Two key words, "very wet snow" and "very long slope".
I have a college friend, also majoring in English for foreign trade, who went to work as a salesman in a factory making CD packaging boxes in Guangdong after graduation, which was in 2005, the last time when CDs and DVDs were about to be abandoned.
Just like film was replaced by digital cameras, CDs were also replaced by digital players and later cell phones.
We all guessed the ending.
He faced the painful situation of unemployment and re-employment.
Optical discs and film, which remained in history for only a short while, were eliminated with technological changes.
This slope is very steep but not long, seize the momentary opportunity to earn a full plate, otherwise only to serve as a background of history.
Fitness equipment is different, it is long enough slope, because fitness is a lifelong activity, and equipment fitness has unmatched efficiency and science of unarmed fitness.
Very wet snow, how to understand?
Is it just a need, there is no repurchase, how high the repurchase rate, is it about life safety and health?
These dimensions can measure the snow of an industry is enough, water enough.
Health is just demand, sports and fitness is the most cost-effective way to enhance physical fitness, disease prevention, and fitness equipment as an aid to sports and fitness, from the degree of relevance, is also a certain degree of just demand, but this just demand requires a trigger point.
Either the medical examination is not pass, or get sick doctor prescription.
There is an action formula called B=MAT.
The B is Behavior (action), M is Motivation (motivation), A is Ability (ability), and T is the above Trigger (trigger).
Action (B) will only happen and continue to happen when the MAT is all together.
From this, we can see that there are conditions for compound interest in the fitness equipment industry, but to make it "very wet snow", we need to put more efforts on T. For example, community operation, content production and rewarding. For example, community operation, content production and the introduction of reward and punishment mechanisms.
In a word, the fitness equipment industry has compound interest.
The moat of compound interest
Many industries have the conditions for compound interest, such as FMCG and beverages, but there are always some companies that can excel and some that can only hope to do so.Why is this?Essentially, the moat is not strong enough.The four moats of compound interest are: intangible assets, cost advantages, network effects and migration costs.Next, we will combine the fitness equipment industry, one by one.
First of all, intangible assets.For example, brand, patent, copyright, etc..The so-called third-rate enterprises to do products, second-rate enterprises to do brand, first-class enterprises to do standards.Fitness equipment industry in the country has spent several stages, from the earliest dependence on imports, to later OEM, European and American brand agency distribution, domestic e-commerce, cross-border e-commerce, and now the brand to the sea.We can see that many companies are moving closer to the route of the brand from simple reliance on channels and products.
However, the brand to the sea is not the same as the brand to the sea.
In addition to selling products, how to form advantages in core competitiveness (such as product efficacy, series, user orientation, etc.) is the ultimate home of the brand.
We firmly believe that the future of China's fitness equipment industry will definitely appear like Apple, Nike and other global brands, with a certain market share, to have the opportunity to develop their own standards.
Then look at the cost advantage.There is a very simple, important, and often intentionally or unintentionally ignored issue in economics.That is, scale determines cost.The larger the scale, the lower the cost.But this scale is a prerequisite.Fitness equipment is different from other products, it is less standardized, each factory or brand may have their own design, and customers in the choice of products, but also favor to buy brand recognition accessories and structure, which leads to a single product is difficult to do scale.
How to break?
We all know the famous 20/80 principle, that is, 20% of the customers contribute 80% of the turnover, or you can say that you can only do business with 20% of the customers, then the remaining 80%? Wouldn't the scale be bigger if you pooled them together? Is it possible to have a cost advantage?
If there is such a tool or platform that can collect 80% of the idle orders and turn them into a whole, is it possible to achieve another dimension of cost advantage?This is the direction that CrossHealth has been studying and working on.Next is the network effect.The typical way of operation of Internet companies is to be applied here.Attract the most users in a short period of time at no cost in the early stage, even with backward methods, and then use the value of the users themselves to obtain more capital and resources, thus forming an oligarchy. For example, WeChat, Drip and so on.I am afraid that the fitness equipment industry is difficult to copy, but need to learn from.Borrowed from the Internet industry is the user thinking.Remember the B=MAT spoken earlier?To make users continue to use your fitness products and services (B), you must find the user's motivation (M), whether it is weight loss or muscle gain, and then also to match the user's exercise ability (A), and finally to help them find a suitable trigger point (T).
It is imperative to embrace the Internet.
Finally, the cost of migration.
Migration costs have two elements, one is time, the other is habit.
Time cost is easy to understand, for example, I have used iPhone for several years, suddenly let me switch to Android phone, not that there is much difference in the use, but it takes a long time to migrate data, quite troublesome.
When a tool with a hand, this time to change a new tool, even if the efficiency will be higher, but in the absence of essential enhancements, the user will still choose the old tool, this is the habit.
How to make users use fitness products and services more frequently and for a longer period of time, thus forming a time barrier and using habits, is the secret to determine whether the brand can last.
With the foundation of compound interest, coupled with 2-3 moats, the future of the fitness equipment industry is promising.
Strategies for compound interest
Different forms of business and the stage they are in determine which strategies should be used.
After the sudden epidemic disrupted the rhythm and experienced a wave of ups and downs, many peers are crying out that the road ahead is confusing and they don't know what changes to make to cope.
As Amazon's Bezos said, instead of discussing how the next ten years should change, why not seriously think about what is constant for the next ten years?
Remember the explanation of compound interest thinking?
Yes, "very wet snow", "very long slope".
My understanding of "snow" is the product, and my understanding of "slope" is the channel.
In the post-epidemic era, coupled with the global economic slowdown (or even the potential for stagnation), product development should adopt two strategies, namely "micro-innovation" and "high-end competition".
How to understand it?
At present, there is a very serious homogenization in the market, a large number of low-end traditional mature product inventory, which is also the last straw to crush many camels.
When this wave of inventory is cleared, does it mean that the products at this price point will be unattended?
Of course not.
It's just that last year's epidemic over-consumed the market demand, when the normalization of prevention and control, economic downward pressure, most people's consumer demand shifted to more immediate needs of the product.
Mature products that have been recognized by the market and consumers are still an important choice for future volume, but too disruptive innovation and the unchanging pursuit of low-cost design is difficult to have room for development.
Mature products micro-innovation can cater to the needs of ordinary consumers in the post-epidemic era.
How is the fight for high-end and how to understand it?
High-end products have a very high threshold, the lack of a certain amount of technology, market and capital accumulation, is very difficult to move up.
There is a scale or volume of factories or domestic brands, should seek a breakthrough in product design, try to enter the high-end users, because no matter how the external economic environment changes, high-end users are willing to pay for the cost of fitness will always be the highest.
In the case of insufficient technology and market accumulation, you can also consider acquiring or taking a stake in a high-end brand, taking a route similar to Geely's acquisition of Volvo. This can greatly shorten the transformation cycle.
Channel development and innovation is also a strategy worth trying.
ToC thinking to operate ToB business is the thing I feel most deeply in these years.
Foreign trade in fitness equipment has been done for nearly 16 years, from the original passive orders in the factory, to the later active development of trade, and now the development of new channels, in fact, is also a step-by-step approach to the C-side of the process.
ToC thinking does not mean to do ToC and grab business with your customers, but also to understand how your customers do business with consumers as the channels change.
Essentially, ToC is about experience, while ToB is about process and complexity. One is emotional, the other rational. Being able to switch between the two ends with ease is an advanced skill package for developing channels.
For example, the cross-border e-commerce has experienced both fire and ice, many of them have been hurt by it, saying that all cross-border e-commerce is a fraud, and some people have achieved the myth of annual income of millions with cross-border e-commerce.
You can say that cross-border e-commerce is wrong?It is actually the same as domestic e-commerce, is a new network sales channels, you see to embrace it, can not see it in the wait and see for a while.Only, it is like to the point to leave the train, it will not be because of your wait and see and stagnant.Product innovation, channel development.This is the next ten years, even twenty years, thirty years will not change things.