--- title: "After Deep Distribution Loses Control, Channel Digitalization Cannot Follow the Old Path!" description: "With the rapid rise of new retail formats such as snack discount stores, instant retail, and transformed supermarkets, there is a common feeling that the deep distribution model is losing control. What is out of control is not just the tactics themselves, but the underlying structure of 'brand-led, distributor-coordinated, terminal-passive execution.' Today, brands, distributors, and terminal stores are all undergoing new role changes. Where is channel digitalization heading, and how should it proceed?" author: "Jack" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2026-02-06" categories: "Distribution & Channels, Retail Formats" language: "en" canonical: "https://xinjignxiao.com/en/articles/after-deep-distribution-loses-control-channel-digitalization-cannot-foll-c2073c75/" markdown: "https://xinjignxiao.com/en/articles/after-deep-distribution-loses-control-channel-digitalization-cannot-foll-c2073c75.md" original_source: "https://mp.weixin.qq.com/s/FbNQQLYLdYjMU5pBEPlCGg" translation: "https://xinjignxiao.com/zh/articles/%E6%B7%B1%E5%BA%A6%E5%88%86%E9%94%80%E5%A4%B1%E6%8E%A7%E5%90%8E-%E6%B8%A0%E9%81%93%E6%95%B0%E5%AD%97%E5%8C%96%E4%B8%8D%E8%83%BD%E8%B5%B0%E8%80%81%E8%B7%AF%E4%BA%86-c2073c75.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/after-deep-distribution-loses-control-channel-digitalization-cannot-foll-c2073c75/" citation: "Jack. “After Deep Distribution Loses Control, Channel Digitalization Cannot Follow the Old Path!.” New Distribution, 2026-02-06. https://xinjignxiao.com/en/articles/after-deep-distribution-loses-control-channel-digitalization-cannot-foll-c2073c75/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # After Deep Distribution Loses Control, Channel Digitalization Cannot Follow the Old Path! > With the rapid rise of new retail formats such as snack discount stores, instant retail, and transformed supermarkets, there is a common feeling that the deep distribution model is losing control. What is out of control is not just the tactics themselves, but the underlying structure of 'brand-led, distributor-coordinated, terminal-passive execution.' Today, brands, distributors, and terminal stores are all undergoing new role changes. Where is channel digitalization heading, and how should it proceed? With the rapid rise of new retail formats such as snack discount stores, instant retail, and transformed supermarkets, there is a common feeling that the deep distribution model is losing control. What is out of control is not just the tactics themselves, but the underlying structure of 'brand-led, distributor-coordinated, terminal-passive execution.' Today, brands, distributors, and terminal stores are all undergoing new role changes. Where is channel digitalization heading, and how should it proceed? The 'Deep Distribution' Model Is Losing Control Combining recent market observations and previous analyses, we can see that the external conditions on which deep distribution relies are collapsing, and it is becoming increasingly difficult to adapt to new channels. 1. The rise of new channel formats is continuously compressing the market share of traditional channels. In the past two years, new formats represented by snack discount stores, instant retail, and 'Pang Gai' (transformed) supermarkets have been continuously eroding the share of traditional channels, with traditional retail terminals and distributors suffering the most severe impact. However, many FMCG brands, especially first-tier brands, rely on traditional channels for over 60% of their total sales. Since the sales operation model in traditional channels is primarily based on 'deep distribution,' the reduction in traditional channel market share is bound to deprive the 'deep distribution' model of its survival ground. 2. The 'deep distribution' model is difficult to adapt to new channel formats. New formats are typically retail-led, integrating 'retail + supply chain' resources, driven by consumer demand, improving supply and sales efficiency, and responding quickly to new market changes. Compared with traditional channels, we can see that new channel formats have the following characteristics that are difficult for 'deep distribution' to adapt to: - Scenario-based marketing: New formats excel at meeting scenario-based consumer needs. Whether it's offline scenario marketing or online multi-scenario reach, they are triggered by consumer needs, with flexible and varied forms and content. In contrast, marketing under the 'deep distribution' model mainly relies on promotions to small B-end (retailers) to drive C-end (consumer) sales, with relatively fixed and monotonous forms. - Data-driven shelves: Shelf display in new channel formats relies on consumer data. However, under the 'deep distribution' model, shelf display is typically achieved by brands 'monopolizing shelves' through 'spending money.' - Wide categories, narrow SKUs, and rapid new product launches: To satisfy consumers' desire for novelty, new formats tend to adopt a strategy of wide categories and narrow SKUs. Additionally, the speed of new product introduction is very fast. However, under the 'deep distribution' model, to enhance brand exposure, manufacturers often adopt a 'maximize display area' strategy to attract consumer attention and squeeze out competitors. - Weak branding: To increase gross margin, new format retailers generally weaken the brand effect of products, launching private label products for best-selling items or co-developing customized products with brands, which further weakens the brand's channel bargaining power. 'Deep distribution' is brand-led, and the weakening of brand voice also means that the model's implementation becomes unsustainable. - Timely fulfillment: Leveraging strong supply chain advantages, new format retailers can promptly meet consumers' online and offline needs, and respond quickly to small-volume, high-frequency demands. The 'deep distribution' model is essentially about maximizing the utilization of traditional channel resources, not about integrating and improving channel efficiency. Therefore, most traditional distributors find it difficult to meet the logistics/warehousing operational efficiency requirements of new formats. New Changes in Channels After 'Deep Distribution' Loses Control With the loss of control of the 'deep distribution' model, both brands and channel partners will undergo new role changes compared to before. Next, we will analyze from the perspectives of terminal stores, distributors, and brands. Terminal Stores Under 'Deep Distribution' Under the 'deep distribution' model, channel operations focus on a 'terminal is king' strategy, emphasizing terminal visualization. Channel promotions focus on pushing inventory to small B-end to drive C-end consumer sales. Channel construction assessment mainly uses indicators such as 'network coverage rate' and 'product distribution rate.' New change characteristics: In the future, it is foreseeable that the trend of 'new format' transformation will further intensify and dominate the market. The share of traditional terminals will increasingly shrink, moving towards 'streamlined' operations. At that time, visualization construction and high-frequency visits will no longer be routine terminal maintenance actions. In addition, terminal promotions will more often be carried out in the form of 'BC integration,' focusing on the pulling effect of C-end sales on B-end. Distributors Under 'Deep Distribution' Under the 'deep distribution' model, distributors and brands are deeply coordinated in business, thus establishing a deeply bound relationship. Distributors not only assume key roles such as 'logistics, warehousing, and capital' in the channel, but also play a key role in 'sales assistance' for brands at the terminal. New change characteristics: Facing new changes, distributors have two trends in transformation. On one hand, they are shifting towards 'platform service providers,' attempting multi-category operations for small B-end. In this way, the original 'deep binding' relationship between distributors and brands will inevitably be unbundled, the role of distributors in brand 'sales assistance' will be greatly weakened, and the brand's channel control voice will also decline. On the other hand, to ensure distributors' scale revenue and improve overall channel logistics turnover and warehousing management efficiency, distributor resources will be further integrated, implementing a 'large distributor system.' Brands Under 'Deep Distribution' Under the 'deep distribution' model, brands lead the implementation of channel strategies. With a focus on 'channel sinking,' they emphasize dense sales at terminal outlets, which requires deep business coordination from channel partners. At the same time, brand sales personnel also play a role in terminal sales assistance: - New change characteristics: In the new environment, it is foreseeable that if brands want to remain competitive, channel management may focus on the following change points: Brands will pay more attention to brand power and product power, specifically reflected in brand private domain operations and significantly faster new product launches; - Cooperate with new format retailers to launch customized products based on scenarios/new channels; - In traditional channel marketing management, due to the lack of distributor support, brands will further streamline sales personnel and concentrate resources on high-quality terminal resources, rather than blindly pursuing indicators such as terminal coverage. The Future Direction of Channel Digitalization After the 'deep distribution' model loses control, the roles of terminals, distributors, and brands will undergo new changes. Facing these new changes, what is the future direction of channel digitalization? We will focus on this next. 1. Current Channel Digitalization System Model Channel digitalization model under 'deep distribution': Currently, channel digitalization is essentially an abstract modeling of business, a digital expression of the 'deep distribution' approach. If channel management work is divided by object, it can be roughly divided into 5 major service modules, each with different digitalization focus points, as follows: - Consumer service module, focusing on: brand power enhancement and private domain operations. Supporting systems include: code marketing, SCRM, membership operation systems, etc.; - Terminal service/channel partner service, focusing on: channel collaboration and data integration. Supporting systems include: B2b terminal ordering platform, DMS channel management system, DP distributor portal system, etc.; - Salesperson/promoter service, focusing on: sales collaboration and human efficiency improvement. Supporting systems include: SFA sales automation system, PMM promotion management system; - Marketing expense management, focusing on: business-finance integration and expense control. Supporting systems include TPM trade promotion management system. 2. New Changes in Future Channel Digitalization Facing new trends, the channel digitalization originally built on the 'deep distribution' model is bound to change. Some changes have already occurred, and some are coming. Next, we will focus on four directions: 'channel partner collaboration,' 'sales personnel collaboration,' 'channel marketing,' and 'marketing expense management.' Due to space limitations, we can only provide a high-level outlook without in-depth elaboration. Channel Partner Collaboration: Digitalization work in channel partner collaboration needs to be divided into distributor collaboration and terminal collaboration, with terminal collaboration further subdivided into traditional terminals and new format terminals. First, looking at changes in distributor collaboration, as distributors tend towards 'platform' transformation and the large distributor system, distributors' own demand for digitalization will further increase. Specifically: - The channel digitalization interface previously led by brands may shift to being led by distributors. Distributors will build or purchase ERP systems and proactively connect with brand ERP systems to obtain product, order, logistics, and other data in a timely manner, improving operational efficiency; - To better serve downstream terminal stores, distributors will also tend to build lightweight B2b ordering platforms and conduct private domain operations for small B-end. Second, in terminal store collaboration, the change trends may include the following: - BC integrated profiling: Currently, B-end store profiles and C-end consumer profiles belong to the SFA system and membership system respectively. But future channel marketing tends towards 'BC integrated' marketing, which requires the construction of BC integrated customer profiles; - Traditional terminal grading/fine operations: Facing the overall decline in traditional terminal sales and low sales efficiency, marketing strategies may shift from focusing on the 'quantity' of distribution terminals to focusing on the 'quality' of terminal output. Therefore, establishing a store grading system, identifying high-quality terminals, and optimizing terminal resource investment are imperative; - For new format terminals, to meet their 'low order volume, high frequency, timely delivery' needs, digitalization will focus on system integration among brands, logistics providers, and retailers, to better connect data and improve supply chain operational efficiency. Sales Personnel Collaboration: Under the new trends, digitalization in sales personnel collaboration may see the following changes: - Flat sales organization management, data-driven visit tasks: Facing the dual dilemma of redundant/low-efficiency personnel and declining traditional channel sales, future personnel streamlining and organizational flattening are likely directions. Terminal visit planning will no longer be a routine action; visits will be generated by the system based on historical business data analysis and diagnosis, with targeted visit tasks; - With the widespread implementation of BC integrated marketing strategies, sales personnel assessment logic will also adjust. In the future, C-end indicators will also be included in sales personnel performance appraisals, such as consumer scan rates, activity conversion rates, etc. Channel Marketing: Channel marketing includes TP (trade promotion) and CP (consumer promotion). Under the current new trends, changes have already occurred, and there are some excellent practical cases (such as Dongpeng's code marketing project). Here is a simple summary: - BC integrated marketing strategy: Traditional channel marketing strategies are top-down, pushing inventory layer by layer from the channel end. The BC integrated marketing strategy, however, is pulled by consumer demand to drive channel sell-through. In addition, new TP and CP marketing strategies can be adjusted in a timely manner based on backend data feedback, by region, time period, and consumer profile, flexibly adapting to market changes; - Consumer private domain operations: With the increase in communication channels and marketing scenarios, enterprises need to connect to multi-channel systems to obtain marketing data and establish a unified membership middle platform to integrate data. Marketing Expense Management: The rapid development of new channel formats will inevitably have a significant impact on the existing marketing expense allocation logic. For example, expenses originally used for distributor incentives and terminal display may shift to new expense items such as platform commissions and traffic procurement; it also increases the difficulty of expense management. On one hand, budgeting for new platform expenses becomes more difficult; on the other hand, the difficulty of designing multi-channel promotion strategies and price coordination also greatly increases. Based on this, the future digitalization trends in marketing expense management may include the following two points: - Dynamic budget allocation mechanism: Unlike traditional fixed expense budget cycles (monthly-quarterly-annual), marketing expense budgets for new formats need to be more flexible, such as adjusting expense allocation based on real-time data (platform traffic costs, conversion rates); - Omnichannel promotion collaboration platform: Build a unified promotion collaboration platform to coordinate promotion policy formulation across channels and monitor and adjust prices in real-time across platforms, minimizing price conflicts. Final Thoughts Under the current environment, the rise of new formats is an inevitable trend. The loss of control of 'deep distribution' does not mean that channel management is unimportant; on the contrary, it means that the underlying methodology of channel management is being upgraded. The roles of terminals, distributors, and brands will be re-divided, and digitalization will shift from 'digitalization of deep distribution' to 'digitalization of new collaboration.' In the current environment, we see that the rise of new channel formats has become a major trend. The 'deep distribution' model is losing control, and channel management and marketing strategies based on the 'deep distribution' model will undergo significant changes in the future, thereby affecting the direction of channel digitalization transformation. This article combines previous viewpoints and personal observations, attempting to summarize and forecast the changes that are happening and will happen. Due to personal limitations, we can only use a limited perspective to imagine one of the infinite possibilities of the future. We hope this article can serve as a catalyst to inspire more professional thinking within the industry! --- ## Citation metadata - Publisher: New Distribution - Author: Jack - Published: 2026-02-06 - Canonical: https://xinjignxiao.com/en/articles/after-deep-distribution-loses-control-channel-digitalization-cannot-foll-c2073c75/ - Original source: https://mp.weixin.qq.com/s/FbNQQLYLdYjMU5pBEPlCGg ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671