Exclusive Interview with the Former President of Tmall, Owen: Choosing Entrepreneurship over Big Companies, Making Consumer Goods Easier than Before

Text | Peng Qian

Editor | Qiao Qian

During the Double 11 period, various live-streaming rooms are still bustling. On October 19, the anchor Aniniu showed an oral beauty and health supplement called "Photon Filter Pill" in the live-streaming room, calling on female consumers to take advantage of the autumn and winter to whiten their skin. This new product, which has not been on the market for long, attracted 190,000 views in Aniniu's live-streaming room in less than half an hour, and the transaction volume of a single product quickly exceeded 2 million.

This health supplement with the nickname "Photon Filter Pill" and the ingredient "Ergothioneine" is from a brand called Beyond Nature. So far, this is still an unfamiliar name to many people, but the team behind it is quite remarkable - it is an Alibaba-based entrepreneurial team founded by Liu Peng (nickname: Aowen), the former president of Tmall, with many years of e-commerce and FMCG experience.

Partner information of Molecular Spirit Company, image from the brand official

Aowen graduated from Nanjing University of Science and Technology, and studied EMBA at the University of International Business and Economics. He has served as an executive in large companies such as Haier, Suning, Goodbaby, and Alibaba. He has worked on both brands and retail. During his 9 years at Alibaba, he was in charge of departments such as Tmall Global, Tmall Supermarket, and five major industries of Tmall. At most, he managed 3,000 people and regarded the cross-border e-commerce business Tmall Global as his most important "masterpiece". In April this year, he left Alibaba to establish a new company, Molecular Spirit, and still chose Hangzhou as the location, which is two kilometers away from Alibaba Xixi Park, his former employer.

In the eyes of many friends, Aowen is gentle, stable and cautious. His decision to start a business is somewhat unexpected. After all, today is far from a good time for consumer entrepreneurship. But Aowen believes that starting a business in FMCG is not as difficult as before. "In the past, you had to spend a lot of marketing money without seeing much effect, and the money return cycle was very slow. Now, if you insist on building your own brand, making good products, finding the right people (influencer bloggers), and keeping the accounts clear when starting a business in FMCG, you will feel more at ease."

In the beauty and health supplement track where he is involved, Swisse (collagen), Pola (anti-sugar oral liquid), and IMEDEEN (collagen tablets) are well-known names. This field has also been long monopolized by foreign brands. In China, when it comes to beauty and skin care, the first thing that local consumers think of are various oral desserts such as bird's nest and peach gum.

But Aowen saw the opportunity in it. The penetration rate of health supplements in Europe and the United States is as high as 35%, while in China it is only 5%. "Health supplements in China have been over-marketed and spoiled before. It is difficult to tell you exactly what effects they have. Today's health supplements are different. Between traditional health supplements and medicine, there is a 'middle ground' of functional health supplements. This perception has not yet been accepted by Chinese people, but it is being led by a group of women who pursue beauty and health and is gradually being accepted. This is our opportunity." Aowen said.

At Alibaba, Aowen witnessed many once prosperous big brands decline, and also witnessed many local brands gradually approaching international brands and replacing the former industry hegemons. In the current health supplement business, and even in the skincare and FMCG businesses, he also hopes to achieve a similar career.

In the October when osmanthus is blooming all over the city, 36Kr met Aowen in a tea house in Hangzhou and talked with him about his choice after leaving Alibaba, as well as the important and far-reaching topic of "How should Chinese consumer brands do?".

Molecular Spirit Team

"The Middle Ground" Is Our Opportunity

36Kr: It doesn't seem like a good time to start a business. Why did you choose to start a business at this time?

Aowen: In the past, the perspective at Alibaba was very macroscopic. When I came out to start a company, the perspective became very microscopic. From a microscopic perspective, you will find that the external climate actually doesn't matter much. What does it matter if it's snowing outside and whether a small grass can grow tenaciously?

36Kr: Isn't the opportunity at other big companies worth considering?

Aowen: The Internet has entered an era dominated by products and algorithms, while my past experience at Alibaba was operationally dominated and business-minded, and the two are very different. In addition, I still have a lot of feelings for Alibaba. The business is so big, and there are many areas that can be done.

36Kr: What is the difference between product algorithm dominance and operation business dominance?

Aowen: These are two worldviews. If it is more business-oriented, it will consider the ecosystem, merchants, and governance; the first consideration of product algorithms is the user. An app dominated by product algorithms needs to maximize the user's time, and at the same time, there will be trade-offs in commercialization. Whether what it pushes to the user is free or paid, and whether this payment is from the merchant or the user, the algorithm controls it. It is the same for the merchant side. If you spend money to buy 6 traffic, then the algorithm must be 2 accurate users, 2 semi-accurate users, and 2 non-target users to maximize efficiency. The algorithm is without "people", while the operation is with "people".

36Kr: This is also the difference between Taotian and Pinduoduo, Douyin.

Aowen: Internet platforms are changing, and now no one will think that users are not important.

36Kr: How did you decide to enter the field of synthetic biology?
 

Aowen: If I want to start a business and enter an industry, it is best if a technological revolution is taking place in it, and some people see it while others don't. Only then is there an opportunity. I spent 3 months chatting with people in the industry and found that this technology is very long-term.

There are several ways to obtain a certain raw material. The first is to extract it from plants and animals. The second is petrochemical. Our clothes and shampoos are carbon-based at the bottom. The third is synthetic biology. Its essence is cell engineering, which is more environmentally friendly and has a lower cost. This technology will bring huge changes to the future daily necessities industry, and the big companies in this field are unlikely to go all in, and new brands will definitely grow.

36Kr: Why can new brands definitely defeat big brands?

Aowen: Because the giant companies in this field have formed a long-term and deep binding with petrochemical giants, and it will cost a huge price to transform the supply chain. This is the common destiny of big companies.

36Kr: Many people still think that health supplements are an IQ tax. How do you respond to this question?

Aowen: In the past, it was difficult for health supplements to tell you exactly what effects they have. But the ingredients are different now, and their effects are more specific and direct. For example, coenzyme Q10, which has been very popular in the past two years, is effective for the cardiovascular system and ovaries. The main ingredient we focus on, Ergothioneine (an ingredient that can be extracted from mushrooms), is good for sleep, can remove free radicals, and achieve the effect of fading spots. We use synthetic biotechnology to create it. But health supplements are not medicine, and the positive effects are not applicable to everyone like medicine. Between the past health supplements and medicine, there is a "middle ground" of functional health supplements. This perception has not yet been accepted by Chinese people, but it is gradually being accepted, and this is our opportunity.

Beyond Nature product "Photon Filter Pill"

36Kr: In this field, what scale will be a stable business?

Aowen: 300 to 500 million will be more influential. In this track's echelon, Swisse has a 5 billion RMB annual business in China. There is a gap below it. There is a group above 1 billion, a group between 500 million and 1 billion, and a group between 300 million and 500 million. The overall size of this track is not large, but we see a rapid growth. The penetration rate of health supplements in Europe and the United States is 35%, while in China it is only 5%, a 7-fold gap.

36Kr: What is your more medium and long-term goal?

Aowen: Entering the oral beauty health supplement niche track, I think there is an opportunity to create a new FMCG brand company, such as Procter & Gamble. Next, we will also do beauty products and consider going overseas to Southeast Asia, because this is the best overseas region for Chinese beauty brands.

The Price War in E-commerce Is the Crusher of Brands

36Kr: Everyone is very concerned about how the former president of Tmall will do consumer goods. Can you first talk about how you allocate your energy on several e-commerce platforms?

Aowen: Live-streaming, shelves, and private domains, we must do all of them. This is the way to do a brand. The proportion is approximately 4:3:3. If you only do Douyin and Kuaishou, and not Tmall and JD.com, you will only become the "fertilizer" of the influencers; if you only do Tmall and JD.com, and not Douyin and Kuaishou, you will not be able to create a sense of value and can only compete on price; if you only do the private domain, you will become a WeChat business.

36Kr: Why is live-streaming worth spending more energy on?

Aowen: Mainly because we are very familiar with the set of shelves, but we still need to learn about live-streaming and pay the tuition fee.

36Kr: What new things have you learned recently?

Aowen: For example, an interesting finding is that the nickname of the product is very important. In the live-streaming era, "Little Brown Bottle" is more important than "Estee Lauder". Those with a professional background will think that the brand is more important. Our core single product was originally called "Photon Pill". An influencer suggested that we change it to "Photon Filter Pill", and the search volume directly increased several times. Later, all the products under Beyond Nature have a memorable nickname, such as "Eye Revitalizer", "Heartbeat Pill", and "Age-Freezing Pill", which are easy to remember at a glance.

36Kr: In the past one or two years, e-commerce platforms have been engaged in a fierce price war. How should brands deal with it?

Aowen: The price war in e-commerce is the crusher of brands. Now live-streaming is very similar to the fan economy. Fans and influencers are strongly bound. If you sell a product for 599 yuan on influencer A and 589 yuan on influencer B, then influencer A and all of its users will rebel, and your channel potential will be gone. Secondly, every platform is telling you that I have traffic, lower the price. Once you make this move, the consumers who have bought your products will feel deceived, and the damage is extremely great. Brands must resist the temptation.

36Kr: The new consumer entrepreneurship has experienced ups and downs. What changes have you observed in this ecosystem?

Aowen: In the past, it was a group of people with traffic who did the brand. Now it is the people who want to do the brand. For example, many people who started as brand distributors and agents are now starting their own brands, accounting for 80% of them.

36Kr: Do you think the threshold for consumer goods entrepreneurship has become higher or lower?

Aowen: As long as it is to do a brand, the unchanging thing is always the high threshold of product quality. We must have a long-termism. We have always been in awe and insist on making consumer goods that we and our families can eat and use with confidence. On the other hand, the threshold for e-commerce operations has been simplified instead. For example, starting e-commerce from live-streaming with influencers, the capital threshold required is not high. We pay the influencers a certain percentage of the sales commission, similar to performance advertising. In the past, you had to spend 20 million yuan on marketing, but there was not much effect, and the product sales cycle was very slow. In addition, supply chain financing is already very mature. The goods are in the bonded warehouse, and you can mortgage them to have funds to prepare the next batch of goods.

36Kr: Is starting a business generally easier than you expected?

Aowen: It is not very easy either. We also have many very difficult things, too many to count. But overall, it is in line with my expectations. The experience and resources are in line with my expectations. For example, when we talk to people in the industry, everyone is willing to sit down and listen to me for an hour or two. Others may not even be able to get the door opened. We are also more able to see the overall situation and trends of the industry and make predictions and preparations in advance.

36Kr: Can you give an example of a difficult thing?

Aowen: In the past at Alibaba, we called it "forming" a team. If we lacked someone, we just recruited. The first lesson we learned when we came out to start a business is that for people from big companies, we now prefer to recruit young and potential students, and we will not recruit "middle-level" people. The middle-level people in big companies have old and young to support. What if the cash flow is cut off? Who will take the risk of starting a business with us? Recently, a girl who is a basic operator in an Internet big company rejected our offer. Most people still prefer a comfortable working environment.

36Kr: What do you expect the team size to be?

Aowen: We are developing multiple brands. A single brand is expected to reach an annual sales volume of approximately 300 million by the end of next year, and the team hopes to be controlled within 50 people. In fact, the bigger we do and the more people we manage, the more we enter the comfort zone of our team. We are not afraid of having more people, but we still hope to be more agile.

36Kr: You have been at Alibaba for 9 years. What is the most important cognitive inspiration for your current entrepreneurship?

Aowen: To build a brand, we must face the users and understand the users. In the past, many overseas brands entered China through Tmall Global. Consumers looked up to overseas products, but now they are looking at them with an equal or even a downward perspective. I can choose any products from all over the world. Many overseas brands have instead fallen behind. Because most of them are designed for the local market, Australian health supplements may not be suitable for Chinese users because the particles are too large and Chinese users find it difficult to swallow. New Chinese brands