Lao Wang, a brand owner, wanted to introduce one of his products into a convenience store chain for sale. The cooperation was agreed upon, the product was listed, and a trial sales period began. As a result, the trial sales failed, the product was delisted, and the cooperation was terminated. Lao Wang was frustrated: What exactly went wrong? To understand the failure in cooperating with convenience store channels, we need to grasp the essence of the matter. Lao Wang actually made a mistake that many brand owners make: lacking understanding of channel characteristics, cooperation methods, and some issues that are not necessarily discussed openly. Know yourself and know your enemy, and you will step on fewer pitfalls. Before discussing "stepping on fewer pitfalls," we must first understand one thing: It is not that the channel deliberately sets up cooperation barriers, nor does it specifically dig pits for brand owners to fall into. Even the best cooperation channels and the most perfect cooperation mechanisms cannot avoid situations where you "step on a pit or miss a step." The cost paid for this is indeed high, just like Lao Wang: after introducing a new product into the convenience store system, he paid every fee required, but the goods he wanted to sell did not sell much, and in the end, he had to clear the inventory. There are countless cooperation cases where people go in with full confidence and return with full disappointment, ending in failure. Lao Wang thought: I just want to cooperate with the convenience store system to sell goods. Is it really that difficult? Yes, Lao Wang, cooperating with the convenience store system to sell goods is indeed quite difficult. A popular saying in the financial field is: Money earned by luck will be lost by ability. Here, "ability" refers to the lesson that must be learned on how to cooperate with the convenience store system. This article will analyze the cooperation between brand owners and convenience stores from the following aspects: fees, trial sales, distribution, organization, management, execution, and data. It will help brand owners gain a deeper understanding of the channel's cooperation characteristics, current cooperation problems, and how to embrace the convenience store channel more happily. Let me give you a preventive shot: When reading this article, keep an open mind and broaden your perspective. Because the intention of writing this article is not to expose shortcomings, but to use the perspective of a third-party observer and neutral party, who has worked in the convenience store industry and B2B industry for 17 years, to reveal the essence of problems between convenience store systems and brand owners, and to work with professionals to promote the FMCG industry towards a more benign direction. Fee Aspect: The "Channel Fees" That Make Convenience Stores "Cripple Themselves" Various Channel Fees and Returning to the Essence of Business Why is it said that "channel fees" make convenience stores "cripple themselves"? To discuss convenience store channel fees, we need to review the development of the retail industry to understand their origin and the current embarrassment. In 1995, Carrefour opened its first hypermarket in China, marking the beginning of the aggressive expansion of Chinese hypermarkets. In less than 10 years, hypermarkets became the first major retail format in China, but after only 25 years, we can see from the cases of hypermarkets declining, transforming, and being criticized that this format has begun a comprehensive decline in China. Carrefour's retreat from China is a typical case. Its decline is due not only to the pressure from China's rapid technological innovation and intense commercial competition, but also to another key factor: various "channel fees" that made the entire system old and sluggish. The once-proud "retail enlightener" and "retail黄埔军校" suddenly didn't know how to fight in commercial battles. As hypermarkets declined, convenience stores became the new hot retail format on the track, maintaining rapid development. Due to their fast growth and economies of scale, they also became the main retail format to inherit the "channel fees" from hypermarkets. Generally, the "channel fees" of convenience store systems consist of barcode fees, deposits, logistics fees, marketing fees, sales rebates, etc. These fees are tempting, but some money, once received, is like a chronic poison: addictive at first, but gradually eroding the system's innovation and vitality. This is comparable to: if you can earn money lying down by relying on your scale benefits, would you still want to optimize your operations and management? There is a saying: "It is easy to go from frugality to extravagance, but difficult to go from extravagance to frugality." When making money becomes easy, the motivation to improve weakens. Some convenience store channels, enjoying the dividends of a large system, have also begun to undergo internal mindset changes. Rent-seeking and corruption gradually emerge with such changes. Some may be individual acts, and some may even lead to collective commercial corruption. Of course, some systems also impose "restraints" on this situation, such as setting up internal "anti-corruption agencies," but corruption still occurs from time to time. Under various deformed product introduction behaviors, the real needs of consumers are pushed to the background, becoming "unqualified" to be put on the table. Instead, brands are judged by their natural market advantages (brands that can be counted on one hand), the amount of fees they can provide, the quality of relationships, or even personal subjective assumptions. The mindset of a "landlord" replaces the idea of refined operations, allowing many products that may not have much value to consumers to enter the system. In addition, product introduction teams that have been "boiled like frogs in warm water" are gradually losing their sensitivity to products. Because they do not prioritize consumer needs, they often miss out on standout products in the market. Even if they don't miss them, the timing of introduction is often many beats behind market reactions. On the brand side, high fees and distorted entry mechanisms can also lead to low-quality products entering stores to make up the numbers. Ultimately, consumers suffer. Besides the fact that "the wool comes from the sheep's back," it also brings a decline in consumer experience, and eventually, consumers can only vote with their feet. However, there are also some pioneering peers in the market trying to break the curse of "channel fees." On August 24, Zhang Sheng, Vice President of Lawson (China) Investment Co., Ltd., stated that "Lawson in Jiangsu, Zhejiang, and Shanghai will change its new product introduction model." The premise for Lawson in these regions to not charge entry fees or account opening fees is to implement new products, new categories, new technologies, and new services. These "four news" mean that product strength and service strength will become the new profit model. A few years ago, He Yi, CEO of Hema, announced at a supplier conference that they would not charge any fees, and they have persisted to this day. As a result, Hema has become the enterprise with the highest success rate in product iteration innovation and private brand development in China's retail industry. The existence of various "channel fees" has its unique historical and practical reasons. Breaking this is like scraping the poison from the bone. Without a solid foundation for new product introduction standards and distribution effectiveness, it is not easy to shake it easily. But the industry leaders' loud calls seem to indicate that the long-standing "channel fees" have many drawbacks and may have reached the time to return to the essence of business. What is the essence of business? It is products. For consumers, the products in a convenience store should achieve: Always satisfied, often attracted, occasionally surprised. Products that always satisfy are relatively easy to achieve, because hard currency, in the era of "CCTV loudspeakers + heavy investment," has firmly occupied strong user mindsets, making them difficult to shake. They have a deep mass base and market guarantee, and are the foundation of product operations. If these products are out of stock, it is equivalent to a crime. But products that are often attracted and occasionally surprised seem difficult to achieve. Because these two types of products, in an era of extremely abundant social media, are hard to win user favor with rigid big advertisements like "CCTV loudspeakers + heavy investment." Instead, the product development and marketing logic must cater to the needs of the most influential and communicative mainstream consumer groups of the era, who pursue "consumption for persona, consumption for emotion, consumption for social interaction." This undoubtedly poses severe challenges for many brands in product development and marketing. But is this the opportunity to develop new consumer products that are "often attracted and occasionally surprised"? Let's look at the changes in Chinese users: Aging, fewer children, childlessness, marriage resistance, and the single economy have become serious social issues; consumption personalization, segmentation, pursuit of high aesthetics, emotional interaction, and same-context communication have also become the main content and direction of consumption for Generation Z. These groups are precisely the best consumer base for convenience stores, but we see that many convenience stores have blank research in this area, or even do not pay enough attention. Therefore, various new retail formats, such as Hema, Miniso, KKV, and The Colorist, have gradually risen, with high visibility on platforms like Xiaohongshu and Weibo. They have seized the characteristics of Generation Z consumers and boarded the train in time. This is the best case of "breaking from within rather than waiting for external forces to break you." This is not a metaphor. The demographic structure changes extremely slowly, so slowly that people hardly feel the impact of population on consumption. But the time gap of slow population change is precisely the opportunity for brand owners to develop products and also the breakthrough point for brand owners to break the cooperation with convenience store systems. The various "channel fees" have caused collective numbness within convenience store systems, rigid product introduction, deviation from user needs, and departure from the essence of business. In fact, convenience stores really need to "revolutionize themselves first." Otherwise, how can they help brand owners realize that developing products that users need is the only truth for entering the system? Do we need to repeatedly use the cost of trial and error to explain this phenomenon of repeated waste of social resources? Trial Sales Aspect: Without Some Capital, You Really Dare Not Enter the Convenience Store System If calculated at 50 yuan per item for a beverage SKU, distributing one barcode to 1,000 stores would cost 50,000 yuan. Moreover, after the product enters the convenience store system, there will be a trial sales period of 2-3 months. If the trial sales do not meet the sales target, the entry fee will not be refunded, and the brand owner must take back all unsold inventory. Trial sales are a laboratory. For some leading brand owners, the funds for product development and marketing are relatively sufficient. But most mid-to-low-tier brand owners may not have such product trial-and-error capability. Therefore, when considering cooperation with convenience stores, brand owners must consider not only their capital adequacy but also the possibility of trial sales failure. Looking backward from the entire cooperation process, the most challenging aspect is still the brand owner's product development capability—whether the cooperative product itself meets the consumption characteristics and needs of convenience store users. Distribution Aspect: Determine Whether It Is Necessary to Enter All Stores from Point to Area When distributing products, it is recommended that brand owners do not go all out unless you have great confidence in the product or the product itself has a strong market foundation. Most convenience store systems divide regions based on their store distribution areas, and products can also be listed by region. It is recommended that brand owners operate according to the following two points: First, enter points first. That is, first enter a small number of stores or regional stores to test the product's effect. Second, then expand to areas. If the effect is good, then promote to more regions and stores. By gradually advancing from point to area, you can not only judge the fit between the product and the market but also understand the true capability of the convenience store channel. Product distribution is like falling in love: you need to be bold to try, but also stop losses in time. Organization Aspect: Pay Attention to the Internal Power Distribution and Information Flow of the Convenience Store System Generally, the organizational structure of a convenience store system is divided into functional departments and business departments. Business departments generally include purchasing, franchising, and operations. If the convenience store is large, it may also add a marketing department specifically to operate consumers. In the era of consumer equality, under the shift from "operating products" to "operating users," many convenience store brands have historically relied heavily on franchising, operations, and purchasing (the profit makers), but in recent years, they have gradually begun to focus on the C-end. Therefore, the marketing department in convenience store systems is gradually gaining some say. However, the most problematic area is the dispute over responsibilities and authority among the purchasing, operations, and marketing departments. Because these business departments have their own KPIs, if these KPIs are not aligned, it is easy to have departmental competition, information misalignment, or even business chain breaks. In most convenience store systems, the purchasing department has the greatest responsibility and authority. What products to introduce is decided by purchasing, and purchasing even bears the sales target, making it one of the core business departments. But when products or activities are implemented, brand owners can experience that even if they have negotiated a marketing activity with the purchasing department, it is difficult to coordinate and push forward when purchasing connects with the TO B (to stores) operations department and the TO C (to consumers) marketing department. Why? It is still the distribution of authority and the uniformity of KPIs that cause trouble. Regarding problems in organizational management, brand owners generally find it hard to imagine the disruptive power of these problems. So I suggest: When brand owners are negotiating marketing cooperation with a convenience store system, if possible, also learn about the internal organizational structure and business communication logic of the system. Understand clearly which department leads and which assists in promoting marketing activities, and to what extent. "Have grain in hand, but know the situation in mind." Management Aspect: Frontline Supervisors' Action Guide Is Mainly Based on Assessment Not only do business departments constrain each other due to KPI and organizational management issues, but frontline supervisors also reflect many management-based problems. Frontline supervisors undertake projects and work tasks assigned by headquarters and large regions, playing a connecting role between the system and stores. They are a very important communication bridge. But when they have too many tasks and KPIs, even the most capable supervisor will make choices: which business to protect? Which to abandon? And this choice is always guided by assessment. What is assessed is done; what is not assessed is not done. Here comes the problem. Take the promotional activities that brand owners invest in convenience stores every half month (different convenience store brands may have different schedules). With so many brand owners investing resources to participate in each promotion, supervisors cannot check and implement every brand's activity. A supervisor manages about 30 stores, and some with dense routes may reach 40, 50, or even 60. Imagine that just the promotional schedule is enough to test the supervisor's time and energy, let alone other tasks like normal shipment follow-up, various themed marketing activities, various convenience services, membership operations, etc. So I suggest: When brand owners carry out marketing activities with convenience store systems, they must communicate clearly with the responsible department whether these activities are included in the supervisor's assessment items. If they are not assessed at all, then the brand owner should think carefully about whether to invest in the activity and what the effect will be after investment. But from another perspective: if you accept a certain state, you must also accept the predictable results. Execution Aspect: Talk Openly About Money with Stores Whether it is product introduction or marketing activities, assessment can make supervisors move, but how to make stores move is a headache for brand owners. There are generally two forms of product introduction to stores: First: Store self-ordering. Second: Headquarters forced distribution. Stores must accept what they order themselves. But the result of headquarters forced distribution is that many stores do not agree or accept it. They either refuse to accept, complain, or even throw the forced goods into the warehouse without even unpacking. When the goods can be returned, they return them to logistics untouched. The word "distribution" itself makes it difficult for stores to get over the psychological barrier, because they think it is not something they decided themselves but forced on them. If it sells, fine; if it doesn't sell, they can't return it after unpacking, and in the end, they feel they have lost out, so they choose to handle it passively by not unpacking or selling. Regarding this issue, I think we should return to the following two points: First, when goods are forced to be distributed to stores, have the stores fully understood the sales opportunities this product can bring? Whether from the perceptual level of market research results or the rational level of data analysis, stores must be given more comprehensive information to enhance their sales confidence. Second, use more proactive and flexible methods to let stores accept and understand why the distribution action is taken and why new products are regularly added. Proactive means that in the early stage of new store training, the first impression of the underlying logic of distribution should be implanted in stores. First impressions are strongest, which can better reduce the communication costs caused by information asymmetry later. Flexible refers to the communication method. Although a franchise contract requires performance, store management is not only a technique but also an art. Once communication is poor, confrontation arises, and much confrontation is actually the result of information asymmetry. Next, let's talk about the promotional and marketing activities that brand owners invest in convenience store systems. These activities are a double-edged sword: stores with better awareness can understand the role of regular and irregular activities in attracting traffic and consolidating customer groups. But for most stores, common mindsets include: If products with guaranteed regular sales are promoted, stores think, "I can sell them anyway, and you're promoting them, which loses my due profit. Even if the system adjusts the price uniformly, I'll handle it passively, not post materials, and reduce user awareness." If new or less popular products are promoted, stores think, "Even with promotions, no one will buy these products. They're not attractive," and they ignore posting materials to inform users of the activity. If promotional activities are a dish, it is indeed not easy to cater to all stores' tastes. Regarding the implementation of promotional activities, I have a few suggestions: First, the primary reason most stores do not execute promotional activities well is that the money issue is not settled. When talking about money, it should be open and honest, letting stores lower their defenses and know the score: Can the full price difference be compensated based on the market unified retail price? Are there display rewards? Are there sales rewards? If it's about money, and in the end, the activity is launched, resources are invested, materials are distributed, and you go all out, but the stores don't cooperate, it is actually not worth the loss. Second, the standard for product display should be simple. For boxed items, it is best to design them so that stores can complete the display with a tear and a pull, without requiring secondary display processing or installation by the store. Store verbal promotion is also a difficult point to break through, but so far there is no better solution. Some convenience store systems have tried to use intelligent verbal promotion to solve the problem of staff being unwilling or forgetting to verbally promote, but so far, the implementation has not been very good. Fortunately, some convenience store systems now push other activity reminders or electronic coupons after mobile payment, but from the current situation, the overall redemption rate is not high because most coupon push scenarios are wrong. For example, if I just want to buy a bottle of water to quench my thirst, my need is clear. At this time, pushing other coupons cannot solve the thirst problem. The design of this marketing scenario is a failure, and naturally, no redemption will occur. Also, if I buy toothpaste, what's the point of pushing a sanitary napkin coupon? What if I'm a man? The underlying issue is whether big data can achieve personalized identification and precision marketing, but most convenience store systems are still far from true big data and personalization. Third, the promotional materials given to stores should not be too complicated. Along with the materials, it is best to include a standard posting diagram. I have often seen many materials where stores either don't know how to post them or don't know where to post them. Overall, in any activity, the operation of people (promotion), goods (display), and place (materials) should not test the store's own thinking ability too much. Why do I say not to test the store's thinking ability too much? First, most convenience store franchise owners do not have particularly high overall quality. They rely heavily on the system, but they also bring many unique personal operating practices. Their motivation to make money is indeed strong, but because of uneven abilities and qualities, coupled with the fact that many systems find it difficult to provide comprehensive training on awareness, mindset, and ability to franchisees, it is an indisputable fact that franchise stores are generally considered to have strong desire to make money but relatively weak operating capabilities. Second, the daily work of stores is already quite trivial: cleaning, shelving products, cashiering, restocking, and recruiting is difficult... These are all odds and ends. Without some work organization, it is hard to manage all store work clearly and systematically. Therefore, when designing any business workflow that goes to stores, if it requires stores to make secondary judgments and reorganizations, it adds a layer of risk for activity failure. I have felt this deeply. So, if the activity design does not consider making store operations simple enough and nanny-like from the beginning, it will inevitably be the biggest obstacle to store execution. Data Aspect: Data Islands and Lack of Feedback After the product is listed and marketing activities are done, for brand owners, the next step is to enter the review stage. In the review process, data is a very important basis for judgment. But many convenience store systems find it difficult to meet brand owners' data demands, mainly in the following levels: 1. Some convenience store systems have no data analysis and mining capabilities at all, and may not even have relevant personnel. 2. Some convenience store systems have some basic data personnel, but they are limited to basic data analysis and cannot further mine the problems presented by the data. 3. Some convenience store systems have strong data and analysis mining capabilities, but they have not formed a mechanism and system platform for sharing data with brand owners. 4. Some convenience store systems already have a data sharing system platform, but they can only check their own brand's sales data in the system, and have no idea how their brand compares with similar products in the system. Therefore, there is no way to improve the cooperation with this system. If you cannot improve the relationship with one system, you cannot improve with a second system... and so on, the brand's product sales remain stagnant. Each convenience store system's data is a data island, and brand owners cannot obtain data from all islands. Moreover, each channel has its own characteristics, and even barcodes may be internal codes. So, you have your island, I have my island, and there are no boats between islands. Different brand owners' strengths also determine the level of treatment in data access. For example, for more influential brand owners, the channel is more proactive in communication, and there are special business communication seminars with specific data analysis and improvement strategies for the brand. But for weaker brand owners, it is not even guaranteed whether data will be provided. It is recommended that brand owners maintain closer communication with convenience store systems in obtaining data. Sometimes, if you don't chase, you get nothing; if you chase harder, you may get unexpected gains. Active Evolution to Respond to Natural Selection After years of rapid development, convenience stores have become relatively mature, but to some extent, they have also begun to enter a state of involution. What is involution? It means the industry has no more innovation. Fortunately, a few leaders have seen through this, understood it, and begun to respond to the market, breaking the practices that age the system. Rather than waiting for others to revolutionize you, it is better to proactively revolutionize yourself. The cost of stepping on pitfalls in cooperation is high. How can we cross the chasm between channels and brand owners? I believe everything should return to the essence of business, listen to consumers' voices, optimize organizational management, break information asymmetry, and enable channels and brands to build mutual trust, cross this long-standing chasm, and achieve a win-win-win situation: channel wins, brand wins, and consumers win. Liu Run mentioned in his 2021 speech "The Power of Evolution": Is an enterprise sick or old? If sick, it can be cured, such as organizational structure problems; if old, with very rigid thinking, the enterprise will eventually decline. If an enterprise cannot use massive competition to respond to complex natural selection, then it cannot stand out in competition, nor can it become the great species that is chosen to survive—Darwin's finch. I wish all brand owners and convenience store brands can actively evolve, respond to natural selection, and become Darwin's finches in their respective fields. Are you "watching" me?