“In the next five years, the only channel that can maintain growth in a shrinking market is instant retail,” a view shared by Zhao Bo, founder of New Distribution, during a recent market visit. In recent years, driven by the new retail wave, platform-based home delivery models like JD Daojia and Pupu Supermarket have emerged alongside the traditional FMCG market structure, while traditional supermarkets such as Walmart, Yonghui, and RT-Mart are also laying out instant retail, digitalizing local supermarkets. In the past, distributors had weak participation in new retail channels, with most managed directly by manufacturers, but instant retail, as part of localized business, provides new opportunities for distributors. Today's protagonist of "New Distribution 100 People" is a distributor who has been entrepreneurial for ten years, focusing on new retail channels and instant retail: Qian Hua, founder of Shenzhen Rongderun Trading Co., Ltd. Currently, the company primarily deals in beverages and snacks, representing over 100 brands including Dongpeng, Wanglaoji, Youyou, and Luobawang, with annual sales exceeding 200 million yuan. Recently, New Distribution had an in-depth exchange with Qian Hua, founder of Shenzhen Rongderun Trading Co., Ltd. (hereinafter referred to as "Rongderun") in Shenzhen. This article shares his thoughts and summaries on doing instant retail channels with you.
Why focus on the instant retail track? Before establishing Rongderun, Qian Hua served as a buyer for 12 years at a large domestic supermarket chain. After founding his own trading company at the end of 2014, he naturally placed strategic focus on the KA channel. Qian Hua told New Distribution that at that time, modern stores had passed the stage of trend-driven growth, with growth rates beginning to decline, but overall they could still maintain slight growth. However, starting from 2017, it became evident that KA was becoming difficult. On one hand, due to channel fragmentation, consumers had more shopping scenarios to choose from, leading to continuous declines in offline traffic, and even some leading chain modern stores frequently reported closures; on the other hand, modern stores not only had accounts receivable occupying funds but also increased various fees, and distributors also had to bear the risk of individual supermarket closures or running away. Facing this challenge, Rongderun began exploring new growth paths, shifting its core business to the instant retail sector, which is maintaining a continuous growth trend.
In 2017, coinciding with Hema's entry into South China, even though only one store was opened at the time, Qian Hua keenly sensed Hema's potential and entered the instant retail field early. With the successive entry of Pupu and Dingdong Maicai, Qian Hua gradually expanded his business territory, continuously expanding business through these platforms, supplementing market share, and gradually increasing sales. Qian Hua believes that the high growth of instant retail is mainly due to three factors: immediacy, product diversity, and innovation in consumption scenarios. The immediacy of instant retail extremely saves consumers' time costs, generally achieving product delivery within 30 minutes to 2 hours; in terms of categories, from mass consumer goods, fresh produce, to low-frequency items like hardware and home furnishings, it offers a rich selection to meet diverse consumer needs. With the continuous development of urbanization, instant retail is not limited to emergency and convenience scenarios. Kantar consumer research shows that on average, a consumer shops in 7-9 different shopping scenarios, spanning multiple spaces, including home, office, hotel, dining, school, etc., covering a broader range of local consumption needs. Behind the business growth, Qian Hua saw the broad development prospects of the instant retail track. Rongderun achieved rapid growth, with more and more brands proactively approaching Qian Hua, representing over a hundred brands, with scale exceeding 200 million.
How can distributors excel in instant retail? Qian Hua told New Distribution that a few years ago, the requirements for distributors in the instant retail channel were relatively lenient, with fast new product listing and long delivery cycles. During the early stage of rapid growth, everyone had good times. With the rapid development of the channel, severe involution has compressed the profit margins of major brands, prompting distributors to continuously introduce more new products. However, shelf space is limited, and competition within the channel is intensifying. Platforms like Pupu and Dingdong are implementing refined management, placing higher demands on distributors' operational levels and capabilities.
In the instant retail field, Rongderun Trading's core strategies can be summarized as: product strategy and operational strategy.
First, product strategy. First, build a reasonable product structure. Holding major brands is key to attracting small brands; even if profits are low, they are indispensable in the product mix. Rongderun Trading, by securing national channel operation rights for major brands, successfully attracts many small brands to proactively seek cooperation, forming a complementary product structure and ensuring the completeness of the product line. Second, emphasize product profit margins. Unlike fresh produce, standard products do not have frequent price fluctuations, and gross margins are relatively stable. When selecting products, Rongderun Trading leverages its strong bargaining power to engage in in-depth communication and negotiation with small brand manufacturers, ensuring that introduced products not only pass quality checks but also have sufficient market competitiveness in terms of profit margins. Third, identify differentiated products. This is Qian Hua's strength. With 12 years of buying experience and a buyer's keen thinking, he believes that products innovating on existing demand are more likely to become bestsellers. For example, popular items like Manxiaobao's braised rice noodles, Zhouxiaojian's hand-torn duck neck, and Zhangyazi peanuts share a common feature: they incorporate novel elements and innovative flavors into stable-selling categories, thereby meeting market demand and consumer preferences.
Second, operational strategy. Qian Hua emphasizes maintaining good communication with various platforms to strive for optimal resources. Each platform system has its unique operational rules; only by promptly capturing traffic changes and adjusting product promotion strategies according to platform dynamics can products gain maximum exposure. For example, platforms use festivals or themed activities to create sales peaks, and distributors must be fully aware of these dynamics to seize sales opportunities. Additionally, Rongderun Trading adopts diverse marketing methods, such as coupons and flash sales, drawing on offline display experience, similar to floor displays, shelves, and end caps, to optimize online product display positions, such as homepage first frame and exclusive discount areas. When selecting resource positions, distributors need to comprehensively consider product characteristics, budget, and activity goals to determine the most suitable resource positions. For example, the first frame on Pupu Supermarket's homepage is the most ideal traffic position but also the most costly; in addition, there are exclusive discounts for new customers, flash sales, brand promotions, full-reduction offers, and "Recommended for You" promotional methods. Traditional supermarket self-operated platforms also offer paid exposure projects, such as boot screen ads and various sizes of floating ad spaces. Clear positioning and professional capabilities are key to standing out. Distributors need to examine themselves, from a buying perspective, deeply study channel characteristics, clarify their own advantages and target markets, to attract more resources. In summary, instant retail provides distributors with new growth points but also brings challenges. By optimizing product structure, strengthening profit margin management, identifying differentiated products, familiarizing with platform rules, monitoring traffic dynamics, diversifying promotional strategies, optimizing product display, and selecting resource positions, distributors can maintain competitiveness in the instant retail field and achieve sustainable development.
Expanding New Incremental Channels Diversifying Business Development The challenges of the market environment have become industry consensus, with distributors facing unprecedented pressure. In this context, exploring new incremental channels has become key to distributors' survival and development. So, are there new incremental channels in the market for distributors to expand? Zhao Bo, founder of New Distribution, shared in a previous article that consumer behavior can be categorized into "buy, browse, follow, and stockpile" four types. Buy: typically occurs when people are thirsty, hungry, sleepy, or tired, needing to quickly obtain goods to satisfy immediate consumption needs. Corresponding channels include supermarkets, mom-and-pop stores, CVS, and instant retail channels. Browse: often occurs during family weekends or leisure time, such as taking children to supermarkets or snack stores, without specific shopping purposes, but the "browsing" process stimulates purchase desire, leading to impulse consumption. Follow: with the rise of e-commerce live streaming and social media, consumers increasingly tend to follow recommendations from KOLs or live streamers. This is usually based on recognition and trust; when seeing others buy, they also follow the trend and join the consumption. Stockpile: when household daily necessities are low or during promotions, consumers tend to buy large quantities at once for future needs. For example, during live streams or store events, consumers may seize the opportunity to stockpile half a year or even longer of daily chemical products. Distributors can tap into the "buy" and "stockpile" consumption behaviors, and the characteristics of instant retail exactly fit these two points, so for distributors, this is indeed a segmented incremental market. Undoubtedly, the trillion-scale instant retail is becoming a new engine for market growth. For brand owners, investment in instant retail budgets will definitely be a focus in the coming years, rather than traditional offline large supermarket chains (KA), traditional catering channels, or mom-and-pop stores. From a macro strategic perspective, distributors and manufacturers should both value channels with growth potential like instant retail. This is not just a single channel choice but a strategic positioning issue. In the current evolving consumption patterns, market environment, and channel structure, facing dual pressure from online and offline channels, distributors must continuously innovate to adapt to the changing market environment and ensure they remain invincible in fierce market competition.