---
title: "Innovative Consumer Brands: Think Twice Before 'Overtaking' the Old Titans!"
description: "A few months ago, Diao Ye published an article titled 'Old Titans Are Anxious, They Are Being 'Overtaken' by New Brands,' which stirred excitement among innovators. Indeed, in an era of national prosperity and internet infrastructure, every consumer product deserves a fresh look, and titans should be anxious. However, truly 'overtaking' the old titans is no easy feat. Consumers have moved beyond functional needs and now demand better, more beautiful, and emotionally resonant products. But need does not equal consumption, nor does it guarantee sustained consumption."
author: "袁来 潘利华"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-12-05"
language: "en"
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# Innovative Consumer Brands: Think Twice Before 'Overtaking' the Old Titans!

> A few months ago, Diao Ye published an article titled 'Old Titans Are Anxious, They Are Being 'Overtaken' by New Brands,' which stirred excitement among innovators. Indeed, in an era of national prosperity and internet infrastructure, every consumer product deserves a fresh look, and titans should be anxious. However, truly 'overtaking' the old titans is no easy feat. Consumers have moved beyond functional needs and now demand better, more beautiful, and emotionally resonant products. But need does not equal consumption, nor does it guarantee sustained consumption.

A few months ago, Diao Ye published an article titled "Old Titans Are Anxious, They Are Being 'Overtaken' by New Brands," which stirred excitement among innovators, who unanimously agreed.
Indeed, in an era of national prosperity and internet infrastructure, every consumer product deserves a fresh look, and titans should be anxious. But frankly, truly "overtaking" the old titans is no easy feat.
Consumers have moved beyond functional needs and now demand better, more beautiful, and emotionally resonant products. **But need does not equal consumption; need does not guarantee sustained consumption.**
Any innovative consumer brand that, without reverence, thinks it can challenge and overtake titans simply because its product is better—I advise them to go back to sleep. The titans' moats are far more than a household name.
The road ahead is long, with pitfalls and traps at every turn.
Recently, I met with Mr. Pan Lihua of Swire Coca-Cola and exchanged views on the rise of innovative consumer brands and the topic of going offline. I'd like to share some interesting insights with you, hoping to inspire and provoke thought among innovators.

**-01- Why Go Offline?**
Regarding why to go offline, I think every innovator has their own answer, but in summary, there are four categories: **either online traffic costs are rising, online growth has hit a ceiling, the goal is to build a national brand, or the category's consumption attributes necessitate going offline.**
But few seem to consider whether going offline is the most correct decision.
On this, Pan Lihua said, **"I don't think it's wise for innovative consumer brands to go offline. Everyone should maximize their strengths; that's the best strategy."**
The core reason most innovative consumer brands go offline is to satisfy ever-growing desires. This year I make 200 million, not enough; I need 500 million; not enough; I need 1 billion; not enough; I need 10 billion, 40 billion—to become as big as Coca-Cola and the world's number one beverage brand.
Unrestrained indulgence of desire is the root cause. If we go back to basics, doing well online, satisfying a loyal customer base, telling good stories, and communicating good value propositions—living comfortably—is also quite good.
Some entrepreneurs feel that after all their hard work building a brand, shouldn't they reap the rewards offline?
In Pan Lihua's view, it's precisely when you think about harvesting that you're on the verge of bankruptcy. Isn't it okay to do something small, within your capabilities? These entrepreneurs know very well how to build a new brand, master a methodology for creating hit products, and grow from 0 to 1, 1 to 10, earning 20 million a year. Since they're not confident in growing from 20 million to 200 million, why not create 10 brands?
Consider the famous failure case of Evergrande Spring Water. At its peak, it was glorious, with excellent advertising and massive spending. Why did it fail? Was the product bad? A bottle of mineral water with a great concept and clear demand.
But the core reason for its failure? Too fast. **To succeed offline, you need meticulous and complex ground force management; product is the foundation, operations are key.**
Offline business has already been surrounded by invisible moats built by giants. These moats cannot be breached with just a little money.
Going offline requires building a large team. You might say you have money and can build a team. But will your team be effective? Impossible. Pan Lihua explained: Why do armies train regularly and conduct live-fire exercises every year or two? Because you never know when war will break out. The purpose of training now is to be ready for the day of battle, not to assemble a team today and fight tomorrow.
Why talk about armies when going offline? Because offline business is extremely complex: store management, investment strategies, expense allocation, handling old stock, damage claims, whether store expenses are paid by the company or distributors, how to ensure 100% of market funds reach stores, how to reconcile accounts at points of sale, whether to offer credit, where to destroy damaged products—at the store or after returning to the distributor—how to ensure accurate counts upon return, whether to exchange goods or offer discounts, and so on.
In the real market, these extremely trivial and complex issues arise daily, completely different from online B2C business.
You might think these are "old-school" ideas—previously, steady progress was needed, but now it's a new era. However, no matter how new the era, human capabilities and organizational capabilities grow gradually. The internet doesn't mean what took 5 months to learn now takes 2 days.
Of course, this doesn't mean you must not go offline; it's just to make innovators fully aware of the difficulty and challenges. Only when you know the road is full of thorns will you deeply consider whether it's truly necessary to go offline and what reasons compel you to do so.

**-02- Business Growth or Value Creation?**
Recently, I read an article by Li Jiaoshou titled "The Vicious Cycle: The More You Want Growth, the Harder It Is to Grow," which resonated deeply. I highly recommend innovators read it thoroughly.
Frankly, when we think about going offline, many start with "business growth." This year we hit 200 million; next year we set a target of 300 million. Where does the extra 100 million come from? Obviously, offline is virgin territory, easy to cultivate.
Hire an executive, build a team, the product has a halo—these KA stores, CVS convenience stores, and various new retail channels offer negotiation space; offline is all incremental. If you don't do it, someone else will—wouldn't that be a loss?
As Li Jiaoshou said, when you have such growth thinking, you easily fall into a growth bottleneck. Short-term volume, long-term anxiety. So when we think about growth, what should we consider? Li Jiaoshou offered three kinds of courage, which I think are also three key criteria:
**1. Face the future, not the past; 2. Face users, not calculate pros and cons; 3. Accumulate value, not grab resources.**
So when an innovative brand goes offline, it must consider: Is it a trend judgment based on category insights, or a demand consideration for the mass market? The business logic online and offline is completely different. **Online targets niche groups in mass scenarios, while offline targets mass groups in segmented scenarios.**
For the offline mass group, are there unmet pain points in the category? Do they need to be saved by you? In the long run, is there a strong need for category upgrade?
When innovators prepare to enter offline, they should seriously consider which segment they are targeting: segmented people, segmented categories, or segmented scenarios. How should the product match accordingly?
After clarifying these, let's look at how to actually go offline.

**-03- How to Go Offline?**
Innovation is the handle; the category is the essence. When innovators hit products online, they rarely consider the "place" (field) issue; they only need to effectively match people and goods. So online, they target "niche groups in mass scenarios." **When going offline, innovators must first consider the "place," i.e., "mass groups in segmented scenarios."**
Offline, the issue is matching place and goods. Once you anchor the place, you find the people. To find the place, New Distribution has drawn a map of offline places to help you locate corresponding offline battlefields.
Offline, first determine the place, then design the model based on the place's characteristics and the people behind it, then reconstruct the product. It must be emphasized: **Online, any touchpoint can be a place and facilitate transactions, so you don't need to consider a standard profile of the place. But offline, you must have a standard profile of the place.**
In the map above, the left column divides current mainstream offline places into old and new. The distinction isn't strict; it's mainly based on time of appearance and maturity, followed by specific channels.
The right column lists city tiers, mainly related to target consumer groups and resource allocation. It also helps quickly find matching benchmark markets in the early stages.
When a new product enters offline, without sufficient research or precise judgment, it's best not to limit to first- and second-tier cities; test all four types. If resources and team are limited and you can only choose one city, I suggest choosing a "median" city, such as a central provincial capital or second-tier city, like Wuxi, Suzhou, Ningbo, Wuhan, Nanchang, or Changsha. These cities have similar consumption ecosystems, both in spending power and consumption concepts, representing both the future of the majority and part of the present.
Back to specific places, whether new or old, the test is "silent selling power." What does that mean? When a product sits on the shelf, relying only on packaging and name, with no one to explain and no extra information, can it attract consumers to buy?

**1. CVS Convenience Stores/KA Stores**
Frankly, current innovative consumer products tend to target younger consumer groups, and online you can obtain standard profiles of these groups. **So based on category attributes and consumption characteristics, CVS convenience stores and KA stores are the first choice.**
Although they are the first choice, the investment is not small. With no sales yet, bar code fees and entry fees are a considerable expense. It's recommended to first pilot in regional CVS or KA stores to observe silent selling power.

**2. O2O E-commerce**
Due to the pandemic, O2O home delivery has grown rapidly, especially in community group buying and O2O home delivery. But currently, demand is mainly for replenishment and stockpiling, with exploratory consumption accounting for a small share, mainly bestsellers.
Of course, this doesn't mean you can't enter. Besides community group buying, the consumer groups behind O2O home delivery are relatively well-matched with innovative consumer products. Also, you can directly connect with consumers and gain insights into demand. **In the early stage, you can test with appropriate investment.**
One reminder: For platform-based O2O, the corresponding stores must have products on shelves. **The best choice is self-operated O2O e-commerce, such as Hema Fresh, Dingdong Maicai, and PUPU Supermarket.**

**3. Traditional Circulation Small Stores/Community Fresh Supermarkets**
The consumer groups behind these channels, strictly speaking, have no group profile; they are all consumers. **To enter such channels, the core research is on the price and gross margin of benchmark products.**
Retail price determines consumption scale; gross margin determines channel push. Therefore, even if a product is innovative, attractive, and high-quality, if it's not in the mainstream price range and lacks brand awareness, it's hard to generate purchases.
Once you have mainstream pricing and gross margin, it's recommended to explore through B2B platforms (like JD New Channel, Alibaba Retail Link) in the early stage. The core purpose is to find the standard profile of target terminal outlets—those with good silent selling power. Once you have the profile, later, based on terminal profiles, you can establish standard outlet distribution profiles after promoting regional distribution.
The above are channel selection considerations. In summary, **when innovative consumer brands enter offline, don't limit channel choices. Pilot first, find the place profile, then replicate and expand. Don't spread out all at once in pursuit of distribution and coverage rates.**
Observing offline silent selling power requires a feedback period. Never grow for short-term performance. When entering offline, first find the soil for offline business to take root, then seek expansion.
Besides place selection, there's another crucial aspect: **building the offline organizational team.**
According to Pan Lihua, choose a few cities, build the team first, and then develop a set of experiences. For example, focus resources on Shanghai, not for the Shanghai market itself, but to train the team. When you work in Shanghai for a year or two, gradually learning the rules of offline market operations and methods to solve market problems, what's truly trained is your team.
Then send these teams to various cities as city leaders to train their teams. At least this way, not the whole country is new; each local leader has been trained within the system.

**Conclusion:**
We've discussed many offline scenario choices, but looking back, the primary challenge for innovative consumer products going offline is: **Often, many innovative products fail to meet the needs of mainstream users, and the so-called "mainstream users" are the loyal customers of the old titans.**
Therefore, maintain reverence, uphold long-term brand value, satisfy scenarios and user needs, accumulate organizational capabilities, find offline soil, abandon short-term performance growth, and face the future rather than the past. It's not about harvesting or scaling up, but about continuously building and accumulating channels to establish awareness and relationships with target users. Transactions are the result, not the process.

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