Big players are advancing into the $10 store.
In August 2020, Meituan launched a good group of goods, the goods are positioned in the 10 yuan price segment, biased towards paper towels, hangers, insoles, garbage bags and other small commodities; on March 23, Taote launched an online 10 yuan store, the main direct operation model, all goods from 1 yuan; although they have never labeled a 10 yuan store, the key price band of Pinduoduo coincides with the 10 yuan store.
In the past few decades, the competition for 10 yuan stores has mostly occurred offline. The originator of the 10 yuan store, Japan's Daiso Dachuang started in the 1970s; in order to seek a market breakthrough in the United States, Dollar Tree in the United States downgraded the original grocery store to a 1 yuan store in 1986, focusing on inexpensive and rich products to cover the middle and low income groups that Walmart has not yet fully reached.
In China, the 10 yuan store has also found a foothold. In the past ten years, the 10 yuan store has gradually moved from a husband and wife store all over the streets and alleys in the past to a large-scale and chained, and even came out of a listed company - Mingchuang Premium.
The 10 yuan business is not worth mentioning at first glance, but the total market is not small, so it has gradually become a must for retail giants. In October 2020, Taote launched a 1 yuan store, which coincided with the listing of Mingchuang Premium.
Why can the 10 yuan store survive for a long time? Pricing ranges can be the key reason.
Hiroshi Yano originally set all of Daizo's products at 100 yen to highlight the cheap price of the goods, 100 yen, which was almost the lowest retail price of a single product in Japan at that time; Ye Guofu, the founder of Mingchuang Premium, clearly pointed out that 10 yuan is a gold price, "this pricing will not make Chinese consumers have any purchase burden and easy consumption." ”
More importantly, on the shelves of the 10 yuan store, there is no shortage of "necessary and not urgent" daily necessities, once the consumer simply hangs out or arrives at the store for the purpose of purchasing just needed goods, this part of the goods can easily become unplanned shopping behavior, bringing more revenue to the 10 yuan store.
Nowadays, consumers' purchasing behavior continues to shift from offline to online, the sinking market is gradually being opened, and the development space of online 10 yuan stores is suddenly open. The 2 yuan store and the 10 yuan store that once blossomed everywhere are growing online in a different way.
A
It is not surprising that the e-commerce platform will do a 10 yuan store at this time, or even go deep into the supply chain in person.
According to Frost & Sullivan statistics, the market size of domestic brand grocery retailers exceeded 100 billion yuan in 2019 and will maintain a compound growth rate of 20.5% in 2020-2024. However, in terms of the competitive landscape, the total market share of the top five companies is only 19.8%, and the share of Mingchuang Premium Products, which ranks first in the industry, is 10.9%.
In other words, there is still a large market space in the grocery retail market, especially for platform companies. Looking at the development trajectory of the 10 yuan store in the United States and Japan, they have all obtained good development opportunities in the slow economic growth and even the downward stage.
According to Tianfeng Securities, since the 1990s, the overall growth of the Japanese economy has been slow, and the trend of polarization of the income structure has also strengthened. As a result, cost performance has become the target of japanese national pursuit, and 100-yen stores have gradually occupied more and more market share and performed well in the economic downturn; similarly, in the decade after the outbreak of the financial crisis in 2008, the US dollar stores represented by Dollar Tree and Dollar General have expanded rapidly.
In recent years, the growth rate of China's total retail sales of consumer goods has also entered a slow downward stage, from January to February this year, the total amount of social zero increased by 6.7%, and the trend of pursuing cost performance will become increasingly apparent.
Open Source Securities pointed out in the report that social consumption will undergo changes in the era of mass consumption, brand consumption and personalized consumption.
When people's income level increases and products are rich, brand formation solves the information asymmetry when choosing products, and meets the conspicuous demand, consumption enters the brand era; and with the further improvement of people's income level, and the education received in the multi-brand market for many years, consumers begin to gradually return to rationality and pay more attention to high-quality and low-cost products. "At present, domestic consumption as a whole is between the second and third stages," the report mentioned.
The entry of the e-commerce platform represented by Taote into the 10 yuan store market is not only related to the various changes that are taking place in the retail market, but also related to the market competition environment it faces and the needs of the consumer population it serves.
In 2021, Pinduoduo's GMV is 2,441 billion yuan, the annual order volume is 61 billion, and the average unit price is about 40 yuan. Pinduoduo has never mentioned the 10 yuan store, but it can be seen from the unit price level of the platform customers that the 10 yuan price band is quite important to Pinduoduo, and Taote wants to compete with Pinduoduo for the market, and it is inevitable to compete head-on with Pinduoduo in this price band.
In terms of categories, Taote relies on daily necessities to start and gradually form a strong user's mental characteristics in the daily necessities category, which is also in line with the 10 yuan store. Dollar General's 2021 financial report shows that 76.73% of its revenue comes from consumer goods, and household items, seasonal goods, and clothing with higher gross margins contribute to the rest of sales.
The category design of Taote 10 yuan store is similar, according to the official introduction, Taote wants to create a daily necessity store with a core supply price of less than 10 yuan, in addition to the home department store that Taote started, the category also includes beauty and personal care, clothing with mother and baby, large consumption and so on.
As for the more direct reason for doing a 10 yuan store, Wang Hai, president of Taote, explained in a recent interview with the media, "Taote 10 yuan store is a more scenario-based channel, which can allow consumers to buy one-stop and pick more simple and convenient." ”
From this point of view, the online 10 yuan store is quite similar to the offline store. Some consumers who enter the Mingchuang premium store do not actually have a clear purchase goal, but in the process of hanging out, they will gradually discover the goal and complete the purchase.
The consumption scene of Taote 10 yuan store is similar. Consumers enter the page, often find that the lack of life or have a sense of value of goods, less than 10 yuan of commodity prices, it greatly reduces the consumption threshold, order churn rate can be reduced.
B
Another similarity between online and offline 10 yuan stores is that their emergence and rise are not only the result of adapting to changes in social and economic development and consumption trends, but also evolving in tandem with consumption trends.
According to the summary of "Michael's House's Consumer School", founder Hiroshi Yano initially set the price of all products at 100 yen, and the gross profit was set at about 30%, but the criticism of "cheap and not good" also came.
Hiroshi Yano's solution is to greatly increase the cost and quality of some goods, and the gross profit of some goods is even pressed to 10% to 2%, which becomes a traffic-based product of the store, complementing the high gross profit products.
The domestic retail market has experienced a period of low price and poor quality development, and this model is obviously being abandoned by consumers. Like the early booms, the latecomers of the Ten Dollar Shop are trying to avoid being labeled a "bargain."
The predecessor of Mingchuang Premium products is more open in the fourth and fifth-tier cities and around university towns, with cheap as the selling point, and the stores of Mingchuang Premium products are aimed at the core business districts of first-, second- and third-tier cities, specializing in young people with consumption ability, with high cost performance as the selling point. In recent years, Mingchuang Premium products have also tried to move closer to the tide goods and take the route of rejuvenation.
The recently launched Taote 10 yuan store has also repeatedly emphasized that it takes the low-price route of good goods. "Our direct supply chain removes the middle link and allows consumers to buy goods with low prices but good quality." Huang Aizhu, general manager of Taote Operations, explained.
It is not easy to control the cost within 10 yuan and at the same time make the manufacturer profitable. The model of Taote 10 yuan store is that, according to market demand, cooperate with the upstream source factory to customize the goods that meet the platform standards and quality; the second step, all the goods produced by the factory are sent to the Tao special production warehouse; the third step, through the marketing method of 3 yuan 3 pieces and 9 pieces 9 three pieces, encourage consumers to combine orders, thereby reducing logistics costs.
The sales method of N yuan N pieces is the reason why Taote can control the cost of most goods within 10 yuan. According to the conventional shopping method, consumers on the same platform of three different merchants to buy three goods, merchants need to send their own courier, in the Taote 10 yuan store of the single mode, the merchant will be transferred to the place of origin warehouse, Taote can be in the place of origin warehouse order, for consumers only send a courier.
Of course, there are still essential differences between online 10 yuan stores and Mingchuang premium products, one of which is the crowd and commodity categories they are facing.
Although Mingchuang Premium is still labeled as a 10 yuan store, more than 95% of its products are below 50 yuan in domestic retail prices, focusing on the core business districts of first-, second- and third-tier cities, proving that the consumer groups it values are young people; Taote 10 yuan stores are aimed at people who pay attention to cost performance, and the goods cover all aspects of daily life.
In terms of business model, the shelf nature of online 10 yuan stores and offline stores is very different. Huang Aizhu introduced that the biggest advantage of the online 10 yuan store is the infinity of the shelves, not limited by space; the characteristics of distributing shopping guides and one-stop shopping according to consumption scenarios also solve the problem that many 10 yuan living items are difficult to place on the shelves offline.
C
There are many differences between taote 10 yuan stores and offline 10 yuan stores, which are also significantly different from the conventional operation mode of selling small commodities with a price of 10 yuan on e-commerce platforms, that is, third-party manufacturers and merchants enter the platform and sell goods by themselves.
The operation mode of Taote 10 yuan store is to cooperate with the source manufacturer and develop commodity standards by Taote. Using paper towels as an example, the platform will determine whether the pulp is safe and whether bleach or fluorescent agents have been added.
"We want to ensure that the quality of the goods does not lose the brand, but the price is the factory price." Huang Aizhu introduced that Taote will cooperate with factories in production, packaging, quality control and other aspects according to consumers' demand for product function and quality, and ensure the quality of goods through third-party testing agencies.
According to Taote's introduction to the 10 yuan store, the goods in this scene will also do higher quality design in terms of appearance and other aspects, as well as follow the market changes in time to update the goods that conform to the trend.
In the first round of large-scale development of the sinking market by the e-commerce platform, users in the sinking market can enjoy a richer category and lower price of goods, but the problem of these goods is also obvious, that is, the quality of the product is not good. Obviously, latecomers are trying to get rid of the low-quality label that accompanies low prices and move closer to low-cost quality.
In addition to ensuring the quality of goods, the logistics experience will also be improved. At present, Taote is building a warehouse network system in the industrial belt, after the manufacturer will put the goods into the warehouse through trunk logistics, Taote will unify the delivery, solve the problems of fast delivery, on-time performance, better parcel quality, and reduce logistics costs by combining orders and assembling goods.
The starting point of Taote's 10 yuan store is to meet the consumer demand of different scenarios of consumers, and even to create demand, but at the same time it is a consolidation and strengthening of its own advantages.
At the beginning of the product launch, Taote will focus on the M2C short chain model, daily necessities are the first to rise in the category, Ali 2022 fiscal year Q2 financial report shows that Taote M2C orders increased by 400% year-on-year, in the supply and demand of products within 10 yuan, Taote has formed a strong consumer mentality.
Last year's double 11 data shows that the consumption upgrade trend of county consumers represented by small-town youth is obvious, and while pursuing cost-effectiveness, they are also pursuing a more exquisite life. Taking Taote data as an example, gardening shovels, flower pots and other supplies increased by 2139% compared with last year, home improvement and other supplies increased by 550% compared with last year's orders, and perfumes, aromatherapy and other supplies increased by 543% compared with last year's orders.
When the quality of the platform goods and service experience are further improved, the loyalty of this part of the users to the platform will naturally increase accordingly.
The direct operation model of Taote 10 yuan store will also bring benefits to factories that do not yet have the ability to operate and open stores. "Taote's direct operation is not only to play Taote's brand, or to make profits from it", Huang Aizhu explained, many factories do not have operating personnel and e-commerce talents, do not have retail capabilities, Taote hopes to eliminate intermediate links through direct operation, help factories find sales channels, and do production capacity.
Obviously, in the M2C source direct supply model, Taote, which is advancing to the era of productization, has begun to lead the competition between e-commerce platforms to bid farewell to the price war and enter the stage of value competition.
Resources:
1. "Taking Japan's Dachuang as an example, can We See If China's Sinking Market Can Recreate a Famous Creation Product?" " Consumer School of Michael Room, January 2020
2. "China,Japan and the United States "Ten Yuan Store" PK: Which model can run through the world better? CBNData Consumer Station, October 2020
3. "Annual Income of 167.1 Billion: Dollar Tree: Dollar Tree, Wal-Mart Rushing Business at the Door", Commercial Real Estate Headlines, May 2020
4. "Weekly Report on Trade and Retail Industry: Mingchuang Premium Products Submit Prospectus, Rapid Development of Domestic Boutique Ten Yuan Stores", Kaiyuan Securities, September 2020
5. "Minchuang Premium Products (MNSO): Pan-category Daily Necessities Retail Leader, Epidemic Mitigation and Re-Expansion", Tianfeng Securities, May 2021