Click to read the original text for details Regarding digitalization, I once made an analogy: saying digitalization is a trend feels like there is a highway over there, seemingly not far from us, but when we actually head in that direction, we find various obstacles and potholes on the road. We are actually pushing the cart forward step by step, and the more we walk, the more unreachable it feels! Why is this? Is it that enterprise leaders do not pay enough attention to digitalization, or are not resolute enough in implementation? Or is it that they have not found a suitable digitalization path for themselves? Today, I want to share my thoughts on the strategies and paths of digitalization for FMCG enterprises through three real cases. 0****1

"Tools" and "Models"

The first case is Dongpeng. In 2021, Dongpeng Beverage's super single product, Dongpeng Special Drink, had sales of nearly 7 billion yuan. In terms of tonnage, it has surpassed Red Bull and ranks first in China. Dongpeng's digitalization has played an indispensable role in achieving this. Let me show you a set of data. As of 2021, Dongpeng had over 2 million terminal merchants, over 2,000 distributors, over 40,000 distribution and wholesale merchants, and a cumulative total of 140 million people scanning codes, with over 4 billion cumulative scans. How did they do it? By using digital means to connect the entire channel chain, with bC integration being a core key. It is not complicated to say: based on basic tools like one-item-one-code and mini-programs, through means such as red packets and one-yuan exchange, they attract consumer participation, motivate terminal promotion, bring traffic to terminals, and digitalized sales promotion in turn promotes digitalized distribution. QR code marketing is very common, but few have achieved what Dongpeng has. Why? I think a sentence from Dongpeng's CIO Zhang Le captures the key: Other companies may just treat digitalization as a tool system, but at Dongpeng, we knew from the beginning that we had to treat it as a business model! Does this mean that Dongpeng thought it through clearly from the start, combining digitalization with the business model for design? Not at all! On the contrary, Dongpeng's digitalization has been iterated step by step. Let me show you a picture, which is my division of Dongpeng's digitalization. The first stage: launching systems like ERP and SFA, which is actually internal informatization. The second stage: I call it digitalized channel marketing, one-item-one-code marketing promotion. The third stage: I call it the channel digitalization stage. Because the previous QR code marketing and bC integration were relatively successful, their digitalization has been advancing, with different system platforms such as consumer interaction platforms, terminal merchant membership systems, and distributor DMS/delivery mini-programs all coordinated, to a certain extent entering the channel digitalization stage. Let me tell you a true story. In March this year, due to a project, I went to Huoqiu County, Anhui for research. One noon, I walked into a small shop and asked the owner if any brand was running a scan-code-to-win-red-packet activity. The owner told me: Yes, Dongpeng Special Drink. Any other brands? He thought for a moment and said, Nongfu Spring's Cha Pai. I bought one, opened it, and there was nothing. Later, I specifically verified this with a friend at Nongfu. He said that when Cha Pai was launched, they did have a QR code marketing campaign, but it was stopped later. Whether it is "scan code to win red packets" or "one-yuan joy", these specific operations are not complicated, and on the surface, they do not look much different. But the key is, what is behind these operations? Many brands actually treat it as a promotional tool for new product launches, using digitalization as a tool to solve a specific problem. Dongpeng is different: they not only use digitalization as a tool, as a marketing tool, but also use it to upgrade the business model and optimize the entire system. When Dongpeng first started QR code marketing, because some people were exploiting the system, they lost about 20 million yuan a year. But what did Dongpeng's boss say? Digitalization must continue; this is tuition we pay, and we need to review and summarize. If it were another company, they might have held people accountable and replaced them long ago. Here I have a thought. Do you only treat digitalization as a tool to solve specific problems, or do you also have a model perspective, using it to iterate the business model and optimize the entire system? I believe both perspectives are necessary. Treating it as a tool to solve specific problems in business scenarios is the entry point for digitalization. But you must not stay at the tool perspective. Because any problem exists within a large, complex trading system, and system optimization is needed to preserve the fruits of single points. More importantly, with a system perspective, digitalization can combine with actual business to bear fruit. 02

"Technology" and "Business"

After talking about Dongpeng, let's talk about another case: Snow Beer. At the end of March, New Distribution went to Guizhou. Why there? Guizhou is Snow's provincial base market. Starting in 2020, Snow Guizhou adopted digital marketing methods to promote its high-end products in both on-premise and off-premise channels. Their QR code marketing can achieve precise delivery based on time and space. What does that mean? For example, a red packet of a specific amount can be dynamically delivered to a certain business district, or even a specific terminal, at selected time periods. This greatly improves marketing flexibility, and through effective bC linkage, maximizes the input-output ratio. In fact, precise delivery is not difficult to achieve technically; the real difficulty lies in operations. Guizhou Snow has achieved outstanding results in this regard. From August 2020 to December 2021, a total of 2 million cans of "Chaoyong" were sold. The QR code scan rate went from only 1% at the initial launch to a staggering 90% by December 2021, with an average scan rate of 76%. Low scan rates are a major problem in QR code marketing. Why were they able to achieve such a high scan rate? After in-depth understanding of Snow, my inspiration is: When it comes to digitalization, everyone likes to talk about technology, tools, and methods. Are these important? Yes! But what is truly important is organizational capability. I have a viewpoint: the difficulties enterprises encounter in digitalization may ultimately be organizational problems. Why? Digitalization requires the support of technology and tools, and it must be combined with business scenarios. It will inevitably change some of the enterprise's original processes, touch the interests of different departments, and involve complex relationships between online and offline, regions, etc. These all relate to the issue of "organizational capability". If a small problem is not coordinated well, it is difficult to advance. When I communicated with a digitalization leader at a certain enterprise, he had doubts: Will the sales department cooperate? Will distributors cooperate? How do departments coordinate? You know, in large enterprises, cross-departmental collaboration is very difficult. Why doesn't Guizhou Snow have this problem? Snow has marketing centers in every province. Guizhou Snow's digital marketing is specifically led by the marketing department of the provincial marketing center, but it is carried out under the leadership of the general manager of the marketing center, making it a true top-leader project. In fact, in the early stages of Guizhou Snow's QR code marketing, the data was not ideal, and the results were mediocre. Later, they achieved a breakthrough in Zhenfeng County. After the Zhenfeng market exploded, based on the Zhenfeng experience, Guizhou Snow summarized the course "How to Forge Ultimate Customer Relations" for the entire Guizhou Snow team to learn and apply to each major region. Breakthrough at a single point, expanding from point to surface, the QR code scan rate rose steadily across the Guizhou market. Combining the Guizhou Snow case, I want to talk about a pair of perspectives on digitalization: technology and business. When mentioning the word "digitalization", people naturally think of technology and tools. Of course, technology and tools are the foundation of digitalization, but this foundation now has professional supply in the market. Whatever tools you need, they can basically be made for you. But the key is, is digitalization really about these issues? No! Technology and tools must solve specific business problems, match your business processes, and your organization must use them for them to take effect. Many difficulties enterprises encounter in digitalization are actually problems of unclear business processes and the inability of tools to organically match the organization. Therefore, some enterprises now have digitalization centers, which is good, but I want to say that if it cannot be combined with business, digitalization cannot land. 03

"Transformation" and "Change"

Finally, there is a white liquor case. Honestly, the name is not well chosen; it is too long. But "worthy of attention from the FMCG industry" is indeed my sincere thought after understanding Shahe Tequ. Why? Because the bC integration logic is not complicated, and the idea is beautiful. But when you actually do it, you encounter many practical problems from real scenarios. However, I found that Shahe Tequ has seen all these problems, thought them through clearly, and not only thought them through but also equipped corresponding solutions. If I were to use one word to describe the impression of Shahe Tequ's digitalization practice, it would be "system design". Why? This is clearer through this link diagram. Similar link diagrams exist in other cases, but most are formed gradually through patching, adjusting, and iterating. Shahe Tequ was carefully designed. Currently, in most bC integration practices, the brand side treats it as a means of market promotion. Frankly, at the time, I thought Shahe Tequ was also using it for new product promotion, and the medium-to-long-term continuous operation remained to be seen. Three weeks ago, New Distribution was invited to participate in Shahe Tequ's digitalization exchange forum. We found that in the past few months, Shahe Tequ's digital new retail has developed very well, replicating rapidly while also continuously iterating. I briefly summarize Shahe Tequ's digitalization as: First, introduce big C at the small b end, leveraging more consumer demand through leverage; second, after connection, activate private domain through refined operations and tap into group buying; third, use digital methods to ensure the effective operation of the benefit distribution mechanism; fourth, digitalization achieves "precise blasting" that traditional methods cannot. How does a local white liquor brand do such link design and system development, including refined online-offline integrated operations? This is actually Beijing Lianyi Lian participating on the ground, with front-line personnel deeply involved, and middle and back offices providing support, around the digital "special zone" project defined by "Shahe Tequ 6". Why do this? Lianyi Lian's founder Lin Feng said that through years of consulting experience, he found that for many enterprises, the challenge of digitalization is not the leader's awareness and concept, but the enterprise's existing business processes and organizational model. Because digitalization is not just technology and tools; it involves the enterprise's business, processes, organization, culture, and other aspects. Simply providing a tool system or consulting plan cannot truly land digitalization. So he chose to personally participate, helping enterprises make digitalization land and grow. Through Shahe Tequ's digitalization practice case, I want to talk about another pair of perspectives on digitalization: transformation, or change? Now when we mention digitalization, we all talk about digital "transformation". But I believe that in this matter, what we should really talk about is "change"! Why? Transformation implies a directional shift on the whole. Always talking about transformation, but the enterprise is like a ship: how to turn? Where to turn? What if we turn wrong? We don't know! But we have to turn, so we first buy a system to try. As a result, leaders talk about digital transformation every day, while subordinates curse every day, saying: What digitalization? It increases workload, wastes time, and is useless. In fact, digitalization is not a so-called directional shift. On the surface, it is a set of tool systems, but in reality, it is the transformation of business processes, organizational functional division, and the enterprise itself. Rather than talking about "transformation", it is better to talk about "change". _ First, change is definitely not a simple direction adjustment, but a transformation of the organization's own model at the organizational level. _ _ Second, change is gradual; it is a process of trial and error, adjustment, and gradual occurrence from point to surface. _ _ Third, and most importantly, when talking about change, we can learn the strategies and paths of successful change. _ 04

"Strategy" and "Path"

When it comes to successful change, China's reform and opening-up is the best example.

If you summarize the experience of China's reform in one sentence, it is actually using increment to drive stock. Specifically, it is doing pilot projects first, not large-scale rollout, from the initial establishment of special zones to the current various policy pilots, all are like this. Using increment to drive stock is a very practical and effective way to break the deadlock. The digital change of FMCG enterprises can also learn from this. For example, should digitalization start from the channel end or the marketing end? Connecting the channel chain through systems is something many brands have been doing, but most still stay at the stage of post-hoc recording information systems. Through mobile onlineization, distributors and terminals have no motivation to do it. Starting from bC integration at the marketing end can be a breakthrough point. First, marketing itself has the issue of expense allocation, and digitalization can make it more precise and effective. Second, the marketing end brings increment; merchants and distributors can make money, so they are more willing to cooperate. But the current problem is that many brands only use QR code marketing as a promotional tool, not elevating it to the level of digital model and system. From the Dongpeng case, we can see that similar actions, different thinking behind them, lead to different results. Also, in terms of products, should we start with new products or old products? Compared to old products, new products are easier. The channel chain value and fee allocation for old products are fixed, and readjusting them is very difficult. New products are different; they need promotion themselves, have marketing budgets, and the various links in the chain are more motivated to cooperate and push forward. The cases we mentioned all started with new products. Additionally, should we do comprehensive promotion or pilot in business regions? If the digitalization department makes plans but does not combine with business departments, the ideas cannot land. Combining with a business region and trying from a single product or a specific project is a feasible path. But there are also problems here. On one hand, business departments are worried about performance every day and find it hard to have a long-term perspective. On the other hand, they are used to quickly getting orders through channel transactions, and truly entering the user operation model is also difficult. But if the regional department has the conditions in terms of ideas, awareness, and capabilities, this is a more practical way than relying on the digitalization center to push at the entire enterprise level. Of course, if possible, like Shahe Tequ, designating a special zone and operating from the start according to the digital model in terms of products, operations, organization, etc., is also an optional way. The above are several summaries from the perspective of "change" in viewing digitalization. Instead of talking about "transformation", we talk about "change", and the idea of "change" is to open new paths with increment, then gradually activate stock resources. Of course, this is a long-term process. 05

Summary

Finally, is there a standard method for digital change applicable to all enterprises? No. On one hand, digitalization is still in progress, and each company is trying and exploring. On the other hand, different enterprises differ in scale, category, process, culture, etc. But the digitalization practices of different enterprises can provide valuable ideas and inspiration to the industry, so industry exchanges and discussions are very meaningful. From the 20th to the 22nd of this month, the 7th China FMCG Channel Innovation Conference will be held in Chengdu . We have specially set up multiple forums focusing on digital topics such as "Digitalization · BC Integration", "Digital Intelligence · Business Empowerment", and "Digitalization · Supply Chain". Marketing, digitalization, and new retail leaders of FMCG brands, as well as friends studying industry development, should not miss it! _ -END- _