Are you comfortable with using short videos to play D2C?

short video platform is also a new channel for e-commerce sales. With its strong supply chain capabilities, it seems to be the ideal platform to build a D2C brand, but is this really the case?

American D2C brands are developing rapidly.

Warby Parker glasses company, founded in 2010, occupied 60% to 80% of the U.S. glasses market in 2015. Sales in 2017 exceeded US$250 million. By 2018, the company had received a total financing amount of US$300 million, and the company's valuation reached $1.75 billion.

Casper mattress company, founded in 2013, achieved revenue of US$1 million 28 days after the product was launched, and sales exceeded US$100 million in the first year. Sales in 2016 were US$200 million, and sales in 2017 were US$300 million. Sales surpassed IKEA and ranked fifth among mattresses in the United States. Sales in 2018 reached US$400 million. In 2019, it received another US$100 million in financing, bringing the company's valuation to US$1.1 billion.

There are many other fast-growing D2C brands, such as BarkBox, a subscription pet supplies brand established in 2011, with revenue exceeding US$100 million in 2018; Glossier, a beauty brand established in 2014, with revenue exceeding US$100 million in 2018; Dollar Shave Club, an established subscription razor brand in 2016, had revenue of US$240 million in 2016 and was acquired by Unilever for US$1 billion that year.

According to IBM reports, there are currently thousands of D2C companies in the United States, including the ones listed above with annual revenue of over 100 million US dollars. Moreover, a total of about 400 D2C brands have received more than US$3 billion in financing since 2012. Both the amount of financing and the sales performance of D2C brands prove that the D2C model has great potential.

In China, D2C is on the verge of replacing O2O as a new sales model. Especially for short video platforms with traffic and users, this model will help them quickly open up the road to e-commerce monetization.

The so-called D2C model, which stands for Direct To Consumer, is a "direct-to-consumer" marketing model.

The main features of this model are reflected in the following aspects:

1. There are no middlemen and channel dealers on the sales side to earn the price difference. After the brand retains reasonable profits, consumers can still obtain high-quality products at low prices.
2. Brands can communicate directly with consumers, master first-hand consumer information, and manufacture products that better meet consumer needs. They can even achieve product co-creation with consumers and cultivate consumer loyalty.
3. mainly uses Internet new media as its marketing channel, and encourages users to participate in content co-creation through unique product experiences.

The superposition of the three actually means that new media, new channels, and new products will form a new brand species-D2C brand in the context of consumption upgrading.

1. In the name of D2C model, short video e-commerce urgently needs to break the circle

Short video platform needs D2C.

In 2018, the revenue of Douyin and Kuaishou are almost 20 billion. The former’s revenue mainly comes from information flow advertising, while the latter’s revenue mainly comes from live broadcast. This year, Douyin has set a revenue target of 50 billion, while Kuaishou The revenue target is set at 35 billion, which shows that Douyin and Kuaishou are accelerating the pace of commercialization in 2019.

In addition to continuing to make efforts in information flow advertising, e-commerce is an important model for monetizing Internet traffic. Kuaishou and Douyin will obviously not give up this big piece of cake. At present, the two major short video platforms have become second-hand e-commerce traffic. One of the main sources, major e-commerce platforms such as Taobao , Jingdong , Pinduoduo , etc. all purchase traffic on the short video platform.

According to media reports, Douyin has signed an annual cooperation framework agreement with Taobao worth 7 billion yuan this year, of which 6 billion yuan is information flow advertising and 1 billion yuan is commission.

Kuaishou has increased the commission of third-party e-commerce platforms such as Taobao, , Pinduoduo, , and Youzan to 50%. Even its own e-commerce platform, Kuaishou Store, charges 5% of the transaction amount, and has severely cracked down on private transactions. Transactions, and began to make efforts in e-commerce monetization.

As Douyin and Kuaishou have massive traffic and users, they have great potential in e-commerce.

For example, on August 20, "Lijiang Pomegranate Brother" sold goods live on Douyin. A total of 120 tons of pomegranates were sold in 20 minutes, with sales reaching 6 million yuan. The ordering speed was very fast, almost 4,000 orders/minute.There are even more stories about Kuaishou’s live broadcast sales. For example, “Sanda Brother” brought in 160 million yuan of goods in one day, sold 30,000 units of double-sided needle toothpaste in one minute, sold 100,000 sets of Septwolves thermal underwear in 10 minutes, etc.

It can be seen that short video e-commerce is feasible, but it is impossible for them to be a second-class e-commerce for a long time. It is just a question of how the platform should intervene. If they do traditional e-commerce with C2C, B2C and other models, they will obviously have to face In a tough battle with e-commerce platforms such as Taobao, Jingdong and Pinduoduo , the D2C model may be a good breakthrough. In addition to new concepts and storytelling to cater to capital, it can also avoid direct competition with e-commerce platforms. It has advantages in establishing direct communication with consumers.

The biggest feature of the D2C model is to establish direct communication with consumers. The enhanced interaction with consumers can be seen as an important difference between D2C and traditional e-commerce (B2C, C2C). This is also the advantage of short video platforms in promoting the D2C model.

According to the German sociologist and philosopher Georg Simmel Simmel proposed "Trust Theory" in his works "Philosophy of Money" and "Sociology", that is, the starting point of trust is interaction, and it is interaction that forms the basis of trust. The complex relationships between people form society.

The author believes that the main form of interaction in contemporary times is exchange, especially exchange mediated by currency. This kind of exchange cannot be carried out without trust, and exchange not only exists in the economic field with currency participation, but also in social interaction itself. An exchange, every interaction can be seen as an exchange. In addition to traditional e-commerce money and goods exchange, the

short video platform also has content exchange and emotional exchange based on short videos and live broadcast content, which is more interactive.

In addition, there is a concept in psychology called self-exposure. Self-disclosure refers to a person's conscious disclosure of his or her true and important information to another person, and sharing of his or her feelings and beliefs with others. If you expose more to others and confess more, you will also gain exposure to others, thus building trust and intimacy.

Various live broadcasts and video content on the short video platform are essentially a kind of self-exposure. For example, through live broadcasts and short videos, you can visit manufacturing plants, product production processes, product trial effects, and even show the personal daily lives of brand founders or brand spokespersons, etc. will further deepen consumer trust.

All these are important reasons why the D2C model can be promoted on short video platforms, but it is not enough to develop D2C.

2. The difference between true and false D2C models, you can’t run far if you play with concepts

Short videos require D2C brands, but it is difficult for D2C brands to settle on the short video platform, which is very embarrassing.

Yu Minhong once said that most of the so-called hot spots in China are playing with concepts, and the so-called new business models that are generated are actually pouring from the left pocket to the right pocket. So are short video platforms playing with concepts when they play D2C?

Returning to those star D2C brands in the United States, let’s take a look at some details of D2C brands. We will find that these D2C brands are still very different from the so-called D2C model of short video platforms.

The first is the issue of communication channels. Since the core of D2C branding is "direct-to-consumer", then the brand needs a platform that can truly communicate freely and directly with consumers. In the United States, this communication platform is the brand's official website, which is truly a free platform for the brand. A space to take control and talk to consumers.

On the official website, in addition to having enough space to display product features, the brand can also collect every move of consumers and conduct pre-production surveys. This situation is obviously not possible on short video platforms.

For example, even if Douyin fans follow the brand, the news pushed by the brand can only be seen by about 10% of users in the first time. Similar problems also exist on Kuaishou, and the short video platform is only a platform after all. Brands cannot fully display their products, and there will be a large number of similar product recommendations when displaying products, which will also distract brand users. In addition, consumer behavior big data will eventually fall into the hands of the platform and cannot be used for the purpose. The brand controls it.

The second is the driving logic of the product. The rise of D2C brands is essentially a consumption-driven production that creates space for the growth of D2C brands by meeting consumers' personalized needs and experiences. The rise of

is due to the new generation of consumers becoming more and more rational, no longer overly superstitious about big brands, and less willing to pay for brand premiums. With more and more brands, the brand halo is slowly weakening. Most consumers increasingly prefer high-quality and low-price products, and are particularly fond of personalized and customized products.

Jack Ma once said that in the future, everything powered by electricity will be intelligent and digital; anything that is not powered by electricity will be personalized and customized. Obviously, the current consumer trend is developing in this direction.

For example, when Casper company launches a new mattress, it will absorb the feedback of 15,000 loyal customers, so that the mattress can be put into a box and mailed to your home, and consumers are allowed to try sleeping for 100 days. If you are not satisfied, you can return it. In addition to combining consumer opinions In addition to manufacturing products that meet the needs of most people, it also solves the pain points of consumers buying mattresses that are difficult to move and have no trial sleeping experience, bringing consumers brand new products and shopping experiences.

Another example is Warby Parker, which mails a variety of glasses for consumers to try on at home. If you are not satisfied, you can return them; Away suitcase has a built-in rechargeable USB jack, a separate laundry bag, and 360-degree wheels for easy pushing. creates a unique cabin experience for consumers.

They will also encourage everyone to share their sleep and trial experiences. This is how D2C brands gain user needs and trust through interaction with consumers, forming product co-creation and content co-creation. The former can increase transaction rates, while the latter can increase The spread rate and authenticity will further increase the transaction volume.

Looking back at the short video D2C model of selling goods, it only accomplishes cutting out the middlemen to earn price differences and large brand premiums. It is still insufficient in realizing product co-creation to meet consumers' personalized product needs and unique experiences. Whether it is selling 3 in 1 minute Even though a single double-sided needle toothpaste was sold, 100,000 sets of Septwolves thermal underwear were sold in 10 minutes. It is similar to the "manufacturer direct sales" model we commonly see on similar e-commerce platforms. It is a low-price-driven model, rather than a production-driven model forced by consumers.

Looking at it now, although the American D2C brand is developing rapidly, I am afraid that using short videos to play D2C in China is not suitable for the country.

This article was originally published by @ Kuai Dou Information Station on Everyone is a Product Manager. Reprinting without the permission of the author is prohibited.

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