Ecological chain is not the antidote to millet

Image source @ Visual China

Wen | Xinyan, author | Ruan Xue, editor | Sang Mingqiang

"Xiaomi's core strategy for the next 5 years will focus on the two major strategies of 'mobile phone + AIoT'." In 2019, the xiaomi "triathlon" composed of three major plates of hardware, new retail and Internet services was replaced, and the xiaomi ecological chain that had been laid out for four years was pushed to power by Lei Jun before the turning period came, and in Lei Jun's open letter in 2021, the time of this strategy was continuously extended and became the core of Xiaomi's next 10 years.

However, no matter how the battle line is stretched, Xiaomi seems to be the original millet, Mijia's products have been turned over several times, and they still can't get around the past running logic, Lei Jun himself is well versed in the way of playing the Internet, but he is not willing to give up on AloT, even if the company on this ecological chain is no longer the expected "next millet".

In nature, the ecosystem is composed of various biological chains, and the relationship between them and the environment, the operation mechanism of the natural ecosystem is similar to a huge self-regulating organism, the self-regulating function constitutes its most basic features, in the ecology of the natural world, the relationship between species determines the flow of energy, new species are constantly emerging, and there is also the demise of old species.

Borrowing the ecological concept of nature for the expansion of the company's territory, Xiaomi is not the only one, and the problems that occur in the construction of ecology also occur in Xiaomi: in the ecology of the business world, the flow of energy is no longer limited to determining relationships, and even determines the appearance of species.

The "de-milletization" in the ecological chain of millet is regarded as an escape, but it is also the inevitable thing that Lei Jun expected, and the natural world can achieve self-regulation, the going and staying of ecological chain enterprises, there are problems that enterprises need to solve, and the reason is from Xiaomi itself.

The disappearance of diversity

The successful experience of using Xiaomi to make mobile phones, to copy 100 small millets, and to lay out the IoT in advance, is the origin of the birth of Lei Jun and Xiaomi ecological chain.

Xiaomi does do the same. Relying on the successful experience of mobile phones in the past, building an ecological chain around the core concept of "cost performance + high quality", Xiaomi will provide resources such as investment, supply chain, design capabilities and sales channels to the target company, while the ecological chain company needs to rely on its own R & D and design capabilities to create "Mijia" brand products for Xiaomi and sell them in Xiaomi's sales channels.

Each of these enterprises on the ecological chain is like Xiaomi, with the same high cost performance, in line with Xiaomi's product style, but each one is not Xiaomi, and even has a completely different growth logic, but from the time they are included in the ecological chain, it means that they have to transform into Xiaomi.

In the early days of the startup's growth, the Xiaomi model allowed them to obtain sufficient funds to maintain operations and continuous research and development, and in order to maintain cost performance, Xiaomi's own channels and traffic were used to reduce their costs, which is why they are like Xiaomi - similar to the initial Internet play of Xiaomi mobile phones.

Like the biosphere in nature, the construction logic of Xiaomi's ecology is actually around the circle layer. In addition to the five major products developed by itself, Xiaomi has formed three product circles around the mobile phone to invest in and establish ecological chain enterprises, forming a full range of loT products produced by Mijia.

The first circle layer is the mobile phone peripheral goods, and the existence of rice noodles makes the mobile phone peripheral the first circle layer with the inherent advantage of millet. Headphones, speakers, mobile power, in order to pursue high adaptability, the purchase of the same brand of accessories is actually a kind of consumer inertia, relying on this inertia, the establishment of the first circle layer has become very smooth.

Smart hardware is the second circle layer invested by Xiaomi, from the traditional white electricity, Xiaomi investment incubated a number of areas of intelligent hardware products, such as Mijia's air purifier, rice cooker, etc., the brand's exposure in life also increases with the category; drones, rare cars, robots and other geek mutual integration, is used to contribute to Xiaomi's brand technology sense.

More familiar to consumers should be the third circle layer - life consumables. Towels, toothbrushes, suitcases, running shoes and backpacks, the launch of these peripheral ecological chain products and the improvement of categories have increased the sales frequency and consumption perception of offline Millet franchise stores, and more importantly: it is most in line with Xiaomi's 80%-80% principle.

According to Xiaomi's logic, when defining products, Mijia usually focuses on 80% of the needs of 80% of users, of which 80% of users refer to most of the ordinary Chinese people, and 80% of the demand refers to relatively concentrated and universal needs, that is, the needs of life. Under this logic, the products of the Xiaomi ecological chain all have a common feature: high standardization, but less personalization.

After those startups survive, they often find that they have become the shadow of Xiaomi.

Nanny-style parenting

Help find the core members of the team, and even sometimes the founder of Xiaomi to join, output the entire set of Millet enterprise management and product methodology; at the same time provide funds, solve the supply chain, brush the "face" of Xiaomi with suppliers, and finally provide brand and sales channels and after-sales support, almost every company invested by Xiaomi has experienced its nanny-like meticulous care.

Xiaomi usually looks for competitiveness and cooperation or team equity investment in the field of subdivision products, in order to achieve the transformation to brand companies, most ecological chain companies will initially be attracted by Xiaomi's brand image, after the completion of investment, Xiaomi will also work with ecological chain companies to design and develop products, the most intuitive point is: Xiaomi's ID design team will even help ecological chain companies to design product appearance.

Therefore, mijia's products usually have a high degree of identity in technology, appearance, and style, and different goods produce synergistic drainage effects between each other, when you buy Xiaomi's household products, in order to ensure the consistency of home style, your shopping cart is most likely to be Xiaomi's products. This has also become an indicator of Xiaomi's success in flaunting the ecological chain, and it was clearly stated in Xiaomi's 2021 financial report that the number of users with five or more devices connected to Xiaomi's AIoT platform (excluding smartphones, tablets and laptops) reached 8.8 million.

After the research and development is completed, Xiaomi will help the ecological chain enterprises endorse the supply chain.

Hardware has always been the foundation of Xiaomi's standing, the right to speak at the industrial end allows enterprises on the ecological chain to obtain upstream and downstream cooperative relations at the same time have greater bargaining space, start-ups enter the hardware field at a lower cost, the cost advantage formed allows them to have a broader consumer group innately, plus Xiaomi has about 500 million active users around the world, "rice noodles" has become an ecological chain enterprise to provide a steady stream of customer resources.

Relying on the development of terminal APP and IOT platform, these consumers will eventually become the source of the birth of explosive models, using big data for user portraits, in order to find industry-level pain points, so that enterprises on the ecological chain can complete product upgrading and new product development.

If the ecological chain model of Xiaomi hardware products is to maximize the scale advantage and reduce costs, then the cost-effective, multi-category hardware products under the new retail have become the traffic entrance of Xiaomi. After the coverage of the population is expanded, with the help of Internet services, Xiaomi can collect user information and feedback to create explosive models, and the "triathlon" is still running on the Xiaomi ecological chain. Taking the Xiaomi bracelet as an example, the self-developed chip and sensor reduce the cost, focus on the user's battery life problem, and support Xiao Ai Voice, behind the explosion is the result of Xiaomi nanny parenting.

Finally, through the ecological chain products after internal testing, Xiaomi will open the two brands of Mijia and Xiaomi according to categories, the xiaomi mall and the product mall at the online end, the millet home at the offline end, and the channel resources provide online and offline marketing support for the ecological chain enterprises, on the one hand, it is conducive to improving the conversion rate and joint consumption of the product, on the other hand, it reduces the sales costs of the ecological chain company.

In this process, the enterprises on the ecological chain have also completely boarded the ship of Xiaomi.

Swaddling that is difficult to get out of

"Turn entrepreneurs into bosses, Xiaomi is a fleet, and every company in the ecological chain should operate efficiently." Replacing commercial strategy with military narrative is Xiaomi's consistent style.

For Xiaomi, it is not difficult to form a fleet, and it is not difficult to maintain operations, but for other companies in the fleet, leaving has become a difficult task.

Although Xiaomi has emphasized from the beginning that ecological chain enterprises are independent companies, in addition to the products of Mijia and Xiaomi brands, they can also develop and sell their own brand products, but in the early incubation stage of the enterprise, Xiaomi will be more involved in the design, production and manufacturing process, and even the transportation team to help complete various functions, the more support, the stronger the dependence.

With the growth of ecological chain enterprises, it seems that the autonomy of enterprises is constantly improving, but weaning has also become difficult, continue to do the ecological chain annexation, or focus on their own brands, in which wavering has become the status quo of many rice enterprises.

The remaining enterprises are crowned with the hat of "nibbling rice family", most of them adopt asset-light operation, adopt the model of "entrusted outsourcing production + Internet sales", all products adopt outsourced production methods, they are not directly involved in the production link, and these suppliers often come from millet, the advantages brought by low prices also make them trapped in the past cost-effective model, and the gross profit margin is difficult to exceed 20%. At the moment when it is difficult to get out of the explosive product, they are also facing questions from the high-end like Xiaomi mobile phones.

In Xiaomi's "bamboo forest theory", more and more bamboo is selected by millet, the competitive relationship between bamboo is also increasing, the life cycle is short, the replacement is fast, the bamboo forest may indeed be formed, but for the bamboo in the forest, the dividend of backed by millet is divided, the track is more and more rolled, and they never know when they will be replaced.

And choose independent enterprises, whether it is Fun Sleep Technology or the same ecological chain company's stone technology, No. 9 company, their growth path has a certain similarity: after the establishment of millet and other capital investment, join the millet ecological chain millet entrusted product research and development and provide sales channels, the revenue obtained is used to support the company's operation and research and development to create its own brand power, continue to expand sales channels and enhance the independence of other links in the industrial chain. Gradually get rid of the dependence on Xiaomi, continue to develop and strengthen its own brand products and further expand other channels to steadily occupy market share.

After the de-milletization, they often face the outside world's doubts about their own capabilities, whether it is the core research and development capabilities or the influence of their own brands, they have introduced special attention, pulled away their relationship with Xiaomi, after tearing off the label of Xiaomi, they even have an invisible competitive relationship with Xiaomi's products, and it is difficult to avoid the impact on the brand.

After de-milletization has gradually become a major trend, an interesting phenomenon has emerged: ecological chain companies, which are the second growth curve of millet, are also looking for their own new growth curve. Whether it is surviving in xiaomi's bamboo forest or in order to gain a firm foothold in the market environment, they finally realize that they need to get out of their swaddling and exercise their viability, and it is foreseeable that xiaomi is also gradually letting go and weakening its influence on enterprises.

In contrast, these small millets, under the millet ecological chain, stay or leave, this is not only a choice, but a survival challenge.