In 2020, had the pandemic not occurred, all industries would have continued along the plans designed the previous year. However, the sudden outbreak made every enterprise realize the 'blind spots' in their business operations. Digitalization, a topic often discussed in recent years, has been mentioned in meetings of every enterprise to varying degrees. Whether it is promoted this year or next, or gradually introduced through a specific project, the timing, importance, and methods differ in each enterprise's operational priorities. Digitalization is something that must be done, just a matter of time. But because of the pandemic, the 'blind men and the elephant' approach to business has made every enterprise realize that in 2020, digital operations must be the top priority.
Recently, New Distribution, in communication with various digital service providers across the country, found that as soon as the year began, business experienced rapid growth. I think this is also a side proof.
Reforming the existing stock: the difficulty of change is unimaginable
Undoubtedly, for the majority of FMCG enterprises, 70% of their business is still offline. To achieve comprehensive digital operations, the offline channel is key.
After 30 years of rapid development in China's FMCG industry, it is clear that the traditional distribution model based on a human wave tactic can no longer adapt to today's retail environment, nor to manufacturers' pursuit of distribution efficiency. The 70% offline business, coupled with low distribution efficiency, has prompted every FMCG manufacturer to think deeply. To this end, New Distribution has also proposed the concept of 'Digital New Infrastructure'. Digitalization is not just a means or form of operation, but the foundation and underlying layer of business.
In fact, the digital new infrastructure is essentially a digital reconstruction and new construction from the bottom up of the brand's traditional R&D, production, communication, distribution, and retail models. In the process of communicating with FMCG enterprises, New Distribution found that many companies have established digital strategy departments on the basis of their ERTM departments or new retail departments. It is worth noting that in the past, the topic of digitalization was only technology-driven, led by the CIO.
The core difference here is that one uses technology to improve operational or management efficiency, while the other uses digitalization to reconstruct the business model. This is enough to show the urgency FMCG enterprises feel about digitalization.
To give specific examples, New Distribution has seen many foreign enterprises making moves, such as Mars Wrigley promoting the third-party logistics of distributors, Coca-Cola launching Coke GO to promote online ordering, and PepsiCo Foods promoting the B2B transformation of distributors. These examples are all prototypes of digital transformation based on their actual business needs.
Behind these examples, we find that these are reforms to the existing stock of interests. Although they are only prototypes of digitalization, the internal resistance during the actual reform process is enormous. The pressures from all sides are far beyond imagination.
Having pressure and resistance does not mean it cannot be done or should not be done. We must clearly see that the enterprise digital strategy is a long-term strategy. With information technology as the carrier, efficiently meeting the diverse needs of consumers is the true goal of sustainable business operation.
Therefore, in this special year of 2020, talking about digitalization is timely. New Infrastructure, looking from 2020 to 2030, the digital strategy is the foundation for an enterprise's growth in the next decade.
Based on these considerations, New Distribution is holding the 2020 (3rd) China FMCG Conference with the theme 'Digital New Infrastructure', hoping that through the sharing of cases by leading FMCG manufacturers, industry experts, and practical service providers, we can help everyone understand digital strategy.
Of course, the digitalization of an industry includes not only the front-end brands, but also the mainstream channel distributors serving the industry, and the operators of new channels, including community group buying, home delivery e-commerce, live streaming, B2B platforms, and so on.
At the same time, there are also a group of new innovators with digital 'genes' entering the industry, such as the rise of innovative consumer brands in the past two years, and same-city logistics based on digital distribution.
New Distribution hopes that through this conference, we can truly improve the efficiency of industry supply-demand matching, drive the transformation of the entire industry's thinking, and thereby promote the industry's digital progress.
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