When Digitization Becomes A Must, How To Find The Fulcrum To Leverage Growth

The impact of the epidemic on enterprises with offline stores is self-evident. The good news is that with the further control of the epidemic situation, offline stores have opened one after another, which naturally gives enterprises a sigh of relief. Under the ideal of "retaliatory" consumption, everything seems to have begun to recover. However, one thing that can not be ignored is that in some industries, the reported consumption is not applicable, such as the leather shoes industry.

Wang Yang (pseudonym) is the boss of a handmade leather shoes brand. He has worked in the hand-made leather shoes industry for more than 40 years. Before 2019, the price of his hand-made leather shoes started at 10000. During the peak period, the annual production of more than 1000 pairs can reach more than 400 pairs in off peak period.

In the relatively small number of hand-made leather shoes enthusiasts circle, Wang Yang has gradually mastered the pricing discourse power. Among them, the reason is more from the exquisite materials, exquisite technology and the precise process from measuring feet to making last to selecting materials and cutting materials.

And the arrival of the epidemic has changed all this. The first is the sharp decline in passenger flow. Due to the relatively small number of circles, the previous revenue was more from the word of mouth of buyers. Affected by the epidemic situation, the capacity of stores to carry customers was limited, and the decline of passenger flow also led to the loss of some potential customers.

Secondly, due to the fact that customers need to go to the store to measure their feet and fix the last at the initial stage, the decline in the service capacity of offline stores has also delayed the purchase behavior of old customers, and the offline attempt behavior of new users has been reduced or even cancelled.

In the face of these changes, Wang Yang did not have no idea. First of all, he "moved the knife" on the product price, broke away from the previous price range of 10000 yuan and above, and launched customized leather shoes of 3000-4000 yuan. Secondly, he optimized the team.

"Our scale is not large, but in 2019, there are about 20 people in the whole team. After a part of the team in the past two years, there are about 10 people left. In order to maintain the staff cost, they made shoes of 3000-4000 yuan." Wang Yang revealed that he had also thought about taking goods through short videos and live broadcasting, but the achievements of his peers made him postpone his plan to try.

According to the data of feigua, the sales volume of the flagship store of Wang Yang, which is also a high-end handmade leather shoes brand, "hydrogen consumption" noticed that from April 1 to the end of April, the sales volume of live broadcast was 18.5w. By comparison, in 2019, the annual revenue of Wangyang brand had reached 400-500w. Obviously, for Wang Yang, the sales volume of live broadcast was 18.5w, The temptation of all in live short video is not enough.

Perhaps, in the traditional leather shoes, the experience of small circle layer high-grade hand-made leather shoes merchants can not represent that the whole leather shoes industry is affected by the epidemic situation, but it is an indisputable fact that the impact of the epidemic on the domestic leather shoes industry is universal.

According to the statistics of China Leather Association, from 2013 to 2019, China's leather shoes output fluctuated and decreased. From January to November 2020, the national leather shoes output was 3.21 billion pairs, with a large decline.

There are also some good news behind the decline in total output. Relevant data show that in 2021, the number of leather shoes manufacturing enterprises in China will be 2122; The sales revenue was 343.782 billion yuan, up 4.8% year on year; The total profit was 23.372 billion yuan, up 5.5% year on year.

Behind the decline in total output and the rise in sales and profits, "hydrogen consumption" has noticed that in the traditional leather shoes industry, there are iterations from the brand to the service provider, whether it is based on the "technical" level of marketing strategy or intensive cultivation based on the digital construction at the bottom of the enterprise, Maybe all of them will provide a new model for "Wang Yang" in the practice of taking back the "disappeared two years".

　　01. What are you doing in leather shoes?

In April this year, red dragonfly and Aokang, as the "big brother" in the industry, released their respective annual reports in 2021. The financial report data of the two enterprises also sent some changes in the leather shoes industry to the outside world.

According to the financial performance report of 2021 disclosed by Aokang international, during the reporting period, Aokang international realized 2.959 billion yuan of operating revenue, an increase of 8.06% year-on-year. The net profit attributable to shareholders of listed companies was about 34.05 million yuan, with a year-on-year increase of 21.87%.

In addition, Aokang International's financial report also mentioned that online revenue exceeded 546 million yuan, a year-on-year increase of 4.5%, and online gross profit rate reached 34.76%, an increase of 1.92 percentage points over the same period of last year.

Obviously, the revenue from online has injected a new increment for Aokang during the epidemic period. Similarly, for red dragonfly, the growth from online has also become a bright color in its financial report.

According to the annual report of 2021 disclosed by red dragonfly, in 2021, the company realized an operating revenue of 2.511 billion yuan, a net profit of 22.5254 million yuan, and the annual private sales of the company increased by 10%. In addition, the revenue of independent stores of the company reached 111 million yuan, with a year-on-year increase of 54.45%. More importantly, under the effect of digitization, inventory turnover days and accounts receivable were also improved, In terms of turnover days, it changed to 140 days, with a year-on-year decrease of 17 days, while in accounts receivable, the turnover days of accounts receivable in 2021 was 102 days, with a year-on-year decrease of 9 days.

Behind the achievements of red dragonfly and Aokang epidemic, digitization is the background of their growth.

Taking red dragonfly as an example, during the epidemic period, wechat was applied to the daily business activities of enterprises. According to red dragonfly, at present, the number of wechat users or members has reached 1.3 million, and the monthly sales volume of online shopping mall has exceeded 3 million. Meanwhile, the annual Gmv of Online mall was between 30 million and 40 million last year, In the mall, the conversion rate reached 8%.

This achievement is due to the fact that the Red Dragonfly's deep cultivation in the private domain is long-term and sustained, rather than speculation in the epidemic situation. And it also benefits from the epidemic.

According to the public data, red dragonfly established its digital transformation strategy as early as 2017. In 2018, more than a thousand self-employed and affiliated stores have already completed the transformation of smart stores, accumulating up to 5.06 million offline member data in just one year. After the establishment of the new retail department in June 2019, its private domain users have reached nearly 10 million levels.

According to Zheng Pei, director of the Membership Department of the Red Dragonfly departure management center, in the early stage of private domain, brand users in red dragonfly offline stores scan QR codes, pay attention to public numbers, register as brand members, and obtain coupons for newly registered members. After users become members of red dragonfly, Red Dragonfly will reach users by SMS and other means, The above actions are the rudiments of Red Dragonfly membership system and private domain.

　　 "Later, a problem was found in the epidemic. Some stores may be closed, but some stores are not. How to let customers know the news, and how to improve the accessibility efficiency of the 8 million members, so that users can get the products by express delivery through our online services when they have purchase demand. Based on the above, we began to deposit the past Store members are transferred to the community's private domain, "says Zheng Pei.

In the early stage of the epidemic, Qian fan, the president of red dragonfly, also came to an end in person. The public information is that, as the commander-in-chief, he led the new retail department to try to sell goods out of the store. However, the implementation from the top level to the grass-roots level of the enterprise has resulted in the interconnection of more than 2000 franchise stores of red dragonfly on the nail in only one week, which is the first step of organization digitization.

In terms of refined operation members, during the epidemic period, red dragonfly launched store guides to contact past store members by phone, and transfer them to the community of corresponding stores. Through the copywriting and activities after entering the group, the sales volume of the stores was increased. From the data feedback, such a strategy is effective, On February 7, 2020, after taking 150000 out of store sales on the same day, online sales exceeded 1 million on the 14th of a week. According to Zheng Pei, since then, off store sales have reached a record of more than 9 million in three days.

"Later, we found that wechat was not an effective way for shopping guides, because store members were precipitated on the personal wechat of shopping guides through phone calls. Once shopping guides changed jobs, customers were taken away, so we started enterprise wechat," Zheng Pei said.

According to dragonfly's wechat, more than 500 million members of dragonfly have been transferred to wechat.

"Now, by scanning the offline store code, the user will open the wechat of the store's shopping guide and receive the membership code. After scanning the membership code, the user can become a member. At the same time, the shopping guide can reach the user more comprehensively through different content push, lottery and second kill activities every week," Zheng Pei said.

Different from other brands that get traffic from online public domain, red dragonfly also stores water for its own private domain by creating its own festivals.

"We have a node to promote every month, but there will be a nationwide promotion in the middle of the year. For example, we created the" 520 pet powder Festival ". On the one hand, it avoids the online rush of e-commerce like Shuang 11, and on the other hand, it helps to precipitate our private users through special festivals," says Zheng Pei.

　　02. When digitization becomes a must, how to find the fulcrum to leverage growth?

In the past context, private domain is often the path of new brand emergence. However, under the epidemic situation, private domain is becoming a necessary option for more businesses to pursue certainty. Based on this, service providers between businesses and consumers are becoming more important.

This kind of urgent expectation from businesses for certainty and private domain operation growth is also reflected in the relevant data previously shared by the players at the head of business service providers,

At youzan Menlo 2022 press conference, huanfang, COO and co president of youzan, mentioned that in 2021, the Gmv of youzan's service businesses reached 98.3 billion, of which the Gmv of store merchants was about 9 billion, with a year-on-year growth of about 70%.

According to the introduction of "hydrogen consumption", compared with other categories, the frequency of re purchase of shoes and clothing is relatively good. Based on the joint effect of the wear combination, it is more in line with the fission and single customer LTV value promotion that private domain attaches importance to.

In addition, youzan pointed out that in order to better reach the brand customers, 50% of the offline chain stores have entered the normal state of store live broadcasting from the point of view of the current shoe brand customers with Zan service.

The reason why shoe merchants are willing to use store broadcast as a channel to reach consumers is that, in addition to the better effect of live broadcast than graphic display, the more important reason is that in the form of live broadcast, especially in the form of shopping guide, it can effectively improve the repurchase rate of the brand's useful users while meeting the user's touch.

Take Aokang, a customer of youzan service, as an example. After the establishment of a new retail team in September 2020, in addition to the addition of 100000 enterprise micro Association members, the customer repurchase rate of Aokang mall reached about 25% through community operation and live broadcast on the basis of enterprise micro members.

Obviously, in the context of the epidemic, the repurchase rate is becoming the steering wheel for brands to drive to the other side of certainty.

According to youzan, in the shoe category, the brands that used to be fast, fashionable and low-cost have begun to pay attention to the re purchase of old customers. In the past, the emphasis on repurchase was often the data that middle and high-end brands would pay attention to.

Just as in the case of the epidemic, the data dimension of leather shoes brands has changed. After the epidemic, red dragonfly has also changed the data dimension of concern to off store sales.

　　 "In 2018, the club just started to work in private domain. At that time, we set our own KPI on the number of new members a year. After a year of experience, the number of members increased to more than 4 million. But later, we found that it was not enough to blindly pursue new users. So in the second year of private domain, we focused on the re purchase. During the period of the epidemic, we changed the KPI to leave Shop sales, "recalls Zheng Pei.

Although he has made some achievements in the field of digitization and private domain, Zheng Pei also admits that there are still some difficulties that need to be explored continuously on the way to digitalization.

"In the past, we said that online is looking for people, that is, we can launch advertisements according to different groups of people, and then determine the focus of all resources and budgets of the enterprise according to the feedback of different groups. However, this method is different from the digital playing method of offline stores.".

Zheng Pei further explained that 80% or even more than 90% of the customers who entered the store actually had a purchase demand. However, it was found that only about 50% of the customers entered the store and the remaining 40% or more did not complete the transaction due to various reasons, such as the price and style not in line with the expectation, or to meet the shopping demand, And it's hard to answer this part digitally.

However, Zheng Pei also revealed to "hydrogen consumption" some of the Red Dragonfly's explorations for customers who have not completed transactions in the store, and "matching and grouping" is one of the strategies.

Through the same way, we can make customers wear the same style through wechat.

　　03. It is not necessarily a single choice question to be younger or to keep the old customers

"No one can always be young, but someone will always be young.". In this way, for the traditional leather shoes, the young people used to regard them as the stereotyped image of old age.

However, at present, whether from the change of brand positioning or the development of the trend, a series of visible changes are adding new notes to the traditional industry of leather shoes.

According to youzan's data, judging from the many leather shoes brands it serves at present, many brands are transforming into younger ones. At the same time, the transformation of leather shoes types is also evolved by the changes of consumers' overall clothing style and use scenarios.

"We generally see two trends: one is to take the exquisite route, make more advanced leather, sew shoes, etc., to serve a small number of elite gentry, similar to the customized suits that tend to the small number of suits. This part of the demand exists, only needs to be touched by the brand, and the other is leisure series," youzan further explained, "In fact, what consumers rejected in the past was not the material of leather shoes, but the combination of comfort and leisure scenes. Therefore, it is an inevitable trend for leather shoes to be casual and fashionable."

In Aokang and red dragonflies, this trend is also reflected.

For example, in the case of breaking the circle of young people, Aokang has cooperated with manwei and baokemeng to create a joint brand, and developed a series of "mountain and sea auspicious animals" products inspired by the Chinese traditional culture "Shanhaijing", which expanded the popularity of young people at the height of the national tide.

Red Dragonfly turned to focus on young fashion, and positioning its products as "suitable for work wear, style and fashion". It is understood that its new business fashion leather shoes have won more than 200 million people's choice. 　　

As a young attempt, Martin boots explosive products had a 300% increase in sales during the double 11 period in 2020, contributing sufficient "ammunition" for the double 11 red dragonfly to win an omni channel achievement of 800 million Gmv.

Zheng Pei said that at present, red dragonfly also divides its products into four product matrices, including business suits, business leisure, high-quality men's shoes and business fashion goods.

In Zheng Pei's opinion, for the red dragonfly, the above actions of making efforts to be younger and keeping the old visitors are not single choice questions, nor is it a practice of neglecting one or the other.

　　 "For business suits, there will still be traditional" Dad's shoes "," Grandma's shoes "and other products that are more inclined to older groups. Business fashion products are more categories like lefook shoes and small white shoes, which young people like. However, in addition to the differentiated appearance of products oriented to groups, comfort is still the bottom line that red dragonfly always pays attention to. For example, business fashion leather shoes have adopted the combination of Technology such as help technology and rebound technology, "says Zheng Pei.

However, it is obvious that the redefinition of the brand and the refinement of the products make red dragonfly able to carry more young consumers. In terms of "face", red dragonfly also needs to think and try to reach young people.

"For example, in the channel, red dragonfly used to put some subway advertisements, but gradually found that this kind of ground advertising can help enterprises to establish an image, but young people will feel that this way of reaching is not special enough, so we reach more young people through the circle of friends, little red book, Taobao, and live broadcast of shaking sound," Zheng Pei said.

And this kind of access to new channels can be seen from Qian Jinbo, chairman of red dragonfly.

On March 8, 2020, on the international women's day, Qian Jinbo parachuted into the Taobao live broadcasting room of Red Dragonfly's official flagship store. Compared with other anchors, Qian Jinbo led the fans in the live broadcast room to "visit" the Chinese shoes culture museum located in Yongjia Red Dragonfly headquarters in Wenzhou to show the fans the cultural charm of Chinese shoes, Qian Jinbo also started a public welfare activity, that is, in the live broadcast, every time a pair of Red Dragonfly business fashionable leather shoes was sold, a pair of leather shoes was sent to the female doctors and nurses of the war epidemic disease. The live broadcast finally achieved 435300 person times to watch and praise 3 million + achievements.

According to the introduction of dragonfly and Pei Hong, there are live broadcasting channels such as Taobao.

　　 "Take video number as an example. We have different types of video numbers, including official brand number, regional video number, store video number, etc. among them, the brand official number is selected by several regions to Ningbo and the headquarters for live broadcast together. The regional number is mainly responsible by the management personnel of each regional office. In addition, there are shop broadcast numbers, which are mainly used to revitalize stores "It can improve the stickiness between offline stores and customers," said Zheng Pei.

Finally, for Wang Yang's confusion, Zheng Pei also gave some suggestions. He pointed out that there might be two ideas for reference.

"One is to try to cut into the b-end business, such as the scene where enterprises purchase employees in large quantities, or try to explore the differentiated market increment such as large leather shoes.".