Conventional Business is Becoming Increasingly Transparent, and Capital is Concentrating in the Hands of a Few

@风中的厂长：Have you noticed that over the past decade, the most obvious change in doing business is the platform economy plus big data? Conventional business is becoming increasingly transparent, and capital is concentrating in the hands of a few. The upcoming AI era will accelerate this trend. For us ordinary people, business has become an open book. I'm sharing everything openly with you, holding nothing back. The key point is what businesses you should no longer do. Next to my assistant Xiao Chen's house, a Freshippo NB opened. Soon, the surrounding fruit shops and small supermarkets all went bankrupt. Then, after a while, the small bosses didn't learn their lesson; new fruit shops opened again and quickly went bankrupt. It seems many people are still unclear about this, so I'll roughly outline which businesses you shouldn't do, which ones you can, and how to do them.

First of all, standardized products and mass-market goods are being crushed by giants and platforms. They rely on scale and supply chain cost advantages, plus selling at a loss to grab market share. Ordinary people absolutely must not touch these. For ordinary people to make money, the core is: avoid the red ocean, focus on niche markets, differentiate, choose products with yields limited by natural environment and geography, aim for high gross margins, target high-net-worth individuals, and keep it asset-light. Or simply invest in the leading companies in the industry you know best. Investing is also a business, and compared to starting a business, the probability of failure might be even lower.

Let me interject here: the best business is always a platform, the landlord of the new era. To put it nicely, it's building an ecosystem. A good ecosystem forms a virtuous cycle where most merchants make money, like the former Alibaba, WeChat, and overseas ecosystems like Apple and Google. Nvidia is actually also an ecosystem; regardless of whether it's a bubble or not, at least they harvest the leeks of the whole world together.

However, some of our current platforms have a very bad trend: most merchants are stuck in vicious competition just running along, while a very few make money. With reduced profits, they can only cut costs everywhere, making innovation more difficult. So I couldn't help but say a few words.

Back to the main topic, how to do open-book business in the new era?

1. Don't touch standardized, mass consumer goods
Sam's Club, Freshippo, Meituan, Pupu, and other new retail outlets are beating up traditional supermarkets and mom-and-pop shops! Platform self-operated businesses have slashed prices for food, general merchandise, and daily chemicals, leaving small vendors with no profit and no way out—absolutely do not do this.

However, you can differentiate based on mass products. For example, my "No Flower Mind Fresh Food" brand focuses on differentiated high-end ingredients, niche products with limited yields, and two main selling points: food safety, and convenience/peace of mind. Plus, the scale isn't large, so it's been doing okay. But my products are destined not to enter every household.

2. Clothing: Avoid mass-market women's wear, low-priced clothing, and clothes that only look good in photos. Focus on high quality, niche, and high gross margin!

The return rate for mass-market women's wear is over 50%. Over-beautified photos easily lead to the product not matching the picture. If it doesn't look beautiful, it won't sell; if it looks too beautiful, the return rate is high—what do you do?

I know a few people who do high-priced, high-quality women's wear with premium fabrics, good fits, and unexaggerated photos. Their return rate is very low. Plus, high-net-worth individuals value their time, so they usually can't be bothered to return things. Besides high-income groups, clothing for the middle-aged and elderly, and specific social circles also have high repurchase rates and low returns.

Another thing I've always felt regretful about is Uniqlo, which has a return rate of only 15%-20%. Which domestic brand can become a Uniqlo substitute (basic styles, good fits, high comfort)? There is actually a huge opportunity here.

3. Health foods (high premium, strong repurchase)

For example, low-sugar, additive-free baking, and healthy light meals. Target fitness and wellness crowds, and avoid the red ocean of mass-market foods.

4. High-end pet supplies and services (high gross margin, low competition)
Pets have become new children; there's nothing that can be done about it. The low-price track is also a mess of fierce competition. But if you don't pursue high volume, then smart pet equipment, high-end pet food, freeze-dried treats, pet funerals, and grooming can still be done with gross margins of 60%-80%. Users have a strong willingness to pay, and the return rate is extremely low.

6. Essential goods for the middle-aged and elderly. The elderly of the new era are a generation that enjoyed demographic dividends; they have money and open consumption concepts. Developing thoughtful, high-end elderly goods and services definitely has huge market potential. I wanted to find a high-quality caregiver for my dad, and it was very difficult. There are actually many things that can be done: anti-slip shower chairs, bedside handrails, anti-tremor tableware, senior-friendly smart bracelets. They can even be customized. Many people are willing to spend the money, preferring to buy expensive rather than cheap.

7. Niche sports equipment (emerging track, low competition). If you look at how varied the hobbies of the American middle class are, you'll know that with the great development of productivity in the future, personal hobbies will explode, and the prospects here are huge. I mentioned this before when talking about Amazon; you can search my previous Weibo posts. Moreover, this is global; you can do it domestically and abroad.

8. High-end custom accessories (high average order value, high gross margin)
Niche designer jewelry, handmade leather goods, high-end silk scarves and ties—these are not tracks favored by big capital, but the gross margins are very high. The average order value is in the thousands, with gross margins of 70%-90%, suitable for private domain traffic and social media lead generation. Doing this overseas also yields good profits without the vicious competition.

9. Niche boutique home goods. I mean high-quality, high-aesthetic items: original ceramics, mid-century furniture, scented candles, high-end fabric soft furnishings. Gross margins can also be 50%-80%. Avoid the mass-market styles of IKEA and MUJI, and focus on being "unique and stylish."

10. Niche enterprise services (B2B, high average order value, asset-light). Leaning towards customization: SME AI consulting, design outsourcing, filming and editing outsourcing, intellectual property agency. Especially in the AI era, it's suitable for small teams of young people who understand business processes and know how to play with AI. High order value, no need to stock inventory, making money through professionalism.

11. Cross-border niche essentials (information gap, high profit). Selling domestic low-price niche products (vintage jewelry, pet clothes, home gadgets) to Europe and America. Utilizing the aesthetic and price gap, gross margins are 50%-100%. Platforms: independent websites, Amazon, TikTok Shop.

12. High-end maternal and baby segments (high net worth, low returns). Many people with good economic conditions still like having children. You can do high-end children's down jackets, organic baby food, and parenting aids. A certain high-end children's down jacket brand has a gross margin of 60%.

13. Local high-end lifestyle services (high average order value, strong repurchase). Such as private chef customization, high-end housekeeping, high-end at-home beauty/fitness, at-home pet care. Order values easily reach a thousand; it's asset-light and relies on word-of-mouth for customer acquisition.

14. Health and wellness niche categories (essential, high premium). High-end tonics (bird's nest, sea cucumber, cordyceps), traditional wellness teas, herbal essential oils. For personal use and gifting, pay attention to packaging design to make it look prestigious. It can't be as tacky as before.

15. Actually, investing is also a business. We may not understand things outside our industry, but we do know about our own industry: which companies have strong capabilities, high barriers to entry, great potential, and strong employee belonging. You can invest in some leading companies in industries you are familiar with. Be a shareholder of an awesome company, and let the most awesome CEOs and teams work for you!