Click 'Read Original' for details. A couple of days ago, I talked with a condiment distributor and asked him whether the pandemic had significantly affected his business over the past two years. He replied that overall there was no major impact; in fact, his business had grown. Why? The pandemic certainly affects the market, with the biggest uncertainty being regional lockdowns that prevent stores from opening normally and consumers from going out. Distributors may face situations where they cannot distribute or deliver goods normally, and traditional sales methods become ineffective. But this is only a change in the market; consumer demand has not changed. The core issue distributors truly face is: In what form can they sell and deliver products to consumers? For distributors, whether it's 'seizing opportunities' or 'stabilizing the market', the core is to reach consumers faster and more efficiently to meet their needs. 1 Seize Opportunities: Online-Offline Omnichannel Distribution In the internet age, the retail industry changes rapidly, with new models and technologies emerging and iterating constantly. The emergence of new things will more or less impact distributors. For example, the rise of e-commerce in 2012 reshuffled market share; in 2018, B2b emerged and distributors complained; in 2020, the rise of community group buying also caused heavy losses for many distributors. 'Online is getting better, offline business is getting harder' – it seems every new retail format is competing with distributors for business. But in reality, whether it was the rise of KA hypermarkets, the advent of e-commerce, or the rise of community group buying, some distributors fell, but others grew stronger. △Image source: Internet Channel changes are an inevitable outcome of industry development. Distributors must not only adapt but also learn to leverage them. The pandemic has made many distributors realize that relying on a single channel is too risky, and integrating online and offline is necessary. A couple of days ago, I talked with Mr. Liu from Shenyang City Dairy, and he mentioned a viewpoint: The e-commerce industry has gradually become a traditional industry, and new retail like Douyin, Kuaishou, and community group buying are also becoming traditional. When online becomes as traditional as distributors, competition becomes on the same level, and the gap will infinitely narrow. At that point, distributors' competitive advantages will emerge. Why are e-commerce and new retail gradually becoming traditional industries? Offline channels are called traditional because over the past decades, their models and operations have formed standardized actions: logistics, outlets, visits, display, sales. Distributors only need to master them and make minor innovations. Currently, e-commerce and new retail are also forming standardized actions. For example, on Douyin, stores used to be operated by third parties, but now they are mostly direct-operated, with standardized processes like traditional e-commerce. In the past, distributors dared not do e-commerce or new retail due to unfamiliarity and lack of standardized processes to reference. Therefore, once standardized processes are formed, just like traditional channels, distributors actually have opportunities to participate, achieving online-offline integration and omnichannel distribution. For distributors, omnichannel distribution does not mean going all-in to open an online store, but rather leveraging the characteristics of online channels to achieve certain sales while reaching consumers and empowering offline business. Reaching consumers is easy to understand. The key is how online empowers offline business? Take new product promotion as an example. In the past, distributors needed to invest a lot of offline resources for new product launches, and success rates were not high. They had to find trial stores, create materials, and design promotional policies. If the product didn't sell well in stores, it would also damage relationships. During my exchange with Mr. Liu from Shenyang City Dairy, he mentioned a method that combines online for product selection and new product promotion, reducing trial-and-error costs to an extremely low level. △Image source: Internet Step 1: After confirming the product, conduct initial trial sales through self-broadcasting and videos on Douyin and Kuaishou teams, focusing on same-city traffic. The public domain traffic distribution on Douyin and Kuaishou is relatively fair, and same-city traffic is more precise. If local consumers approve the product, it preliminarily confirms the product is viable. Step 2: After initial confirmation, use the private domain traffic of self-built community group buying (such as property management and convenience stores) for a second trial sale. If consumers in the private domain pool approve, it further indicates the product has a market. Step 3: After online screening, enter offline and conduct pilot sales in chain systems. Chain systems offer more product choices than traditional offline; if sales remain good, it proves the product can also turn over normally offline. After three confirmations, it can be basically determined that the product is effective, and entering traditional offline channels will ensure sell-through. Offline promotion is asset-heavy, requiring deep coordination of people, goods, and places, mobilizing a lot of resources, which may cause repeated trial-and-error. So distributors are cautious about offline new product launches. Online trial sales are asset-light, low-cost, and high-efficiency. Apart from a few points of sales commission, there are almost no additional costs. Compared to offline, it reduces trial-and-error costs and increases fault tolerance. Of course, this is just one part of omnichannel distribution. Online-offline integration is definitely a trend, and distributors should try it if they have the capability. 2 Stabilize the Market: Deeply Explore Community Stores for Potential Growth Today, despite rapid online retail development, the basic market for FMCG in China is still offline. In exchanges with distributors, community stores are a term frequently mentioned. Many distributors underestimate the potential of community stores. Their importance lies in being not only the terminal nerves of the last mile but also key nodes for people's livelihoods. Community consumption occurs at the doorstep, characterized by immediacy, high frequency, and diversity, making it an important part of residents' lives. Especially under the normalization of COVID-19 prevention and control, consumers actively reduce their activity radius, making community consumption venues even more important. △Image source: Internet Previously, the Ministry of Commerce, together with 12 ministries, issued the 'Opinions on Promoting the Construction of a 15-Minute Convenient Living Circle in Cities', which mentioned many small store formats, fully demonstrating the importance of community stores. So, from a distributor's perspective, how can they deeply explore the value and growth of community stores? 1. Be a proactive 'supply chain', not a passive 'middleman' In the past, distributors' business logic with community stores was to push whatever products they represented. But with China's economic development, products are extremely abundant, and supply exceeds demand. For consumers, product choices are infinitely expanded, and their diversified and personalized needs are stronger. Now, distributors can shift their business logic with stores to: What products do stores need? Distributors find those products for them. When distributors transform from 'middlemen' to 'supply chain', they serve not only brands but more importantly serve community stores. The relationship between stores and distributors will also change, from 'weak links' to 'strong connections'. Stores' product needs can be maximally satisfied, and distributors can find new growth here. 2. Break down data barriers with stores, from 'one-way transmission' to 'two-way growth' With digitalization, more and more distributors have realized the value of data. But I see that most distributors are still stuck in 'one-way transmission' of data, mainly analyzing their own operational data to make market decisions. In this process, distributors use self-data to empower business but ignore the store link. In the current market, most small stores lack data capabilities, and daily operations rely mainly on natural sales, with success left to fate. For these stores, if they could be empowered with data to help improve product structure, promotional methods, display atmosphere, etc., there is a high probability of increasing sales. From this dimension, the value of data can be maximized through stores, enhancing both their own operational capabilities and empowering store development, achieving two-way growth. Final Thoughts: A couple of days ago, I talked with Mr. Leng from Nanchang八戒 Trading. He had a thought-provoking sentence: 'Changes in the market environment do not mean that being a distributor is not a good business.' The new environment makes distributors' business complex, and this stage requires distributors to adapt and learn. The environment cannot be changed; only oneself can be changed. From July 20 to July 22, the 2022 (7th) China FMCG Channel Innovation Conference will officially launch in Chengdu, with the theme 'Seize Opportunities, Stabilize the Market', inviting the most influential frontline entrepreneurs and executives in China's FMCG industry to discuss new concepts, models, tactics, and opportunities under industry challenges. For distributors, this is an excellent opportunity for learning and exchange – don't miss it!