Gu Jun, the founder of Newme, has been in business for ten years, and has worked in JD.com and Lefeng.com, and founded cross-border e-commerce Need. In 2020, we will explore new overseas traffic depressions, bet on TikTok and establish Newme, with independent stations and Amazon stores as the main conversion positions, and the supply chain side will further define new products through self-research and package payments, so as to create a DTC home furnishing brand. Its main products cover lamps, small kitchen appliances, small bathroom appliances and power tools, etc., priced at 30-100 US dollars, to meet the needs of European and American housewives and hot mothers.
Up to now, the official TikTok account "newmeofficial" has accumulated 100,000 followers, more than 1 million likes, and has received a monthly GMV of nearly one million US dollars, with sales of more than 100 million yuan in 2023. A few days ago, Gu Jun, an e-commerce veteran, talked with the boss about the entrepreneurial process of the past ten years.
01
Talking about entrepreneurship:
Ten years of sharpening a sword,
1% happiness is enough to offset 99% of pain
- Boss Talks: Please give us a personal introduction of your entrepreneurial background and experience.
Gu Jun: Since April 2014, I have been in business for ten years. He first stayed at JD.com for almost three years, and then went to Lebee.com, and later sold to Vipshop. During this period, he mainly engaged in new media content on e-commerce platforms, and accumulated valuable experience in live broadcasting.
After working for five years, he founded his first company, Need, which mainly sells Japanese and Korean beauty and personal care products to China, such as Pinduoduo or Weidian, which is one of the first companies to integrate quality and efficiency. Fortunately, in the first year of entrepreneurship, the revenue was 700-8 million yuan, the first pot of gold was harvested, and it was exchanged for a down payment on the house. As the saying goes, the money earned by luck is lost by strength.
The reason why I switched to cross-border e-commerce was because the growth of the domestic market was relatively slow at that time, and at the same time, I saw the huge potential of brands going overseas, especially the hot trend of online retail in India, the Middle East and the local market in the United States.
In 2020, TikTok traffic swept the world, and in November of the same year, Newme was quickly founded, capturing the minds of Generation Z in the United States with the help of the live broadcast platform with the "new, strange and special" advantageous products of China's supply chain. Of course, Newme does not stop at selling goods, but also hopes to accumulate an understanding of channels and people through selling goods, and gradually develop the brand business. Up to now, Newme has accumulated more than one million US dollars in short video advertising on TikTok, with a monthly live broadcast revenue of 1.5 million US dollars, a peak daily advertising revenue order of more than 1,000 orders, and several SKU single products sold more than 10,000 pieces. It has built nearly 20 live broadcast rooms in China and the United States, and is the first company in China to try the full closed-loop cross-border live broadcast in the United Kingdom and the semi-closed-loop local live broadcast in the United States. In March 2023, TikTok's first hero product in the United States will be launched, and 3,000 pieces will be sold in a single day, and the store will top the list in the United States that month.
However, due to the fact that most of the products come from OEM or third-party procurement, they lack a certain brand power. Therefore, Newme will focus more than 70%-80% of its energy on the R&D and construction of its own brand, establish differentiated competitive barriers, and strive to achieve 30%-40% GMV.
In the future, Newme's goal is to be at the top of TikTok in the home furnishing field, because in this way, it can fully understand the channel, understand how to do and how to collaborate on the content and transactions on TikTok.
- Boss Talks: As a hard-core entrepreneur, what kind of opportunity made you decide to start your own business?
Gu Jun: Naïve, I don't want to work anymore. The most fundamental reason is that many ideas could not be effectively verified in large factories at that time. From 2011 to 2015, at that time, JD.com and Lebee.com were experiencing the transition process from PC Internet to mobile Internet, and the number of netizens in the PC Internet period was very limited and did not have the ability to access the network. In the era of mobile Internet, there will be many new incremental people, as well as new commodities and new traffic content.
Thinking about the changes of e-commerce from the perspective of categories, JD.com has achieved the ultimate in B2C all-category e-commerce, and we hope to carry out incremental business changes based on the overflow of users from the perspective of media business, so that media business and commodity trading can form a better connection in the mobile Internet era, so as to find new opportunities in the market.
However, due to the fact that the direction of content e-commerce and social e-commerce was not well practiced at that time, and at the same time, the deeply recognized star talent economy failed to achieve a good business landing, so he chose to leave the big factory.
Founded the first company Need, aiming to form user social content based on WeChat traffic commodity transaction purchase, is the first batch of imported social e-commerce entrepreneurs;
- Boss Talks: We can feel your enthusiasm for the entrepreneurial process, but entrepreneurship is often a long journey with uncertain results. How did you convince yourself and make it to the end?
Gu Jun: Starting a business is like raising children, 99% of the time comes from pressure, responsibility, entanglement, and hesitation, and only 1% of happiness is enough to offset 99% of pain.
It used to be about winning, now I just don't want to throw in the towel. When we were in high spirits, we fought a business war with Jumei, the rival of the year, for more than a year, and the result was that Jumei won and went public, and we sold it to Vipshop.
I started wanting to win, I wanted to spend 5 years to build a $1 billion company, but now I don't want to lose, and now I don't want to lose, and now I see that two 5 years have passed, and I am still far from my goal. It's just that when I talk about entrepreneurship today, I don't care much about how big a company it can be in the end, but many things I hope to do in my heart have become more and more clear. The so-called don't want to lose, but I don't want to lose to the certainty of my heart - to realize the vision of more brands going overseas.
- Boss Talks: What are the solutions for founders when they encounter bottlenecks or internal friction?
Gu Jun: The founder will not have internal friction only when he is alive and dead, or when he has no way to choose, and his expectations are reduced. Me too.
How can you not imagine the future, that is, when you are still hungry today, the reason why people become realistic comes from having to face reality. Different entrepreneurs have different ways to choose, and for me, I may still be looking forward to imagining the future, but on the road to entrepreneurship, there will also be factors that have to face reality. For example, the current capital environment is indeed far worse than in the past, and founders should support their long-term dreams by supporting the company through profits.
- Boss Talks: What is the proportion of overseas employees in Newme, and how to coordinate domestic and foreign operation management?
Gu Jun: At present, there are more than 20 colleagues in China, mainly responsible for store management, product design, live advertising, and upstream supply chain sourcing, while 70 colleagues in the United States are mainly part-time anchors, who regularly come to the company for live sales.
In terms of coordinating domestic and foreign operations and management, the most important thing is to find a good partner who can solve most of the problems. At the same time, I am also traveling frequently, with an average of one round trip per month between China and the United States last year, in order to better coordinate the business balance between the supply chain side of China and the traffic side of the United States. But there will inevitably be some regrets, such as missing a good opportunity at the most important stage of traffic.
On the one hand, on the supply chain side, with the emergence of more and more Amazon sales, independent station sales, etc., no matter how hard you try, you may not be able to catch up with these companies that have goods in hand or even have sold goods very well; Therefore, in 2024, the strong requirement for myself is to stay in the United States and do live broadcasts.
It is worth noting that doing traffic does not mean doing branding, which is not an inevitable undertaking logic. First of all, it is necessary to achieve the stage of having a huge ability to do traffic; secondly, whether there is still the willingness, ability and energy to make a brand after that stage; third, whether the company's actual business capabilities and scale match, including many cut-offs. There was a lot of foreseeable suffering, but it had to go through it this way.
02
Talking about experience:
Get the balance between content native and cost of output
- Boss Talks: What are the selling points of Newme's products, and what experience can you share in overseas live broadcasting?
Gu Jun: Whether it is crystal jewelry, beauty and personal care during the live broadcast period, or 3C digital and small household appliances in the stage of making its own brand, Newme has a rich enough category. I always believe that the core advantage of China's supply chain is still to win in cost performance. For most Chinese companies going overseas, if they want to penetrate the US market, more competitors are actually from Japanese and South Korean companies, especially in the field of non-FMCG, such as 3C digital and small household appliances.
According to incomplete statistics, about 2 million SMBs (small and medium-sized enterprises) in the United States are purchasing Chinese goods through various channels, and live streaming is one of the effective ways to better reach these buyers. For example, everyone in the live broadcast room speaks English, but there is a huge difference between Africans speaking English and Americans speaking English, and the original sound of the content actually directly affects the live broadcast turnover and traffic.
In addition, supply chain efficiency is also worth pondering. Local revitalization may be relatively easy, but the difficulty lies in the implementation of actual businesses such as inventory management, sample delivery, remote control, etc., and there are still many barriers of values and cost efficiency to be broken through in the matching between the localization status quo and the Chinese model.
- Boss Talks: What are the different categories of phenomena that you have observed in different regions, and what are the different communication materials?
Gu Jun: Cultural differences in different regions can affect the popularity and acceptance of products. In the U.S. market, yoga pants, shapewear, and lip gloss are popular and reflect the American culture's quest for health, beauty, and fashion. In particular, lip gloss, because of its thermal ingredients, can temporarily increase the fullness of the lips, which is in line with the aesthetic preference of American women for plump lips, which is why the product sold out in the United States at that time.
(Newme lip plumping product picture)
Today's cross-border entrepreneurs need to have a keen insight into overseas cultural trends, and understanding the cultural background and consumer preferences of their target market is essential to creating products that meet market needs.
- Boss talks: From the perspective of pricing, what are the differences in the choice of unit price of brand categories in different regions?
Gu Jun: In the U.S. market, the average order value on TikTok is on the rise. From $30 at the beginning, it has now increased to $30-50 (mainstream price), and even $50-150. With the growth of the platform, there are still many opportunities for continued high customer unit value.
The order price in the Southeast Asian market is about 10 US dollars, the unit price in the European market is between 15 and 20 US dollars, and the unit price in the Middle East market may be on par with the US market, but the overall market size in the Middle East is relatively small, and the delivery cost will be higher.
When considering a pricing strategy, you need to consider local delivery costs in addition to the average order value, including logistics, taxes, and other related fees. The structure and difference of these costs will directly affect the final pricing of the product.
03
Talking about the market:
Why can't "Aquaman" TikTok win the UK
- Boss talks: After the launch of TikTok Shop in the UK, Newme also started live streaming at the same time, how is the overall performance?
Gu Jun: Frankly speaking, I lost a lot of money on the British station. One of the reasons is the misjudgment of the market, especially in the selection of products, choosing a lot of products that are thrown (large in size and light in weight) or heavy (heavy in products and low in order price).
In the early stages of the UK market, the platform heavily subsidized the shipping cost of small packages, but this did not apply to all types of products. For example, plush toys and crystal jewelry sold at that time usually needed to be shipped to the local area in bulk and in the form of containers to reduce the shipping cost of individual goods. If it is based on small package air freight, the cost will increase significantly, and even account for 50% of the overall customer unit price, which means that although the platform provided freight subsidies in the early stage, this subsidy cannot be maintained for a long time. Once the subsidy is discontinued, the business model based on small package logistics may not be sustainable, as the terminal price will become uncompetitive due to high logistics costs.
Based on this, Newme also adjusted its strategy and began to focus on local stocking of commodity inventory and generating localized content to reduce costs and improve efficiency. The experience based on the UK market not only helped Newme find a suitable path in the UK market, but also opened up new ideas for strategies in other markets such as the United States.
- Boss talks: In July last year, TikTok e-commerce also opened the door to the U.S. market, compared with the sales of the U.K. station, what is the obvious difference between the average daily volume of Newme's U.S. market and the overall sales?
Gu Jun: In terms of user base and market size, the population base of the United States is about 300 million, which is much larger than the population of about 60 million in the United Kingdom, which means that the potential market size is also larger. Assuming that half of the population is TikTok daily active users, the number of daily active users in the US market (about 150 million) will be significantly higher than in the UK (about 30 million). This difference directly affects whether it is necessary for cross-border sellers to set up special warehouses for localized stocking. In contrast, the U.S. market may be a more reasonable strategy due to its large user base, setting up a local warehouse to reduce logistics time and costs, and improve the user experience.
Therefore, the size of the market capacity determines whether cross-border sellers should carry out large-scale commodity stocking. In markets with large user bases, even a small fraction of the target demographic of daily active users can mean potential consumers for millions.
From the perspective of regional market integration, cross-border sellers should not be limited to a single market, but should expand their perspective to the entire European market, such as the markets of countries such as Germany, France, Italy and Switzerland. This kind of local stocking based on the whole of Europe is more conducive to further reducing logistics costs and improving market efficiency.
- Boss talks: Why was it so difficult for the British to do it at that time, but the American was able to do it?
Gu Jun: On the one hand, the actual order value difference is about $15-20 in the UK market and $30-$50 in the US market. This difference means that in the U.S. market, the revenue per trade is higher, which may lead to higher profit margins.
On the other hand, the proportion of logistics costs, assuming that the logistics cost of small packages is fixed in both countries, is about 5-7 US dollars. When logistics costs account for different percentages of the total order value, it can have a significant impact on the overall gross profit structure. In the UK market, logistics costs account for a large proportion due to the low unit value of customers, which will compress the gross profit margin of goods. Conversely, in the U.S., a relatively low share of logistics costs due to higher average order value helps maintain higher gross margins, which also means that many business models in the U.S. are more likely to run successfully.
In addition, in terms of advertising and traffic costs, the unit price of customers also affects the affordability of advertising and traffic costs. In the U.S., where the average order value is higher, merchants can spend more money on advertising and traffic acquisition because the potential profit per transaction is higher, covering these costs. In the UK market, a lower average order value may make advertising and traffic costs relatively high, affecting overall profitability.
04
Talk:
Good content-based products come with content capabilities
- Boss Talks: When doing its own brand on TikTok, how does Newme determine whether a product is worth launching?
Gu Jun: There are three methodologies, first, use the successful cases of the Chinese market, learn from the products that have become popular on short video platforms such as Douyin in China and also meet the needs of overseas local culture, and it is likely that it will be popular again overseas, such as visual ear picking, Second, test the attractiveness of the product in short videos, shoot the product into a short video form, observe whether it can arouse the desire of overseas users to buy, and at the same time require the product manager or purchasing manager to have a certain video production ability, at least be able to use simple tools such as mobile phones to shoot short video content that can attract consumers; Third, look for market opportunities for replacement products, look for those products that have proven successful in the market, and consider whether it is possible to develop more cost-effective alternatives. For example, Lefin Ping Dyson vacuum cleaner and Dreame Sweeper Ping Dyson robot vacuum cleaner attract consumers who are looking for value for money by offering competitive price and quality.
- Boss talks: How to balance content and advertising in the publicity and promotion work to be carried out after selecting a product?
Gu Jun: First of all, good content-based products come with content capabilities, which means that they can naturally attract users' attention. On TikTok, due to the different algorithms, traffic distribution, and followers of influencers, the attractiveness of the content is the key factor that determines the success of the product. Therefore, when creating ads, you should focus on showcasing the unique selling points and user experience of your products, so that the content itself can be more explosive and attractive.
Secondly, to understand the logic of different e-commerce platforms, traditional e-commerce platforms such as Amazon (shelf e-commerce) and interest e-commerce platforms such as TikTok (interest e-commerce) are fundamentally different. Amazon relies on a search and review system, while TikTok relies on algorithmic recommendations and influencer effects. Therefore, on TikTok, the advertising content needs to be more creative and interactive to adapt to the platform's traffic distribution mechanism.
Third, the matching of people and goods and the differentiation of content, on TikTok, the degree of matching between the product and the influencer, as well as the differentiated selling point of the product itself, is crucial to the success of advertising. The content of the ad should be consistent with the image and style of the influencer, while highlighting the characteristics of the product, so as to increase the user's purchase intention.
Fourth, the concept of global e-commerce, in China, Douyin has entered the era of global e-commerce, which means that users are not only on Douyin for entertainment, but also to discover and buy goods. In this environment, the line between content and advertising becomes blurred, and advertising is a kind of content in itself. Similarly, on TikTok, ads should be designed to be more natural and seamless in order to better blend into the user's browsing experience.
Fifth, using the platform dividend, TikTok is still in the bonus period, the so-called bonus period, refers to the time when a single channel can also be ROI correct, you can use the platform's traffic subsidies and low-price cooperation with influencers to effectively improve the exposure and sales of goods. As a result, it further helps products quickly gain attention on the platform and drive overall sales.
- Boss Talks: Finding a way to create good content on a content platform is the best way to continue to get traffic and high growth, in your opinion, how to create this good content?
Gu Jun: First of all, good content must be localized rather than piled up, which means that the content needs to resonate with users in the target market and meet their needs and interests. Localization isn't just about language and culture, it's about understanding local market trends and user behavior. Especially on an algorithmic platform, such as TikTok, it can accurately push content to relevant user groups according to its localization characteristics.
Secondly, a good product is naturally good content. Factors such as the product's design, usage scenarios, differentiated features, and price are all key factors that determine whether a product can be good content. Therefore, instead of ignoring the potential of the product itself as content, businesses should put more energy into discovering and showcasing the unique selling points of the product.
Third, cross-border sellers can use localized resources to create good content. For example, working with local short video creators or live streaming influencers. In the short video live streaming ecosystem, the influence of influencers is very strong, and their short videos and live broadcasts can greatly promote the sales of products. By partnering with these localizers, you can create and distribute content more effectively.
Fourth, precise advertising, the traditional wide and global advertising method is outdated, enterprises should turn to more accurate, algorithm-based traffic channels, and cooperate with influencers to achieve the matching of people and goods, so as to more effectively reach the target user group and achieve higher conversion rates and user engagement.
05
Talking about the brand:
The turning point of the times is coming,
Go out bravely and seize the opportunities given by the times
- Boss Talks: As a pioneer of brands going overseas, do you have any suggestions for brands that want to go overseas in the future?
Gu Jun: Brands first need to clarify what their core strengths are. Don't just choose to enter a category because it has a high gross margin, but consider whether you truly understand the consumer needs of your target market and whether the product is differentiated and appealing to local consumers.
First, to determine whether the category has a supply chain advantage, especially in terms of production costs, brands should take advantage of this advantage, but when choosing a category, they should also consider whether the United States has the corresponding industrial chain capabilities.
Second, whether the category has branding opportunities, some categories may not require strong brand recognition, but rely more on channel capabilities. For example, wet wipes, mineral water, etc., channel ability is more important than brand ability, and brands should decide their own market strategy according to the characteristics of the category.
Third, the consideration of ultra-high pricing, for whether to carry out ultra-high pricing, need to be carefully considered. Judging from the situation of Japanese and Korean companies in the U.S. market, even with localized production and brand building, it may still be difficult for foreign brands to fully understand the core needs of local consumers. Based on this, Chinese cross-border sellers can leverage their existing channels and market knowledge by acquiring local brands, so as to combine the advantages of China's supply chain with the design and market positioning capabilities of local brands, and ultimately form a strong competitiveness.
- Boss talks: In your opinion, what is the biggest opportunity for the cross-border e-commerce industry in the next few years?
Gu Jun: Brand. Brands are able to drive repeat purchases, customer loyalty, and profit margins. The value of a brand lies not only in the quality and cost-effectiveness of its products, but also in its ability to build long-term relationships with consumers and achieve sustainable sales and growth through this relationship.
China's supply chain has strong production capacity and cost advantages, which provides rich product resources for cross-border e-commerce. However, the supply chain advantage alone is not enough to ensure the long-term competitiveness of the product, and brand building is the key. As more and more Chinese young people engage in cultural exchanges and integration overseas, it provides an opportunity for Chinese brands to build a global presence. This ability to understand and integrate cultures is a key factor in building a brand.
If I only do one thing in the next 20 years – focus on brand building. Until I retire, I hope Newme will become a brand that will be remembered by local users.
Going forward, Newme will continue to focus on the TikTok channel and leverage its core strengths. In 2024, it will shift from simply selling goods to promoting more independent brands, and the proportion of sales of independent brands will increase to more than 50%, and at the same time, the revenue scale of cooperative brands will reach more than 100 million.
Brand building is the historical responsibility of this generation of Chinese entrepreneurs. With the arrival of the turning point of the times, I hope that every cross-border seller can seize the opportunities and waves given by the times, bravely go out, and use the advantages of China's supply chain and in-depth understanding of the target market to achieve the integration of products and the local market and build a competitive brand.