Infrastructure refers to basic construction, generally meaning the engineering facilities that support social production and provide public services for people's lives, serving as the foundation for a society's survival. Common examples include highways, railways, airports, communications, water, electricity, and gas. Today, we extend the concept of "infrastructure" to the FMCG industry, referring to the entire chain from factory to consumer—production, warehousing, logistics, distribution, retail, and communication—all aimed at delivering products to consumers better, faster, and in greater quantities. The importance of this is self-evident.

Over the past 40 years, China has developed rapidly, but many commercial infrastructures were incomplete, forcing many large enterprises to build their own supporting facilities through self-operation or self-construction. For example, an entrepreneur in the past who wanted to sell a product nationwide would first face the challenge of recruiting distributors. Before selling to consumers, they had to convince distributors, then small shops, and finally consumers, completing the closed loop from production to consumption.

Today, however, with the emergence of new infrastructure, it may not be necessary to own a factory, find distributors, or even be present in small shops. With just a decent product, one can sell to consumers nationwide through online e-commerce in a very short time. Online e-commerce is one form of new infrastructure.

We can clearly see that today's infrastructure is far richer and more complete than in the past. Short videos, live streaming, community group buying, community e-commerce, content e-commerce, social e-commerce, and home-delivery e-commerce—these fragmented infrastructures present not only opportunities but also challenges for enterprises. Choosing which form to adopt, how much resources to invest, and how to configure the organization—these sudden new infrastructures leave every role in the FMCG industry at a loss, hesitant and indecisive.

Who are these roles?

1. Traditional manufacturers: Reformers under new infrastructure 2. Peripheral enterprises: Providers under new infrastructure 3. Innovative brands: New entrants under new infrastructure

-01- Traditional manufacturers: Reformers under new infrastructure

In 2020, had the pandemic not occurred, every FMCG enterprise would have followed the plans designed the previous year, step by step. But undoubtedly, the sudden outbreak made every enterprise realize the "blind spots" in their business operations.

What is the core focus of new infrastructure? Undoubtedly, digitalization. Although this has been a common topic in recent years, discussed more or less in corporate meetings, it was either to be promoted this year, next year, or gradually introduced in certain projects. The timing, importance, and methods were merely different priorities in the enterprise's operations.

Digitalization is inevitable; it's just a matter of time. But due to the pandemic, the blind-man-feeling-the-elephant style of management made operators realize that in 2020, digital new infrastructure must be the top priority. After 30 years of rapid development in China's FMCG industry, the traditional distribution model based on a human-wave strategy can no longer adapt to today's complex and ever-changing retail environment, nor to manufacturers' pursuit of distribution efficiency.

In fact, digital new infrastructure is essentially a digital reconstruction and new construction of the brand's traditional R&D, production, communication, distribution, and retail models from the ground up. In communications with enterprises, New Distribution has found that many companies are now establishing digital strategy departments on the basis of their ERTM or new retail departments. It's worth noting that in the past, digitalization topics were solely driven by the technical department led by the CIO.

The difference here is one is using technology to improve business or management efficiency, while the other is using digitalization to reconstruct the business model. Such a shift clearly shows the urgency FMCG enterprises feel about digitalization.

In concrete examples, we see many foreign companies are trying this. For instance, Mars Wrigley is promoting the third-party logistics of distributors, Coca-Cola launched Coke GO to promote online ordering, and PepsiCo Foods is promoting the B2B transformation of distributors. These examples are all prototypes of digital transformation based on the enterprises' actual business needs.

Behind these examples, we find that this is a move against existing interests. Although it's only a prototype of digitalization, the actual reform process faces enormous resistance. Internal and external pressures are far beyond imagination.

Renovating the old city into a new one—reformers under new infrastructure. For traditional manufacturers, reform inevitably involves bloodshed. This is a huge test for them.

-02- Peripheral enterprises: Providers under new infrastructure

Who are the service providers here? Distributors, system providers, retailers, and platform providers. These service providers are also constantly evolving under the new infrastructure.

Distributors have been involved throughout the 30 years of rapid growth in the FMCG industry. Although their position is unshakable, as independent business entities, they also need to transform and upgrade in this round of new infrastructure. Digitalized distributors are the inevitable direction.

Of course, in the distribution field, the "FMCG B2B platform providers" that emerged in 2015 have now reached a turning point. Although these FMCG B2B platforms are inherently "digital," they also face many difficulties in actual operations.

System providers: Today, SFA, ERP, WMS, OMS, and TMS technologies are maturing and becoming widespread. But in the context of digital new infrastructure led by FMCG manufacturers, system providers must always be attuned to needs, ensuring that underlying tools match the actual business scenarios of manufacturers. Or, from a cutting-edge technology perspective, they should help manufacturers solve real business pain points with efficiency as the core. Whether matching business scenarios or leading manufacturers to solve problems, there must be sufficient communication and exchange.

Retailers: Retail has undergone tremendous changes. In the past, the mainstream was KA hypermarkets, CVS convenience stores, and mom-and-pop shops—essentially three types. But today, with community group buying, home-delivery e-commerce, social e-commerce, and live-stream selling, new species under the new retail era are multiplying. Traditional retailers, whether through self-transformation and upgrading, actively going online, or extending online business, or new retailers aggressively entering the market with traffic-thinking to harvest the market, are all complex, changing daily and monthly.

How should FMCG enterprises respond to such a retail environment? Some are dividends—how to seize them first and position early; some are forbidden zones—how to effectively avoid pitfalls; some are trends—how to make strategic investments.

Of course, besides these mainstream roles, there are more new roles, such as live-streaming and short-video platforms. They are both providers under new infrastructure and service providers for FMCG manufacturers to complete digital new infrastructure. They all need mutual communication and exchange.

-03- Innovative brands: New entrants under new infrastructure

In recent years, innovative consumer brands have emerged continuously. Many manufacturers believe that information redundancy and fragmented transaction scenarios bring too much uncertainty to enterprises, but from another perspective, this also brings a wealth of opportunities for innovators.

In mature business fields, it's hard for small or innovative brands to emerge, but today we see so many innovative brands in China. The core reason behind this is the emergence of the aforementioned new infrastructures, which greatly lowers the difficulty for entrepreneurs! Many innovative consumer brands, leveraging new infrastructure, have quickly become excellent brands in their fields. Moreover, with their inherent digital genes, we believe these startups will grow into large-scale FMCG enterprises in a much shorter time cycle.

Of course, there are problems and difficulties. Similarly, during the growth of innovative consumer brands, brand accumulation, offline entry, and organizational matching are also challenges for them to enter the next development stage.

Traditional manufacturers have spent decades on brand building and channel construction, which cannot be easily broken. As new entrants, innovative consumer brands should also adopt a humble attitude and learn from traditional manufacturers. Since traditional manufacturers have been able to span time cycles and build lasting businesses, there must be a reason.

Taking the essence and discarding the dross is the mindset and cognition that both innovative brands and traditional manufacturers should have.

Finally:

Every role has its own value. In the torrent of the times, each role is interdependent and mutually integrated into a community of shared interests. No one can be separated from another, and everyone needs to understand the other.

The theme of the 2020 (3rd) China FMCG Conference is "Digital New Infrastructure." Digitalization is the handle, and new infrastructure is the background. Today, new infrastructures are increasing, and the value each role provides is becoming richer, while uncertainty is growing stronger.

How should traditional manufacturers renovate the old city into a new one and reconstruct their businesses? How should peripheral enterprises—distributors, system providers, retailers—serve enterprises and consumers? For innovative consumer brands that have completed 0 to 1, what is the next step, and how can they fully utilize new infrastructure to reach the next level?

New Distribution hopes that through industry exchanges, we can promote mutual understanding and cognition, and that every role and every position can find the direction for their own development and growth in the future!

From August 24 to 26, 2020, the 2020 (3rd) China FMCG Conference, hosted by New Distribution, will be grandly opened in Shanghai! Nearly 200 heavyweight sharing guests, 3,000 FMCG industry practitioners, and 16 major topics. This conference will focus on the theme of "Digital New Infrastructure," exploring the opportunities and inspirations that digital new infrastructure brings to the industry.

Tips will be paid 400-2000 yuan once adopted.