Summary of Key Points
This article discusses various industries, including entrepreneurship, cross-border e-commerce, and smart hardware, and reveals many industry "myths": Most projects fail due to a superficial understanding of opportunities, not a lack of them altogether. It emphasizes that running a business involves more than just looking at surface-level opportunities (such as industry size or traffic strategies); it's essential to establish a comprehensive operational system. When learning from others (like SHEIN), one should not merely copy the front-end activities but focus on the core back-end capabilities. In the AI era, talents need to first understand the business before utilizing tools. The smart hardware industry, in particular, is in dire need of professionals who can oversee the entire value chain.
1. Don't Mistake a Large Industry for an Easy Profit Source
Many entrepreneurs think they can get a share of the market just because it's worth billions, or they want to replicate successful European and American products in China. However, the reality is that market size is external; whether you can make money depends on your ability to integrate products, supply chains, channels, and cash flows. For example, an AI hardware product may seem like a good opportunity with user demand and profitable competitors, but implementing it requires continuous product iteration, long-term investment in channels, inventory management, and a local support team. Many people mistake seeing an opportunity for the ability to succeed, ignoring their own limitations—some are better suited for developing products, while others excel in managing channels; not everyone with resources is cut out to be a entrepreneur.
2. Learning from SHEIN: Focus on the Back-End System
When learning from SHEIN, people often focus on TikTok influencers, low-price promotions, and frequent new product releases, but these are just surface-level aspects. SHEIN's true strength lies in its demand-driven supply chain system:
- Small-scale testing: They release a few hundred SKUs in small quantities to gather data on user behavior (clicks, purchases, returns) to determine which products to develop further.
- Rapid order fulfillment: They immediately place orders with manufacturers, prepare materials in advance, and ensure consistent quality.
- Data-driven decision-making: Click-through rates influence traffic allocation, return rates determine which SKUs to discontinue, and regional sales adjust inventory and logistics.
Conventional cross-border sellers that mimic SHEIN's front-end tactics end up with more inventory, higher advertising costs, and more returns due to the lack of a back-end system.
3. AI Is Not Just for Writing Reports
Many companies use AI to train employees on writing prompts or generating product listings, but this doesn't address core issues such as product definition, inventory management, and ad placement logic. AI can enhance existing capabilities: Those who understand the business can use it to better identify user needs; those who only copy competitors will use it more efficiently for replication. In the AI era, talents should first understand the business before applying AI.
4. Smart Hardware: Having a Product Is Not Enough
Shenzhen's mature supply chain allows companies to create decent-quality smart hardware (with good design and functionality) that can sell for several million yuan. However, the industry lacks professionals who can integrate technology, product development, supply chains, channels, and branding. There is a disconnect between different roles within companies (product managers ignore returns, sales teams overlook profit margins), and no single department takes full responsibility for business outcomes. Investors are reluctant to overvalue smart hardware companies because the market is relatively open: functions can be copied, and prices can be compressed, leading to higher inventory risks. To achieve significant success, a company must have unique systems (e.g., cutting-edge technology, subscription-based revenue, global channels).
5. Sales, Marketing, Branding: They Are Not Alternatives; They Work Together
These three areas address different challenges:
- Sales: Determining whether customers are willing to pay for the product.
- Marketing: Attracting more customers who are willing to spend.
- Branding: Building customer trust and loyalty over time.
In the early stages, sales should take the lead by identifying paying users and ensuring products, prices, and after-sales services are in place. In the middle phase, marketing can help turn sales strategies into replicable processes (e.g., through content and case studies). Later on, branding can reduce sales barriers (making customers more willing to pay higher prices). The biggest issue is when departments work independently—sales might focus on price, while marketing emphasizes lifestyle aspects. A coordinated approach is crucial.
In Conclusion
Running a business means building systems rather than simply copying tactics; using AI to solve real problems rather than just creating tools; and being an entrepreneur means recognizing one's limitations and persisting in doing the right things despite difficulties. True success comes from long-term commitment to effective strategies and minimizing mistakes.
(Source: Xiao Wanzi Jiangjiangjiang Talks about Business)