But no matter how the model changes, a distributor needs four basic capabilities to do business well:
1. Coverage capability of local retail outlets 2. Service capability for market terminals 3. Consumer marketing capability 4. Supply chain management capability
But these capabilities share a common characteristic: all actions revolve around the "retail store" scenario, a model of "goods not moving, people moving."
No matter how many types of channels there are, the distributor's sales model is relatively simple. In summary, it comes down to eight words: outlets | visits | displays | sales promotion | orders | warehousing | logistics | finance.
-01- Online and offline, combined into one
Recently, Yonghui Superstores released its financial report. In the first quarter of 2021, revenue declined 9.9% year-on-year, net profit attributable to the parent company declined 98.51% year-on-year, and operating cash flow declined 65.86% year-on-year. As for RT-Mart, Walmart, Carrefour, and other large retailers, it goes without saying that they are all in a state of widespread decline.
When the nest is overturned, how can the eggs remain intact? With such a sharp decline in hypermarkets, how can distributors have a good time? Consumers are still the same consumers, but where have they all gone to consume?
Undoubtedly, today's consumers have migrated en masse to the mobile internet. According to a large-scale survey by a consulting firm, 63% of Chinese consumers have begun to shop both online and offline in a hybrid manner.
The boundary between online and offline retail has become very blurred. Local hypermarkets have been so impacted by community group buying that the shift from physical retail to full-scenario retail combining online and offline is inevitable!
Full-scenario retail includes both the physical store retail model where goods don't move but people do, and the O2O model where people don't move but goods do.
-02- Reach and operation + relationship and experience
Online retail is no longer just the job of the brand's e-commerce department; full-scenario retail within the same city is a capability that every distributor must possess today.
In the face of such a severe retail environment, whether it's offline retail, O2O models where transactions happen online and goods are picked up offline, or private domain traffic, community group buying, same-city short video e-commerce, etc., distributors must ensure they have the capability of full-scenario distribution and all-scenario distribution: when people move, goods are there; when people don't move, goods arrive.
This full-scenario distribution capability is a brand-new distribution capability, fundamentally different from traditional distribution models. It is a brand-new supply chain model:
Distributors' past capabilities → coverage | service | transaction | efficiency. In the face of the full-scenario retail environment, in addition to doing the original model well, distributors must develop new capabilities: reach | operation | relationship | experience.
-03- Passive to active + media recommendation
In the past, brand manufacturers described the distributor's marketing work as simply placing goods at points of sale (distribution) and doing good merchandising, which basically completed the task. I call this model, which only solves in-channel distribution and merchandising, the "coverage model."
But today, users have begun to consume in all scenarios, and consumers have significantly reduced their shopping in physical stores. Consumers also order takeout, participate in community group buying, and shop on Moments, WeChat groups, mini-programs, short videos, and even through QR codes on elevator posters. This large number of fragmented transaction scenarios requires distributors to have the capability to reach all channels.
Moreover, for online sales, the old model of just putting products on shelves won't work. We must gradually shift from a passive sales model to an active sales model. I call this reach capability the reach model. How to understand it?
Wherever users' attention is, we appear there.
If users are in communities, we are in communities; if users are on Douyin, we go to Douyin. We try every means to reach users with our product information.
How to build the capability to reach users online locally?
From the perspective of reach actions, it can be divided into four categories:
Passive: electronic shelves, one product one code; (associated transactions) Media: localized Douyin, official accounts; Recommendation: KOC, shopping guides, Moments; (direct transactions) Active: user social referrals;
All our actions revolve around how to push our information to consumers through these four categories of means, so that consumers perceive our existence.
Distributors should understand that manufacturers and distributors must cooperate more deeply to complete localized online reach work more efficiently.
-04- Operate users + operate content
The concept of service is easy to understand. From the perspective of service targets, distributors used to serve brand manufacturers. The flow of commerce, logistics, capital, and information, the allocation and transformation of time and space, ultimately completed sales.
At the same time, distributors also serve terminal retail stores, helping retail customers complete a series of service actions such as moving goods, shelving, exchanging goods, and handling customer complaints.
These are all services.
But today, it's not enough to just serve brand manufacturers and retailers well. No matter how beautifully we display products at the terminal, if consumers don't buy our products, they won't sell. Today, we need to think about how to sell products to consumers through operations.
The operation here includes two meanings: user operation and product/content operation.
User operation is easy to understand: it's a series of means and techniques through social tools to ultimately let consumers see and identify with our products.
The core purpose of product/content operation is to stimulate consumers' purchase needs.
We can persuade consumers through images, copy, advertising, and other methods. For example, the recent hot Douyin/Xiaohongshu planting and harvesting online and offline is a typical content operation method.
The purpose of product content/operation is to get users to complete actions such as forwarding, liking, commenting, and participating. Ultimately, it achieves a series of behaviors close to product transactions, such as following → ordering → visiting the store → registering as a member.
Many people may not understand why we need to do content operation.
Liang Jiangjun explained this topic on his official account: During the TV and PC era, when people advertised, they didn't care about content; advertisers cared about the time slot and ad position.
Because these two points determined the click-through rate.
But now, when location and position are not as effective as good content in capturing user attention, content operation has become the focus of all our operational work today.
Moreover, you should know that you cannot complete channel transactions on all channels and media, but content can make users remember and follow up in the long term.
The essence of content operation is to trigger users' sense of consumption value, letting consumers truly feel the charm of the product.
Distributors may ask, isn't this the manufacturer's job? What does it have to do with me?
Operating users is one of the basic actions of every shopping guide today.
Operating content is the prerequisite for distributors to do localized traffic reach well.
-05- Relationships determine brand attractiveness
In the past, all links between distributors and consumers were transaction-oriented. When the transaction ended, the link ended. All repurchases were based on brand influence plus broad channel coverage.
But today, meeting consumer needs at the product level is no longer enough to create deep attraction to the brand. Only by building a certain relationship with users and creating an emotional connection with them can there be sustained transactions.
In the past two years, private domain traffic has been very popular. It sounds high-end, but it's not far from our FMCG industry. Simply put, you can understand it as our shopping guides and our customers becoming good friends through long-term connections, thereby further deepening consumers' loyalty to the brand.
So private domain is essentially the monetization of interpersonal relationships. Through building a deep link of brand + relationship with users, we ultimately achieve consumer loyalty and identification with the brand.
Private domain is not contact; it is relationship.
-06- Matching under diversification and pluralism
In the past, distributors' business was built on efficiency. They represented a single category, distributed through a single model, and sold on a single channel at scale. They obtained profits by accelerating the turnover of goods and capital.
But the internet has made today's retail extremely diversified, and consumer demands extremely pluralistic. If we continue to use the old HBG model (mass production, mass communication, mass distribution) for sales, we will find that consumers simply don't buy it.
Today, to win consumer favor, we must consider the diversity of retail scenarios and the pluralism of consumer demands to satisfy consumers and maximize their experience. The essence of this maximization is a shift from selling one product to 1 billion to selling 100 products each at 10 million.
When it comes to distributors, how should they do it?
1. Match SKUs based on scenarios and consumer needs, rather than selling a single product for efficiency and low-margin volume. 2. Based on consumer behavior and consumption characteristics, make targeted changes to transaction and delivery forms.
Another dimension to interpret the four points described above:
1. Cognition: Not only passively discovered by consumers, but also actively manage consumers' cognition of our products/brands.
2. Transaction: Ubiquitous | value for money | proactive reach.
3. Relationship: From knowing, contacting → identifying, relationship.
4. Delivery: Online + offline | 2B + 2C + 2O | retail + e-commerce + social.
In short, the product line should be rich; not only passive dissemination but also proactive reach; transaction forms should be both offline and online; not only sell goods but also make friends with consumers; delivery forms should be both to the store and to home.
Summary:
Several concepts of distributors must be transformed:
1. Abandon the game theory mindset; manufacturers and distributors should cooperate deeply, have a holistic view, and be sufficiently open.
2. Abandon the low-margin volume model and gradually shift to a high value-added, high-margin model.
3. Abandon the goods-moving model; transform from distributor to operator, shifting focus from retailers to consumers.
4. Upgrade from informatization to digitalization: online, precise, efficient, routed.
Over the past 30 years, distributors have been constantly changing with the changes in brands and retail in China's FMCG industry. Today, with the diversification of retail and the pluralism of consumer demands, it is clear that distributors' capabilities have fallen behind the changes of the times.
Undoubtedly, digitalization is the core strategy for all brand manufacturers in the next five to ten years. Insight into users, discovering needs, leading needs, and satisfying users is no longer just the responsibility of brand manufacturers.
In the future, the connection and cooperation between manufacturers and distributors will become closer and deeper. Only in this way can we better serve consumers and remain invincible in the future.
| Founder of New Distribution, expert in the FMCG industry channel, original author of over 400,000 words of FMCG industry research articles. For communication, you can add WeChat by long-pressing. When adding, please indicate your company, position, and name. | If a tip is adopted, a payment of 400-2000 yuan will be made.