Chapter 3: Supply Capacity—the driving force behind growth
I guess many people don’t understand it.
What is the relationship between growth and supply capacity?
The relationship is too big. Many times, when we want to grow, we have to improve our supply capacity first. Otherwise, even if you can attract a large number of users, you will not be able to convert them in the end.
The most typical example is e-commerce.
Some e-commerce companies sell their own brands and have their own foundries, so their production and supply capabilities are not unlimited. The order quantity cannot exceed its own supply capacity in any case. Because it exceeds its supply capacity, it cannot support it.
I once participated in the product of a car rental platform. In the early days, it achieved an increase in order volume by connecting with large domestic travel platforms. However, due to the limited number of vehicles, even if a lot of traffic was diverted, it could not be converted in the end. Later, in addition to increasing the number of vehicles, we also made some algorithms to increase the supply of "rental cars" while keeping the number of vehicles unchanged. This will increase order volume.
There are also self-media people.
What is the key to self-media? It is the ability to supply content, especially high-quality content.
Why was it that in the past when we were working in self-media, just posting something would attract a lot of attention, but now, we need to spend a lot of time and money on content production?
Because now, many platforms and many subdivisions are in a situation where supply exceeds demand. Only when the quality of content is good enough can we stand out and eventually attract the most attention in this field.
Therefore, the ability to supply content has become the key to the success of a self-media.
Supply capacity is the driving force behind growth.
If you make an APP, everyone knows that making an Internet product requires constant iteration, even very frequent iteration.
Why iterate?
People who have never done the Internet cannot understand it. Even those who are outsourced cannot understand it.
Iteration means constantly adjusting, optimizing and matching the details of user needs based on feedback from users on product use.
In fact, it is difficult for a team with poor R&D capabilities to support long-term and rapid iteration of an Internet product.
Internet products that cannot be iterated quickly are likely to be surpassed by a bunch of competitors in a short period of time, and users will also be snatched away by competitors.
Growth is out of the question.
This is also the supply capability of an Internet team.
The growth of supply capacity is often directly proportional to the growth of users and profits. This is especially evident in multi-sided market products.
For unilateral market products, the supply capacity is actually the supply capacity of the team for this product.
For multi-sided market products, the supply capacity is actually one of the "sides" or "multi-sides".
For example, for an e-commerce platform, the growth of supply capacity is actually the growth of B-side, that is, the growth of merchant users. Network effect, the growth of B users will inevitably lead to the growth of C users.
Many effective growth methods, even strategic-level growth strategies, actually improve supply capabilities.
Takeout, taxi-hailing and other highly profitable businesses that have emerged in recent years, their growth strategies are actually mainly to improve supply capabilities.
As for their C users, of course, whoever has the strongest supply capacity will use it. Whoever has more takeaways, whoever has more cars, whose takeout service is better, or whose taxi service is better, then use that one.
Therefore, all methods and tools that can improve supply capabilities are worth trying.
Everyone knows that AI is important, but many people don’t actually understand why AI is important.
The most important thing about AI is the improvement of production and supply capabilities.
In the past, things that required a team to do can now be done with a computer equipped with AI tools.
Even things that were impossible to do in the past can now be done at a very low cost using AI.
In this way, various industries will experience improvements in production and supply capabilities once or even again and again. Whoever can better utilize and grasp this opportunity will gain huge growth capabilities.