2023, like every previous year, is full of different experiences of "thousands of people and thousands of faces". In our eyes, business has left a series of different marks in 2023. Let's reproduce these memories one by one with the "time machine".
01. "Trend Alternation" of Low dimensional Competition and High dimensional Competition
At the beginning of 2023, ChatGPT set off a technological whirlwind in the field of artificial intelligence. Subsequently, a number of domestic manufacturers followed up and released their AI application products. Huawei, which has laid out the AI field early, also continues to iterate the "Pangu Big Model" based on the industry segmentation application scenarios. Another important news triggered by Huawei in the field of technology is undoubtedly the introduction of Mate60 with self-developed chips in August.
As a representative local high-tech enterprise, it has always been the object of research, learning and imitation. Especially after suffering from "extreme pressure", it still can maintain amazing strategic flexibility, organizational tension and resilience. Among all the important reasons for attribution, Huawei's unswerving "ecosystem strategy" is indispensable.
In 1993, James Moore, a business strategist, introduced the definition of "ecosystem" from Arthur Tansley, a British botanist, and put forward the term of "business ecosystem" for the first time. It is described as the ability to take one or several "business subjects" as the core leaders, coordinate relevant participants (suppliers, producers, competitors, customers, etc.) in the "business community", and synchronously develop into a group of common customer groups to create value. Although the concept of "ecosystem" has been around for a long time, PWC survey found that a series of factors such as digital transformation really promoted the value of "ecosystem strategy". By 2021, the average market value of enterprises with "ecosystem strategy" will be four times that of other enterprises.
Once, people thought that third class enterprises were "products", second class enterprises were "brands", and first-class enterprises were "standards". Now, we must say that top class enterprises are "ecological". What does "ecosystem" mean to enterprises?
First It is a key way to build organizational resilience and achieve long-term growth (Growth and Resilience through ecosystem building, 05/23/2023);
Second It has set up a strong "competitive barrier" for enterprises. "Ecosystem" enterprises can firmly lock customers in the "ecosystem" through their own combination of multiple products and services, and integrate the coordinated development of multiple participants.
Third It is one of the "core competitiveness" of cross-border development of enterprises. When we criticize "Internet car building", we can think from another perspective: traditional OEMs believe that cars are high-tech products that need historical precipitation, and "Internet enterprises" obviously do not have this advantage; However, in the view of "Internet enterprises", "automobile" is likely to extend the combination of multiple products and services in the existing "ecosystem" and expand new alliances of participants around it. Imagine that for Apple, which is rumored to be making cars "flickering", and Xiaomi, which is about to launch its first car, "cars" are likely to be the ultimate part of its "consumer electronics products".
From this, we can see why more and more enterprises focus on building "ecosystem strategy".
When potential and new competitors try to challenge their competitors in the original "ecosystem", they are not competing in a low dimension at the level of a single product, brand and standard, but competing with the entire "ecosystem", or even competing with different "ecosystems" in a high dimension.
02. The "historical cycle" of consumerism and simplicity
Looking back to 2023, what "phenomenal" events have occurred in the consumption field? We have thought of: Costume, "B1B2" Economy, Budget Brand, community canteen, dopamine clothing, City Walk, "leftover blind box", military coat, etc. What kind of information can these seemingly unrelated "hot words" convey?
In the past, when we discussed the "consumer market", we always habitually set a prepositional attribute - "middle class". But now, we need to give it a different content - "the new generation". According to the statistics of the seventh population census, starting in 2020, the population of Generation Z in China is about 265 million, accounting for 17.4% of the total population. The insight and understanding of their "consumption characteristics" will determine the future "business opportunities". So, what will these new "behavioral changes" be?
First, low cost: In August 2023, China Daily published an article "Young people have changed their views on consumerism" on its website, telling the "consumption stories" of seven post-90s and post-00s young people, focusing on reflecting a keyword "Frugal - thrifty", reflecting their advocacy of "Low Cost Lifestyles - low-cost lifestyle", which certainly has external objective reasons, But it also shows the change of self consumption concept of "young people" on another level.
"Low cost" is not only a kind of "careful calculation", but also a kind of consumption behavior that can frankly accept the so-called "losing face": buying "second-hand goods". In the community where I live, there is a community of "school uniform adjustment" spontaneously formed by residents. Some "new products" of inappropriate size or "second-hand products" of good quality can find their next destination here.
Other professional platforms specialized in "second-hand idle goods" trading have also developed rapidly in recent years. In 2015, the market value of "Resale resale" was about 300 billion yuan, rising to 1.05 trillion yuan by 2020, and is expected to reach nearly 3 trillion yuan by 2025 (Frost&Sullivan, Tsinghua University’s Institute of Energy, Environment and Economy）； However, "Re Commerce second-hand e-commerce" accounts for about 36% of the whole "second-hand market" (iiMedia Research).
In addition, consumers' consideration of "low cost" also enables a group of "Budget Brands - cheap brands" with "good value for money" to rapidly occupy the "sinking market", and at the same time, have the opportunity to gain more development space in the "first tier and second tier cities" and other consumer markets.
Second, cost performance: At the beginning of the year, "Little Red Book" and the Chinese Academy of Social Sciences jointly released the report "2023 Little Red Book Annual Lifestyle Trend", which mentioned "Simplified Living - Minimal Life", the number of notes related to this increased by 242% year on year, and "Recycling Unused Items - Idle Cycle". According to "Little Red Book", when "unlimited products and limited income" collide fiercely, people's consumption concept will become "rational", and "low cost" will naturally become the "consumption habit" actively cultivated.
However. This is not the whole theme of "behavior change". In this report, we mentioned eight other trends, from which we can see that everything from "dopamine clothing", to "City Walk", to "leftover blind box", to "military coat" is explained. In addition to "products and prices", consumer groups with the "new generation" as the core never give up their demands for "emotional value" in the consumption process, This includes: personality expression, quality of life, spiritual experience, social responsibility, etc.
For example, the essence of choosing City Walk is to have a spiritual interaction with communities, cities, environments that you are familiar with or unfamiliar with, as well as different "characters" that may appear. This shows that Neighborhood Warming - warming up near neighbors, Take a Trip - going far, Eating Authentic Local Flavors - eating authentic flavor Light Destress - Decompression, and other "life trends", as well as the accompanying "behavior changes" of consumption.
In the past, people may have preferred "consumerism" under the self consumption concept of pursuing high premium/high-value products and "market encouragement". Today, "simplicity" has pushed us to another "historical cycle".
03. "Offensive and defensive translocation" of leading and challenging enterprises
From the "two strong contenders", to the "one-man show", to the "two male meetings", to the "three kingdoms dispute", China's "retail industry" is like a historical masterpiece with ups and downs, full of drama. In order to better support the data perspective to "restore" this process, we have compiled the following chart 1. Briefly: the data mainly comes from annual financial reports, authoritative statistics, Internet search and other channels, and is based on multiple verification, logical calculation, reasonable assumptions and other methods to ensure the authenticity and effectiveness of the data as far as possible (readers are welcome to correct); In addition, the chart mainly lists the sales volume or GMV of each enterprise. Although this single indicator does not fully reflect the "overall picture of enterprises and competition", our main purpose is to capture the big development trend from the data, so as to simplify the comparison.
(Chart 1)
Back in 1998, Ma Yun of Beipiao failed to start his business and chose to leave Beijing and return to Hangzhou. Before that, he had set up a translation agency, created "China Yellow Pages" and developed an official website. In the same year, Liu Qiangdong rented a counter in Zhongguancun, Beijing, to sell optical and magnetic products, which started Jingdong; Huang Zheng graduated from Hangzhou Foreign Language School and was recommended to Zhejiang University, majoring in computer science. No one had expected that the three who did not intersect at this time would become the three e-commerce giants that would change the future pattern of China's retail industry, and the gear of fate began to turn.
2003-2008 Two Powerful Competition
North Gome and South Suning, at this stage, two traditional offline home appliance retail enterprises are struggling fiercely. In terms of annual sales, Gome has a slight advantage. The "turning point" seems to start from the "broken halberd" of Gome's founder in 2008. Suning seized the opportunity to counter attack in an orderly manner and gradually opened its competitive position with Gome when it fell into a series of internal conflicts such as "fighting for control". At that time, Alibaba and JD did not seem to be comparable to the "two strong". Although Alibaba's "Taobao" GMV reached 999.6 billion yuan in 2008, it still focuses on the C2C field, and no e-commerce enterprises have been able to launch substantive challenges to the core business "hinterland" of Gome and Suning. However, just when Suning thought that it would be able to get through the winning bonus of the "two strong contenders", the east wind of "e-commerce" has quietly put "competitors outside the industry" on the fast track of rapid development.
2008-2015
Alibaba launched "Taobao" for online retail market in 2003; Due to the impact of SARS, JD was forced to complete customer orders by phone, mail, mail, etc., and in 2004, it tried to launch the online retail platform "JD Multimedia". It seems that both started in the field of "e-commerce" at the same time, but Alibaba and JD can really be compared as "peers". It should be 2008, when Alibaba differentiated from "Taobao" to "Taobao Mall" of B2C platform, that is, in 2012, it completed the renaming of "Tmall". This change is not only the need for brand upgrading, but also to cope with e-commerce competition in the B2C field. Combined with the analysis in Figure 2 (from 2009 to 2011, we did not trace back to the separate "Taobao and Tmall" GMV, so the comparison between Alibaba/Tmall and JD began in 2012):
(Chart 2)
In the three years from 2013 to 2015, although "Tmall" was on a par with JD in terms of GMV growth, Alibaba's overall GMV growth lagged behind JD due to the slowdown of "Taobao"'s GMV growth. Even so, JD's share of GMV in "Tmall" was just over half in 2015, which was lower than Alibaba's "big market". At this stage, Alibaba is quite "outshining others".
2015-2018 Intercontinental Meeting
In 2017, JD adjusted its internal GMV statistical caliber to align with "friends". Therefore, since 2016, when the GMV was adjusted according to the new standard, JD has significantly narrowed the gap with Alibaba and Tmall. Whether Alibaba admits it or not, JD is strongly challenging its "Jianghu status". It was also at this stage that the two protagonists of the "Two Men Meeting" unintentionally gave "assistance" to another competitor: "Taobao" began to tend to promote high premium/high-value products, dismissed sellers suspected of "counterfeiting" or providing "low quality and low price" products, and JD also completely closed the C2C e-commerce platform "Paipai. com".
The Three Kingdoms Dispute Begins in 2018
Do you still remember the year 1998 when the magic gear of destiny began to rotate? Huang Zheng, who previously seemed to have been unknown in the field of "e-commerce" and "ploughed" in the consumer group "forgotten" by the giant, led "Pinduoduo", which broke the original stable "e-commerce" competition pattern, and promoted the company to go public in 2018. From Figure 2, we can see that JD has invested more than 10 years to achieve more than 40% of Alibaba GMV, while Pinduoduo has only spent 6 years. Not only that, Pinduoduo quickly reached the GMV scale of JD, and may have completed the actual transcendence; More impressive is that, as of November 29, 2023, its US stock market value once exceeded Alibaba. Why can Pinduoduo "counter attack"? There are many relevant business analyses, but we think there are two crucial reasons. One is that when competitors only see the demand for "consumption upgrading" generated by economic development, Pinduoduo sees the other side of demand, that is, a wide range of "price sensitive" consumer groups; The other, as its founder said in an interview, is to combine game thinking and operation thinking to promote "e-commerce" from the era of "birds of a feather flock together" to the era of "people of a feather flock together".
In the future, the competition in the field of "e-commerce" may be an exciting "Three Kingdoms Dispute". But just as "e-commerce" challenges "traditional retail", will "content e-commerce" be another competitor challenging "traditional e-commerce"? It is conceivable that after 2023, the story of "attack and defense" of leading enterprises and challenging enterprises will continue to be staged.
04. "Dynamic exchange" of strong and weak roles
On December 18, New Oriental Education and Technology Group announced that Dong Yuhui was appointed as the cultural assistant to the group chairman and vice president of New Oriental Culture and Tourism Group. So far, a business and workplace "drama" near the end of the year has temporarily ended. During this period, many "outsiders" have made different interpretations of this event, and even predicted what the future "end" of Dong Yuhui would be like.
As the head IP with 20 million fans, his "destiny" has received such high attention. In addition to the recognition of his natural talent, he also likes the simplicity and sincerity that can not be "performed" but can be seen in small words and deeds. This seems like the "green" life and career growth stage of most people who have passed away. Therefore, we are willing to endow Dong Yuhui with all the good "ideas" that we have realized and have not realized, boldly expected and dare not expect, and try to keep him away from the "bad" results as far as possible through some "collective efforts".
At the same time, another Internet celebrity, Meng Yutong, also aroused heated debate again because of the relevant "remarks" in a new student's entry ceremony. However, this time, she was similar to Dong Yuhui, and almost gained the support of online public opinion one-sided.
Most of the time, we appreciate entrepreneurs who have worked hard from the bottom, but also wonder that they often lose empathy for "past self and past experience" after "success". "Power" may be one of the most important factors to change all this. There is evidence that the mirror neurons of the brain of people with "power" will be damaged, which will lead to two results: one is that the "sensitivity" is reduced, especially for people who are in a "weak role" in status, it is difficult to have a sincere "emotional resonance" with them; The other is to form a rigid thinking and behavior mode, which is really "self-centered", trying to make "weak roles" more dependent on themselves, so as to consolidate their "strong roles" in mutual relations.
However, this asymmetric relationship has reversed under the intervention of "network forces". At a certain moment, leaders accustomed to "strong roles" seem to have to experience the "passivity" of "weak roles"; But a real leader should never be intoxicated with letting others accept his "power status", but know how to respect everyone's "uniqueness" and "value" created.
2023, worth aftertaste; 2024, we can look forward to it!
