Staring at a pile of empty bottles on the table, Old Wang's face was flushed, and his eyes were a bit dazed. For this labor insurance group purchase order, Old Wang had really gone all out today. He couldn't remember whether the beer he drank tonight was the seventh or eighth bottle, but he was clear that he had to secure this big labor insurance deal...

In the channel division of first-tier city managers, besides conventional channels, there is another type called special channels, which are invisible and elusive. To this day, there is no precise definition. As a representative of traditional non-mainstream channels, special channels are relatively closed and heavily reliant on relationships. Over the years, they have remained a unique presence in the FMCG industry. Examples include well-known enterprise labor insurance, gas station convenience stores, drugstores, prisons, military, tobacco, points redemption platforms, gift companies, and scenic area supermarkets. These non-mainstream channels constitute the "special channels" of every urban market.

The acquisition and coverage of these businesses can be broadly divided into two types: direct coverage, usually supplied directly by special channel distributors, and indirect coverage, such as through third-party companies or intermediaries. The key to these two forms depends on who holds the customer relationships.

Whoever has the relationships can do it! It seems simple, but doing this business well is not easy. Because every project and every order in this channel is non-standardized and heavily dependent on relationships. Due to long development times, instability in the relationship subjects, lengthy and inefficient decision-making processes, and many uncertainties along the way, this is truly not an easy channel.

For city managers, special channels are auxiliary rather than core, but the biggest advantage is that they help local distributors monetize their social resources. Many distributors have been doing business locally for years, accumulating networks and social resources that have always existed but lacked monetization avenues. In the current era of rapid new retail changes, seizing a closed channel to do "slow business" has become more important than ever.

Although special channels are auxiliary and non-core, they can still be scaled. In some regions, special channels can account for 30% or more of the business.

This article focuses on the business of "special channels" and aims to provide inspiration and thoughts for first-tier city managers of various FMCG brands on how to maximize incremental growth in special channels.

-01- Special Channels: Platform, Scale, Professionalism, and Transparent Procurement

Although the special channel business cannot be standardized at present, there are some definite evolutionary trends. The first trend is the shift towards online and platform-based models, becoming more centralized and scaled.

Why? Sunshine procurement has been increasingly mentioned in recent years. According to incomplete statistics, the group purchase welfare market is about 400 billion yuan, of which 300 billion is enterprise labor insurance, which is the mainstream market for special channels.

In the past, almost every company had a "gray area" in procurement. But with the emergence of platforms like JD.com, Deli, and third-party gift companies in recent years, many group companies and government agencies are vigorously promoting "sunshine" procurement, completing standardized bulk procurement of labor insurance online. These units are increasingly inclined to use relatively transparent national platforms like JD.com and Deli, rather than the previous fragmented offline traditional procurement models. For example, JD.com has become one of the nationally designated "sunshine procurement" platforms for enterprise labor insurance.

On the other hand, centralized procurement is also becoming a clear trend on the enterprise procurement side. By establishing independent teams, departments, or companies, previously scattered fragmented procurement is integrated into centralized procurement, which improves procurement efficiency and reduces communication costs.

For example, for bank points reward physical items, previously the Guangzhou branch procured its own, and the Beijing branch procured its own, with different varieties and prices. Now, they are unified nationwide. Such centralized procurement not only improves bargaining power and work efficiency but also reduces the "gray areas" and "gray operations" within each unit.

Trend two: more professional, more open and transparent.

When an independent department or group is established within the company, with unified management procurement processes, product quality inspection becomes stricter, and there is also a desire to cooperate with brand owners or local mainstream distributors in joint marketing.

This involves not just procurement but also the provision of solutions. This goes beyond the past focus on price, kickbacks, or relationships, where relationships could determine everything. Now, with departmental and group professional operations, there is a demand not only for price but also for professional marketing solutions.

Of course, this is an opportunity for big brands. The more centralized, transparent, and scaled, the more disadvantageous it is for small and medium brands, which find it hard to pass through layers of screening, especially in terms of quality and margin distribution.

Group enterprises and public institutions have also publicly formulated strict procurement standards, even conducting whole-network price comparisons, such as benchmarking against JD.com and Tmall prices.

Trend three: create new demand and tell good stories.

Procurement by enterprises and public institutions ultimately reaches consumers, employees, or target service recipients. Products are just carriers; meeting end-user needs is the key.

For example, if you are a city manager for a cooking oil manufacturer and China Merchants Bank is procuring, you cannot just provide the product's formula and price; you must also "tell a good story" and coordinate related activities, such as marketing plans like "Attract Wealth and Treasure, Abundance Year After Year" or "Use Good Oil, Use Good Cards."

Another example: with more and more delivery riders, hand sanitizer brands can partner with platform companies to launch rider care initiatives, providing riders with cleaning and disinfecting products like hand sanitizers.

Frankly, riders do not have such a rigid need, but if local city managers can proactively create demand and tell good marketing stories, using products as carriers to convey value-added paths, many special channel businesses can be realized. This is the ability to "create demand out of nothing," which is one of the key capabilities for every city manager to excel in special channels.

Above is a global perspective on the evolution trends of special channels. Conversely, let's look at the pain points and misconceptions that first-tier city managers face with such channels.

-02- One-Sided Cognition, Unprofessional Operations, and No Matching Exclusive Products

Perhaps because special channels are non-mainstream and non-core, city managers often have limited understanding of them, sometimes even one-sided. Due to little or no resource investment, they easily neglect these channels, leading to unstable relationships. Additionally, because these are closed channels, customer resources are often held by specific key individuals.

If city managers have little or no cooperation with local special channel distributors, this business will be significantly reduced. Moreover, the larger the procurement customer, the more they have their own interest chains, such as intermediary "white glove" affiliated companies.

Without going through these affiliated companies, it is difficult to connect with major customers. Therefore, the first pain point for city managers in special channels is insufficient understanding, extremely low professionalism, unfamiliarity with special channel needs, products, margin distribution, and relatively weak decision-making and operational processes.

The second pain point is the lack of product matching for special channels.

Not only is there insufficient attention at the business level, but even at the headquarters or regional level, there is limited understanding of such channels, often using wholesale circulation specifications for special channels. However, because the prices of such products are relatively transparent, they often lack competitiveness in price comparisons. Many brands do not have exclusive products for special channels, and the profit distribution requirements are quite different, such as requiring the lowest price across the network while also having price tiers and levels.

These issues become bottlenecks. Of course, more and more companies are now developing and producing products exclusively for special channels, achieving exclusive supply through differences in specifications and flavors (often niche).

They realize that to do special channels, they must plan for them and have customized products. Even with whole-network price comparisons, because these are exclusive products, it is relatively easy to leave enough channel profit and margin space.

The third pain point is that many first-tier city managers approach special channels with a "wait for the rabbit" mentality.

Each order in special channels has a long development and cultivation cycle, making it easy to stall halfway. Over time, sales teams develop a "gambling" mentality of waiting for luck, and a lack of proactive development strategies is doomed to fail.

Above are the pain points city managers face with special channels. Next, let's look at the specific methods and strategies for first-tier city managers to address these pain points.

-03- Establish a Dedicated Team, Set Exclusive SKUs, and Develop Special Channel Customers

I will break this down from the three dimensions of "people, goods, and place."

1. Dedicated Team, Specialized Follow-up, Professional Training

First is the people aspect. If you are in the early stages of establishing special channels, my suggestion is to set up a part-time team, similar to a "Navy SEAL team," selecting some relatively young, daring, and challenging sales colleagues to work in small teams during weekends or spare time, jointly developing with distributors.

After a period of operation, once the business reaches a certain level in the mid-to-late stage, establish a special channel specialist. If a city manager truly wants to find incremental growth in special channels, they must specialize, cultivate professionals, and do professional work.

With dedicated personnel, you can conduct in-depth research on your market, formulate special channel standard products, channel strategies, and corresponding professional sales stories, and reshape, recreate, and innovate the value chain.

As mentioned earlier, to do well in special channels, besides relationships, products, and prices, with the evolution of channels, sales stories are also very important. In the absence of "strong demand," how to impress current special channel customers with sales stories, and how to achieve sales influence that creates waves even without wind, is a test of the special channel development team's capabilities and level.

Compared to the constantly iterating retail channels, relatively closed special channels do not change much. With dedicated personnel, you will become more skilled and experienced over time, gradually building a moat for this channel. Once consolidated and established, it will be easy to defend and hard to attack, making it difficult for competing brands in the market to encroach.

2. Differentiate Products, Develop Specifically, and Select Products with Integrity

For special channel product selection, it is recommended to differentiate from regular e-commerce and KC specifications. Companies can set exclusive SKUs for special channels, list clear prices on JD.com and Tmall flagship stores to set benchmarks and facilitate customer price comparisons.

Do not aim for high online sales; just establish price perception to give the offline ground forces space to promote and develop special channels more conveniently.

For the design of special channel standard products, in the early stage, conduct market research to fully understand the channel's needs for product margin distribution, and also carefully analyze competitors' situations to develop targeted products.

How to do it specifically? For example, set a few niche or slow-selling flavors and fragrances from regular standard products as special channel products. And set targeted product selection strategies based on competitors' main price bands. For instance, if research finds that 15-20 yuan is the mainstream and most chosen by group purchase labor insurance customers, launching killer products in the 15-20 yuan range with more competitive prices is the right tactical direction.

Finally, select products with integrity. In the past, many city managers defined special channels as "channels for clearing inventory." For example, if they found 100,000 yuan worth of near-expiry products in the warehouse, they would quickly find a few customers to clear them at a discount through "labor insurance."

This may seem like a clever way to solve immediate old inventory problems, but it often backfires. Special channels ultimately reach consumers. If consumers use near-expiry products, their experience will be greatly diminished, ultimately affecting the brand's image and product reputation in the minds of local consumers. More directly, it is easy to lose future labor insurance orders.

Consumers will ultimately pay for the product experience. This is the biggest misconception in the past operations of special channels by city managers. Be vigilant, do not eat your seed corn, and do not let short-term interests harm long-term reputation.

3. Develop Special Channel Distributors and Co-create Activities with Platforms

Special channel customers vary by city. For example, some cities have mining groups, telecom companies, or electronics factories like Huawei and Foxconn, making them more suitable for special channels.

Of course, such major customers must be handled in cooperation with professional special channel distributors. As the saying goes, "professionalism comes from specialization." These long-established special channel distributors not only have ready-made special channel networks but also possess customer relationships and professional expertise. City managers must proactively seek and develop professional special channel distributors in these cities to achieve rapid distribution coverage of special channel products, reaching the goal of "borrowing a boat to go to sea."

If there are no professional special channel distributors locally, encourage existing local distributors to jointly develop with them. In the early stage, fully tap into the distributors' social resources and specific relationships, let them taste the sweetness of special channels, and later gradually standardize and professionalize.

Additionally, as mentioned earlier, special channel platform companies like JD.com and Deli can be co-created with distributors, trying new marketing methods such as live streaming sales, online discounts, flash sales, and gifts with purchase, to give end users of special channels a better experience.

In summary, although the sales volume of special channels in each city market is limited, and the characteristics of special channels vary by category, as a first-tier city manager, you must value every channel that can generate sales. For such closed channels, if you do it, you have it; if you don't, you don't.

As long as you accumulate resources and expertise in the early stage, you only need regular maintenance in the later stage to reap stable sales orders. Compared to the fierce competition in other channels in the red ocean, relationship-driven special channels have a natural moat. It just depends on whether you are willing to take time to think and put in the effort to do it!

Start building your special channel business foundation! Every first-tier city manager will be extremely happy if they have a stable "slow business" channel in the future...

At 7:30 in the morning, the urgent and cheerful phone alarm rang on time: "Worker, worker's soul, workers are above all..."

Old Wang's hangover finally cleared. He couldn't remember the scene of being carried back by colleagues last night, but he clearly remembered that this big group purchase was close to closing.

Standing up and walking to the window, the winter sun shone on his face, warming his heart. He had paid too much for this labor insurance deal, not knowing how many words he had spoken, how many drinks he had drunk, how many versions of the plan he had revised, and how many white hairs he had grown...

But he felt all the efforts were worth it. Old Wang believed that the harder the order to develop, the longer it would last in the future, because few people are willing to do difficult things. In the special channel track, there are actually not many real competitors...

About the author: Xu Xiang, currently the Sales Director of Unilever South China, with 20 years of experience in FMCG daily chemicals, dairy, and condiments, deeply engaged in regional market management and customer marketing. Willing to exchange and learn with peers. The above article represents only personal views.

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