Introduction: Opportunities are reserved for those who are prepared; active and scientific preparation will always yield rewards. Many practitioners and distributors are not optimistic about this year's Spring Festival gift market. My view is simple: opportunities are for those who are prepared, and active and scientific preparation will always yield rewards. Looking back at last year's Spring Festival gift market, it's easy to see that some distributors sold out and made a fortune; some had market demand but suffered from insufficient stock; and some overstocked, leading to inventory losses. I've summarized the difference between profitable and loss-making distributors into two points: one is a positive mindset, and the other is scientific stocking. So how should distributors plan the gift market this year? Let's discuss today.

Distributors should not follow the crowd Maintain a positive mindset First, my view is: If your gift box products serve ordinary people visiting relatives and friends, don't listen to talk about the global economic downturn, the Russia-Ukraine war, or Sino-US relations. These have little to do with you. Even if annual income is low, you can't visit elders or friends empty-handed during the Spring Festival. For example, if you distribute eight-treasure porridge or milk, you should consider whether consumers have time and space constraints when visiting relatives and friends. Time refers to whether the infection peak has passed (detailed later), and space refers to whether most people have returned to their hometowns. Other environmental factors can be ignored. Recently, I called several distributors and summarized two mindsets to share.

Negative mindset:

  1. After three years, consumers' incomes have generally been significantly affected. Just because epidemic prevention policies have been adjusted doesn't mean their wallets will suddenly bulge and consumption power will surge.
  2. The adjustment of epidemic prevention policies doesn't mean people will proactively visit relatives and friends. The virus still exists. Although "celebrating the New Year locally" is no longer discouraged, returning migrants may still be "disliked" by each other. It's best not to affect oneself or others.
  3. Psychological change: After three years of the epidemic, both distributors and terminal outlets have seen their previous mentality of stocking up to earn more diminish. They'd rather earn less but ensure a smooth transition. In short, there's insufficient confidence in future market consumption.

Positive mindset:

  1. Over time, people's fear of the epidemic will decrease. Unlike three years ago, when there was concern the virus could be fatal, it will gradually be treated like a common flu. So after a brief panic period, the impact on social interaction will diminish.
  2. Trust the government's determination and ability to revive the economy. As the Spring Festival is the biggest annual consumption peak, the government will use consumption vouchers and other measures to stimulate consumption, boost domestic circulation, and restore economic order as soon as possible.
  3. Follow the example of brand owners who were responsible to distributors during the 2020 Spring Festival. Give them full trust and follow their strategies. Follow such companies without hesitation.

Let me share my personal feelings: Everyone's views have no right or wrong, as these are real investments. Even before the epidemic, making money in FMCG was quite difficult, and losses are something no one wants to see. But business must continue. The FMCG business is like sailing against the current; if you don't advance, you retreat. If you don't do gift boxes during the Spring Festival, there seems to be little business to do. Personnel, warehousing, and vehicle expenses all cost money. Every morning, the first thing is that you've incurred thousands or even tens of thousands in debt. So rather than passively taking hits, it's better to actively attack. The market is huge; with a positive mindset, opportunities will always come.

To do well in the gift market Master key time nodes This chart predicts the first wave of infection peaks by province. I personally feel the prediction is quite accurate. Data source: Data Emperor chenqin Data organization and production: Tonghuashun Data Visualization Distributors should plan reasonably based on their market tier and province. Let's briefly analyze:

1. Distributors in first- and second-tier cities First, look at the prediction for gift sales peak: China's first- and second-tier cities are basically population-inflow cities. The closer to the Spring Festival, the more people leave. Cities like Beijing, Shanghai, and Guangzhou can be described as "empty cities" during the Spring Festival. So the gift sales peak in these cities is concentrated before people leave. Chinese New Year's Eve is January 21, 2023, and the gift sales peak is generally around the 25th of this month. If terminal outlets are not fully stocked by the 20th, it may be too late. Now look at the infection peak prediction: If the infection peak coincides with the sales peak in first- and second-tier cities, distributors should be cautious about stocking gift boxes, as consumers will visit less frequently during the infection peak. Take Beijing as an example: The infection peak is estimated around the 13th, about two weeks before the sales peak on the 25th. Given that "positive" patients recover in 5-7 days, and Academician Zhong Nanshan predicts a very low probability of reinfection, it means that by the 25th, those recovered will be visiting relatives and friends.

2. Distributors in non-first- and second-tier cities First, look at the gift sales peak prediction: Non-first- and second-tier cities are basically population-outflow cities. The closer to the Spring Festival, the more people return home. So the gift sales peak in these cities is concentrated after people return. Chinese New Year's Eve is January 21, 2023, and the gift sales peak is generally around January 15 (after the Little New Year). If terminal outlets are not fully stocked by January 10, it may be too late. Now look at the infection peak prediction: As above, if the infection peak coincides with the sales peak, distributors should be cautious about stocking gift boxes.

How to stock and distribute scientifically and reasonably? Let me state a view: If you don't have previous Spring Festival sales data, stocking is blind and no valuable basis can be provided. I suggest you visit your wholesale and fortress terminal customers more to understand the specific situation, then make a stocking plan. If distributors have previous sales data, first analyze the same period last year and the recent months' sales data to estimate sales volume, and set reasonable inventory levels based on historical data. Consider weather, transportation, delivery personnel, traffic restrictions, vehicles, and manufacturer production cycles to reasonably set order quantities. My suggestions are as follows:

1. First, review two data sets: The first is the top 20% of customers by cumulative receipt volume during the 2021 Spring Festival; the second is the top 20% of customers with the most returns after the 2021 Spring Festival. Pull out the details, analyze with the team, formulate a receipt strategy, estimate stocking quantities, and combine with the sales peak and infection peak analysis above to set scientific pressure-stocking targets. Complete the first wave of distribution one by one, and complete the second wave for other customers.

2. Review the peak sales period of customers (based on days before the Spring Festival and distribution system order times). During high-sales periods, arrange salespeople to promote at core outlets. In fact, if you do good merchandising during the first wave of pressure stocking, there's no need to follow route visits at other times; stationing at core outlets for sales promotion is most effective.

3. Hold ordering meetings: I suggest holding offline walking ordering meetings where salespeople carry order forms with sales policies. Try to collect full payment, or at least deposits. This is an important basis for stocking and distribution.

4. Recommend vehicle sales: Mobilize everyone, group sales, and set rewards and penalties based on same-period sales and growth targets, with intra-group PK. Boost team morale and market atmosphere. Only with "momentum" can there be a "market."

Monitor the sell-through process of gift boxes With the improvement of living standards, consumers not only focus on price but also on the happy consumption experience of "the whole family buying New Year goods together." Buying atmosphere, buying feeling, buying service, and buying value—these "four buys" constitute the main theme of this year's Spring Festival consumption. Distributors should always monitor the sell-through of their gifts, especially at core outlets. After the 2022 Spring Festival, I visited a distributor who was in a meeting. I overheard: "This Spring Festival, several supermarkets sold out of gift boxes, leaving a gap, but after the festival, we still recalled several hundred boxes from the market and now need to discount them. Where's the problem?" First, pressure stocking was unscientific; they stocked as much as possible without considering historical sell-through data. Second, there was a lack of sell-through monitoring. Outlet owners are busy during the Spring Festival and can't pay attention to our products, so it's normal for gift boxes to accumulate. We don't lack inquiry-based inventory checks; we lack actual warehouse inventory checks of gift boxes. Finally, our PK reward and penalty system didn't consider later stock transfers. Subjectively, everyone had insufficient concern for transfers, leading to a lack of attention to sell-through monitoring. Indeed, many distributors lack necessary processes and systems for gift box sell-through monitoring, focusing instead on whether outlet inventory is sufficient. Understand that handling one unsold gift box may lose the profit of ten gift boxes. This Spring Festival has many uncertainties; if you don't monitor sell-through, you may end up losing more than you gain.

To do well in gift boxes Stock transfer & recall plan Gift box recall should be clean and decisive, never hesitant! I've seen many distributors who, after the Spring Festival and Lantern Festival, still have unsold gift boxes on the market. They're not in a hurry to recall them, thinking that leaving them at outlets for another day might sell one more. This view is very wrong. Gift sales have a fixed time period; once passed, it's hard to generate sales. The longer the time, the greater the loss. I advise all distributor friends: The market is yours. Avoid losses from unsold products while also affecting customer relationships. Estimate the sell-through situation at each terminal store during the first month, pull back excess products to the warehouse at once, and sell them in fresh food areas of supermarkets, vegetable markets, and other places related to people's livelihoods. So I suggest distributors prepare a gift transfer and recall plan. The time nodes can refer to the following plan:

1. After the eighth day of the first lunar month: This is the first wave of gift recall. Focus on transferring inventory between outlets, moving products from low-sell-through outlets to high-sell-through outlets, ensuring high-sell-through outlets have safety stock.

2. After the fifteenth day of the first lunar month: This is the second wave of gift recall. Focus on converting inventory within outlets. You can sign exclusive sales agreements with outlets (with certain policies) or conduct promotions like discounts or bundling.

3. After the second day of the second lunar month: This is the third wave of gift recall. Focus on centralized digestion of gift products. You can sell at deep discounts in community convenience stores, street stalls, etc.

4. End of February: This is the fourth wave of gift recall. Focus on breaking boxes and selling loose items, selling in small quantities to clear all gifts.

Of course, we suggest distributors prepare a gift box transfer & recall plan, but we also hope distributors don't need the third and fourth waves. As I said at the beginning: For 2023 Spring Festival gift box sales, distributors should be neither pessimistic nor aggressive. Opportunities are for those who are prepared; active and scientific preparation will always yield rewards.

Extended reading: Hai You: Special contributor to New Distribution, senior researcher, offline channel marketing practitioner, and enterprise channel coverage model designer. He has provided channel consulting for more than ten first-line brands, earning a good reputation.

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