Click to read the original article for details In the past two years, the rise of innovative consumer brands has been evident to all. With the support of capital, the dividends of e-commerce, changes in user demand, and category innovation, many new consumer brands have become hot topics in the industry. New Distribution has been continuously following and reporting on new consumer brands, hoping that their innovative cases can inspire more people, provoke thought, and bring about changes that adapt to social trends. Of course, while learning from innovation, we also see that "no one is perfect." New consumer brands may have crossed the threshold of venture capital and been highly favored on e-commerce platforms, but when faced with the 70% of business that comes from the offline market, they often look bewildered. What exactly should be done offline? How to break through, and what is the key button? Is it a problem of product price, channel promotion, or brand, or is it a problem of organizational capability? A while ago, I had an in-depth exchange with Mr. Hu Hao, the strategic partner of Haowangshui & Kouwei Quan. As an FMCG professional with both online and offline "genes," how does he view the offline "dilemma" of innovative consumer goods? Before discussing how innovative consumer brands can go offline, let's first talk about Hu Hao's personal experience. Only by understanding his background can we appreciate the value and significance of his insights on the key buttons for new consumer brands to go offline. Constantly Changing Roles, Possessing Both Online and Offline Perspectives Hu Hao recalls that he entered the FMCG industry in 2002, with his first job at Master Kong. After more than a year, he joined Jia Duo Bao (then selling Wanglaoji herbal tea) in 2004. At that time, Jia Duo Bao was planning to expand nationwide from its base markets in Shenzhen and Wenzhou, and Hu Hao was part of the team recruited for this national expansion. From 2004 to 2015, he experienced the entire process of Wanglaoji herbal tea going from 1 to 100 and Jia Duo Bao herbal tea from 0 to 1. Especially as the head of the South China market, after the Wanglaoji brand could no longer be used on May 12, 2012, he truly experienced what it meant to be in a "battle between past and present lives." At the end of 2015, Hu Hao left Jia Duo Bao and hoped to step out of the beverage industry to experience more cutting-edge business fields, which led to the later smart locker commercialization project and the smart convenience store startup project. Hu Hao admitted that although both projects ultimately failed, it was precisely these two projects that allowed him to break free from the role of a professional manager as a cog in the machine and the traditional business understanding of the beverage industry, broadening his cognition and understanding of the business world. Especially in the later smart convenience store project, as a founding partner, he was responsible for setting strategy, defining goals, and conquering the market. At the same time, because of entrepreneurship, he met many fellow entrepreneurs in the VC field and new consumer brands. In October 2019, by chance, Hu Hao joined Alibaba. At Alibaba, he saw a more diverse new world and a richer ecosystem of the business society, absorbing internet methods and thinking that were inaccessible in the traditional beverage industry, and also made a group of loyal friends and colleagues. It is these diverse experiences that have given Hu Hao a three-dimensional understanding of online and offline, and through long-term communication with new consumer brand entrepreneurs, he has come to understand their pain points and problems. Misconceptions of New Consumer Brands Going Offline Regarding the misconceptions of innovative consumer brands going offline, Hu Hao was blunt: many problems are actually cognitive issues of the founders. For example, from a people perspective, founders do not understand offline, thinking that finding a good sales partner or sales director will solve offline sales problems. But in reality, even if the person you hire today is reliable and highly professional, it is still difficult to do well offline. Why? Hu Hao explained that sales directors can generally be divided into two categories: expansion-oriented and operation-oriented. An expansion-oriented sales leader is typically a master of attracting distributors, opening customers nationwide, but there is a fatal problem: they attract distributors but fail to operate well. The offline FMCG market emphasizes daily progress and meticulous daily operations. It is not about opening a customer today, pushing a bunch of goods, and finishing the performance numbers. Even if your product enters 7-Eleven today, how to increase the PSD (daily sales per store) from the current 0.1 or 0.2 to 1, 2, or 3 in the future is the result of operations. And it is not just sales operations; it also includes integrated operations of product, brand, and sales. On the other hand, operation-oriented talents usually have weaker expansion capabilities. In addition, operation-oriented leaders often handle a specific segment or channel in large enterprises. If they are to think about the overall business from the perspective of a founder/boss, it is almost impossible because large enterprises, in order to balance and divide power, almost always have each person responsible for their own duties. So selling goods into channels is relatively simple. But what about after entering? This question seems to be the responsibility of the sales leader, but as mentioned earlier, it is closely related to product, brand, channel, and even supply chain. These key links require the founder to coordinate and solve. Starting with the product, online you can inform consumers through videos, text, images, and external reviews, but offline, on the shelf, consumers will only spend a few seconds or a dozen seconds looking at the product and then leave. In those ten-odd seconds, how do you get them to choose to buy? This includes whether the product packaging design is suitable for visual presentation on the shelf; whether the sales personnel have established good relationships with the store after entering, so that supermarket staff can place the product in the golden eye-level position; and when users are choosing among similar products, whether your brand gives them a sense of safety, fun, or even romance... Then there is pricing. There is a saying in the industry: "Pricing determines the world." The price settings at each level of the channel directly affect whether the customers in the brand ecosystem stay with you. For beverages, especially new consumer brands, offline distributors may need to retain a gross margin of 20%-30%. From distributors to terminal retail is even more complex. Taking supermarkets and restaurants as examples, in supermarket or convenience store channels, in addition to front-end gross profit, back-end gross profit must also be considered; in restaurant channels, customers require a gross margin of 50% or more for beverage products. If the price system is not clear, thinking that a good product with sufficient selling points is enough, that is not the case. Finally, regarding brand, Hu Hao believes that the beverage industry is typically brand-driven rather than channel-driven. With a broad audience and high-frequency repurchase characteristics, brand becomes the best tool. But brand is not a lofty slogan; it is the channel advancement and operation after scenario-based deconstruction according to brand positioning, and it is consumer cultivation and interaction in high-frequency scenario-based channels. After explaining these points, new consumer friends should have a sense of it. Doing all these well is not something a sales partner or sales director can handle. It is actually a top leader project. The founder must personally participate and coordinate all resources to improve day by day, and the final result can be the growth of PSD. It's Okay Not to Understand Offline at the Beginning, But Not Forever To solve these problems, we must return to the origin and think from the founder's perspective: what is your strategy? Who to become, who to benchmark against, and who to position against. Once you have a clear strategic direction, you can set business goals. For example, if your strategic positioning is to be the NO.1 in a new consumer track in a certain category, the business goal is to have an absolutely high market share, and the three-to-five-year business goals will emerge. Based on such business goals, you can then plan your offline partners and the profile of the people you recruit. And according to the characteristics of the sales leader, you can combine and match the sales management team to enhance overall offline business capabilities. The most critical point is that founders must learn and understand the offline business. The reason is simple: wherever the business is, the founder should be. Founders who do not understand the offline business will find it difficult to build trust with partners, and thus there will be no win-win cooperation. Regarding how founders can go offline, Hu Hao also listed some key steps for reference. First, for the top X distributors offline, the founder must know that they need to personally maintain relationships, conduct regular business visits and business reviews. This is the core lifeline of the offline business. Second, when products are developed for the offline market, they should first be test-sold using the MVP method, and the founder must participate in understanding user feedback on price, taste, packaging, etc., in the high-frequency channels covered by the planned scenarios. Third, from MVP to building a city model, the founder must lead the way in carving out a path. Leading the team to victory is the founder's basic skill. Fourth, the Chinese market has huge opportunities, but founders need to go down to the market themselves to discover and explore market opportunities, rather than staying in the office daydreaming and giving orders. Fifth, only by going into the enemy's camp can you understand the reasons behind their strengths and weaknesses. Only by going to their strong markets can you dig out the talent you want. Finally, Hu Hao said, Recently, I have been emphasizing: sell-through. Frankly speaking, after the past two or three years of accumulation, new consumer brands now have a certain perception and understanding of offline. Wearing the cloak of being an internet celebrity and entering channels is no longer too difficult; it is just a matter of entry negotiations. But after entering the channel and getting on the shelf, how do you sell the products? That is the true starting point of entering the offline market. Note: For more on how new consumer brands can break the offline market dilemma and achieve efficient sell-through, we are honored to invite Mr. Hu Hao to give a special sharing session at the 2021 (4th) China FMCG Conference held by New Distribution in Shanghai from August 24 to 26. Stay tuned! PS: From August 24 to 26, 2021, the 2021 (4th) China FMCG Conference organized by New Distribution will open in Shanghai. Focusing on industry trends + practical cases + growth through connection, 3,000 FMCG practitioners will gather for the event. 10 thematic forums cover new retail O2O, community group buying, short video and live streaming e-commerce, distributor transformation, rise of new consumer brands, new beverage interpretation, distribution B2B supply chain, omni-channel marketing, B2B2C new technology applications, etc., with operators from various segments bringing the latest case interpretations. Some of the confirmed heavyweight guests so far include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, global expert partner at Bain & Company and former vice president of marketing for Coca-Cola China; 4. Chen Xiaodong, senior vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 5. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; 6. Yang Hongbin, vice president of Junlebao Dairy Group; 7. Yang Shun, COO of Lipton Greater China; 8. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operations Center; 9. Li De, e-commerce general manager of Gold Hong Ye Paper Group... A grand event for FMCG professionals, you must be there! Are you "watching" me?