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Recently, Ruixing released its third quarter financial report for 2019. Data show that the operating profit of Ruixing stores turned to profit for the first time, achieving a profit of 186 million yuan and a profit margin of 12.5%. In addition, it has also received the collective recognition of the capital market for the first time since listing: by last week, the cumulative increase was 58.98%.

Ruixing’s “new species” chain seems to be ushering in an inflection point. It is undeniable that Ruixing has achieved online and offline connections through data-driven, product industrialization, standardization of operations, and management of individual soldiers. And unprecedented expansion in the retail industry, but the middle is also controversial. Looking back at the development of new retail in the past two years, similar companies still have convenience bees.

What common logic lies behind them? Are more of the current retail segments still applicable?

Recently, Inspur New Consumers interviewed Li Luan, the founding partner of Panda Capital, an early investor in Mobike, extending his experience from Mobike to the consumer retail space. He is very optimistic about the chain represented by Ruixing and Convenience Bee. The future performance of new species, and believes that the industry model of omni-channel integration will be the new generation consumer market trend in China.

Li Luan, Founding Partner of Panda Capital

Standardization, high efficiency, offline traffic … These are the keywords that Li Lun repeatedly emphasized. In his view, relying on the products or services just needed to get a lot of offline traffic, and then through technology empowerment, to convert offline traffic to online, will have the opportunity to become a new platform company, and expand more business around the traffic pool .

How to understand the essence of Ruixing’s “online + offline” fusion? Will China also usher in similar retail chain changes in Japan and the United States? How to create the unique advantages of the chain format in the new round of change? We had an in-depth discussion with Li Lun for more than an hour to share with consumer entrepreneurs.

From the perspective of products, services and markets, the chain business is still broadProspect

The consumption area is the key direction of Panda Capital’s future investment. Among them, we are most concerned about offline chain formats. Offline + online omnichannel integration developed from offline chains will be the mainstream trend in the future. Our confidence in the consumer field mainly comes from three aspects:

First, from the perspective of products, China ’s consumer market is very broad, and a large number of categories of demographic dividends have not been released.

Why do you say that? Let’s look at the example of Costa. Costa has more than 30 million consumers in the UK, its main market. But in such a small market, Costa can open 3,000 offline stores, 17,000 coffee vending machines, and sell them to Coca-Cola for £ 3.9 billion. Behind this is the high frequency of local coffee consumption and higher income levels.

Will such categories appear in China? Of course, there are differences in performance.

Many of our consumer goods are different from Westerners. The chances of something sweet on the new track are not great, because China’s per capita sugar intake is one-seventh that of the United States, and we are resistant to high sugar. Once high sugar, the incidence of diabetes in our ethnic group is very high, so a large number of people in first and second-tier cities now pursue sugar-free and sugar-free.

Conversely, Chinese people eat more salty products like Xiaoluwei. Many brands such as Jiujia, Juewei, and Zhouheiya are long-term packaging and planned consumption for 7-15 days. There are many similar categories, which gives a lot of market space for offline consumer chain formats.

Second, from the perspective of service, we find that consumer demand has not been well met.

Some people have asked if China ’s economic growth has slowed down. Will it affect the consumer market? I don’t see any impact in the short term. Urban residents have no need for large expenditures. Many of them no longer buy houses or cars, and the money available for consumption will not decrease.

Then, under such circumstances, education and consumer medical care would be a good service category to carry these needs.

Why education programs are so popular, education is essentially a kind of consumption. Affected by traditional ideas, the Chinese are willing to invest one-third of their disposable funds in education. Hunan Satellite TV’s hottest programs “Everyday Up” and “Happy Camp” are basically education advertisements before and after. This is a typical consumer product category.

In addition, the market for consumer healthcare will also be large. Health care, medical beauty, assisted reproduction and other sub-sectors will have opportunities for the rise of emerging companies. From the perspective of commercial real estate, in fact, more and more new chains of education and consumer healthcare are beginning to emerge.

Thirdly, from the perspective of the market, I believe that China’s consumer industry will present a global trend.

During my business trip to the Philippines, I found an interesting phenomenon. Because of the semi-colonial relationship, Filipino culture is closer to the United States, which makes its consumer goods form very different from China.

Take the local family supermarket as an example. In China, more than 70% of the family’s income comes from hot food, but this one is completely absent in the Philippines. A large number of eating habits in the Philippines are very close to Americans. Consumers have a very high intake of sugar, coffee has more sugar than all Chinese coffee shops, and Oreo sold in supermarkets are all sugared versions, the same as in the United States.

This reflects the influence of culture on consumer formats. And China’s cultural recovery and cultural export will definitely become the future trend. Once our cultural export is completed, a large number of countries’ consumer formats will be transformed by us.

For example, Seoul, South Korea now has three Haidilao businesses, but the popularity of the business has surpassed the domestic level every day. Koreans will now also watch Chinese TV series such as “Three Life, Three Miles and Ten Miles of Peach Blossom” and “Langyao Bang” in Korean, and they have a new understanding of the living conditions of the Chinese.

In the long run, foreign markets must not exclude China ’s consumer lifestyle output, which has given the consumer industry a wide range of possibilities. As long as this foundation is in place, the future Chinese chain formats rely on efficiency and standardization and can quickly open up in overseas markets.

Enlightenment from Ruixing and Mobike: How to find new value depressions in the chain business?

In the chain format, Ruixing is currently the most eye-catching project. Panda’s experience on Mobike makes us understand the underlying logic of Ruixing combining online and offline.

We need to look at the case of Mobike and Ruixing in an abstract way, to observe the driving force behind it and the possible opportunities. Especially for the entrepreneurs of the chain format, we can see where the “trend” of the so-called “follow the trend” is.

1. Mobile Internet transformation is coming to an end and online traffic dividends have dried up

First of all, the emergence of this wave of companies is essentially the inevitable result of the previous wave of Internet transformation. In the PC era, Taobao and Tencent came out; in the mobile Internet era, WeChat and Headline came out. Every wave tide has created new flow value depressions.

However, in fact, online traffic has no value of depression. Today’s headlines and WeChat have become traffic distributors on the entire network. Maybe there are traffic value depressions in individual content directions, butThis content is very difficult and requires content to have consumption attributes.

For example, is there a small content market for middle-aged and elderly people? Very large, but there is actually no way to realize a large amount of content. Except for choosing a gray industry, there are very few categories that can be realized.

On another level, let’s look at online social e-commerce and private domain traffic. I think social e-commerce will only have opportunities on certain categories of products, because the core reason for its high efficiency is trust, and trust has a certain size and radius.

Now we have expanded this trust and radius supplement. The traffic obtained by social e-commerce is actually not its own traffic, but a sufficient number of people who can serve as traffic nodes in the private domain.

These people on the nodes need to form a professional team if they have too many functions to complete traffic fission, delivery, and sales. It is difficult to enlarge the business model. In the long run, the efficiency of social e-commerce will not be high. In the end, it is necessary to go outside to find traffic, and the costs are the same.

So overall, online traffic is not very good, and the price advantage of offline traffic is more obvious. In fact, from the earliest time, when we invested in Mobike we valued offline traffic. Because before O2O was pushing down the traffic on the line, the wave was almost dead. Why? Because online traffic is already expensive, how to convert to offline does not turn out well.

2. The offline advantages are prominent, and the chain format becomes a traffic collector.

Only starting with Mobike, we think this is the first project to convert offline traffic to online. I make a bicycle, I do n’t need to burn traffic online, I just build a car. In fact, everyone mistakenly believes that Ruixing and Mobike burned money. In fact, they did not burn money. They just invested in hardware and stores.

This thing is right, because this part is definitely a phased investment, and after the investment is all stable traffic. Mobike builds cars for offline use, users can scan the code to use bicycles, Mobike can build traffic in the APP itself, and in fact it was very successful. After completing traffic collection through self-built channels, enterprises will be able to expand more services around the traffic pool.

The same is true of Rui Xing’s case. We went to see Ruixing’s financial report, and nearly 50% of users placed orders directly through the APP. This ratio is surprising, indicating that Rui Xing accurately grasped offline traffic and eliminated offline traffic.Consumers turn into online users.

Then, Ruixing can also use this traffic advantage to incubate projects or do distribution. The latest data show that Rui Xing’s delivery business also only accounts for 10%, and the majority of them have been picked up at the store.

Excellent cases, such as Wenheyou in Changsha, are typical traffic collectors. Wen Heyou can achieve an average of 20,000 tables a day during the National Day, and the performance is very amazing. It transformed the entire mall into an old block, and invested one time to create an old space of 10,000 square meters.

Wenheyou itself has IP attributes, high value, Internet celebrity, and its own fans. These attributes can be used to make a two-host mode traffic distribution, and give its own traffic advantages to third parties.

3. Efficiency improvement becomes the key, standardization reshapes the chain business

So there are two key nodes in the entire path: first, after the cable is off the store, can the traffic be quickly established through standardization and rapid expansion; second, whether it can be converted after it is built, depends on the industry Attributes, industry reach and project coverage.

High standardization is a very important point in the future chain industry. All products and services may be standardized and transformed. The final market, goods, and stores will be standardized, and users will become standardized after being trained by such products for a long time. We will see that, in fact, the urban population is eating a lot of food that is OK, 70 ~ 80 points.

As a result, companies only need to polish the in-store management standards to minimize human impact. At the same time, as smart hardware becomes better and better, and the standardization of the production process is improving, the accumulation of chain data will eventually be lower than The traditional business format is much faster, and then it becomes bigger and deeper into its own advantages.

Just like Ruixing’s coffee machines are imported, the coffee industry is already a highly industrialized and standardized category, and the supply chain is much simpler than other industries. The convenience bee model is also a scheme. It is very heavy investment to invest in upstream to build a factory to achieve product standardization, but now the capital market has given such an opportunity.

Why did the United States use the franchise model before? My understanding is that it cannot solve the problem of capital and people. At that time, there were not so many VCs and PEs to provide funds. At the same time, the franchise method allowed the franchisee to become the manager of the store, which incidentally solved the people’s problems.

The current model in China is that capital is not short of money, andAnd through standardized operations, stores no longer need store managers. Once these two things are resolved, it becomes very simple afterwards, just give the standard. In the future, China’s chain industry will not need to take VC or PE money. It can be a standard financial return product like real estate, which will have very high efficiency.

How does “new species” break through? Grab rigid needs and uniqueness

1. There are defects in traditional linkage, “new species” need to reflect unique values ​​

So, who can have an advantage in this chain change around “online + offline” traffic and standardization? I think it is unlikely to be a traditional chain format, because the traditional chain has two obvious shortcomings:

First, the traditional chain may not have enough understanding and cognition for this change.

Many people have proposed to copy the Ruixing model to other industries, but how many people dare to really let the 600 IT staff come in to complete the system development without opening the first store? Few people have this courage.

For example, a company like small medicine, why can it grow so fast in the B2B field of medicine? In the early stage, Xiaoyaoyao solved the long-term non-standard problems through the development of 1,000 IT personnel with a large number of systems. Once the development is completed, the first-mover advantage and scale effect formed are rolling.

Second, traditional chains are products and services already on the market, and it is difficult to form core competitive advantages.

I think Mobike now, or Ruixing, basically provides a product or service that is not on the market, and this product or service is just a need. Otherwise, without this item, it is difficult to effectively capture offline traffic by just opening a store.

The product provided by Ruixing is not just a cup of coffee, but a cup of coffee with a particularly high cost performance, while achieving great convenience through self-lifting and delivery. By the same token, Mobike is not just a bicycle. These unique and newly needed offline products and services are the super-traffic depressions.

So “new species” need to be able to provide previously needed products and services that were absent, so as to obtain the most valuable flow depressions, and at the same time, this matter needs to have a scale effect.

But scale is not infinite, it has a boundary. Real estate is a typical example of the scale effect. Beijing is only limited to interact with neighboring North China. There is no possibility of scale interaction with Shanghai. The situation varies from place to place. The localization of the same execution strategy is definitely not enough. At the same time, the central government still has huge management costs.

2. Entrepreneurs’ breakthrough, relying on service and industry incubation

Since traditional chains have certain disadvantages, how can entrepreneurs seize this opportunity? There are also two cases:

First, if there are no industrial resources, entrepreneurs will most likely need to break through from the service field instead of making products.

An early company raised 20 million to build production