Editor's Note:
The iterative upgrading and ice breaking restructuring of every industry will always involve the leaders of that era who will try to find many efficient methodologies and success theories for the latecomers. This is also true in the field of cross-border e-commerce going to sea. At every stage and at every sub track, you can always find some successful companies who are still willing to put down their positions and return to zero, and look at future business with a more long-term perspective. In view of this, Hugo Cross Border launched the "Boss Talk" column（ Click here to enter ）We talk to one such "excellent player" every week. We have different definitions of "excellent", which can be GMV, black technology, prediction of macro trends, or insight into the details of enterprise operations... The cross-border business owners are welcome to contact Hugo Cross Border for reporting.
This is the 50th issue of our program—— Sun Meng, General Manager of Xiamen Fractal Technology After graduating from the software engineering major of Xiamen University in 2011, he joined a foreign trade enterprise. In 2012, he borrowed 100000 yuan from his former boss to start cross-border e-commerce. In 2013, he became one of the first Amazon billion sellers in Fujian. The company has created a unique brand boutique operation mode. Through the competitive advantages of independent stations and Amazon, it now has several mature Best Seller brands in outdoor sports category, with sales exceeding 300 million in 2023. In terms of changing the cheap image of "Made in China", we started the way for small and medium-sized brands to go to sea. At the same time, we also had profound insights into thinking about the business model of going to sea and how to choose entrepreneurial partners. We talked with Sun Meng.
01
After three years of inventory clearing, we lost millions of dollars. Why did we lose in succession?
Boss meeting: at The embryonic stage of cross-border e-commerce ， Fractal technology has become one of the first billion Amazon sellers in Fujian, Realized in a very short time Transition, What is it ？
Sun Meng: Graduated from Xiamen University in 2011, when Internet enterprises were highly sought after, the idea of combining industries that were still relatively traditional at that time but could also be connected with the Internet emerged. The cross-border e-commerce track was a good opportunity.
Foreign trade products Through retail online retailers How ， Direct Middle end consumers in Europe and America ， Shorten the transaction chain and have more competitive advantages, from Some Conceptually It must be a more advanced choice. However, in the wave of domestic cross-border e-commerce, the large products of foreign trade companies that were hired at that time were not suitable for cross-border e-commerce channels, including sales, logistics, and FBA warehousing. It was very difficult overall. Even though some large products were found around the shelves, the number of orders still did not improve.
I am optimistic about the prospect of cross-border e-commerce track. In 2012, the former boss borrowed 100000 yuan of start-up funds to co establish with younger students Fractal information technology, relying on the advantages of Fujian's manufacturing industry, focuses on the outdoor sports category with a longer life cycle. From outdoors ， Extend to courtyard ， Home ， Now this three large Category II 4-5 have been created individual Lifestyle oriented brand In 2023, the annual sales will reach 300 million yuan.
Boss talks: On the way to entrepreneurship ， What are there Impressive story ？
Sun Meng: Loss of money Their experiences are often impressive. For about 1-2 years, due to the wrong prediction of the market, blind investment led to unsalable products. It took 3 years to clear the inventory and lost millions.
At that time, we were lucky to operate a product with an inner price - sports glasses. In terms of product packaging and art design, the price was set at $30, which was on a par with the price of well-known brands in the United States. This was a very radical practice at that time, and the company's strength was far from enough to do more high-end brand display.
On the one hand, once the price is too high, the product cannot be sold; On the other hand, if the price is reduced, it will inevitably face the risk of loss. This self righteous simple idea eventually led to a painful situation of high cost, low actual premium and continuous overstock of inventory. So, To make a brand go abroad, we must be pragmatic, rather than directly copying those big brands that have made certain achievements, which is obviously a bit of imitation.
(Picture Fractal Technology Sports Glasses)
In addition, intellectual property issues have also stepped into many holes, and products have been taken off the shelves one after another, resulting in huge losses. The students who worked together left the company one after another due to excessive pressure. But in fact, it is inevitable that entrepreneurship will encounter difficulties. As long as it is not a fatal problem, you can continue to improve through learning, so as to promote the future in a more positive direction. We firmly believe that anything that can not be killed will make you stronger. When the pressure is high, I will ride along Xiamen Island Ring Road to decompress through sports, or immerse myself in swimming to enjoy the sense of stability brought by sinking in the water.
Boss talks: How do you think about whether to find friends when choosing partners in business?
Sun Meng: Shortly after graduation from Xiamen University, the network resources are limited. Fortunately, the relationship of the school association federation has accumulated, and more and more students have joined in entrepreneurship. From 3-4 small teams to hundreds of people now, I have been persuaded. In addition to respect for senior students, entrepreneurship has relatively few conflicts so far. At the initial stage of entrepreneurship, the company was overly idealistic and considered a lot of equity distribution and organizational structure matters, even was willing to share money, so there were few contradictions on the issue of benefit distribution.
Do you want to find friends when choosing partners in business? Personally, I think You'd better not find an iron friend ， Especially don't find friends who have a good emotional foundation. The core of entrepreneurship and business is to be pragmatic. Emotions are too deep. When making decisions, too many emotional factors are scrutinized, which leads to the loss of rational judgment, too many constraints and even the loss of good decision-making opportunities, thus greatly reducing the success rate of entrepreneurship.
Boss talk: What characteristics do you think young entrepreneurs need to have, and their probability of success will be higher?
Sun Meng: Ability and character are the criteria for assessment. In terms of capability, the best partner is the one with complementary capabilities For example, if you are from a business background, you need to find someone with enough industry insight to start a business together. Otherwise, there will be no complementary effect, which will not only lead to conflicts, but also the same blind spots, which will easily lead to fatal problems and risks; On the other hand, in my personality, I am more persuasive and can accept people who cooperate with me to express their ideas directly without being particularly tactful. If I care about face, Try to choose partners who can get along well with your personality to reduce conflicts.
What I observed Most young entrepreneurs are active in thinking and dare to try, but also lack experience and patience. They tend to think that there are many opportunities in the industry and they are constantly working hard, but in fact, too many choices are equivalent to no choice ； In addition, entrepreneurship must have continuous focus, but it cannot be too rigid. Once the boss is a bit lax, the team will probably have a strong idea of running away. Perseverance is crucial.
02
Run through the new mode, 60% - 100% growth every year, what is the reason?
Boss talk: Fractal technology has a unique boutique operation mode. What is the specific mode?
Sun Meng: I'm not good at distributing goods. I have the gene of code farming, and I just want to develop in the direction of high-quality goods. together with For platforms Traffic mechanism The research is particularly interesting, and the underlying logic research is more thorough They are also willing to settle down and deepen the supply chain and products.
The so-called high-quality operation mode exploration is more about how to identify and produce good products, what kind of products can be better accepted by consumers, what kind of products can get better traffic location, and how the rhythm is more consistent with the benign operation of products. Based on these foundations, we will continue to optimize the product development model to match the operation model.
After the establishment of this boutique operation mode, the shop operation is as smooth as the assembly line, and the product success rate is higher. It can achieve a significant growth of 60% - 100% every year, which is more suitable for the operation of products with relatively low standard This is also the fundamental reason why I am in the south of Fujian but do not operate clothing categories (non-standard products).
As the market matures, it is no longer competitive to just study the traffic model. Amazon constantly changes the traffic weight, not only to study free traffic, but also to increase the proportion of paid traffic. Therefore, the development of the company no longer depends on a single boutique operation model, but more on comprehensive advantages - matching the development supply chain with the boutique operation model.
Boss talk: How does Fractal Technology form a unique forward-looking development strategy in terms of product optimization and innovation, category layout, brand building, etc?
Sun Meng: Keep polishing with reference to the mature experience of peers. For example, in terms of talent recruitment, we will find talents with work experience in high-quality supply chain enterprises to introduce product development teams, give them 100% voice and certain financial support, purchase new products with potential for money explosion overseas for reference, and research and develop new products. Personally, Cross border sellers should continue to learn from imitation, especially for start-up cross-border enterprises. It is not necessary to create 100% original products.
On the one hand, constantly optimize their own products in hard work; On the other hand, in terms of soft skills, Give more care to core users based on marketing, such as In the membership system, birthday cards, holiday gifts, etc. are issued to enhance interaction, thus increasing the brand image of consumers and enhancing trust.
Judging from the overall cross-border e-commerce market in recent years, The new plan of Chinese sellers is relatively conservative, which is mainly due to the serious price contagion of the platform, the increase of paid content, the double pressure of competition in all aspects, and the severe squeeze on profits. For products with a short life cycle, it is necessary to maintain a faster pace in order to bring about better growth. In addition, you can also pursue increment from the perspective of category derivation, such as from outdoor to courtyard to home. In a word, the innovation of products should be judged from the perspective of both the company and the overall environment. Any major category has new opportunities for sellers.
Boss talks: There are three freedoms for individual power, financial freedom, time freedom and ideological freedom, but organizational power is more about resources, rules, and capital. How do you build an efficient organization management system?
Sun Meng: An organization is an amplifier of strength, and efficient cooperation can only be achieved on the basis of selecting the right people. The essence of management is not to manage people The founder has formulated a good principle and rule, which will not be arbitrarily adjusted due to changes in the external environment, and employees will not feel free to be constrained. Clear rules and regulations, and publicity of employee manuals, can only be better promoted by the mechanism recognized by most employees.
The backbone of the company ， Either you can Bring support to core business ， Or they are breakthrough talents who dare to break through. Real top talents don't have to come by air , when organization When growing, personality talents are obvious.
After the recruitment test for new positions, we found that, The success rate of air landing is generally lower than that of internal excavation, Internal excavation effect Maybe better 。
What really can leave core talents is the project sharing, reasonable distribution mechanism, fair benefit distribution, equity incentive, etc. When the goals are inconsistent, I will not force employees to stay in the project with determination. Only the right talents and positions can shine.
03
Thinking about entrepreneurship with a pragmatic attitude, "consumers are the parents of food and clothing" is the never outdated business philosophy
The boss talks: In the field of agency operation, Fractal Technology also cooperates with Jianfa and Seven Wolves. From your observation, what are the ways of big brands going to sea? How to evaluate which method is better?
Sun Meng: There are two typical ones. One is that big brands set up their own teams to do offshore business; The other is generation operation. From the perspective of the development trend of domestic e-commerce, the latter will certainly enter into overseas business more quickly, but most big brands will choose the former way to go overseas. The main business will be their own companies, and a small part will be left to the agent operation, thus reducing the running in cost.
For the big brand business model, The agency operation cooperation will gradually become marginal in the future and gradually move towards the self support mode.
Boss talk: In your understanding, what is the Sailing brand?
Sun Meng: The concept of "going to sea" brand is a typical concept based on China's supply chain and manufacturing industry, which helps China's small and medium-sized factory products quickly connect with target consumers and achieve brand product repurchase.
In the past, big domestic brands went abroad to talk about the concept of combining environmental protection, even to the packaging and product design itself, but in fact, few brands can really combine with environmental protection; and More cross-border e-commerce brands go to sea from a pragmatic perspective. On the one hand, the cost of over packaging brands is too high, on the other hand, they can not focus on the key points.
Compared with domestic big brands going overseas, Chinese cross-border e-commerce sellers have inherent supply chain advantages and good products. What we need to do now is how to keep these historical order customers sold, meet consumers' core needs, refine target groups, complete re purchase, and let consumers truly remember the brand.
in short, Repurchase, historical customers and private domain are the three most valuable factors for brands to go overseas. We should stabilize these must options to maximize our advantages, rather than directly compete against the already mature big brands.
For cross-border e-commerce sellers, they used to rely more on the platform to provide a good location, but in fact, The real food and clothing parents must come from consumers. Only when they really contact consumers and carry out private re purchase can they develop for a long time. There are many ways to accumulate customers. You can make your own brand official website, leave contact information on product packaging, including after-sales email, etc. At the initial testing stage of the product, let member users provide suggestions and improvements after trial in the real scene.
For example, Previously, a sports outdoor tent was developed, Unlike domestic consumers, European and American consumers spend as much as a week or a month on outings, and even choose to set up tents for the night. When this outdoor sports tent was launched to the market, it was found that the user test could not apply to long-term outings at all. Once encountering rainy and windy nights, it even leaked water. This event also made me feel more deeply the importance of deep connection with consumers, Take a look at the Review to learn more about requirements matching, rather than relying only on the platform. This is like learning to write from a dictionary.
Boss talk: when it comes to brand power, it is not only reflected in "popularity" and "brand association", but also helps brands leverage online resources and save traffic costs. So, how do you build brand power?
Sun Meng: Building brand power or from Pragmatic perspective set out. Different from the domestic big brands going abroad, it already has quite strong financial strength, and even more does not hesitate to pay a lot of money to make high-end promotional films. Taking Uniqlo as an example, just a small fabric improvement and upgrading may cost tens of millions of dollars to achieve small results, which is hard for cross-border sellers to achieve. Therefore, never compete positively with what big brands are good at, which is not cost-effective.
The so-called brand building, as the name implies, is to start from the original advantages, keep improving through products recognized by consumers, continue to accumulate core users, and help us put forward more effective suggestions. Through historical sales orders, the private domain builds a membership system, and some of them are core users contacted from customer service consulting. They will take the initiative in Facebook Instagram , TikTok publicity; Of course, there are also some loyal fans of brand products. When the products of the same series are updated, they will be given a certain discount, so as to continuously accumulate the user pool, and then carry out label based hierarchical management (such as by interest, climate, age group, occupation, etc.), and gradually expand the brand extension effect by word of mouth. The ultimate goal of the brand is nothing more than to pursue corporate profits, mobilize the minds of consumers, and the key to breaking the circle of the brand is to lead from point to area.
Boss talks: how to formulate the strategic layout of the enterprise in 2024?
Sun Meng: 2024 is also an extension of a certain trend in 2023 ， The cross-border track is still in volume, the strategy of the old seller remains flexible, and the stock volume is relatively conservative.
The whole cross-border e-commerce industry has a long cycle and a short cycle, Long term refers to predictable trends For example, the proportion of Amazon advertising has increased year by year, and the best location of platform traffic has also been given to advertising, which is irreversible and can make long-term judgments; Small cycle is more like peer competition under sketch category , including the amount of R&D costs invested, designer costs, private domain accumulation, etc., which can be flexibly adjusted. In 2024, our company will follow the trend of rolling in a long cycle, and try to expand the space in a small cycle to speed up the update speed of the product line, whether in quantity, price, premium and other aspects.
It is predicted that in 2024, the company's growth rate will still maintain an efficiency rise of more than 50%, while paying more attention to profits to ensure stable cash flow. Of course, sellers should not worry too much about the cross-border e-commerce market in 2024. They should accumulate their own advantages, slowly expand, and settle down. As long as they survive this downturn, they will certainly reap the effect of compound interest. We firmly believe that the cross-border e-commerce industry is a very good track, and the future is certain.
（ Wen/Chen Lin ）
(Source: Chen Mumu)
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