How do e-commerce companies capitalize? 8 words: Planting grass online and planting trees offline

The protagonist of this "Lao Gao Live·You Q&A" session is Liu Jingli, a partner of Bailian Zhigao Investment. The theme he brings to you is "New investment opportunities in the e-commerce industry under the economic downward trend" . The following are all sharings:

Content Sharing

Let’s talk about the capitalization path of e-commerce companies. Some of the projects we invest in in recent months are nearly half of them companies related to e-commerce attributes. So how do e-commerce companies capitalize? I have summarized eight words - planting grass online and planting trees offline.

Now online grass planting platforms are gathered on Douyin and Xiaohongshu. Whether it is Douyin or Xiaohongshu, we are essentially not producing grass, we are just grass porters.

Douyin and Xiaohongshu have different focuses. Douyin tends to plant mowers for personalized products, and consumption is instant, while Xiaohongshu is a plant mower for lifestyle. To sum up, these two do not produce grass, they are porters.

So what is offline tree planting? Let me give you an example, take a Hangzhou company invested by Bailian New Consumer Industry Investment Fund, a trendy brand matrix company of Chinese youth and Star Walk. Our grass planting on Douyin is to cooperate with many top internet celebrities with more than 10 million fans, and to incorporate elements of our products into short videos.

When planting grass, many people will think about what brand this is and will search on Tmall. Compared to the original advantage of relying on burning traffic to drive GMV, this method can allow brands to enter the minds of consumers through communication , which is very different from purely this kind of advertising traffic. Its essence is that after the content achieves the Internet celebrity effect, it forms a strong pull on the brand, and this communication forms a differentiation from traditional and powerful brand advertising.

Take Star Walk as an example. How do you break through in the field of trendy sports shoes? First of all, let’s analyze the leading brands like Nike and Adidas. In fact, it is difficult to cooperate with internet celebrities. Their communication cooperation is basically on celebrities, because even if they cooperate with internet celebrities on Douyin, it is not that likely that affects consumers’ minds. The original channels and attributes have solidified the original consumer group.

Today's Generation Z consumers should have their own personalization. For example, the trendy shoe of Star Walk, I cooperated with Li Jiaqi some time ago. I brought nearly 10,000 pairs in one night, and the average customer price was less than 1,000 yuan. I didn't rely solely on buying traffic to burn it, and the profit margin was very large.

Next, we will combine it with the industries under Bailian Group. Because grass has been planted online, everyone has a certain understanding of this trendy sneaker. They will choose some better stores to open an offline store among some of the assets under Bailian Group. They will plant trees offline to better spread the mind of this brand offline.

Online and offline are linked together. In fact, the most core essence of the process of planting grass and offline trees is that traffic is not an asset, but brand is. Don’t blindly committing to the flow like before. committing to the flow is like taking drugs. You can’t take it or you can’t get it, and you can’t get it or lose your essence. To build a brand by relying on traffic, what is accumulated is the GMV burned through traffic, and the brand has not settled.

There is another brand called adopting a cow, which sells well through online planting. Many of its channels are now focused on offline, and entering through various supermarkets and offline scenarios. There is also a brand called Bruco building blocks, which was also developed online. It opened its first offline store in Henglong, Guangzhou two years ago.

In recent years, there is another brand that is quite popular. The underwear brand without steel rings - both inside and outside, and has also started online, but its offline stores have exceeded hundreds of stores. The logic is to plant good grass online and plant trees offline. The core essence of these examples is that brand is the asset, and traffic is not an asset.

Therefore, there is a suggestion for the future capitalization path of e-commerce companies, which is to plant grass online and offline. We must remember the essence: traffic is not an asset, but brand is.

You ask me and answer

1. E-commerce has many tracks and many categories. Which tracks do you prefer to layout? Can you share it?

Most of the products of e-commerce companies are sold to family consumption. The logic behind the family consumption is that children are the most important, followed by women, pets, and finally men. The opposite of the opportunities in that category are the latter two, one is a male and the other is a pet. So, I am more optimistic about some categories in the men and pet tracks.

For example, men’s previous personal clothing always has those brands. In fact, men should really be better for themselves in their entire family consumption, and men’s maintenance is also quite important. In the past two years, many male brands have also appeared one after another. For example, for personal care, we also invested in a clothing brand that makes men's skin-fitting. This is the so-called "his" economy. The domestic male market is also slowly emerging. The population base of men is actually very large. It turns out that in family consumption, men may be the backwards. I personally think there are very opportunities in the future male track.

Let me talk about pets again. In recent years, the market ownership has increased from 50 million to now, from 20% to 30% year by year. In the future, the pet market will definitely grow to 80 million or more than 100 million.

The opportunities among pets are first of all pet food. Domestic brands have already played very well on Tmall. Pets have opportunities for smart hardware. The leading brand is Xiao Pei, which is now worth more than 2 billion yuan. It also plants grass online and trees offline, and also opens some chain pet maintenance stores offline. So in the pet hardware track, there will be at least three such companies in the future.

We have also invested in the pet smart hardware track, and the layout logic is very simple because the increment of this track is large enough.

In general, there are two tracks, one is the economic field of men, and the other is pet smart hardware.

Because I often travel on business trips to watch projects, I really like to eat some delicious food in the alleys in various places and gather with three or five friends. The feeling of this kind of fireworks is particularly good, but this field has categories but no brands.

In the first half of last year, capital began to enter this track, constantly developing large-scale potential energy, highlighting the value of some brands. Many brands have emerged, such as Chen Xianggui, Ma Jiyong, and Zhang Lala, with valuations of more than 1 billion yuan. In the consumer track with categories and no brands, capital has been very crazy in the past two years, and has given a great valuation. The logic behind it is the blessing of capital, which has accelerated the chainization of various catering categories in China.

Whether it is the ramen track, hot braised track, baking track, or barbecue track, the catering chain will surely give birth to more standardized prefabricated service companies. There is a logic in the pre-made dish track that is the improvement of the product strength of ToB pre-made service companies, which may extend to the ToC track in the future. In the future, more consumers will buy pre-made dishes, that is, semi-finished dishes.

A listed company has already emerged on the offline ToC side. Weizhixiang focuses on the scenes of farmers and vegetable markets, as well as Luckin, which is familiar to everyone. Last year, it laid out a company called "Talk Hero", which targets various scenarios in various communities. In less than a year, it opened 3,000 franchise stores, specializing in pre-made dishes on the ToC side.

In the future, there will definitely be pre-made dishes online, and it is still unknown. In fact, Wei Zhixiang lays the foundation for the educational costs of C-end consumers, because buying semi-finished products or pre-made dishes requires education. There will definitely be a leading online pre-made dish company in the next two to three years.

2. What stage do you think is the most suitable capital to join hands with?

What is the most important thing to return to the company is definitely the product, and it needs to be considered in different products. If you look at product categories, I will take the pet track as an example. If it is a blue ocean market, as long as the founder is not bad, the angel round can also be raised. If it is a red ocean market, capital will be more inclined to choose leading brands that have already occupied the minds of users in the category, or companies with supply chains.

Take the pet food track as an example. The competition is very fierce. Many brands do not have their own supply chains. They rely on financing or love for pets to invest in traffic. The volume is also very fast, but the supply chain is lacking. So our investment logic is that the blue ocean market, a track with good prospects, a good project or team background, and an angel round is also invested. Red Ocean Market invests in leading brands that occupy users' minds, or companies with supply chains.

So when the stage of development of e-commerce companies is suitable for holding hands with capital, considering from the company itself, first, look at the future trend of the track where your current products are located, and second, if your category already has a leading brand, you can look for opportunities in the segmented fields.

3. How should e-commerce companies make their own golden business cards?

Regarding how to sort out an effective business plan and how to make a golden business card, I will share it with you from six perspectives. The core is to talk about 6 points well. The first is what to do, the second is who is doing it, the third is why, the fourth is how to do it, the fifth is how to do it, and the sixth is what I do.

The first point is what to do. Taking Tang Seng as an example, he did his best self-introduction. In Journey to the West, he asked him what he did. He always said in one sentence, I came from the Tang Dynasty in the East and went to the west to obtain scriptures. This sentence introduces where he came from, what he does, and also talks about the meaning behind his doing this.

When communicating with capital parties or supply chain companies, you must make it clear. So the business plan on the first page explains what you do. After you finish speaking, you can add a slogan at most , which is a slogan. I personally prefer to have action instructions to let others know what you are doing. For example, the slogan of Red Bull was to drink Red Bull when you are tired and sleepy. Later, it was changed to your energy beyond your imagination. Others don’t know what they are doing, and when you are tired and sleepy, you will have an action command.

The second point is to explain who is doing it, what kind of background is the founder’s founding team. If the founder’s founding team is weak in one aspect, you can invite some experts to join your team, and it is also possible to enrich who is doing this part in the form of an advisor.

The third point is why you do it. First of all, you must think clearly about your original intention of starting a business on this track. For example, Lao Gao’s original intention and the mission of the company is to help e-commerce succeed. When we start our own business, how can we enter this field, we will dig deep into some small stories and some points that we touch, and have an emotional resonance.

I have seen many entrepreneurs and many business people. The one who can eventually achieve great things is people with original intentions. In a word, the farther money is from your pocket, the closer you are to your heart. On the contrary, if you look at money every day, you may not be able to make money. So when talking about the third point, you must clarify your original intention of starting a business, otherwise it is actually quite difficult to impress capital by relying on a track to be large enough.

Why do this thing? It must be a combination of emotion and reason. First, analyze how big the track is, what opportunities are there, why you want to enter this track, and secondly, you must explore the original intention of entering this track, whether there is any thing or detail that touches you, making you have a stronger sense of mission. Never just talk about money or feelings. You must not only look up at the stars and be down-to-earth.

The fourth point is how to do it. There is a triangle model. The first is product strength, the second is channel strength, and the third is communication strength. Extending from these three points, how do you build a brand or create your own product that can meet the demands of consumers.

The fifth point is how you do it. You can use a picture or a table, because one picture is better than a hundred tables, and one table is better than a thousand words . It is especially taboo to use words throughout the article to express it. Basically, investors can pass it.

The sixth point is what I do, depending on whether the track and product you are in have their own R&D capabilities, channel capabilities and various abilities. We must dig deep into one of our core competitiveness, that is, the moat.

4. What are the shortcomings of e-commerce companies you have seen in the past?

When we invest in enterprises or look at enterprises, we will examine them from four dimensions: the first is industry standards, the second is corporate standards, the third is market standards, and the fourth is management standards.

The industry's guidelines depend on whether the industry's prospects comply with national policies. We will have many specialized colleagues studying the industry. It turned out that investment institutions may be based on regional distribution. Now, many investment institutions are based on industry distribution and will do a long time of research, including studying upstream and downstream companies in the supply chain.

Corporate guidelines : The enterprise model should be simple enough to have long-term prospects and a stable business history.

Market guidelines : To evaluate whether the projects in this primary market have good growth and development through the secondary market, how much expected returns will be after buying, and whether they can be empowered to the other party through industrial resources.

Management standards , the essence of management is to look at people. We will not look at companies with irregular management, such as tax evasion and tax evasion, which do not comply with national laws, regulations and policies. Except for non-human factors.

When communicating with the founder, look at the founder's pattern, thinking, strategy, insight, etc., because the ceiling of the founder and the founding team is the ceiling of the company. If these aspects are limited, we will not talk in depth.

We will also observe the management capabilities of organizational strength. For example, when I go to a company, I have a habit of looking at the hygiene of the office and observing the details of all aspects of the company to evaluate the overall effectiveness of the company.

5. Where are the opportunities in the men's down jacket market?

The entire down jacket category already has the leading brand Bosideng, which occupies the minds of users in the entire category. But I think there are opportunities in the sub-track track, such as down jackets specifically for men, women and children can have opportunities. There is no need to consider the supply chain perspective, you can process OEM or find some brand processing factories to process.

What we need to consider is whether there is empowerment and innovation of new materials, whether our advantages are R&D capabilities, original channel capabilities, or our own unique strategy, and we must design down jackets for men based on what we are good at and combined with consumer needs.

6. For companies with strong supply chain and relatively weak brands, how do you think they should take the path of capitalization?

We still have to return to the essence of the problem. Where is the strong supply chain? Some companies' strong supply chain lies in their own supply chains, while some companies' strong supply chain lies in integrating supply chains. If the supply chain is strong, is it because it has its own core barriers or has very strong production capacity and a supply chain with core barriers can cooperate with some companies that match each other.

If you are strong in your integrated supply chain capabilities, you can build an S ToB ToC platform. You can not do full categories like leading companies. You can choose to do sub-categories, such as those in the trendy brand field, or those in the down jacket field. There are still opportunities in sub-categories.

If you are creating hot products with strong supply chain and not having core technology, it depends on whether the hot products you create today have a brand that has occupied the users' minds. If you have it, you can segment the people to find opportunities, and ultimately occupy the users' minds through product power, channel power, and communication power.

7. What financial indicators do you pay more attention to in a mature e-commerce company?

We will look at two financial indicators. The first is the cash flow indicator, because a company's cash flow is definitely very critical. I pay attention to three points in the cash flow indicators: 1) Whether the operating cash flow is sufficient, and understand the upstream and downstream through financial reports to analyze some cash flow situations; 2) It is a cash flow model, which determines the difficulty of the next round of financing; 3) I will measure the payment method and look at the efficiency of online and offline payments, and the second is the profit indicator. From the cost structure, the essence of an enterprise is to increase revenue and reduce expenditure. We will pay attention to these two aspects. In addition, we will also pay attention to the wages of key personnel, operating costs, financing costs, online and offline costs, etc.

In general, we will evaluate whether a mature e-commerce company has the opportunity to go public or whether it is a merger and acquisition based on cash flow indicators and profit indicators.

8. Are men's fashion brands a supply chain company a target of your investment? What is the industry prospect?

I have to understand how large your company is in the men's fashion brands, and which brands are the first five B-end customers. If the scale is relatively large and the flexible supply chain is better, it is actually very valuable. It has both recognition from leading brands and can also create flexible supply chains. Your supply chain company has investment opportunities.

In the future, you can provide flexible supply chains for online or offline fashion brands, and also for designer brands to create flexible supply chains. After the niche designer brands and trendy brands are built, build a platform for S ToB ToC. When opportunities arise, you must build your own brand, because your supply chain has been improved, which is equivalent to doing both making money and valuable things, which is valuable.

9. What is the prospect of smart small appliances? He is a maternal and infant household appliance. Can he develop a brand in this track?

Although the country encourages third-children, the growth rate of maternal and infants in the past two years and the future trend is that the growth rate will not be particularly large. The dividend period for maternal and infants has passed in the previous few years, and it also depends on what category you are doing. I personally think that the increase of maternal and infants is actually more difficult. But the increase in pets is quite large now, such as pets’ smart hardware, you can consider it. Nowadays, many investment institutions rarely look at projects in the maternal and infant track. When doing this track, you must figure out whether you do it as a business or a career. Doing it as a career, I think you still have to consider growth.