--- title: "How to Implement Deep Distribution in the Internet Era?" description: "Deep distribution is a tactical system, not a strategic one. It serves as a sales accelerator and an offensive weapon for both traditional FMCG companies and internet firms (ground promotion). However, once it falls into a prolonged war or is used for defense, with excessive coverage and long battle lines, management difficulty increases and it will inevitably decline. The controversy over deep distribution has never ceased since its inception, with various voices of support and doubt. In recent years, with the advent of the internet era, there have been many voices predicting its decline, especially as many traditional companies skilled in deep distribution have seen performance decline, further fueling the debate." author: "方刚" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2017-10-23" language: "en" canonical: "https://xinjignxiao.com/en/articles/how-to-implement-deep-distribution-in-the-internet-era-991d0376/" markdown: "https://xinjignxiao.com/en/articles/how-to-implement-deep-distribution-in-the-internet-era-991d0376.md" original_source: "https://mp.weixin.qq.com/s/rgSne3w-VnErta14Crd9hA" translation: "https://xinjignxiao.com/zh/articles/%E4%BA%92%E8%81%94%E7%BD%91%E6%97%B6%E4%BB%A3%E7%9A%84%E6%B7%B1%E5%BA%A6%E5%88%86%E9%94%80%E6%80%8E%E4%B9%88%E6%90%9E-991d0376.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/how-to-implement-deep-distribution-in-the-internet-era-991d0376/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # How to Implement Deep Distribution in the Internet Era? > Deep distribution is a tactical system, not a strategic one. It serves as a sales accelerator and an offensive weapon for both traditional FMCG companies and internet firms (ground promotion). However, once it falls into a prolonged war or is used for defense, with excessive coverage and long battle lines, management difficulty increases and it will inevitably decline. The controversy over deep distribution has never ceased since its inception, with various voices of support and doubt. In recent years, with the advent of the internet era, there have been many voices predicting its decline, especially as many traditional companies skilled in deep distribution have seen performance decline, further fueling the debate. **Preface:** Deep distribution is a tactical system, not a strategic one! Whether for traditional FMCG companies or internet companies (ground promotion), deep distribution is a sales accelerator and a powerful offensive weapon. Once it falls into a prolonged war or is used for defense, with excessive coverage and long battle lines, not only does management difficulty increase, but it will surely decline after prolonged warfare! The controversy over deep distribution has never ceased since its inception, with various voices of support and doubt. In recent years, with the advent of the internet era, there have been many voices predicting its decline, especially as many traditional companies skilled in deep distribution have seen performance decline, further fueling the debate! **I: The Background of Deep Distribution** Deep distribution is a sales operation system based on terminal control. **The main component of its performance source is the number of controlled terminals, i.e., distribution rate**, and the improvement of distribution rate stems from the visit and communication of grassroots sales representatives. At the end of the last century, when the wholesale market had just declined, and modern channels such as supermarkets (KA, CVS) were not yet strong, traditional retail terminals (individual mom-and-pop stores) dominated the urban market. Deep distribution, as a linking tool characterized by a human-wave tactic, began to gain popularity. Almost every major FMCG brand used this technique, and it was extremely powerful! To summarize, **deep distribution is an organizational system that links fragmented individual terminals, and its establishment premise must have the characteristics of low cost and high efficiency.** **II: Key Factors in the Decline of Deep Distribution** Deep distribution has strong capabilities in capturing and integrating fragmented terminals, but it is often powerless against KA, CVS, e-commerce, and large terminals. Especially, sales representatives are divided by small regions, and the ability of a single sales representative cannot handle large terminals or chain terminals distributed across regions, let alone invisible terminals. The modernization process of commercial terminals starts from cities from top to bottom, meaning **the effect of deep distribution fails first in cities; the more developed the city, the higher the proportion of modern terminals, and the weaker the power of deep distribution!** In addition, personnel costs and management logistics costs are directly proportional to urban modernization, so deep distribution is often driven to marginal areas or lower-level markets! Moreover, the update of sales management systems in enterprises is often slow, and deep distribution begins to become a system with high cost and low efficiency. **III: The Essence and Core of Deep Distribution** Offensiveness is the most essential function of deep distribution. For enterprises, incremental contribution is the root of its popularity. The path to increment mostly comes from the increase in the number of terminals, the promotion of new products, and the improvement of single-store sell-through rate. In the dimension of increment, deep distribution is a low-cost and high-efficiency tool because as the distribution rate, sell-through rate, and product count increase, incremental performance will dilute costs. However, **once it falls into a defensive battle for existing stock, once the distribution rate decreases, the sell-through rate decreases, and the survival rate of new products cannot be guaranteed, deep distribution will fall into a systemic vicious cycle: performance decline, personnel loss, and territory shrinkage.** Traditional individual terminals do not have the unified control system of modern chain terminals. Due to the strong autonomy of individual terminals, there is great arbitrariness from purchasing to selling, and the lowest price of the same brand varies, which can bring trouble to enterprises. Deep distribution, as an organized management system of enterprises, appropriately solves these problems by having sales representatives visit and manage fixed areas, gradually standardizing these individual terminals. Why are ground promotion teams based on deep distribution vibrant? For example, Didi, Meituan, and even B-end e-commerce! Many internet companies not only have advantages in technical resources but also have large offline promotion teams. Their management and operation logic is no different from deep distribution! More and more young people are gathering in cities, but the overall trend of deep distribution is contrary to urbanization! **IV: The Impact of the Internet Era on Deep Distribution and Its Future** From the perspective of commercial evolution, terminal fragmentation is further intensifying. From the unified supply and marketing system to individual mom-and-pop stores, wholesale, supermarkets, e-commerce, and social channels... The terminal classification in enterprise sales management systems is becoming more and more complex, which places higher demands on the capabilities of sales representatives and the coverage of the sales system! Whether it is deep distribution, deep co-marketing, or brand-driven customer agency models, the core sales volume will come from terminals. Opening the sales reports of enterprises, many companies' vast majority of sales come from traditional terminals, and many also come from deep distribution systems! Facing various criticisms of deep distribution, few of the traditional FMCG giants that have benefited from the increment tool have announced withdrawal from this system. The existing stock of tens of billions makes it difficult for giants to easily give up. From another perspective, no system has yet been able to replace such a huge existing stock. **Once output becomes low, costs cross the red line, personnel performance declines, and management efficiency cannot be improved, deep distribution will inevitably fall into the mire!** For traditional FMCG companies, a more prudent approach is to have two teams to conquer the world: **one to capture mainstream sales, and one to lay out future trend brands!** **One team uses human-wave tactics in channel terminals; the other is a special forces team of fans and mouse clicks!** From the brand perspective, the marketing department has a team to guide online aggregation of fans. From the sales department's perspective, one team captures mainstream sales, and another captures trend sales! From the channel layout perspective, incremental brands (varieties) should re-layout distributors! **Aggregate fans online, capture terminals (channels) offline!** Online can shout, offline can do! Trends attract attention, mainstream repairs the earth! Update your channel classification standards, **sweep the streets offline, sweep the net online!** Offline terminals still rely on the iron army of deep distribution (co-marketing) to sweep the streets; online terminals establish a supplementary network, and new terminals such as platform e-commerce, urban distributed e-commerce, and community e-commerce are handled by another team! The success of traditional FMCG is mostly built on channel terminal teams constructed through deep distribution or deep co-marketing models. For major brands, this team is often a large force of tens of thousands or even hundreds of thousands, guarding mainstream sales! The transformation of this group is a huge project, and directly transferring to the increment competition in the information civilization era is extremely difficult! Many voices believe that the factor for deep distribution to exit the historical stage is the impact of the internet. From sales data, offline terminals still account for 95% of the main sales volume, but the impact of online on traditional FMCG stems from traffic robbery. In traditional marketing, the understanding of traffic is vague, but in the internet world, traffic is not only the mother of sales, but also the key point is that traffic equals attention! Traditional marketing's means of capturing traffic come from two dimensions: **one is media** (TV, newspapers, billboards, etc.), **and the other is the terminal's three-arrival principle**: see it (vivid display), hear it (terminal recommendation), and buy it (distribution rate). **V: The Transformation and Boost of Internet Tools to Deep Distribution** In the deep distribution system of traditional FMCG companies, the management of sales personnel's whereabouts and performance is a large workload. Many visit-sales software emphasizes these basic tasks, some add order transmission and distribution rate indicator analysis, and vividness indicator landing monitoring. These tools improve the management efficiency within the deep distribution system and appropriately boost enterprises to introduce or improve terminal management systems. **It is also one-sided to think that just a tool system can achieve a company's mainstream marketing system, or fundamentally solve the root of deep distribution problems for existing stock companies.** The basic logic of deep distribution is people management. Whether it can improve unit output and reduce operating costs is an effective dimension to test the advancement and applicability of a tool. The marketing history of FMCG in the past decade or so has largely been the history of deep distribution, achieving countless successes in attacking and daring to go downstream. **The improvement or transformation of deep distribution for existing stock companies is a systematic upgrade issue. The coexistence of chainization and fragmentation in the commercial system also determines that the means of capturing sales must be diversified. The era of relying on just one or two means to conquer the world is over!** > Liu Chunxiong's Comment > > Excellent Chinese FMCG companies have basically all done deep distribution. This is determined by the fragmentation of Chinese distribution channels. > > > > > The fragmentation of Chinese channels, even for multinational companies with strong brand power, such as P&G and Coca-Cola, they have also done similar work to deep distribution, let alone Chinese local companies? > > > > > Deep distribution actually relies on human-wave tactics, which are inefficient and costly. In times of industry growth and cheap labor costs, this is not a problem. > > > > > Now, the FMCG industry as a whole has entered a decline, labor costs are high, and deep distribution can no longer be sustained. Therefore, the once-marginalized "second-tier wholesalers" have made a comeback. > > > > > In the internet era, is deep distribution still needed? I agree with Teacher Fang Gang's viewpoint: **It is not about abandoning deep distribution, but that deep distribution must evolve with the internet era.** > > > > > Since deep distribution is beneficial for terminal coverage, the goal of deep distribution must be achieved. Since the human-wave tactic is too costly, can the internet era provide new solutions? > > > > > I think the current SaaS systems and B-end platforms can be regarded as an internet-based deep distribution tool. Its advantages are: **First, precise deep distribution; Second, efficient deep distribution; Third, low cost.** > > > > > Now, the situation for deep distribution is different from the past. In the past, deep distribution was used to "eliminate blank spots," now it is used for "precise service." The goals are completely different, so the methods and tools are also different. > > > > > It can be understood that SaaS or B-end platforms are a data-based efficient deep distribution system. > > > > > Precise deep distribution can also solve another practical problem, namely the promotion of upgraded products. In the past, whether it was the sales personnel of manufacturers or distributors, they were deeply involved in channel distribution, shelf management, and promotion, and their main energy was not on new product promotion. **If internet tools can liberate marketing personnel, and shift their focus to promoting upgraded products, it can solve both product upgrade and operational efficiency improvement.** **The 2017 (Third) FMCG + Internet Conference** will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting **1000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions** to jointly explore a new chapter of cross-border integration! Click the link below to review the highlights of the First and Second FMCG + Internet Conferences: [2016 "FMCG + Internet" Summit Forum]() -END- --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671