Community group buying has been a hot topic this year, naturally becoming the biggest 'scapegoat' for declining sales among some FMCG marketers. Recently, I visited several distributors and brand managers. When discussing sales in April and May, they shook their heads and sighed. When asked what caused the weak sales, they casually said, 'Community group buying is burning so much cash that many terminal outlets can't hold on, let alone our sales.' Pessimism pervaded the entire conversation. After listening, I responded bluntly: 'Your products are first-tier brands like Nongfu Spring and Master Kong, which are hard-to-circulate goods. Even if you carry some small brands, they are just supplementary, with a very low proportion. Your main sales come from non-planned products with strong immediate consumption, which are hardly sold through community group buying. Why blame community group buying?' I believe many distributor owners and brand managers have heard similar complaints. So how do we identify the real reasons for declining sales? Based on my experience, I'll share three steps to diagnose sales decline. -01- Step One: Self-Inspection If FMCG manufacturers and distributors see declining sales in April and May, they should first look for reasons within themselves. 1. Is it related to inventory pressure at the beginning of the year? Almost all manufacturers enthusiastically aim for a strong start, offering channel policies, grabbing money, occupying warehouses, and pressing storefronts. So, is the poor sales in April and May due to excessive channel inventory? Brands should consider distributor inventory and year-on-year comparisons; distributors should consider sub-distributors, wholesalers, and terminal stores' inventory and year-on-year comparisons. If inventory is indeed excessive, find ways to boost product sell-through and ensure smooth channels. If inventory is not higher than last year, figure out why the inventory push failed—was it promotion intensity or other reasons? 2. For Brands Number of distributors and proportion of quality distributors: Brands should consider the number of distributors, especially the proportion of quality ones. Three humble people can outsmart Zhuge Liang. For non-leading brands, if the number of distributors doesn't cover the national channel, more distributors and broader coverage are better. So, check whether your distributor count has increased or decreased year-on-year. Quality distributors are a boon for growth, with sufficient outlet coverage, delivery vehicles, and fortress stores. If this is the issue, my suggestion is to increase new customer assessment, get everyone involved in recruitment, and organize training for existing distributors. Hardware can be solved with money, but learning how to better serve terminal outlets requires training. 3. For Distributors Horizontal and vertical growth: A distributor's lifeline is the number and quality of outlets. If sales decline in April and May, first check whether your active outlet count (also called effective outlets) has declined. What is an active outlet? Each company defines it differently, but the principle is the same: outlets that regularly receive goods within a certain period. For example, some companies define active outlets as those that receive goods at least once a month. Dying outlets are not counted. Next is outlet quality: has the average SKU per store declined? Has shelf share declined? Has in-store display score declined? And so on. If this is the issue, my suggestion is to focus on basic skills and strengthen distributor team training. Otherwise, if the market becomes half-baked, the consequences can be disastrous. Summary: Self-inspection is the first step to correct attitude. When problems arise, look for internal causes first. In many cases, sales decline is not due to external factors but self-inflicted. Discovering and correcting it promptly is the most crucial step. -02- Step Two: Macro View of the Industry 1. Overall Category Industry Analysis A while ago, several executives from daily chemical companies discussed recent sales declines with me. I analyzed: From a macro perspective, the overall industry sales for daily chemicals, especially laundry detergents and liquids, should be higher than in February and March. Two reasons: first, the number of consumers won't change much; second, hot weather increases laundry frequency. If conditions allow, check overall industry data. Why first understand the overall category data? The reason is simple: If the category is growing, it's easier to find your growth within that increment. Everyone has room to grow, and tactics can be more flexible. If the category is shrinking or stagnant, it's harder to find growth. Your growth must come from competitors' decline, requiring cautious, tiptoeing tactics in squeeze-style growth. It's like the mindset when the market rises or falls in stock trading. 2. Understand All Competitors in the Market If your sales have indeed declined, and year-on-year comparisons also show decline, and self-inspection is done, then visit competitors' distributors to research their sales and year-on-year growth. Methods are simple: invite the regional head of a competitor for a meal, share feelings, and probe for information. You can also visit competitor customers under the guise of a new distributor, or visit influential local wholesalers to learn about their purchasing. In short, if you want to find out, there's no wall that doesn't have a crack. Why understand competitors? The reason is simple: if competitors are growing, they've clearly taken your sales. You need to study their tactics and devise countermeasures. If competitors are also declining, a new product is emerging to eat into your sales. You need to find it and suppress it. Of course, if the overall category is declining, that falls under the industry analysis above. 3. Understand Market Channels Ten years ago, channels were finely divided; now they can be split into two: online and offline. Non-planned products focus on offline, while planned products focus on online. The emergence of community group buying has given cheap, small enterprises a survival space, indeed impacting some companies' sales. But at this point, identify which products are affecting your sales. What are the actual sales of these products (some sales are unreliable, being fake orders)? How much of your decline is attributed to them? If the proportion is significant, deeply study your product positioning, pricing, marketing scenario setup, and consumer communication. Just like a 100,000-yuan car's promotions won't affect luxury car sales at all. -03- Step Three: Micro View of the Market This week, I visited a Master Kong instant noodle distributor in the northern Henan market. He returned to the office quite late, around 8 PM, having been following sales reps in the market recently. He said business in May and June was particularly slow, with daily collections only tens of thousands of yuan. I asked if his market visits revealed why business was slow. He replied: 'The pandemic has indeed affected people's lives; they seem to spend less. Premium instant noodles are selling noticeably slower, and the previous growth is shrinking. The classic braised beef flavor is also affected. Meanwhile, mid-to-low-end products like Yibeiban are being squeezed by Jinmailang's Yibei Ban, Baixiang's Duo Ban Dai, and Siyuan's Da Dai Mian, leaving us stuck. Previously, good times meant we didn't think deeply, but now we must solve these problems.' His answer was fair and reflects what I mean by micro-viewing the market. Declining sales is both a phenomenon and a result. Every effect has a cause. So what is the cause? We need to go to the market and investigate deeply. During market research, focus on observing opportunity points: which single product has breakthrough potential? Which channel has breakthrough potential? Then explore specific methods tailored to local conditions for easy implementation. Final Thoughts: Community group buying does disrupt channel pricing, and companies should coordinate with channel partners to avoid it. I also believe it can have some impact on sales. However, the reasons for declining sales cannot be unthinkingly blamed on community group buying. After all, over 80% of FMCG sales still come from offline channels. The urgent need for FMCG companies is to recognize the real reasons for sales decline, especially their own shortcomings, to find ways to reverse the decline and restart growth. Only with such concerted effort and morale boosting can they carve out their own small trend against the overall unfavorable backdrop. Payment of 400-2000 yuan will be made once the tip is adopted.