The "Digital New Infrastructure · 2020 (3rd) China FMCG Conference" hosted by New Distribution was grandly held from August 24 to 26 at Shanghai Fuyue Hotel! The event attracted 3,000 industry professionals including distributors, manufacturers, and internet companies from across the country, with a full house and unprecedented scale. The following is the speech content of Mr. Zheng Yunfan, founder of Huihe Technology, at the parallel forum "How Digital Technology Drives Enterprise Growth," organized and published for readers. Based on the digital new infrastructure in the FMCG retail industry, I believe the core is to build digital new infrastructure in three aspects: transaction methods, logistics methods, and marketing methods. FMCG is a huge market, with most sales occurring offline, but this number may have been rarely encountered in the past. Each year, FMCG brands invest heavily in channel marketing expenses or consumer expenses, accounting for about a quarter of the total transaction scale. Each brand invests about 8 to 15 percentage points annually, but for this 500 billion yuan channel expense, we have traditionally used very conventional methods. Competition in FMCG is fierce. For example, in the war between JDB and Wong Lo Kat, the mineral water war, and the candy brand war, we find that direct or indirect competitors are all vying for intermediate resources and shelf space. Also, in terms of store composition, traditional mom-and-pop stores dominate under China's national conditions. These stores have a characteristic: very low digitalization. There is a huge contrast: the only digital device in these stores might be the owner's smartphone. How do we build digital new infrastructure in such stores? The marketing problem from brands to traditional stores is the long management chain. For example, in the middle route map, most brands go from headquarters to traditional stores, with a very long supply chain and marketing activity chain. Each level incurs losses in communication and execution. At the same time, after the store implementation, the marketing may be execution or consumer communication, but after such marketing is achieved, the brand needs to do a reverse settlement with the entire supply chain because it involves costs. Reverse settlement is a very lengthy process, with losses, information asymmetry, and authenticity issues at each level. We summarize that in China, most brands, as long as they do traditional channels, have huge problems in the communication of marketing activities, monitoring of execution, and final expense distribution. These problems require digital new infrastructure in traditional channels to help brands bring about change in future traditional stores. Besides channel marketing, there is also consumer marketing. Previously, we considered scenarios landing on KA and CVS systems, but in reality, in China's retail process, KA and CVS account for a low proportion. China has about 20,000 KA stores and over 300,000 CVS stores, leaving more than 5 million small retailers and small stores outside our controllable C-end marketing scope. These mom-and-pop stores lack digital capabilities, making it very difficult for our personnel to reach them. So how can we use digital new infrastructure in traditional stores to open up some marketing to C-end consumers? Let me share my cognitive journey. After 2000, the earliest FMCG brands in China, possibly represented by foreign brands like Master Kong and Coca-Cola, proposed information technology transformation. This was a top-down process. In the past, we often called marketing "marketing management" because internal brand management personnel, through factories, distributors, business formats, and finally software, gradually pushed the market out. But today, I think brands have almost pushed the "push" aspect to the extreme. In the future, we need to consider how to do the "pull" aspect. With so many stores in China, besides relying on the capabilities of brands, distributors, and salespeople to push, we can also do "pull." The "pull" is a bottom-up process, which means using stores, store owners, and store staff to help brands accomplish what they want. This is a fundamental change and a direction to consider for construction. First, we need to systematically consider what we can bring to brands in the "pull" aspect, or which key nodes in the product sales process need us to push or pull. We manage a product's lifecycle, dividing the process from product entry into the store, inside the store, and out of the store into three core nodes. Each node requires the store to autonomously pull the brand's marketing implementation to change this matter. How to construct this in terms of specific informatization? Huihe Technology has built the E店佳 platform. Brands can publish marketing activities for different products through our platform. After publishing, traditional stores can immediately know what to do today, without needing a long chain to reach the store level by level, achieving marketing. On the settlement chain, we help brands publish activities, help stores participate, and also monitor and obtain information on whether stores meet standards after participation. For example, a brand might ask stores to place its beverages on the third and fourth layers of the freezer. This becomes an activity. The store owner will see the brand asking them to do this, with a weekly fee of 50 yuan for freezer display. The store owner accepts the task, completes it, and then an audit and settlement action is performed. This involves expense settlement. In the past, it was done through goods and then given to stores by sales representatives, often resulting in long and opaque expense distribution cycles. Today, Huihe Technology can achieve direct information connection and direct expense distribution between brands and stores. This is the biggest change and a fundamental logic. Only after these two things are achieved can marketing effectiveness and store participation truly improve. Based on activities at each product stage, in the product entry stage, it can be achieved through one-code technology. Huihe Technology helps many domestic carbonated beverage brands use case-opening scanning codes to penetrate activities into stores. But there is a difference: the E店佳 platform has connected most traditional stores, so when a brand activity is launched, stores can know in advance before the actual boxes arrive. In the past two years, after collecting a large amount of data, Huihe can use algorithms to tell brands what discount intensity to offer in different regions and stores to meet store price needs. We can also tell brands what a reasonable monthly stocking target is for each store, setting a reasonable value through algorithms. After the product arrives at the store, the merchant quickly places the stock into the freezer, onto shelves, posts promotional posters, and does price communication, etc. This is actually an in-store execution opening. In the past, this relied entirely on distributor salespeople or brand salespeople doing terminal visits and terminal execution at each store. This model has a bottleneck, mainly depending on the number of personnel and each person's visit frequency. Many domestic stores are not as dense as in cities. One store might be two kilometers or more from another, so personnel visit efficiency is physically limited. Add human nature, which tends to be lazy, and visit frequency is generally insufficient. In Huihe Technology's bottom-up push process, there is actually a change: we turn each store owner into a brand executor. So in the entire in-store execution, the core participant is the store owner. After the store owner accepts the brand task, they execute the entire activity and perform periodic maintenance. Because the store owner is in the store every day, and the staff are also there every day, execution frequency can truly be once a week. Every Monday, the platform opens the execution tasks for 1, 2, 3, 4, 5 brands that need to be completed that week. After execution, AI and algorithms are used for settlement. If qualified, the fee can be quickly given to the store the next week. The brand clearly knows how many stores nationwide truly participated, how each store executed, whether they participated, and whether they were qualified. The third node is product exit from the store. Stores want to sell quickly; only by truly selling products can they accelerate new goods entering the store. So we also need to solve how to help these traditional stores sell quickly. In the past twenty years, this has been the most difficult thing for all brands in traditional stores. Previously, this couldn't be done at all, but today with the E店佳 platform, we have connected stores and formed a settlement system with them. We can truly graft consumer activities onto traditional stores. In consumer activities, we conceive consumer touchpoint scenarios, with three types. The first scenario: for example, standing in the venue today, my talk is very boring, and you don't want to listen, so you start scrolling Douyin. You might see a Coca-Cola coupon. At that moment, you don't want to drink Coca-Cola, but a future purchase intention is implanted. Later, when the meeting ends, you go downstairs and remember the coupon you saw during the meeting and can use it. The change for consumers is that a purchase need is pre-implanted before purchase. In the past, this could only be done in supermarkets or e-commerce. For FMCG, it needs instant landing, requiring finding the fastest and shortest purchase scenario. Based on the density of traditional store locations, we can easily achieve this, giving consumers one-click navigation, telling them the coupon can be used at a small store 50 meters away. The second scenario: when consumers walk into the store, they might stare at the freezer. In the morning, someone shared that consumers first have a category concept, then a brand concept. If it's category first, like buying water, a core concept, this scenario needs a final push. So in the in-store scenario, we add a marketing QR code, telling consumers they can scan online to claim coupons. This was previously only seen in CVS stores like FamilyMart and Lawson, but almost never in traditional stores because brands couldn't settle with stores. After Huihe connected the payment and settlement systems, we help brands do the final push in these stores. The third scenario: when consumers have already purchased the beverage or food, in the past, activities like printing a QR code on the bottle cap or a card in the packaging were done. Most activities were either red packet distribution, online traffic diversion, small games, or online benefits. Now consumer participation in such activities is very low. If it's non-cash prizes, participation is basically one in ten thousand, and one in a thousand is hard to reach. What is the best UGC activity? Looking at the history of UGC development, the most successful was Master Kong's "Buy One Get One Free" for iced black tea. In the 1990s, this activity was crazy: two out of three bottles were buy-one-get-one-free. Why did they stop? There were several core reasons. First, store owners had a bad experience: they had to pay upfront, with a quarterly cycle, and brands didn't settle in real time. Second, consumers had a bad experience: if they gave the cap, they lost the cap, and they had to drink immediately. Third, brands also had issues: at that time, a brand would produce hundreds of millions of caps, and millions returned were fake. But now, with a platform in stores and a system built, we can actually do "second bottle half price" on caps, truly driving quick settlement. Through digital methods, we change and construct content for the consumer exit scenario. Overall, E店佳 has two systems: one is support for the channel side, including purchase discounts and penetration of different category SKUs, and secondly, the placement of in-store display activities, which can become automated placement. The second is more diversified consumer support. Besides consumer discount activities, there are also in-store membership management, etc., all types of activities. What changes will digital new infrastructure bring in the future? From three dimensions: From activity preparation, in the past, planning an activity involved internal submission, approval, and regional training, taking two weeks to a month. Today, on the E店佳 backend, it only takes two days to complete the entire activity approval, granularity selection, and activity release. Imagine in a fully competitive environment, if you can complete in two days what used to take two weeks or a month, efficiency will greatly improve. From implementation, in the past, activities and marketing were executed through distributors or agents, a process fully sinking into multi-tier markets, relying on manpower. Now it's real-time placement. As long as the store is an E店佳 user, they can see it in real time, understand the electronic agreement, and execute the activity. Finally, effect recovery: in the past, it was a reverse recovery process, reporting level by level. Although there are many tool-type software now, authenticity or usage rates are still questionable. Because in the past, when enterprises did marketing management, most IT architecture and digital architecture were built on the management dimension. Stores are a difficult dimension to manage, and consumers are even harder. We can only use better touchpoint methods to communicate; we can't ask stores to install a brand's ordering software or marketing tool. For a brand, no matter how strong, it only accounts for a few percent of a store's revenue. How to solve this? Through a public platform. E店佳 is a builder in the marketing entry point of new infrastructure. In terms of effects, it can tell brands in real time how many stores signed up today, how many executed today, and how many received sales expenses today. This is the biggest change in efficiency. We now serve 60 to 70 first-tier FMCG brands in China. Their marketing has begun using E店佳 for marketing placement and consumer-side marketing placement, bringing significant changes. E店佳 has been online since 2017. Currently, out of 6 million traditional mom-and-pop stores nationwide, 1.4 million are using it, bringing an average income increase of about 1,000 yuan per store. This 1,000 yuan includes marketing expenses from many brands, but behind this 1,000 yuan is greater sales revenue growth for brands. This is the current approximate situation. We hope to use the E店佳 platform to help the entire industry establish a new digital infrastructure on the marketing side, and then bottom-up re-sort and change this matter. That's what we are doing. Tips will be paid 400-2000 yuan once adopted.