---
title: "Consumer Brands Without Supply Chain Advantages Are Doomed"
description: "This article discusses the critical importance of supply chain advantages for consumer brands, arguing that the current boom in consumer brands is largely a result of decades of supply chain development. It emphasizes that brands must build robust supply chain capabilities to achieve sustainable growth, rather than relying solely on internet traffic and sales."
author: "李倩说品牌"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-12-10"
language: "en"
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# Consumer Brands Without Supply Chain Advantages Are Doomed

> This article discusses the critical importance of supply chain advantages for consumer brands, arguing that the current boom in consumer brands is largely a result of decades of supply chain development. It emphasizes that brands must build robust supply chain capabilities to achieve sustainable growth, rather than relying solely on internet traffic and sales.

These are all honest words. If they happen to be right, please bear with me.
Today, let's talk about the relationship between consumer brands and the supply chain.
Not long ago, I mentioned a topic in a sharing session: the current boom in consumer brands is actually a collective report performance of the supply chain achievements over the past few decades. To put it more bluntly: **the dazzling array of "good things" we see are all supported by a powerful shared supply chain behind them.**
**-01-**
[Consumer goods] is a category of entrepreneurship and investment that is particularly prone to industry misunderstandings, because it is too "lively" and "sexy," so it is often viewed as too "shallow." Let me give a few examples:
Whenever someone around me "starts a business," eight or nine out of ten will engage in various "consumer goods," because they "understand." Just became a mother, and immediately "understands" maternal and infant products; because they love food, they "understand" food; because they are fashionable, they can do "apparel"... Examples abound. Let me explain: I am not questioning the power of original intention, but rather pointing out that "consumer goods" appear to have a very low barrier to entry.
How many consumer brands do we assume are doing "well" simply because they are "hot" recently? Then investors swarm in, and consumers applaud. Finally, before they have time to develop slowly, they are "killed by praise" under capital and urging.
Doesn't the down-to-earth phrase "带货" (product promotion) resemble the shouting of "clearance sale! clearance sale!" from a loudspeaker at the market when we were kids, easy to understand and imitate? Such a friendly term gives every entrepreneur who has never done business a sense of "what's so hard about this" courage.
......
There are many examples; I won't list them all.
The more seemingly barrier-free things are, the more frightening they are. On closer thought, it might not even be as good as "artificial intelligence" or "big data," where you can figure out the concepts; relying solely on information asymmetry itself has already become a barrier.
So you see, all along, financing for "low-tech" consumer goods has relied on buzz and "sales volume," while "high-tech" relies on science popularization and explanations of the supply chain. If investors can understand, they can get money.
Actually, it should be the other way around.
We should view consumer goods with a "science popularization" mindset. And for many "high-tech" things, we should instead look at market application feedback and "sales volume."
So, this leads to a phenomenon: **projects that are truly doing the right thing are easily missed, while projects that cater to investors' thinking habits are very good at being clever.** Of course, this also explains why most investments fail.
Let's get back on track.
**In the heyday of [consumer goods], entrepreneurs and investors have their eyes fixed on "selling"—how to generate traffic, create bestsellers, find product promoters, and make products sell well has become the top priority.** It seems that apart from "selling," there are no other problems. Even as consumer goods, people don't look at "profit" or "repurchase," only sales volume.
This leads many projects to sell at a loss to seek "product promotion," and to accumulate sales figures to "finance." Too many projects, even some relatively large consumer goods projects, have fallen into this vicious cycle:
Can't make money -> Start a business to make money -> Without investment support, can't make money -> To get investment -> Increase sales -> Sell at a loss to increase sales
See, this is a world spinning around sales volume.
Among these, two groups are secretly pleased.
**One group is the OEM factories and supply chains working silently behind the scenes. The other is the platforms, institutions, and individuals who hold traffic and can advertise and promote products.**
Because most consumer projects do not have the ability to handle production and supply chain themselves, nor do they have their own sales channels.
Upstream, they rely on OEM factories and shared supply chain systems; downstream, they rely on parasitic price reductions in exchange for volume on platforms. In the middle, they just integrate, and in fact, they don't make much of a price difference. After all, the information asymmetry in consumer goods is not that large; anyone can find the OEM factory by following the product label.
Let's set aside traffic and sales for now; indeed, there is no reliable way to quickly attract traffic, so they can only take a roundabout way to private domain and slowly accumulate.
But the supply chain part, which is still being ignored, is truly unjustifiable.
**-02-**
It can be said that consumer brands without supply chain advantages are doomed. Let's analyze this from two aspects:
**1. Internet traffic and sales are too fragile when applied to consumer goods; you must take the opportunity to quickly build hard strength**
A very strange thing in the entrepreneurship circle today is the [mixing of internet logic and consumer goods logic]. Although everything is now "+internet," that does not mean the main logic of the industry itself should be interfered with. **Consumer goods themselves should refer to consumer logic; the importance of product and supply chain is unparalleled, while internet traffic and sales, when viewed in the context of solid consumption, are a bit too fragile.**
The internet as a tool for "bestseller operations" and "sales efficiency" is fine, but it is only a tool. As an independent brand, tilting all its competitiveness onto it is not very meaningful. So after the O2O wars and live-streaming product promotions, we saw piles of [traffic ruins], like free "door-to-door car washes" and "selling goods at a loss."
We thought we could exchange for real users, but in reality, it reflects a generation of internet entrepreneurs' lack of understanding and respect for the physical consumer sector.
But our only capability is the internet. Can we quickly ramp up sales? Yes. But what does internet sales without profit win you?
It's time.
It's a time window to hurry up and make up for the shortcomings in upstream products and supply chain.
Because only by filling these capabilities can product costs truly be controlled, and control over front-end sales greatly increased. Companies that sniffed this out are all making up for this part after quickly ramping up volume. The first half is internet people, the second half is traditional product people with mud on their shoes.
Here's an example: "Flowerplus" (花点时间) is one of those companies with keen insight and quiet action. After becoming the largest flower subscription e-commerce brand, in 2018 they quickly shifted marketing expenses to building their own supply chain and offline flower shops. During the "silent" period, they quietly worked in the fields.
Now they have 100,000 mu of flower fields, large warehouses in 18 cities nationwide, 8 automated flower processing production lines, and 200 offline flower shops firmly in hand, and can directly serve users in 300 cities nationwide with cold chain operations. It is said that in 2021 they plan to continue opening 500 chain flower shops, and some lower-tier cities will enjoy the same high-quality, affordable flowers as first-tier cities.
To achieve this step, it would be absolutely impossible without strong supply chain support behind them.
While others are still frantically cutting prices for volume at the front end, some are already quietly laying out upstream.
After the layout, the power is doubled when they return.
A small piece of data can give a glimpse: I asked around, and during the just-passed Double 11, Flowerplus sold 50 million yuan in one day, and sales on Tmall alone exceeded all of last year's Double 11.
If previous sales were still fragile, now looking at this data, you can feel some confidence.
Most people don't see this, and some see it but don't realize the value, or realize the value but don't make up their minds to do it.
In fact, in the global flower market, the companies that have become giants have all followed this path. 1-800 in the US, Lynch in Australia, and Hibiya in Japan have all walked the path of "digging demand -> making products -> scaling up -> supply chain."
**The growth of consumer businesses that only focus on growth, especially those that have risen under the internet background, is actually very fragile before the supply chain matures.**
Without a mature supply chain as a foundation, even if you sell a lot, it's not solid.
**2. The voice in consumer goods actually lies in product and supply chain**
We all tend to be intoxicated by surface phenomena, as if the front-end brand side is lively and thus the most important link.
Not long ago, I chatted with a friend from one of the largest cosmetics and skincare OEM factories. They are still consistently low-key, humble, and pragmatic. When talking about their views on brands and supply chains, it gave me great inspiration. Because the front-end brands have been particularly lively this year, these traditional OEM factories and supply chain companies have had a relatively fast growth year, with good profits.
Compared to the front-end brands' glamorous listings and mass adoration, although they are hidden behind the scenes, their actual returns are completely opposite. Apart from big brands, the micro-business brands and small similar brands driven by big brands all produce from the same production and supply chain channels.
This is still cosmetics, a consumer category with very strong brand attributes. Let's look at consumer electronics and flowers.
Xiaomi.
Is Xiaomi an internet company or a consumer electronics company?
Of course, it's the latter!
The latter, as a physical industry, has a low valuation due to the times, but that doesn't prevent it from being a consumer goods company with strong business model innovation capabilities.
Xiaomi just has a strong internet gene and operating methods, but behind it, it still leverages the strong product and supply chain capabilities of the consumer electronics industry. In my view, its core is the ability to [prioritize screening of products and supply chains in the consumer electronics industry].
Global priority screening and ownership—friends who have done investment know what a crushing advantage this is!
The Xiaomi marketing methodology, hunger marketing, "Participation," Xiaomi UI, etc., that we saw in previous years are just the first three moves in the whole playbook. What follows is the huge value in supply chain integration and screening, which is both hidden and great. Xiaomi is using investment and internet play to screen and seize the industry's supply chain. Later, NetEase Yanxuan and Pinduoduo also follow a similar logic.
Flowers are even more interesting. Flowers are a consumer category with relatively weak brand attributes and relatively low R&D dependence, but at the same time, consumers' perception is particularly strong.
Such categories are more suitable for quickly seizing supply chain advantages, because the front-end sales entry points will be dispersed, and ultimately the test is still the competition from the supply chain. Flowerplus saw this early on, and three years on the bench will not be in vain.
At the sales front end, consumers may only see Flowerplus's WeChat official account and Tmall store with 5 million users, but what is hidden behind is the key: **a huge flower supply chain network is the core value point of this matter.**
What everyone doesn't know is that Flowerplus is actually the flower supply chain provider behind giant platforms like JD.com and Hema. Building a solid supply chain not only serves yourself and reduces costs, but also opens up sources to serve more channel giants.
The more fragmented the front end, the greater the value and voice of the supply chain end.
Let's imagine: if Xiaomi only had the marketing ability to gather people on the internet, always relying on "low prices" and "OEM" operations. If Flowerplus only had the ability to attract traffic with 100,000+ reads on its corporate account, always relying on 99 yuan for 4 bouquets to attract users. What a huge "black hole" that would be, never to be filled.
Too many consumer brands only have some fragile sales volume, aimless customer acquisition and growth, without the ability for true "growth." To grow, they have to lower prices and subsidize, and the front end is constrained by the supply chain, squeezed from both ends, unable to survive.
**A true [brand] must be able to live well for a long time, not just die after a brief thrill.**
Many consumer goods founders have professional backgrounds more in sales, marketing, and channels, so they often underestimate the value of front-end supply chain, production, and logistics. But it is often these differences that actually determine whether a consumer brand can go far.
A few days ago, I attended a closed-door sharing session. A senior executive from Huawei said something that touched me deeply: "Many people mistakenly think that high-tech requires high intelligence. Actually, it's not. High-tech capabilities require long-term high-quality delivery."
The same applies to the consumer goods industry. We always think that becoming a successful consumer goods company requires earth-shattering high intelligence or amazing sales skills. On the contrary, it requires day-to-day continuous optimization and relentless pursuit of processes, supply chain, and products.
These efforts are invisible. But they play a decisive role.
The internet is fast, traditional industries are slow. Traffic is fast, supply chain is slow. Sales are fast, profit is slow. This is a well-known truth.
**-03-**
When we discuss business standing on [traffic ruins], I still want to end with the repeated saying: **All speed must be exchanged for slowness.**
Source: Li Qian Talks Brand (ID: liaotian78), Author: Li Qian
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