In 2019, China's online retail ushered in a milestone. The total online retail sales of physical goods reached 8.5 trillion yuan, accounting for 20.7% of the total retail sales of consumer goods, breaking through the 20% mark for the first time.
Unfortunately, not all industries have enjoyed the dividends of digitalization. Relevant agencies estimate that the online penetration rate of the home furnishing industry in that year was only 8.5%, far lower than the overall level of the entire retail industry. Characteristics such as high degree of non-standardization, cumbersome after-sales service, and heavy experience have become obstacles for homes to embrace the Internet.
Also in 2019, the home furnishing industry leader Red Star Macalline opened a new exploration of home digitalization.
Today, two years later, Red Star Macalline has shown the world the transformation of TA. On this year's Tmall 618 "Super Brand Day", the number of online commodity visitors to Red Star Macalline Tongcheng Station increased by 108% year-on-year, Taobao Live sales orders nearly 20,000 orders, an increase of 186% year-on-year, global sales totaled 8.63 billion yuan, online guided sales of 2.745 billion yuan...
What is unique about Red Star Macalline's vigorous layout of the same-city retail model? How can digital transformation help companies operate efficiently and acquire customers accurately? What are the pain points, difficulties, and blockages in the comprehensive digitization of service links?
Recently, Chen Donghui, EXECUTIVE PRESIDENT OF Red Star Macalline Home Furnishing Group and General Manager of New Retail Center, accepted an exclusive interview with 21st Century Business Herald reporters and made a comprehensive analysis of the above issues.
<h4>The past and present lives of the same-city retail model</h4>
Chen Donghui told us that Red Star Macalline's exploration of same-city retail originated in 2015. At that time, they created an online and offline integrated online and offline retail model in nanjing, Shanghai and Suzhou, and independently developed an APP.
In 2016, the company began to develop its own Dragon Wing System, which is an online and offline integration tool of business management + retail, which is regarded as a digital infrastructure. This year, Chen Donghui is also regarded as the starting point of Red Star Macalline's digitalization.
In 2019, Red Star Macalline Tmall Tongcheng Station was born.
Based on LBS technology, Tongcheng Station carries out localization product display and localization service undertaking, and can push the localized product interface of the region to consumers online according to their geographical location. When consumers enter the "same city station" interface, the background system will locate the consumer's geographical location and automatically generate the "same city station" browsing interface for a specific city, so that consumers can choose to buy home products in the same city offline Red Star Macalline mall without leaving home.
It can be seen that Red Star Macalline's city station is not the same as the traditional online flagship store, which is not a model of selling the whole country online, but closer to the local life model similar to the US group.
The characteristics of non-standard, heavy service and heavy experience make it difficult for the home furnishing industry to be completely online. The high unit price of the home makes consumers dare not look at the picture to place an order, and the delivery and installation services deeply affect the user experience, in this context, offline stores have always played an important role.
Therefore, the logic of Red Star Macalline Tongcheng Station is based on offline stores. Through the layout of the node of "stores", the user's experience, distribution, installation and other links are more efficient.
David. In his best-selling book The Non-Disappearing Store, Bell mentions two types of "buying resistance," position resistance and search resistance. The former is easy to understand, the farther away, the lower the willingness of people to enter a store; the latter means that when the required information is lacking, people's willingness to buy will also decline. For example, when it's unclear exactly what a store is selling, we obviously have no incentive to walk into the store.
The important role of online city stations is actually to break the original "search resistance" of offline stores and realize the empowerment of offline stores. After the product is online, consumers' browsing of the product is no longer limited by space and time. They can freely select products, shop, and consult online at any time and place, making the most of fragmented time.
In essence, online and offline retail in the same city emphasizes the reconstruction of people, goods and fields, which is different from the traditional e-commerce model with "goods" as the core. Because consumers may be offline or online. In this context, online and offline retail in the same city must take "people" as the core, which can reach consumers through a virtual online platform and provide services through physical stores.
Chen Donghui concluded: "Goods can be virtual online, fields can be virtual online, but services need to be localized."
The theory of the whole tongcheng station has passed the test of practice. After just a few years of development, Red Star Macalline's same-city retail business has achieved good results. According to public data, the same city station accumulated nearly 55 million traffic in the public domain last year, of which 33.14 million was commodity traffic, reflecting the precise needs of users.
<h4>The platform is the core driving force for the digitalization of the home furnishing industry</h4>
Of course, the landing process of the theory is not smooth. For example, when the original product is sold in a physical store, the user can see the product directly; but online, the first thing consumers see is a picture, a video, and an introduction detail page. Turning products into graphics, into detail pages, into parameters, uploaded to the internet, many merchants are not good at this.
Therefore, Red Star Macalline uses its own advantages to help merchants improve their online operation capabilities. For example, Red Star Macalline has opened up its own system tools to help merchants quickly generate graphics and other content. In short, merchants' online operation capabilities need time to upgrade, which is the main challenge that Red Star Macalline is facing at this stage in expanding its online and offline retail business in the same city.
"As the main body of business, it takes time for merchants to improve their online operation capabilities, and we must make up for the shortcomings of merchants, and fully train merchants from all aspects such as commodity launch, service launch, marketing line, management line, etc., to help them establish this capability."
In Chen Donghui's view, behind this actually reflects a trend - the platform must be the core driving force to promote the digitalization of the home furnishing industry.
When people want to buy tiles, sofas, mattresses and other household products, it may be difficult to think of a specific brand, but they will think of Red Star Macalline, which shows that "strong channels, weak brands" are significant features of the home furnishing industry.
Home furnishing stores such as Red Star Macalline, as the entrance to home consumption, have more users, more categories and more products than single brand owners. Therefore, Chen Donghui believes that the channel has more opportunities to empower the industry and upgrade to the middle office of the industry's user operation.
Taking the system as an example, today's various operating entities and factory systems are isolated from each other, which can easily cause a series of problems (such as the famous "bullwhip effect"). Obviously, if we can connect these islands of information, the efficiency of the industry will improve. But this project is almost an "impossible task" for a single merchant, so it must be completed by an industry-leading platform.
In contrast, Red Star Macalline has significant advantages in technology and data. After years of development and iteration, the Dragon Wing system has been upgraded from a business system to a business middle office and a data middle office; the Meow Zero POS system allows the company to realize the integration of user resources and promote the marketing activities of home mall members to be more accurate and effective.
<h4>Home retail "one brother" leads the digital "leap"</h4>
In the face of new consumer trends that may appear in the future, Chen Donghui believes that it is difficult to specifically judge the user preferences in the next 5-10 years, but it is certain that the product will develop in a more functional and intelligent direction. All companies can do is find some trends in the large amount of user data.
Steady progress is still the main axis of Red Star Macalline's future digital development.
The home furnishing giant's online and offline retail in the same city is still upgrading, refining the dimension of operation from "merchant" to "commodity", which is what Red Star Macalline has been doing.
As of the first half of this year, Red Star Macalline's total traffic in the Taoshi commons has reached 42.56 million, of which the merchandise traffic is more than 41 million, which has exceeded more than 33 million in the whole of last year. Chen Donghui believes that this validates the company's model of "obtaining public domain traffic by deeply cultivating commodity operations."
It's not just the idea that's upgraded, it's also the technology.
As of June 30, 271 shopping malls of Red Star Macalline have been upgraded and transformed digitally; 73 shopping malls of Red Star Macalline in 28 cities have launched the same city station. Although it has been explored for many years, Red Star Macalline's products and technologies are still iterating.
"We will digitize more than 400 stores in batches according to the development of the business." It is reported that Red Star Macalline's strategy is to first promote the onlineization of qualified shopping malls, and finally lead the digital full coverage of the home furnishing industry.
Of all the uncertainties faced, digitalization is the most certain and huge opportunity for the home furnishing industry right now.
The trend of digitalization in the home furnishing industry is accelerating, and opportunities and challenges coexist for the home retail "brother" who is leading the industry change.
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