Click to read the original text for details. How important is the channel? Coca-Cola has a famous 3A strategy: Availability, Affordability, Acceptability. The most important of the 3A's, "Availability," is the channel. Over the past two decades of marketing in China, the most significant change has been the evolution of channel models. A closer look reveals that this evolution is merely the repeated application of "flattening" and "going down" (to lower-tier markets). Every past flattening and downward expansion seemed highly effective, bringing sufficient growth and dividends. Eventually, continuously flattening distributors became the primary means for many professional managers to meet sales targets, until it abruptly stopped in 2015. Times change, and the platform distributor model may be the optimal solution for the future evolution of FMCG channels. What is a platform distributor? The platform distributor here is vastly different from the platform concept in e-commerce. It primarily takes on the main functions of market layout, promotion, and management for a brand in a relatively large region. To draw an analogy, it is similar to the functions of a brand's regional sales branch or office. In terms of scale, platform distributors are similar to big distributors, and comparing big distributors with platform distributors helps in understanding the latter. What are the differences between platform distributors and big distributors? Compared with big distributors, platform distributors have a closer relationship with manufacturers. This closeness is not only reflected in the consistency of understanding of brand strategy, marketing model, and regional goals, but also in possible mutual capital involvement at the equity level. Around 2000, Mengniu rapidly established a national sales network relying on the big distributor model. In some important regions, Mengniu adopted a platform distributor model that was closer than the big distributor model. The most typical sign was that these distributor companies existed in the name of Mengniu sales branches. In recent years, some emerging brands have risen rapidly using the platform distributor model. According to my understanding, some regional platform distributors have enterprise equity participation behind them. Some excellent platform distributor owners can even participate in the brand owner's operational decisions. Compared with big distributors, platform distributors' capabilities are more oriented toward market operations and management. Traditional big distributors undertake all functions for multiple brands in the local market, including promotion, sales, management, and logistics. But platform distributors' capabilities are more oriented toward market operations rather than warehousing and logistics. In the FMCG field, many platform distributors do not even need warehouses or logistics. The organizational form of a platform distributor in a region is similar to a brand's sales branch, which is quite different from a big distributor. Big distributors have many logistics and service departments, with a considerable number of non-combat personnel, but platform distributors concentrate all personnel in market, promotion, and sales, with very few non-combat personnel. In the traditional big distributor business model, warehousing and distribution functions account for a significant proportion. For platform distributors, the most important are the marketing department and sales management department; other functions are not the focus. Compared with big distributors, the source of profit for platform distributors is quite different. Compared with big distributors, platform distributors, because of their closer relationship with manufacturers, often take a longer-term view. Under the traditional big distributor model, price differences are the main profit, along with some rebates and interception of terminal expenses. But platform distributors' profits are often clearer, often calculated directly as a fixed percentage of sales volume, plus a portion of market management fees. In summary, the big distributor model is more like an intermediate state between the small distributor model and the platform distributor model. How do platform distributors work? In the traditional sales organization of manufacturers, regions often exist in the form of sales branches, which makes unified action less problematic but efficiency is too low and autonomy is weak. Once headquarters grants regional autonomy, it can lead to widespread professional corruption. Kevin Kelly, in "Out of Control," introduced a highly autonomous yet highly efficient organizational model. This model has a "brain," and other parts of the organization are usually in an autonomous state, not requiring direct instructions from the brain. But once the brain issues a command, all parts can quickly form a collective action with maximum efficiency. To achieve effective autonomy, the platform distributor must be the owner of the regional platform's property rights, or at least one of the owners. Today, we have the hope of using the platform distributor organizational model to form a new channel model under the command of the brand headquarters, which is highly autonomous yet capable of unified action. So, how do platform distributors and brand owners divide their work? The brand owner's focus is to build "air combat" capabilities, mainly concentrating on the two "pull" forces of brand power and product power. Apart from products, the brand owner must first determine its brand strategy. Strategy prioritizes stability and sustainability; a brand strategy that cannot last three to five years is better than having no strategy at all. Second, it must continuously develop and promote "weapons," polishing effective promotion models for regional effective promotion. Jiangxiaobai's headquarters has a creative center of several hundred people, covering everything from copywriting, design, animation, to movies and TV dramas, to entertainment activities. It is precisely because of such a powerful creative center that the unique "Jiangxiaobai phenomenon" was created. Third, the brand owner must determine its marketing model. If there is no defined marketing model, let the market test and find an effective one. What should platform distributors do? Build strong "ground combat" capabilities in the region. Build a promotion team and a sales team dedicated to a specific brand. Among the two teams, the promotion team is prioritized. Why dedicate to one brand? A team operating multiple brands simultaneously, except in the absence of strong competitors, is usually not effective. This ineffectiveness is not about not making money, but about failing to achieve the brand's strategic goals in the region. Why prioritize promotion? The power of terminals in product promotion is gradually weakening, and more and more consumers have a definite brand in mind when entering a terminal. Therefore, using promotion to connect with customers and generate sales pull, combined with the "precision" emphasized in deep distribution, can achieve good sell-through results through a combination of push and pull. In promotion, according to the promotion plan provided by headquarters, combined with regional realities, formulate and implement effective local promotions. Whether to use the headquarters' or the regional plan depends on one criterion: the feedback from market results, whichever works better. Marketing is a field that only values results; all marketing outcomes need to be verified by data. Platform distributors need to complete corresponding market building goals and sales targets according to headquarters' requirements. In terms of expense usage and team management, platform distributors often achieve several times higher cost-effectiveness than brand owners. This is determined by their investor attributes. Platform distributors do not keep idle personnel, have very few non-combat personnel, and performance assessments are often closely linked to results, leading to better incentive effects. Compared with distributors, platform distributors' operations are often more professional and more aligned with brand owners' operations. However, due to capital attributes, platform distributor owners differ from professional managers. They are both the highest regional managers with sufficient autonomy and investors with the ability to take responsibility for results. Pros and cons of the platform distributor model and how to avoid pitfalls The biggest advantage is that after clarifying the responsible entity, it can maximize the capabilities and resource advantages of the regional sales organization. The same manager, whether positioned as a professional manager or as an owner, thinks and decides from different angles and heights. Needless to say, when a regional manager is a professional manager, the primary consideration is job security, then the market and customers, which is also the source of countless channel conflicts. When the regional manager is also the beneficiary of regional operations, and a long-term beneficiary, their personal long-term interests are maximally aligned with the long-term interests of the market, customers, and brand. In this case, it is easiest to form a joint force between the manufacturer and the distributor. The second advantage is the improvement in management efficiency. When platform distributors manage the sales team rather than the brand owner, the per capita output of the sales team can often be doubled. Some may argue from a social responsibility perspective that this is inhumane, but when we review every corporate case, we find that "humane" sales systems often only lead companies down the path to failure. Many seemingly "humane" systems, in essence, often ignore the outstanding contributions of "strivers," which is truly inhumane. The biggest hidden danger of the platform distributor model is the falling out between manufacturers and distributors. Under the platform distributor model, in the same region, both parties have a one-on-one back-to-back relationship. Once they fall out, it is a lose-lose situation, and compared with manufacturers, regional platform distributors often suffer more. In recent years, there have been incidents of regional general agents being "cut at the throat" by brand owners. This problem of being able to share hardships but not prosperity is the biggest challenge facing the platform distributor model. Niulanshan liquor is one of the brands that has operated successfully under the platform distributor model. Chuangyitang is a platform distributor for Niulanshan, with a cooperation history of over ten years. After Chuangyitang succeeded in Beijing, Niulanshan entrusted it with some markets in Shanghai and Zhejiang for cross-region operations, and Chuangyitang became a famous super distributor because of Niulanshan. Song Kewei, general manager of Niulanshan, said of Chuangyitang, "Chuangyitang and Niulanshan have cooperated for many years, trusting each other and being in sync. We have no communication costs, which is very important." In the FMCG field, how many manufacturers and distributors can trust each other like this? Niulanshan is also a brand that publicly states it will not easily flatten its channels. Song Kewei said, "Niulanshan will not easily flatten its channels. Now, as products and markets go down, we let the original distributors do it. The market you develop, the returns belong to you. Market sinking and product adjustments will give you time and space." When manufacturers and distributors fall out, the responsibility often lies mainly with the manufacturer. If the market has already been developed, facing the manufacturer, whether it is a distributor or a platform distributor, they are relatively weaker. At this time, apart from cases where the platform distributor or distributor indeed cannot keep up with the manufacturer's strategy, it is often due to the manufacturer's impulse to strengthen market control, or for reasons not known to outsiders, such as someone "picking the peach." How to achieve mutual trust between manufacturers and distributors? What if there is not enough mutual trust? Mutual trust between manufacturers and distributors is so important for the platform distributor model that if there is no suitable person to build sufficient trust, it is better not to introduce the platform distributor model in that region for the time being. Some brand owners choose their former subordinates or friends as platform distributors, which is a realistic approach. When going to battle, if you still need to guard against your comrades, you will definitely lose. From this perspective, choosing platform distributors starting with "nepotism" is correct. How to seize this wave of platform distributor opportunities? The flat channel model for FMCG has reached a dead end, and there may be a wave of platform distributor rise next. But this wave of opportunity is not for all distributors. The two most important capabilities for platform distributors are marketing expertise and the ability to build and lead a team. Many provincial platform distributors for Jiangxiaobai come from marketing backgrounds. Having experienced marketing careers in famous liquor brands like Jin Liufu, professionalism is their biggest advantage. Jiangxiaobai's founder, Mr. Tao Shiquan, himself came from a professional manager background, so under his leadership, a group of platform distributors with professional manager backgrounds rose to prominence. Many traditional big distributors have advantages in transitioning to platform distributors. Besides financial strength, big distributors have strong abilities to build and lead teams in their regions. Some big distributors are even fully comparable to manufacturers in new product promotion capabilities. Zhengzhou Longting Trading Company, with Nongfu Spring as one of its represented brands, has a sales team of nearly 100 people. It successfully operated the launch of Nongfu's new product "Cha Pai" in the Zhengzhou market, as well as brands like "Heika." Although after "Cha Pai" became successful, it was "mercilessly" flattened by Nongfu Spring, relying on its strong team capabilities, Longting Trading's business was not severely damaged. Big distributors like Longting Trading, which deeply cultivate the market, will gain more and greater opportunities in the future trend of transitioning to platform distributors. Note: If you are seeking a path of transformation or upgrading, if you are seeking platform distributor opportunities, or if you have topics to share about the platform model, you are welcome to join the "Platform Distributor Model and Opportunities Group" built by New Distribution. New Distribution will organize experts, brand manufacturers, and everyone to discuss the future together. Scan the QR code to join the group: