---
title: "Abandon Illusions of Online Sales, APP Sales, Direct Sales, and Group Buying; Pre-Investment Remains the Key to Victory"
description: "This article argues that pre-investment in consumer cultivation and market pull is essential for success in the FMCG industry, despite the allure of e-commerce and direct sales. It warns against over-reliance on online channels without prior brand building, using examples from the liquor industry to illustrate the consequences of neglecting pre-investment."
author: "增祥文"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-11-21"
language: "en"
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# Abandon Illusions of Online Sales, APP Sales, Direct Sales, and Group Buying; Pre-Investment Remains the Key to Victory

> This article argues that pre-investment in consumer cultivation and market pull is essential for success in the FMCG industry, despite the allure of e-commerce and direct sales. It warns against over-reliance on online channels without prior brand building, using examples from the liquor industry to illustrate the consequences of neglecting pre-investment.

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*Elementary school math problem: three inlet pipes, two outlet pipes, when will it overflow? Consumers' willingness to buy is the outlet; consumers' ability to buy is the inlet. Too many and too fast inlets have already caused flooding. Please, e-commerce, chain stores, retailers, and platform companies, slow down and let consumers catch up.*

Abandon the illusions of online sales, APP sales, direct sales, and group buying; pre-investment remains the key to victory.

**I. Can consumers' direct orders support online investment?**
1. Consumers typically purchase brands they have had good experiences with, such as mature brands like Wuliangye.
2. Or, specific recommendations from acquaintances. "Specific" refers to the acquaintance's technical prestige and personal trustworthiness.
3. Or, sales from trustworthy retailers.
4. However, online and mobile channels require stronger sales stimuli.
   For example, products with an established price benchmark may be priced lower online;
   Or, products without a price benchmark but whose packaging "indicates" a price significantly lower than the selling price.
5. Emergency purchases and impulse orders have no loyalty, and even no brand memory.

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With so many additional conditions, only occasional purchases occur.
Add to that the rising costs of online promotion.
The profitability for suppliers and e-commerce can be imagined.
The key issue is that manufacturers either don't know or pretend not to know about "pre-investment";
And e-commerce either doesn't know or pretends not to know that "I possess the special ability to operate without manufacturers' pre-investment."

**II. What is "pre-investment"?**
First, there is a distributor (e-commerce) payment; after the distributor (e-commerce) pays, you invest in the market according to the proportion of the distributor's (e-commerce) payment. This is not "pre-investment."
Regardless of whether there is a distributor (e-commerce) payment, the brand operator first has an investment plan for consumer cultivation and market pull, and then determines the "channel mix" based on consumers. This is "pre-investment and market control."
The vast majority of Guizhou baijiu and imported wines are "without pre-investment."
Among companies without pre-investment, those with existing consumers, like Moutai, Wuliangye, Château白马 (Château白马), and Château Mouton, naturally live well and happily;
But the vast majority of companies "without pre-investment" are losing money. Moreover, it can be said that they have no possibility of significant development.
The vast majority of baijiu from Jiangsu, Shandong, Henan, Anhui, and Hubei, including Sichuan's Langjiu, and a few imported wines like Castel, are "with pre-investment."
Companies with pre-investment, although not guaranteed to be profitable, at least have the possibility of rapid development.

**III. The essence of pre-investment**
In daily life, everyone can perceive the significance of many "pre-investments":
For example, when job hunting, an important person first helps you communicate with the employer and recommends you, then you go;
For example, when dating, you buy luxury brands and learn high-end social etiquette; (The value of luxury goods lies in their ability to make the other party treat you better and see you as better than you actually are.)
Borrowing money in a BMW versus on a bicycle naturally yields different success rates.
In summary:
1. Pre-investment helps you gain trust;
2. Proper planning of pre-investment (positioning of transaction targets, expression of competitive benefits, planning of transaction methods, etc.) ensures your success;
3. Pre-investment only guarantees temporary success; it cannot replace long-term brand reputation maintenance.
4. If you have sufficient brand equity, you may not need pre-investment. For example, if you are Li Ka-shing's son, you certainly don't need a BMW to prove your "economic reliability." This is the same reason why Wuliangye, Lafite, and Château白马 succeed without pre-investment.

**IV. Opportunities in the liquor industry—three misconceptions and four results**
Three misconceptions:
1. Not acknowledging "pre-investment"
Valuing "merchant recruitment" but neglecting preparatory work before recruitment, such as product competitive advantages, recruitment tools, and the competitiveness of the business team (even hoping the business team can achieve success without resources, or work first and share profits after successful recruitment).
These bosses have several similar catchphrases, such as: "There are many liars among salespeople," and "Professional managers only know how to spend money."
2. Not acknowledging the technical content of "planning"
"Anyone can spend money," "If it requires spending money to achieve, why would I need you?"
3. Not recognizing the completeness of investment, giving up halfway
"There's no need to establish so many service departments early on; let's set up the business department first";
"You said investing 1 million could bring in 2 million in returns, but we've already spent 100,000, and not a penny has come back. Is the method wrong?"
These misconceptions lead to four results:
1. No one invests in consumer cultivation
An advertiser once said: "Advertising is expensive; not advertising is even more expensive."
Although he was advertising for himself, the principle is roughly correct:
Every penny saved on "consumer transaction costs" may result in a loss of ten cents in the channel: the cost that distributors give to terminals multiplies, and when passed back to the enterprise, the cost that the enterprise gives to distributors also multiplies.
Wuliangye's price can be inverted, while some new products face exorbitant demands from distributors, and e-commerce platforms impose harsh terms, and after listing, there are no clicks. This is the reason.
2. High terminal barriers
Entry fees, online search ranking fees, etc., arise because manufacturers neglect terminal pull, leading to competition in terminal bribery.
Without planning "terminal transaction costs," or with improper planning, the transaction costs at this juncture will become increasingly high.
3. Difficulty in merchant recruitment
Travel expenses for the recruitment team, business expenses, advertising fees in professional media, recruitment meetings, etc., are all wasted.
4. Difficulty in hiring
It seems there are no capable or good people in the business field.
People come and go like a revolving door, "Thousands of sails pass by, none are the one; the setting sun shines on the water, heartbroken at the white duckweed isle."
Such is the current state of the industry, and therein lies the opportunity.

**V. Winning with "pre"**
1. Acknowledge that "spending money" is a "profession with a high technical threshold"
Almost all unsuccessful bosses share a common flaw: they emphasize sales over marketing, emphasize payment collection over "investment" that "makes payment collection easier."
They are willing to hire a sales director at a high salary but do not believe that the planning director, who "specializes in spending money," is the engine of the enterprise.
2. Let professionals understand "target consumers" and cultivate the courage for "pre-investment"
Don't think "I am also a consumer."
Doctors find it hard to diagnose their own illnesses; barbers don't cut their own hair. Because everyone has biases and preferences.
Improving the professionalism of "pre-investment" also enhances the determination for "pre-investment."
3. Plan the enterprise's "pre-investment" based on "core competencies"
"Pre-investment" is not only an important element of the enterprise's core competencies but also a tool for enhancing them.
To a large extent, "pre-investment" aims at changing and improving the enterprise's core competencies.
Core competencies can be simply understood as the attractiveness of the products (sensory benefits, brand image, service benefits, price, etc.) that the enterprise offers to target consumers.
Based on target consumers, using pre-investment as a means to build corresponding core competencies, Shuijingfang used this to carve out a large share from Wuliangye and Moutai, and Castel used this to achieve performance in China surpassing the five major châteaux.
Winning with "pre" means planning in the tent and winning a thousand miles away; it means the outcome of the war is decided before the war begins.

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