"In all these years, prices have never been this low!" the distributor boss said as he showed me around his warehouse. "But sales have never been this bad either." Looking at his warehouse piled high with various goods, this FMCG veteran who has been fighting in the South China market for over a decade was deeply puzzled. This boss's situation is by no means an isolated case. What he faces is not a problem unique to distributors, but a dilemma affecting the entire upstream and downstream of the industry. In China's extremely competitive market, everyone is fighting on low prices, yet what we see is: Brand owners complain—"We've squeezed profit margins to the limit, but channels still report no sell-through!" Distributors lament—"Manufacturers push down targets, warehouses are full, terminals are stocked to the brim, but payments aren't coming back!" Retailers are helpless—"We rotate through discounts, markdowns, and free gifts, but shoppers just pass through like a revolving door, taking a glance and leaving..." Price is indeed a killer weapon, but once competition reaches a certain level, the differences between players narrow, and there comes a moment when consumers become indifferent to low prices and need other reasons to buy. Price is just one factor in winning customers. In a market where everything is available, even oversupplied, the path of price competition is a dead end if continued! What we really need to compete on is the ability to aggregate consumer groups, gain insights into their needs, and quickly match supply to demand!

Low Price ≠ Sell-Through:

"Cheap" Is No Longer a Killer Move

Take an example. A distributor represented a beverage brand touting "ultra-high cost-performance." When launching a new product in county and township markets, they priced it 20%+ lower than similar products, with eye-catching packaging. Initial distribution progressed rapidly. However, the good times didn't last. After a few months, payment cycles grew longer, inventory piled up, and the boss's confidence was on the verge of collapse. We visited small terminal stores. A store owner who had been in business for over 20 years in the town center said bluntly: "The products are indeed cheap, and I did stock them. But what do customers say? 'Never heard of this brand,' 'So cheap? Could it be clearance goods?' My store relies on neighborhood business; people recognize familiar faces and trust their instincts. For a new brand like yours, being cheap alone won't work—you need to match their 'taste'!" Retail stores are also struggling. In recent years, wherever the discount trend has swept through, everyone is competing on low prices. But does lowering prices actually improve business? In fact, when low prices and discounts become the industry norm, low prices only become the basic condition for keeping a store "alive." Consider another example: the failure of "seeding" for a new brand. A ready-to-drink tea brand with a "zero-sugar, healthy" concept ambitiously entered first- and second-tier markets. They invested heavily in social media, ran five rounds of intensive "seeding," generated buzz, and set seemingly reasonable prices. But the data was stark—huge buzz, yet conversion rates were ice-cold. A deep review revealed that the brand made a typical "self-righteous" mistake: they believed "health" was a politically correct trend that was bound to take off. But the core young users truly craved emotional value beyond "health": the refreshing relief after exercise, the pick-me-up during overtime, the lazy enjoyment of a weekend at home. They weren't just buying a drink; they were buying a scene, an atmosphere, and emotional comfort. Placed next to a stylish picnic basket and camping gear, it becomes an accessory to a "refined outdoor lifestyle," and people rush to buy it. But placed in a convenience store cooler, lost among energy drinks and carbonated sodas, it fades into obscurity, ignored. Such examples are everywhere. Is the price not low enough? Is the quality really much worse? None of these. It's a misalignment of the "coordinate system" between supply and demand.

The Era of Mismatch:

The Underlying Truth Behind the Failure of Price Wars

The key to understanding the current predicament lies in seeing the essential picture of the supply-demand relationship. In a previous article, I drew this diagram: Blue Ocean (Demand): increasingly fragmented, stratified, and emotional consumer groups with diverse, changing, and personalized needs. Red Storm (Supply): the mutually competing "production-supply-sales" chain, with massive existing inventory and severe homogeneous competition, every field crowded with players. The Intersection (Consumption): the "sweet spot" where transactions actually occur—the purple area where the blue ocean and red storm precisely match. It is becoming smaller and harder to find. In the past few decades, China's market was in an era of high-speed growth with incremental demand, and goods were relatively scarce. Everyone competed fiercely on price, expanded capacity, and improved quality, essentially to meet the basic need of "having it or not." At that time, supply and demand could easily find "large-block" intersections. But today, we have fully entered: A market of stock competition: the pie is no longer growing; you're fighting for what's in others' bowls. Highly stratified consumption: some seek extreme cost-performance, others pay a premium for emotional value. Severe oversupply: it's not that goods aren't selling; it's that consumers don't know which to choose. The current "oversupply" is not primarily about absolute excess quantity, but about a severe deficiency in "matching capability"! Here are a few typical "mismatch" scenarios:

  • Consumers want a little "self-indulgence" and small pleasures, but you keep harping on about "high protein" and "functional benefits."
  • Consumers are starting to seek "light burden" (small packages, less hoarding, psychological ease), but you're pushing "family packs" and "stock up for savings."
  • Consumers crave a "relaxed" and "pressure-free" shopping experience, but your sales associates are still hyped up, pushing "buy now or it's gone." It's not that you (the brand/product) are bad; it's that you (your expression, reach, and scene construction) are wrong! Look closely at cases that are thriving or even growing against the trend—none of them win solely by being a "price oasis":
  • Sam's Club: It's not "cheap." It makes middle-class families feel, after paying an annual fee and relatively high per-transaction amounts, that "this money is well spent—saves time, saves effort, and quality is guaranteed." It matches the "efficiency and quality security" of family shopping.
  • Mixue Ice Cream & Tea: Cost-performance is the foundation, but the core is the ubiquitous "sunshine town" and "sweet town" vibe—catchy jingles, bright yellow and blue tones, and locations where you're most likely to be thirsty (schools, shopping districts, community entrances). It matches the "instant happiness and small pleasures" of young people.
  • Pop Mart: The core isn't the cost-performance of blind boxes, but the precise capture of young people's (especially Gen Z) "emotional gap periods" and social currency needs—surprise, collection desire, identity recognition (as trendy toy enthusiasts). It matches "I need a little healing and social conversation starters."
  • Discount stores like Mingming Henmang and Haoxianglai: On the surface, they're about "discounts," but the core is "instant gratification + combined surprises." A huge SKU selection satisfies the curiosity of "wanting to try everything," small packages make choices burden-free, and "grabbing a few items" costs little but instantly delights. They match consumers' "stress-relief shopping" and "reward desire." So, do you see the key logic behind all this? Cheapness is just the "door-knocker" that gets consumers to take a look; precise "matching" is the "deal-closing code" that makes them willingly open their wallets!

The Game-Changer:

From "Price Warrior" to "Matching Master"

The future battlefield demands a complete shift in mindset: from a bloody price war of "competing on resources" and "who's tougher" to a matching battle of "competing on collaboration" and "who understands better." To put it bluntly, "competing on price" is a "war of attrition" that tests who has deeper pockets, more resources, and can outlast the other. "Competing on matching" is a "positional battle" that tests the comprehensive capability of the system: Can you aggregate consumer groups (Who), keenly identify needs in specific scenarios (Where + Why), and rapidly mobilize all resources (product, channel/supply chain, marketing, content) to precisely deliver value (What + How)? The smooth operation of this system is key to winning market positions. I've summarized a table comparing their essential differences:

How Should Brand Owners and Channel Partners Fight the "Matching Battle"?

After all this talk, what should you actually do? Here are a few suggestions for reference. First, Brand Owners: Build a "people-driven" supply ecosystem (rather than a product shelf).

  1. Invert R&D logic: Let users define products. Abandon the "I have a great product" mindset. First, clearly define which specific consumer segment you're serving (e.g., meticulous lazy moms, urban white-collar men focused on body management, or the emerging elderly in small towns), deeply understand their pain points, delight points, and scenarios, and then define or even co-create the product.
  2. From "product manual" to "scene immersion": Value needs atmosphere. Your product manual needs an upgrade! Explain which life scenario it fits (a 3-minute quick makeup look on the morning commute? Indulgent late-night snacks while binge-watching? A tipsy moment at a weekend gathering with friends?), and what emotion or minor annoyance it solves at that moment (not looking frazzled when in a hurry? A small indulgence to relieve stress? Creating a relaxed atmosphere for a party?).
  3. From "one-off transaction" to "nurturing companionship": Long-term customer relationships. Use private domains (WeChat groups, enterprise WeChat, membership systems), content (precise scenario-based pushes), and services (personalized solutions) to continuously provide value, build long-term, warm connections with users, and increase switching costs. Not long ago, a regional head of a brand told me that their new product launches were becoming uninspired. "Materials, promoters, store investments—the effectiveness of these traditional practices is declining. We need support from the user end!" So, can we move beyond simply "launching new SKUs" to "giving young people a new identity label (e.g., new Chinese trend enthusiasts, low-carbon pioneers) as an expression tool"—does the new product align with their identity needs? Does it provide shareable content (aesthetically pleasing packaging, social currency topics)?

Second, Retailers: Evolve from "Selling Terminals" to "Consumer Interfaces."

The traditional people-goods-places framework is too crude. Successful retail must deeply cultivate "user operations + supply chain management + scenario marketing." The biggest opportunity for retailers lies in having real-time touchpoints with users and first-party data. If willing to dig deep, they can evolve from a "sales front" to a "manager of consumer minds." Specifically, retailers' evolution priorities include:

  1. From shelf managers to consumer data operators: Use membership systems, POS data, and user behavior analysis to build store profiles and consumption habit profiles, guiding product selection and operations.
  2. From passive selling to proactive content expression: Not just arranging goods and price tags, but learning to use "scenes," "atmosphere," and "scripts" to stimulate demand.
  3. From static stores to dynamic content platforms: Create in-store IP, user communities, mini-program malls, and other composite touchpoints, making "offline stores" multifunctional spaces for content dissemination + transaction conversion + immersive experience. My observation is that many "counter-trend growers" in community retail often have a methodology: deeply cultivate specific user groups, build trust relationships, and strengthen the perception of "I understand you." The future retailer is not in the shelf business but the user business. Whether they can truly understand users' "mental accounts" and become trusted consumer interfaces determines the ceiling of their success.

Third, Distributors: Transform from "Channel Roles" to "Resource Integrators."

The value of distributors is undergoing a dramatic reassessment. In the past, they were "channel builders" for brands: controlling channels, pushing inventory, running promotions, and boosting sales. Now, with system restructuring, direct brand-to-terminal connections and platform-mediated supply-demand matching are increasingly common, compressing the traditional channel value of distributors. But this doesn't mean distributors are "out of options." It means shifting perspective: from a "selling goods" mindset to an "integrating resources" mindset. Specifically, distributors' transformation directions include:

  1. From shelf-stockers to crowd organizers: No longer just "selling in," but discovering local specific consumer groups and operating them in depth.
  2. From channel movers to production-sales connectors: Collaborating with brands on R&D in reverse, proposing regional customized product selection suggestions.
  3. From brand agents to regional solution providers: Integrating logistics, warehousing, display, promotion, and sales guidance services into a one-stop resource package, providing end-to-end solutions for brand implementation. Many successful new-generation distributors no longer wait for brand owners to assign tasks. Instead, they lead product selection, define strategies, and even invest in brands or create their own products. They understand the market, users, and scenarios. More importantly, their resource control becomes a key variable in solving "matching." Distributors that survive in the future must possess one capability: becoming the "middleman" that connects brands with real market demand.
Summary: Matching Capability Is the Ticket for the Next Decade

Finally, I want to say: reality is cold, but the trend is clear. Goods are abundant, but star bestsellers are hard to find. Prices keep hitting new lows, yet consumers are more hesitant and picky. Consumer behavior is a mix of rationality (calculating carefully) and emotion (going by feeling). In fact, every turning point is the start of a reshuffle and a redefinition of the landscape! The past decade was the era of "price wars"—brutal growth, each counting their own gains. The next decade is the era of "matching battles"—collaborative cultivation, with production, supply, and sales working in sync. This is also the core theme of our August Shanghai 2025 China FMCG Conference: New Demand · New Supply. New supply must match new demand! To win the matching battle, you must gain insights into demand, open up data and decision-making chains, and build a production-supply-sales ecosystem that can quickly adapt and respond to change. Buying your ticket now is the highest-return investment you can make:

✅ Get the latest growth cases in turbulent times

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✅ Connect with incremental channels and negotiate cooperation directly From August 19-21, 2025, join thousands of peers seeking breakthroughs to find your "matching battle" key and practical implementation plans, and find the definitive answer to growth in the new blue ocean of demand. **🔺