refunded, and I have to pay another 3 yuan. The customer's mentality collapsed on the first day. It's like setting up a street stall, taking away two pairs of slippers, and I still give you 3 yuan. On the second day, the bid was cut in half, and the conversion cost dropped to 21 yuan. On the third day, the conversion cost reached 15 yuan. On the fourth day, the conversion cost of one order reached 9.8 yuan. The next step is to place orders steadily and make guaranteed profits.

Because the sales method of 29.9 yuan is cash on delivery, the receipt rate is 94%. This also leads to the fact that Luban operators in some cities will choose to bid high in order to test whether the product can really perform well on the platform. In this way, you can grab a large amount of Douyin user traffic to see your advertisement. If the click-through rate and conversion rate are at a good level, then this product is worth spending time to manage carefully.

• Factors affecting the acceptance rate

On e-commerce platforms such as Taobao, Tmall, and JD.com, most of the people who buy things are users with very clear purchasing intentions, so the signing rate after purchasing the items is often very high. These customers all have the intention to buy, so the signing rate is very high.

But the Luban platform is different. It relies on platforms such as Douyin and Toutiao to deliver advertisements based on relevant user groups. The purchasing intentions of these groups are often not very clear and they tend to be impulsive consumers. In addition, most of the purchases are made on delivery, so Luban's signing rate is naturally significantly lower than that of traditional e-commerce platforms. If you have too high expectations for its signing rate, you will probably lose money.

Generally speaking, it is considered good if the sign-in rate of most products of Luban E-commerce is maintained above 80%. The sign-in rate of products such as clothing and home textiles is only around 70% (even clothing is around 55-65%).

• Insufficient inventory on the supply chain side

Luban e-commerce's explosive orders often happen overnight. You may only have a dozen orders the day before, but suddenly you may receive thousands of orders the next day. Therefore, for many dealers, big problems may often arise on the supply side. If you fail to deliver the goods within the specified time, the platform will fine you severely, so preparing sufficient supply of goods is a necessary prerequisite for doing Luban e-commerce.

Here, I would like to give you a small suggestion, which is that it is best to have 1-2 more merchants as the source of goods. Otherwise, once there is a problem with the supply chain, it will easily lead to the embarrassing situation of not being able to ship out the goods after a surge in orders.

There was once a customer who took advantage of the Valentine's Day gift box set. Luban sold 4,000 orders, but the problem was that the manufacturer itself was also retailing this product and the supply was in short supply. As a result, the manufacturer was unwilling to supply the goods, resulting in a loss of 140,000 yuan. Moreover, once the 2.14 holiday period has passed, it will be useless to ship the goods further. Therefore, the supply chain is a very important basic link.

• Serious shortage of staff

Just like the shortage of manpower and supply chain, Luban’s orders exploded overnight. If you don’t have sufficient manpower, there will be a lot of customer complaints once the orders exploded. If there are few people to help handle customer complaints at this time, your products may very likely trigger a lot of refunds and bad reviews, and your sudden surge in orders will undoubtedly dig a hole for yourself.

Here is also a small suggestion, you can outsource it to a professional customer service team in the early stage. Currently, we have some Luban customers who are doing very well.

3. Experience

• Successful Experience

1. Currently in July, I have clients who have started selling leather coats, outerwear, jackets and even down jackets through live streaming. The effect is quite good, it's not the usual way.

2. A colleague of mine has a client named Luban in Hefei, who made a net profit of 130 million yuan in 2 years. Invest tens of millions and earn 10 times+ (net profit after excluding all labor and payment costs). Currently, the client's team mainly focuses on product selection. All operations, after-sales, and advertising materials have been streamlined to create hot-selling products. Some manufacturers are even willing to pay extra money for brand promotion.

3. I have a client who invested millions and had a keen eye for product selection. He made a net profit of 4 million yuan from a single product (laundry detergent beads).

4. Generally do not follow products unless the team responds very quickly, for example: pineapple socks. There was a client who was extremely fast in following products, had a short video shooting team, and a strong local supply chain in Yiwu. He discovered this hot-selling product on the same day and made extremely high profits. I found the source of goods on the first day, shot the materials in the evening, passed the product review and advertising review on the next morning, went online in the afternoon of the next day, and started making money as orders exploded in the evening.

5. Customers who play Lu Ban and make money must have something that is difficult for others to imitate.

• Failure Experience

1. A product cannot accept early losses and has problems with high conversion costs. The operator is very confident that it can make money, but the customer gives up. Later, the same product is recommended to other customers for promotion, and then money is made. (I regret it very much. Sometimes you have to trust the operation experience)

2. The backend team is too lacking, and the second-tier e-commerce itself is a fast one! It took half a month to select a product, find the source of goods, shoot videos, launch it online, and go through qualification review, etc. By the time it was actually launched online, others had already finished the product.

3. Single product. This problem often occurs in manufacturers. The entire production line only has 3-5 products. If they don’t become popular after they are launched, then they are doomed and the manufacturers will directly refund the money and close the store.

4. The capital chain is not strong, and the popular products do not have enough promotion funds. As soon as the products start to become popular, others follow suit and the company ends up not making any money.

• Second-tier e-commerce experience

1. What are the second-tier e-commerce companies? TV shopping is one of the earliest types. Now there are Kuaishou, Luban, Baidu, Tencent, etc. It is best to choose 10 products before entering the industry! (Douyin Luban is currently the strongest)

2. Before opening an account, talk about operational capabilities. Whether the operations can be used well is a double-edged sword.

3. Salesmen, you must respect highly professional salesmen, because they will give you a lot of company information;

4. The front end relies on operations, and the back end is the real skill. If you have the ability to output short videos, then you are stable!

5. The most direct purpose of second-tier e-commerce is to make money. Don’t have the idea of ​​accumulating customers and engaging in strategic losses like first-tier e-commerce. If you don’t make money in the early stages, you may never make money again.

6. Don’t think that everything is fine when you have a surge in orders, because if the acceptance rate is too low, you may lose money and labor.

There are many more, such as product selection, user tags for delivery, landing pages, increasing the sign-in rate and repurchase rate , etc.

4. Let me say some plain words!

Lu Ban can really make people earn millions a day. Those who have a budget of several thousand or tens of thousands should forget about being Lu Ban, as they cannot afford it.

There is also Luban’s profit point, which many bosses don’t know and simply think is a way to sell by promoting advertisements on the platform. The advantage of platform promotion is that it has large traffic, acquires many customers, and sells goods quickly, with thousands of orders a day. The disadvantages are advertising costs and after-sales capabilities. It is difficult to make a profit without a team to solve the after-sales signature problem.

With so much customer information, wouldn’t it be great to build private domain traffic based on your own products? This type of customer has high purchasing stickiness, and you generate purchases through WeChat or Taobao. First of all, there is no advertising fee, and secondly, you can sell it at Luban’s price (even the fan welfare price can also bring super high profits). At this time, the money you earn is real profits. The profit is actually higher than digging a hole.

The key point! The key point! Another key point is that Luban’s sales link can generate repeat purchases . There is no charge for people who repurchase through the Douyin homepage. The repeat purchase profit of a 199 product can reach 120+. Isn’t this a huge profit? (Hint: fast-moving consumer goods!)

Moreover, Luban's target customers are from the lower-tier markets. Nearly half of China's population lives in rural areas and small towns. With this kind of traffic base, pushing products through the Douyin Luban model can also help companies build their brands.

There is huge profit margin in the sinking market. For example, the Zulijian shoes for seniors are specifically sold to China's lower-tier markets, with sales of several billion per year. All his advertising and marketing methods are to sell his products through villages and small towns. If manufacturers and bosses can truly recognize Luban's gameplay and advantages, it means that you have a strategic vision far beyond ordinary people.

Author: Zhu Jianwu

Source: S Wu is here