The sinking market that is getting hotter and hotter is more complicated than you think.

Editor’s note: This article is from the WeChat public account “deeply” (ID: deep -echo), author Ma Xiaojun.

Everyone is “sinking.”

There was a lot of listings last year to detonate the concept of sinking the market. Everyone has started to attack this market that has not been fully exploited before. But when the blue ocean turns into the Red Sea, is the secret of sinking growth? ?

One inevitable situation is that when the e-commerce giants who had been deeply ploughed into the first and second lines have already gained a lot in the sinking market, it means that the “sinking market” has become the new normal. Then, in the case that the penetration rate of all parties to the sinking market has gradually mentioned the high position, what is the next key to the Nuggets sinking market?

“Invisible new middle class” may be the core of this next phase of growth in the sinking market.

“New engine for sinking market: “Invisible new middle class””

To understand what is “invisible new middle class”, we must first consider the differentiation and complexity of the sinking market.

If the sinking market is defined as “three-tier cities and below, as well as rural areas in the vast rural areas”, it is not difficult to realize that this is actually a vast market with a population of 670 million. In such a huge market, there must be multiple customer groups with different characteristics, which need to be divided and ruled.

The data of the “Sinking Markets in 2019” shows that in the sinking market, users with monthly income above 3K (double-employee households earning more than 6K per month) account for 75.6%, and users with monthly income above 5K (double-employee households earn 1W per month) The above) accounts for 40.8%.

But at the same time, due to the difference in house prices and prices, they actually have a low spending power. From the perspective of retailable consumer spending, there is a large group of people, which is what we call “Invisible new middle class.” It can be seen that the e-commerce platform such as Jingdong has recently paid more and more attention to this group of people.

“Invisible New Middle Class” is a group of people: most of them live in third- and fourth-tier cities. The income is not significant, but after taking into account the difference in consumption expenditure between cities, from the perspective of consumption power Actually quiteView. This group of people has long been ignored by us due to factors such as inter-city differences and survivor bias.

The familiar “town youth” crowd is one of them. From the point of view of consumption power, the town youth is actually a large population with considerable consumption: the National Bureau of Statistics shows that the number of young people in the town reached 227 million, more than three times that of the young people in the city of 68 million first- and second-tier cities; The average monthly expenditure of young people in the town is 2,150 yuan, which is not much different from the monthly expenditure of young people in first- and second-tier cities.

Specifically, from the composition of consumer spending, compared with young people in first- and second-tier cities, the proportion of young people in housing consumption is 5 percentage points lower, which makes them have to eat, drink, drink, and have fun. More consumption surplus, so as to release the spending power can not be underestimated.

And the “invisible new middle class” in the sinking market is not only a small town youth, but the silver-haired family is actually an emerging consumption force: they mainly live in the third-fourth and lower-tier cities, most of which have their own houses, so The proportion of housing consumption is low. The number of people in the sinking market is growing, and at the same time, the proportion of the net and the transparency of information are increasing, prompting the rapid release of their consumer demand.

In terms of population, according to the National Bureau of Statistics, the number of Chinese silver-haired people has continued to grow, reaching 449 million by 2019.

With this background, the mobile Internet penetration rate of Chinese users over 50 has increased from 10.4% to 12.5%. As the mobile Internet penetration rate of the silver-haired family gradually increases, their information transparency is gradually increasing, which means that they have more judgments on making consumption choices.

In addition to this, a phenomenon that has been neglected to some extent is that the consumption of the silver-haired family is actually increasing rapidly. Kantar data from the research institute showed that the overall food and beverage value of the market increased by 3%, but the growth of the silver-income family reached 7%. The development of high-end products in the silver-haired family is far higher than the average, especially the health care products are growing very fast in the consumption of the silver-haired family. For example, the category of soy milk, the growth rate of demand for high-end products by the silver-haired family is very alarming.

In addition, the online food and beverage online shopping growth rate of the silver-haired family in 2018 has almost reached 42%, which is consistent with the trend of the higher the proportion of the contact nets of users over 50 years old. The population and network penetration rate continue to increase, while the demand for high-end products continues to grow, which makes the silver-haired family gradually become a category that cannot be underestimated in the “invisible new middle class”.

Summary, the key to the growth driven by the “invisible new middle class”, including the town youth and the silver-haired family, is actually the increase in the unit price of consumer customers. As the platform penetrates the “invisible new middle class”, the invisible new middle production has a better and more targeted product/service coverage.

In the past few years, the sinking market has first migrated through the offline consumption segment to the online process, giving the platform a traffic migration bonus in the process.

Therefore, the market should go through the process of moving from lower-quality consumer products to higher-quality consumer products (Trade-up), and in this process push up the unit price and drive growth. “Invisible New Middle-class” will be the main force in this wave, first of all, with the demand for consumption upgrades to promote the quality upgrade, category upgrade and brand upgrade of goods and services in the sinking market.

“So, how do you manage “invisible new middle class”?”

It should be noted that the consumption behavior of “invisible new middle class” still conforms to the core consumption characteristics of the sinking market: due to the low efficiency of information transmission in the sinking market in the past, the information barrier of commodity circulation is relatively high, and information transparency is biased. Low, in fact, the sinking market is pursuing low-risk shopping.

The analysis of the sinking market has concluded that whether it is low prices, acquaintances, or physical store operations, it is essentially a means of reducing consumer risk:

  • “It’s cheap anyway, it doesn’t matter if you lose money once” – low prices offset the fear of risk;

  • “Friends recommend, there should be no problem” – acquaintances recommend reducing the risk of buying mistakes;

  • “Running a monk can’t run the temple” – offline stores have reduced the risk of not being able to provide after-sales service.

It can be said that the so-called purely cheap and cheap customer group is a misunderstanding of consumers in the sinking market – the pursuit of low-priced products, the core is to reduce risk. In the case of sufficient information transparency and risk resistance, sinking market users will also make full comparisons within their own capabilities, considering quality rather than simply considering price, this is still a logical logic of rational judgment. .

Therefore, in the face of a strong low-risk shopping tendency, at the same time, information is transparent.What kind of play should be adopted in the sinking market, which is gradually increasing in brightness, “invisible new middle class”?

The industry generally believes that there are several key changes in the retail industry today. One is from product and new traffic-driven growth to growth based on consumer operations (full lifecycle value realisation). And under the logic of growth based on consumer operations, there are three levels: marketing change, product/service enhancement, and operational and supply chain upgrades.

In marketing, the purchase and social fission for the sinking market has now become a regular marketing weapon. After a lot of efforts, Jingdong and Ali have already launched targeted traffic weapons. Jingdong will also exclusively access the WeChat level entrance (WeChat-Discovery-shopping) before and after the National Day this year. Based on social traffic and acquaintance networks, online traffic marketing tools for consumers will become the new normal. Then when conventional marketing weapons gradually become standard, competition will begin to evolve from the marketing layer to the product layer, and finally the competition in the supply chain system begins.

The competition between products and services is also easy to understand. As discussed above, with the improvement of information transparency, the consumption habits of invisible new middle-class products will inevitably be aligned with first-tier cities, and users will do the calculation of rational consumption: cheap but quality is not guaranteed. For products with a short period of use, the average price amortized must not be cost-effective, but products that can be used for a long time are cost-effective. Therefore, there are more quality products and services that are affordable and risk-controllable, and users will not stay in the original product quality requirements – which puts demands on brands and platforms, and opens another level. competition.

The competition at the product and service level, in turn, is to compete for operational efficiency and supply chain capabilities. The core is how to ensure the competitive supply of goods at the same time by integrating the supply chain and reducing operating costs. Improve user trust.

In the article “I am in the “sinking market” for a month in the circle of friends”, the author “11 lazy dad” gives a very important observation: in the sinking market, offline Shops, offline operations or a very important means of grabbing the user’s mind.

At the same time, the existence of the offline store for the sinking market users, but also through the acquaintance business + physical store after-sales service highlights, reducing the risk of user consumption, especially for the relatively high customer price category So – this goes back to the user characteristics of “low risk consumption” that we mentioned earlier.

One side of the evidence is that online retail giants are now starting to lay out offline. At present, the sinking market is not all local stores, or there is no printing.The world of good Chinese apprentices, like Jingdong 2016, has begun to lay out offline stores. According to public information, Jingdong’s offline specialty stores are mainly divided into three types: Jingdong specialty stores, which mainly operate mobile phones, computers, digital and creative goods, and Jingdong home appliance stores, which cooperate with Midea, Haier, Gree and other home appliance brands, and Jingdong. Digital computer store.

Jingdong Store

The latest data released by Jingdong recently shows that Jingdong stores have opened nearly 2,000 stores in 30 provinces across the country, covering more than 350 cities; Jingdong home appliance stores have reached 12,000, covering 25,000 townships across the country. 600,000 administrative villages; Jingdong digital computer store has also opened more than 160, covering more than 100 sinking market cities.

At the same time, the transformation of the sinking market by the large e-commerce platform has also reached the supply chain level.

Jingdong’s “Hundred Billion Plan” takes Jingdong as an example. In the next three years, JD will focus on cultivating more than 10,000 “super factory stores” with sales of over one million and over 100 sales of tens of millions. The belt has become a “super industry belt” that has broken through the 100 billion mark, and has created more than 100,000 high-performance products into the sinking market. Based on Jingdong’s latest “daily special” business, it is to use the integration of the upstream supply chain to ensure The price competitiveness of the final product on the channel terminal.

In addition, Jingdong also has Jingdong New Channel, which is mainly engaged in B-channel and supply chain. Its one-stop B2B ordering platform, Jingdong Treasures, also has a million users, which has penetrated 1-6 lines and deepened. The market below 3 lines; and the Jingdong convenience store, which is the entity of the line, has also been rolled out nationwide.

The demand for consumption upgrades of “invisible new middle class” can be realized by the sinking of the channels of branded home appliances. In addition to being able to serve as a brand’s sinking channel, it can also provide a stronger sense of security for local consumers in the distribution, installation, and after-sales maintenance of large-sized home appliances. Further meet the needs of consumers in the sinking market for “low risk consumption”.

The current 670 million sinking market users used to be a customer group that has not been given enough attention and proper service. In the past two years, the industry’s operation on the sinking market has completed the initial penetration of this market. – But this is not enough.

From the difference between the sinking market and the consumption of first- and second-tier cities, on the one hand, the sinking market obviously has a lot of upgrade potential and cannot be tapped.On the one hand, the 670 million users themselves are very complex and diverse. In order to achieve sustained growth in this market, users of each cluster need to be refined and divided.

In each of the different segments, “invisible new middle class” is clearly the “Early Adopter” among different groups of people, which means they must be the key to the next stage: The “invisible new middle class” business will also be able to seize the early opinion leaders in the market and gain future opportunities.

How big is the consumption imagination of 670 million people? Their advanced demand for consumption is still a vast ocean.