Dialogue with Wang Zhixiang, founder of Otter Tonton: To achieve a brand, it is necessary to achieve a category 

The 100 billion new tea drink track has run out of an e-commerce "dark horse".

At 8 p.m. on October 24, the pre-sale of the 2023 Tmall Double 11 opened, and the three new autumn and winter fruit tea products of red pomegranate orange, strawberry peach peach, and longan ginger and ginger ushered in a wave of pre-order peaks. Founded in April 2021, Otter Ton Ton focuses on instant freeze-dried fruit tea, with online as the main business position. Because it has hit a more subdivided track in the new tea market, it quickly ranked first in the freeze-dried fruit tea category on Tmall and multiple e-commerce platforms, with annual sales of nearly 100 million yuan.

Wang Zhixiang, the founder of Otter Tonton, is a native of Henan, graduated from the Department of Chemistry of Nanjing University, and has served as the head of game companies such as Shanda Network and Boya Interactive. In his view, the methodology for the efficient operation of the game industry and the grasp of the emotional needs of users are similar to the management of brands.

In addition to these experiences, Wang Zhixiang also learned the importance of "focus" from past entrepreneurial projects. The initial project focused on the concept of a collection of local specialty snacks, and although there were many SKUs, there was no more energy to concentrate on polishing the product details. Now, after the front has shrunk to the large single product of large moon cakes in southern Fujian, it has been handed over to a professional team to operate, "better than our previous operation," Wang Zhixiang said.

The implementation of the "focus" strategy, Otter tons also borrowed from Luckin. Wang Zhixiang said that they also wanted to make a "raw coconut latte"-style large item, so they focused on the elements of super fruits and made a super single product of flavor. At present, there are more than 20 flavors of freeze-dried fruit tea, of which 10 million cups of oolong peach have been sold, accounting for 30% of the entire product system; The gross profit margin of the whole line of products is nearly 60%, and the repurchase rate is 40%.

As a new brand in the involution market, how does Otter get the first wave of users?

Wang Zhixiang said that he chose interest e-commerce in the early stage, and there will be millions of investments in a single month to do paid promotion. "But then the real increase in volume depends on user self-propagation."

The team organized user activities on content platforms such as Xiaohongshu and Douban, formed the topic of grass planting, and then attracted it to the core e-commerce platform to pull weeds, so it accumulated a group of early passers-by fans and word of mouth. "Some interesting topics such as #Fruit tea is freeze-dried##A cup of fresh fruit tea in three seconds# spilled over to the Weibo platform, and it was also on the hot search, with more than 20 million exposures and discussions in one day, and we were quite surprised." This pattern has been preserved to this day.

At present, more than 80% of Otter's revenue comes from online channels, including Taobao Tmall, Douyin, JD.com, Pinduoduo, etc., of which Taobao Tmall accounts for more than 50%. There are differences in the operation strategies of each platform, such as displaying the brand and building the brand mentality on Tmall, doing product display and planting grass on Xiaohongshu, and doing content operation for fun brewing on Douyin. At the same time, they attach great importance to live broadcasting: they will cooperate deeply with the super head talents of the Tao system to design customized models for their channels; Cooperate with six or seven hundred Douyin influencers every month; also set up a self-broadcast live broadcast room and tried 24-hour live broadcast.

Otter Ton also did something unexpected – opening up some of its production technology to the supply chain.

"The business logic of the factory is to saturate production and maximize the efficiency of the production line, and after they master the technology, they will not be satisfied with the cooperation with a single brand, but will release the technology to more interested partners. More partners to do this together is actually a process of accelerating market maturity. In Wang Zhixiang's view, to achieve a brand, it is necessary to achieve a category.

According to the "2022 New Tea Beverage Research Report" released by the New Tea Beverage Committee of the China Chain Store & Franchise Association, the market size of new tea drinks in mainland China will exceed 100 billion yuan in 2022, and the total number of new tea beverage stores will exceed 480,000. The scale is expected to exceed 200 billion in 2025. The entire new tea drink track is also known as "the most volatile new consumption track in recent years": old players Hey Tea and Nai Xue's tea have successively opened up to join and expand their product lines, hoping to reach more people; New players continue to attract young people with IP co-branding, product peripherals and other gameplay.

In a track where consumers always have a sense of freshness in "products, tastes, packaging, and topics", how will otters overcome all the obstacles?

Wang Zhixiang

The following is the content of the conversation between "World Online Business" and Wang Zhixiang, the founder of Otter Tonton, which has been deleted:

Hopefully, in the next five years, there will be a tenfold increase in users

World e-commerce merchants: What kind of track are otters on?

Wang Zhixiang: New tea users are the fastest-growing user group in the past 10 years, with a scale of about 300 million, and fruit tea users account for more than 60% of them. We hope to provide users with a convenient form of fruit tea products, so that everyone can have a more convenient scene in fruit tea consumption and fruit tea drinking. Otter has already served 3 million users, and hopes to serve 30 million users in the next five years, a tenfold increase.

Tianxia online merchants: Who are the people who are the new tea drinkers in China?

Wang Zhixiang: The new tea drink crowd first changed from a little bit of users of milk tea branding, to Hey Tea later, and then coffee lovers also joined in, forming a relatively large group. The characteristic of the new tea drink is that it enriches the taste and drinking method of the tea itself, and emphasizes its own freshness in the raw materials. In the production process of otter products, the original fruit and original tea formula are also used to obtain a freeze-dried product form.

World's online merchants: Why has freeze-drying technology become the core technology?

Wang Zhixiang: Freeze-drying technology has been fully used in food production. The principle is very simple, that is, the product is fully solidified, in which the moisture is solidified into ice crystals, and then through rapid heating, the ice crystals are turned into water vapor volatilization, and after the dehydration treatment is completed, it is the solid block of the product that we see. We spent two years polishing the product plan and technical solution, developing the fresh extract freeze-drying technology, and officially launched the otter ton in 2021. This version of the product can be dissolved in 10 seconds with room temperature water.

Make a product that is affordable

World E-commerce: Where does the inspiration for entrepreneurship come from?

Wang Zhixiang: First of all, my colleagues are all from relevant backgrounds in the food industry, and they are very interested in solving the consumption needs of young people. More than 80% of the office are girls, and everyone orders milk tea every day, on the one hand, they will be anxious about the calories of milk tea (400~600 kcal), and on the other hand, the choice and waiting every day will make people irritable. In addition, from the perspective of the cost of living, a few hundred a month is not a small amount. Then we thought, why can't we use the food technology we are good at to make a product that we can afford to consume ourselves?

We went to investigate tea bags for the first time, because tea bags are more mature. But after experiencing almost all the tea bags on the market, we found that we didn't achieve the satisfaction and happiness that the new tea drink brings. We said that we wanted to make a product that could be restored, and we thought of the best freeze-drying process to retain the product form.

At that time, the market could learn from the first type of freeze-dried coffee powder, which was very popular from 2018 to 2019; The other category is the freeze-dried soup soup products popular in Japan and South Korea, this block-shaped product structure is very interesting, such as seaweed egg drop soup, seaweed and eggs are kept in it, this is the product form we want.

Tianxia e-commerce: It took two years from project establishment to launch, what are you doing?

Wang Zhixiang: The process is a bit more complicated than we thought. On the one hand, seaweed egg yolk soup needs to be brewed with hot water, but we pursue cold water brewing at room temperature, so it took a little effort to do research and development. On the other hand, the front-end process of seaweed egg drop soup is relatively simple. After doing fruit tea production, we found that passion fruit, kumquat, lemon these products have a better flavor, based on the fruit itself The flavor is very obvious, but when it comes to peaches, oranges, mangoes, pineapples, if only simple product mixing, there is no way to make a good flavor of fruit tea, so the fresh extraction link is added. We went to the factory to simulate the production process of making fruit tea in the store, and carried out centralized production of the manual production process.

How to do pricing?

Wang Zhixiang: The new tea and coffee market has been very volatile in the past two years, and they are all in the price range of more than ten yuan. When our fruit tea was launched, the price was 10 yuan a cup, and now through the membership operation system, member users can get a single cup of about five or six yuan. Comparatively speaking, we are more cost-effective than food and beverage products.

From Internet workers to entrepreneurs

Tianxia E-commerce: What kind of work did you do before starting your business?

Wang Zhixiang: After graduating from Nanjing University with a major in chemistry, I wanted to do something that I felt was suitable for this age, so I chose my hobby - games. I went from operation to project leader, managing the R&D, operation, and marketization process of the game, and my annual salary was one million at that time. I've been in the game industry for 5 years, and I'm half a game industry graduate.

Tianxia e-commerce: How did this experience affect you?

Wang Zhixiang: The essence of the game is a virtual economic industry, where everyone consumes their time and gains some virtual value, or emotional value. These have become some of the starting points for my thinking in other industries and fields in the future: for example, in terms of systematic play, our team will cut in a relatively more efficient way and pursue the needs of consumers themselves. This is also something that we dig deep into and crawl in the game industry.

World e-commerce: From Internet workers to entrepreneurs, what kind of changes have taken place in your heart?

Wang Zhixiang: When considering starting a business, the starting point is not the yearning for financial freedom, but more about the freedom of time and the freedom of thought. I've always been an interest- and achievement-oriented person, and after I left my job, I fell in love with food and was ready to get into the food industry. I think China, as a big food country, has a very mature supply chain and can make great brands.

What was the first entrepreneurial project?

Wang Zhixiang: In 2016, I started my first business and made a snack brand called Wei BACK. This is a process of crossing the river by feeling the stones, groping from 0 to the entire online process in the food field. The rapid development of Wei BACK benefited from the demand of the market itself at that time, and we chose the development direction of multiple categories, and the sales volume was piled up by 50 products. This kind of multi-SKU operation, when we reviewed it later in 2019, we thought that it would become a local specialty version of the little three squirrels, or it could become another snack collection store.

The original intention of BACK is to build China's local specialty snacks into a mature brand system. But we found that there was no way to accomplish this in the direction at that time, so we stopped in time. Later, I will further think about where we can focus on what point we can focus on, first solve the needs of a group of people, and create a product that everyone can accept and experience consumption repeatedly. We focused on the large mooncakes in southern Fujian, and successfully popularized this relatively local and niche product to the entire market, making it the fourth largest mooncake category.

Tianxia e-business: How do you divide labor with your partners in the otter ton project?

Wang Zhixiang: Another founder, Mo Mozi, graduated from the School of Food Engineering of Sichuan University, and has 11 years of food-related work experience and methodology. When we created the project, there was a relatively tacit division of labor: Momozi's advantages are in the product and brand supply chain, and my advantages are in market-oriented operation and refined operation, and we amplify the advantages. At the same time, the two different advantages will collide and run in in the whole development process, which is actually the process of penetrating, learning and precipitating each other's fields.

Learn from Luckin to take a large single product strategy

World e-commerce: Introduce the development logic of the product.

Wang Zhixiang: The logic of product development is to continue to learn from Luckin and run in a serialized way, such as fresh fruit tea series and fresh lemon tea series, and develop accordingly in combination with the seasonal season of the fruit itself. At the same time, we will focus on the top products of oolong peach and jasmine orange to do continuous and in-depth construction.

Tianxia online business: What are your big products now?

Wang Zhixiang: Peach-flavored fruit tea is the highest selling item in the whole category and industry. Our big single product happens to be in this area, there is a one called oolong peach, which accounts for more than 30% of our entire product system (revenue), although it has not reached the height of raw coconut latte in Luckin, but we are continuing to optimize. Because in addition to the focus of a large single product, fruit tea itself is very rich in fruit elements. We will combine these superfruit elements more often to achieve super single-product flavors.

World e-commerce: What is the value of fruit tea?

Wang Zhixiang: There are two major items in the beverage industry, Coca-Cola and Sprite. Sprite is a lemon-flavored soda to some extent, and in terms of fruit elements, the global universality of fruit flavor is very high. Why is there such a single item, and the value of fruit tea? Because people are not satisfied with just flavoring, they want to drink lemon-flavored and orange-flavored drinks. For example, the orange flavor, from Fenda fruit orange to now must be orange flavored fruit tea, everyone's demand continues to evolve in a more natural and healthy direction.

How much does the annual R&D investment in products be invested?

Wang Zhixiang: For each new product developed, the overall comprehensive investment accounts for 5% of the entire process, from early product design to laboratory verification and production verification, to consumer testing and packaging design. Through technology, we can achieve 50~60 calories in a single cup of fruit tea, which is one of the health values that the product brings to consumers.

World e-commerce merchants: what is the consumer portrait like?

Wang Zhixiang: Our users are mainly between 20 and 35 years old, which is very overlapping with the consumer group of new restaurants. The focus is on first- and second-tier cities, and their repurchase frequency will be higher.

Tons of otters at the Red Hill Zoo

Taobao and Tmall channels account for more than 50%.

Tianxia e-commerce: What is the proportion of your revenue on each platform?

Wang Zhixiang: At present, our (revenue) in Taobao and Tmall channels accounts for more than 50%, other platforms including Douyin, JD.com, Pinduoduo, etc. more than 30%, and some offline retail circulation also accounts for more than 10%.

The world's online merchants: why does Tmall account for the highest proportion?

Wang Zhixiang: Tmall is like a large-scale shopping mall, which is good for a branded product and brand company. Users have formed a complete behavioral chain, and Taobao Tmall is to search for a certain product and meet a certain consumer demand, and there are very clear product needs and ideas.

Tmall also has the advantage of the path in that it will do a lot of actions with the brand. For example, oolong peach peach, jasmine orange orange these flavor search terms did not have at the beginning, consumers after drinking otters tons of tons of delicious taste, when they came to search for "jasmine orange orange", but nothing matched, and then we were able to match us. At first, users didn't remember our brand name, but then we were able to match us quickly after optimization. Behind this is that the platform and the merchant work together to promote the update of search related words, and the logic of the platform is to hope that every action that users come in will generate effective value.

World e-commerce merchants: When will the first wave of sales peak?

Wang Zhixiang: In 2021, we did a wave of activities on Double 11, which was to buy otters and give away raw coconut lattes, because Luckin's raw coconut lattes were very popular that year, and we also developed freeze-dried raw coconut latte products. With this potential energy, everyone rushed over to learn about the otters, and the first snowball rolled. At that time, there were 1 million transactions in a single day on Tmall Double 11, and 20,000 or 30,000 transactions a day were usually made.

World e-commerce: where is the focus of this year's efforts?

Wang Zhixiang: Mainly online layout and operation, as well as some offline retail testing. Online is to do a relatively modeled operation, re-operating Douyin; At present, some convenience stores have been entered offline, such as convenience bees in North China in Beijing, 711 convenience store system in southwest China, as well as supermarket systems and local supermarkets like Ole. Now the focus is on some large supermarket systems and membership store systems. In addition, we will also pay attention to the construction of more vertical channels and cooperation in some specific places offline, such as opening our fruit tea shop in Hongshan Zoo, and selling fruit tea while popularizing the brand concept and life concept.

The essence of co-branding is to express the core of the brand

World e-commerce providers: how to find the first wave of users?

Wang Zhixiang: We released activities through self-media, and went to the whole network platform to find (traffic), on Douban is the Heguo milk tea group, and on Weibo to find related topics. The early conversion must not be high, but there are still some users who have leisure time, or are interested in the content, so they come to learn about it, try it, and think that this thing is quite interesting and delicious, so they repurchase it. They will take this as a surprise and repurchase it to themselves and share it with friends and colleagues. These people become a new chain of transmission.

World online business: What do you think of the new tea drink's enthusiasm for co-branding?

Wang Zhixiang: The essence of co-branding is to express the core of the brand. Many consumer goods brands will simply treat co-branding as a traffic exchange, but it is not. I think Luckin has been very successful in co-branding, and the direction chosen is highly consistent with the topic concerns or spiritual core concerns of my own consumer groups.

For example, if you co-brand with Moutai, you will find that Luckin is not a user of sauce, not a middle-aged and elderly user, but a young person who wants to collide with the culture on a larger level that he recognizes, and find a sense of national pride: this kind of co-creation is a good description and portrayal of the brand voice of both parties and the meaning of the brand itself.

World online merchants: What co-branding have otter tons done?

Wang Zhixiang: In fact, in the case of no promotion at all, the most paid by consumers is the co-branded product. But we are very restrained in doing co-branding, there are only 4 co-brands in total in the 2 years since we were established, and they are more about expressing the lifestyle of young people, and do not take traffic as the core consideration.

As early as the beginning of the brand's establishment, we reached a joint cooperation with Hongshan Zoo and adopted an otter "Banna". This information is what we want to convey to our users, and together we can improve the lives of animals and understand the colorful side of the world.

Tianxia online business: I heard that your neighborhood is very popular?

Wang Zhixiang: Last year, 618 and Double 11 were all based on the surrounding fire. We are honored to use the development of peripheralization to give more consumers the opportunity to learn about otters. The periphery is a supplement to the brand expression, and we hope to build a scene concept of everyone's comfortable life, and relax in the lifestyle. Therefore, the development of our peripherals is not limited to functional products, such as the urban series of fruit and tea shop building blocks, using small building blocks to decorate everyone's desktop, this building block has received a lot of user evaluation, feedback and return to the picture. We will give away many events for free, so I hope that everyone's life itself is full of fun.

To achieve a brand, it is necessary to achieve a category

Tianxia online merchants: More and more brands are entering this track, how do you face the competition?

Wang Zhixiang: When you do well in a market, you will definitely be concerned by more powerful brands, and the market will be fully competitive. From the perspective of brand influence, we actually welcome more related brands to enter the market, such as bubble tea restaurant chains, they really need some products to supplement the product demand when people don't want to order milk tea and takeout. But the difficulty is that this product and the store product are fighting left and right. This is a burden for large enterprises on the one hand, and on the other hand, they can't all be in this matter, and their main battlefield is not here.

World e-commerce merchants: Why do you do technology openness?

Wang Zhixiang: From the perspective of a category dimension and a larger market dimension, we believe that we need to do this. Only when we share product forms and product technologies can this market have the real supply capacity to meet more consumer demand. From the perspective of the market, we hope to attract more brands to do the freeze-dried fruit tea business together, so that the category can cover more users. To achieve a brand, it is necessary to achieve a category. Let's make a small gold mine into a big gold mine together, and make a small cake into a big cake together.

Otter tons and tons of production workshop

The first step is to maintain the viability of self-sufficiency

Tianxia online business: You still rely on factory OEM, what do you think about this matter?

Wang Zhixiang: At present, we have not yet reached the scale and stage of a self-owned chemical plant, and in the early stage, we pay more attention to the use of mature things through cooperation, so that consumers can form a product experience.

Many brands will say that the scale effect of consumer goods comes from the supply chain, but we believe that the most important thing is the brand perception and taste perception formed by consumers. In a way, it's a statistic, and when you think of Coca-Cola, you know that it tastes, and it's some signals that your brain remembers. These signals are put in the era of the information industry, that is, data, what we have accumulated is this data, data does not depend on the server, does not depend on your program, it is more of a database, this thing is the most valuable.

Tianxia online business: How do you plan for the next development of enterprise scale?

Wang Zhixiang: A brand must first maintain the viability of self-sufficiency, survival means that you are needed by the society and the market, so after we go through the trial and error stage, focus on profit composition, at least to achieve a flat, and then make a small profit, and even go to the normal operating profit of a consumer product, which is 5%-10% of the profit range. The second is to consider scale, because scale is essentially an amplification of business logic or product logic. Only when the product logic is confirmed can it be amplified. Some very good brands do some loss expansion in the early stage, and it must be that the logic of the product itself has been demonstrated in other ways to have such space. Otherwise, it is more of a state of burning money for traffic, and finally declining.

World e-commerce: What do you think of the statement that "new consumer brands are only 3 years of life cycle"?

Wang Zhixiang: It still depends on whether the brand really solves consumer needs. There are a lot of good brands that have been far more than a three-year cycle, such as empty carved pasta, Jane Eyre, and three and a half meals. This year is the third year of Otter Tons, we only care about the needs of consumers, how to serve them with such a product form, and are determined to be a product brand that solves consumer needs and truly serves users.

Last year, we reached out to users to do actions by planting grass and sending samples. The logic is simple, that is, more users, we feel that they need this kind of simple product experience, so we do it. This year, we have developed product forms such as freeze-dried tea cubes, and there are smaller products on the line, which are all service upgrades after we communicate with users. This upgrade will allow us not to worry about whether we can survive three years as a new consumer brand, but to focus more on this group of lovely users.

"At the age of 30, I hope to be able to do something practical"

World E-commerce: What is your entrepreneurial philosophy?

Wang Zhixiang: It's enough for you to figure out what to do. For example, when I first started my career, I wanted to make a good game, whether it was to participate or lead, I was running towards it. When I entered the field of consumer goods, I wanted to make a good product, and I needed to be a company and organize a team, which naturally became an entrepreneurial model. So the core is that I want to make a good product that can solve the consumption needs of some consumers, and if this demand is a common demand of a large group of people, I will be happy to do it.

World Online Business: What kind of personality are you?

Wang Zhixiang: I don't give myself too many rules and requirements, I have a sense of purpose, I respect the goal, but I am not a person who will work 24/7 for the goal. On the contrary, I will be willing to take the time to live and experience, stand in the same role and position as my users, and do empathy. To put it simply, it might be: serious and comfortable.

World e-commerce: What is the change in mentality after starting a business?

Wang Zhixiang: Gaming is something I loved and pursued when I was 20 years old, and I think it is also a way to bring spiritual value and financial freedom. At the age of 30, I hope to be able to do something practical and make a product that I am more satisfied with when I look back at the age of 40, and at the same time have a foundation and paving for me to do something at the age of 40 and make a better otter, so I will be very content to do this with all my might.