Summary of Key Points
This article focuses on the difficulties faced by small and medium-sized retail merchants in being "taxed" by platforms, AI, and other factors (such as rent, advertising fees, and AI tool costs). It proposes a "sub-optimal closed-loop" solution to break this situation: migrating externally to the WeChat ecosystem (to avoid traffic taxes and reduce costs) + reorganizing internally (using AI to assist in providing personalized services). These two approaches work together to create a "semi-sustainable" model for merchants—one that does not disrupt the existing platform ecosystems while reducing their reliance on these external factors and allows them to establish their own foothold through human touch, which AI cannot replace.
The Three Tax Challenges Faced by Small and Medium-Sized Merchants
Small and medium-sized merchants are currently trapped by three major costs:
- Space Tax: Rent payments required by landlords.
- Traffic Tax: Fees charged by platforms for advertising and promotion; without these fees, their products won't be visible to customers.
- Intelligence Tax: Renewal fees for AI tools; failure to use them means falling behind in competitiveness.
Why are they unable to escape these costs?
- Restrictions from Platforms: For example, WeChat prohibits the sharing of external links within its platform.
- Multiple Platform Requirements: Operating on multiple platforms means paying additional taxes.
- Independent Websites: Still need to purchase advertising services (such as Google Ads).
- Lacking Capital: Merchants like Luckin Coffee and Perfect Diary have substantial financial resources; smaller businesses may not be able to afford their strategies.
- Low Effectiveness of SaaS Tools: The renewal rate for small businesses using SaaS tools is only 13%, meaning these tools often fail to improve operational efficiency (for instance, private customer groups can become inactive).
These costs are "rigid, unavoidable, and systemic"—failure to pay them means being excluded from the market. Individual efforts are insufficient; they are inherent structural elements of the retail system. Therefore, merchants must find alternative solutions within the existing framework.
External Solutions: Migrating to the WeChat Ecosystem to Avoid Traffic Taxes
The "external solution" does not involve breaking the current closed-loop structure but rather switching from platforms like Taobao and Meituan to the WeChat ecosystem. Why WeChat?
- No Traffic Tax: WeChat does not charge a commission on transactions; merchants' customers are referred by their physical stores, so there's no need to pay additional advertising fees.
- Changed Cost Structure: While platform fees range from 21% to 40% (including commissions and logistics costs), the WeChat ecosystem only charges 0.6% for payment processing, 0.3%-1% for cloud services, and 3-5 yuan per delivery within 3 kilometers. For a store with monthly sales of 100,000 yuan, the cost difference between using WeChat and other platforms is 5,400 yuan.
How to implement this strategy?
1. Use Stores as Entry Points: Convert existing offline customers into online ones.
2. Utilize Mini-programs: Use them for services like inventory checks, pre-orders, and exclusive discounts.
3. Promote In-person Experiences: Provide opportunities for face-to-face interactions (e.g., offering free groceries or showing concern for customers).
4. Local Data Storage: Store customer information on your own computers or in a private cloud; WeChat serves only as a payment and communication channel.
This approach is suitable for businesses such as community convenience stores, fresh food shops, and restaurants that have repeat customers within a 3-kilometer radius. However, it may not be effective for businesses with low average transaction values or a small range of products.
Internal Solutions: Reorganizing to Use AI for Personalized Services
Even with a successful external strategy, internal changes are necessary. Otherwise, the savings might be used on more expensive AI tools (incurring additional "intelligence taxes") or end up in the owners' pockets. To create a warmer customer experience, organizations need to restructure:
1. Transform Roles: For example, designers can stop creating initial drafts and become visual strategists using AI; customer service representatives can handle emotional issues instead of repetitive tasks.
2. Eliminate Unnecessary Tasks: Use AI to automate routine tasks like data entry and product selection.
3. Foster a Warmth-based Culture:
- Owners should share profits (20%-30%) to create a bonus system that encourages employee engagement.
- Make customer data transparent and accessible to all staff.
- Reframe performance evaluations from sales volume to customer retention rates and response times on WeChat official accounts.
4. Balance AI and Human Interaction: Let AI handle basic tasks, while humans provide personalized, warm interactions (e.g., reminding customers about special offers).
The Power of "Warmth" as an Unpredictable Factor
"Warmth" is a non-quantifiable element that AI cannot capture through data standardization. It represents the personal connections and emotional support that make a business stand out. Over time, this "warmth" becomes an invisible network outside the traditional closed-loop structures, giving merchants more independence (from being mere tenants to becoming semi-sustainable operators).
Avoid Blind Optimism
While the strategy is promising, it's not without risks:
1. WeChat's Future Uncertainty: Changes in WeChat's policies (e.g., introducing traffic fees for mini-programs) could affect its attractiveness.
2. Difficulty in Standardizing Warmth: While policies can specify gestures like offering free groceries, they cannot quantify the value of a smile from employees.
3. Organizational Change Challenges: Implementing these changes is more complex than adopting new technologies.
Conclusion
The author notes that no perfect example of success has been found yet, but this approach is based on thirty years of experience. His ultimate goal is for someone to say in five years, "He was wrong"—when platforms lower rents or AI returns control to merchants, they will no longer need to rely on these external factors to survive. This would be the ideal outcome for experienced retail professionals.
This article offers practical advice rather than empty motivational rhetoric. Small and medium-sized merchants should not try to confront platforms directly but instead seek opportunities within the existing system, using both "warmth" and efficiency to build their businesses. For store owners, the key is to focus on converting offline customers to WeChat and using AI to understand customer preferences, as these approaches may be more effective than traditional advertising strategies.