As a "veteran" city manager, Lao Wang, who has been relied upon by his company for years, has recently felt frustrated and depressed. He has missed his performance bonus for three consecutive months, his name has long been absent from the company's internal hero leaderboard, and Xiao Zhang from the neighboring city is thriving aggressively. The boss has also started to sound the alarm...
After putting the kids to sleep, Lao Wang walks into his study, turns on the desk lamp, and falls into deep thought—Am I really going to be eliminated?
Fast-moving consumer goods (FMCG), as daily necessities, have traditionally relied on the conventional distribution channel as their primary sales battlefield due to their low value and immediate consumption characteristics.
From the market economy in the 1990s until 2014, the linear chain of raw material suppliers → manufacturers → distributors/wholesalers → retailers → consumers remained largely unchanged for FMCG distribution.
In recent years, with the continuous penetration of "Internet + capital" into the retail and consumer goods industries, the traditional FMCG landscape has been forced to accelerate fragmentation and restructuring. If you look closely, you'll notice that channels are becoming more numerous and fragmented.
Especially since 2015, with the milestone of Double 11 sales exceeding 90 billion yuan, e-commerce truly rose. In the same year, driven by capital and the support of BAT giants, O2O gave rise to more and more Internet+ retail formats and FMCG platforms. Coupled with the supply-side reform, from 2015 to 2019, in just four years, the restructuring, transformation, and upgrading of traditional offline markets have been in full swing.
In summary, for FMCG practitioners, there are now more channels to sell through, and they are getting closer to consumers. The traditional FMCG model was linear and non-dispersed, channel-centric, and focused on deep distribution at physical points of sale. Now, it is increasingly fragmented, with more consumer touchpoints, and almost every touchpoint can become a point of sale.
Caption: Past FMCG landscape Caption: Current FMCG landscape
As shown in the figure above, B2B platforms are restructuring the traditional and single trade circulation system. On the retail side, large supermarkets are adding online-to-home services, while traditional convenience stores are extending their business online by joining platforms or using mini-programs. In addition, various O2O new retail formats are approaching consumers infinitely.
-01- How should FMCG manufacturers respond to this change?
Although the external landscape is undergoing drastic changes, the opportunities and challenges vary for each category and each FMCG company.
From a category perspective, take beverages and frozen foods as examples. Although both are FMCG, the high immediacy of beverages and the household consumption characteristics of frozen foods mean that the impact of new retail on traditional offline channels differs.
From a company perspective, for example, foreign-funded daily chemical companies that were not particularly strong in traditional offline channels now have an incremental opportunity to quickly cover more traditional points of sale through FMCG B2B platforms like Alibaba's Lingshoutong and JD's Xintonglu.
However, for domestic daily chemical companies, the emergence of FMCG B2B may represent a stock competition with existing distributors. In the past, they used a "rural encirclement of cities" strategy and deep distribution to cover traditional trade points. Obviously, this overlaps partially with the outlets currently covered by FMCG B2B platforms.
Another example: due to the impact of COVID-19, community group buying has surged, and household-based categories such as rice, flour, and cooking oil will divert some sales from traditional trade and modern retail.
Undoubtedly, these new channels and restructured old channels are profoundly affecting the current market access landscape for every FMCG manufacturer.
Therefore, I propose the concept of "omnichannel distribution," which means abandoning the past single linear thinking for FMCG channels and establishing a multi-dimensional, all-channel, three-dimensional distribution network. This requires every FMCG company to conduct comprehensive and in-depth research on all channels, combine its own category characteristics, corporate strategy, and resource allocation, and make comprehensive judgments and heavy bets.
I believe that amid the rapid iteration and change in the retail landscape, some FMCG companies will use new changes to overtake on the curve, such as innovative consumer brands that have risen through online channels in recent years. Others may remain indifferent and fall behind. This is a significant test for the founders and decision-makers of every company.
Of course, I think it's not just companies that are affected, but more so the marketing practitioners behind them. Behind channel fragmentation is sales dispersion. I believe business managers at FMCG manufacturers are the first to be affected. Many business managers deeply feel that despite working hard every day, they still can't stop the decline in sales.
What should they do in the face of these new species?
-02- Business managers need to pay attention, but also establish correct awareness
Business managers have already perceived the changes in the FMCG landscape, both from the real market and related media reports. In this context, many experts and scholars are constantly emphasizing and advocating that we should actively embrace change, and if we don't, we'll fall behind. Although they propose embracing, they never seem to explain how to embrace it specifically.
Many traditional FMCG practitioners are gradually becoming confused and flustered in the process of embracing. Some even create anxiety, shouting "escape your comfort zone quickly, or you'll lose your job."
Therefore, before discussing how business managers should specifically respond to changes, we must first establish the correct concept of embracing.
First, it must be emphasized that while we should indeed pay attention to the emergence of new retail and new scenarios, it does not mean our past skills are useless.
I believe many FMCG practitioners who have climbed to manager positions have done so by walking the streets, working from 8 AM to 9 PM, and even doing PPTs and replying to emails after work. They fought their way up with performance, eventually earning a monthly salary of 10,000-20,000 yuan and the ability to manage a market.
Business managers worry that their ability to manage markets over the past decade or more will become useless due to new retail and digital channel platforms, and they might lose their jobs. I think this is completely unnecessary, and you shouldn't believe in the so-called "escape from the comfort zone."
My view is that in the new era, business managers should not escape their comfort zone but expand it. The new changes in channels are absolutely not a complete overhaul, but rather adding muscle to the existing capability system. What does that mean?
Currently, 80% of sales still come from traditional channels, while various new retail and online e-commerce account for less than 20%. So you can't abandon your existing capabilities, let alone escape them. The correct approach is to learn new skills under the new business format while maintaining your existing capability system.
Continue doing the visual merchandising and key sales days. At the same time, learn new retail business, such as understanding how JD Daojia works, how to negotiate for placement, and how to increase sales.
So business managers should not be afraid of new retail. Simply put, new retail has arrived, and the sales skills required now are more than before. Don't panic; just learn!
Of course, besides some excessive pessimists, there are also some excessive optimists who always think "e-commerce can only sell a few dollars," like a frog in warm water, underestimating new retail. I think this is also a wrong perception. As a frontline commander, if you use an old map, you'll never find a new continent.
In summary, as a business manager, you should neither underestimate the enemy nor be anxious, and certainly not listen to the so-called escape from the comfort zone. Respond calmly and actively overcome challenges—this is the correct attitude we should establish.
-03- How should business managers embrace new changes?
Returning to the simple truth of sales for business managers: Where the business is, we go! If part of the business leaves the main battlefield, no matter how hard you try, it won't work.
A category has 1 million in sales, previously divided among 3 channels. We had a 300,000 share, and competitors had 200,000. We kept pushing and increased our sales to 350,000, while competitors dropped to 150,000, and we won.
Now there are 10 channels. Our competitors are not in the old 3 channels but elsewhere. Capacity is always limited. If we continue to fight on the original battlefield, no matter how hard we try, sales will still decline.
For example, community group buying might currently account for only 1% of category sales, but it could be 5% in the future. If we don't pay attention now, we'll lose sales. Similarly, ERTM platforms like Alibaba Lingshoutong and JD Xintonglu had zero sales two years ago, but now they are channels that no FMCG company can ignore, and it's only a matter of time before their sales share exceeds double digits.
Omnichannel marketing is for corporate decision-makers. For business managers, the simplest way to understand it is as stock business and incremental business.
How to understand the stock market? In one sentence—old scenarios, old retail.
The "old" in old scenarios and old retail is not outdated; it means remembered sales and core sales. It is what business managers have been good at in the past, and it's also business that is within their capabilities and continuously improving. This part still accounts for about 80% of the overall share and is the true core business.
In the stock market, it can be divided into direct coverage and indirect coverage. Direct coverage includes modern channels like various supermarkets, which FMCG manufacturers cooperate with directly. Indirect coverage includes various wholesale markets, which are difficult to control but allow for rapid cash flow for companies.
How to understand the incremental market? In one sentence—new scenarios, new retail.
JD Daojia, Taoxianda, various community group buying, Alibaba Lingshoutong—these are all new scenarios and new retail. Additionally, for a beverage brand, dining establishments are also new scenarios and new retail compared to traditional trade. For a grain and oil brand, corporate group buying benefits are also new scenarios and new retail compared to past channels.
We don't need to define the boundary between old and new retail from an expert perspective, nor should we be rigid or copy mechanically. Dividing into two dimensions is just to help business managers respond to and understand the ever-changing market more calmly. At the same time, it makes it easier for business managers to control when commanding operations in local markets.
Once defined, the next strategy becomes relatively easy.
For the stock market, we should use new tools to improve distribution and sell-through efficiency. For example, for route visits and sales management, we should fully leverage digital tools and systems to help us analyze, improve visit efficiency, and increase the return on investment of promotional spending.
For the incremental market, we should use new methods to increase more business opportunities. For example, if traditional mom-and-pop stores are under-covered, we can "borrow a boat to go to sea" and use platforms like Alibaba Lingshoutong and JD Xintonglu to help us cover them. If we did it ourselves, the maintenance cost would be high, and the ROI might not be proportional.
For various new retail platforms, regardless of the volume, dive in, proactively engage, and practice first, then summarize. In practice and summary, find patterns and master methods. Only then can we truly understand how to learn and what to do in the face of new retail!
-04- Omnichannel Distribution
The cause of omnichannel distribution is that there are more channels, which divert some existing stock and create some increment. So our underlying logic is: Where the business is, we go!
As business managers rooted in the frontline market, we should not be obsessed with or lost in the fancy rhetoric of the Internet. Return to the essence of business: coverage and selling. It's just that coverage is now online + offline, but the essence of FMCG remains unchanged—sell-in and sell-out!
As the highest commander of a market, the most important thing for a business manager is to stay calm and objective. Remember, the market has always been changing, and there are new species every year. It's just that in the past, information wasn't as massive, dissemination costs weren't as low, and anxiety peddling and Internet cheerleading weren't as fierce. That's all.
Our value is reflected in growth; growth is the only hard truth!
Since the era of omnichannel distribution, what city managers need to do is open their arms and embrace it steadfastly!
What does the future of omnichannel distribution hold? City managers must marry new retail and stay together until old age.
Thinking of this, Lao Wang heavily wrote down the four characters "Omnichannel Distribution" on paper. He has deeply realized that sticking to old methods won't work for new retail! Only by relentlessly pursuing omnichannel distribution can he truly ensure that he and his business remain undefeated in the workplace and marketplace competition!
New challenges are coming; veterans must not retreat! Facing the goal in your heart, you can fly! If you can't fly, run; If you can't run, walk; If you can't walk, crawl! As long as you have a goal in mind, persist to the end. You need to support your family, but also stay true to your original aspiration! "Old soldiers never die, they just fade away"! Wrong! Lao Wang says: "Old soldiers never die; they are still in their prime!"
About the author: Xu Xiang, currently Southern China Sales Director at Unilever, with 20 years of experience in FMCG daily chemicals, dairy, and condiments, deeply involved in regional market management and customer marketing. Willing to exchange ideas with peers for mutual progress.
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