---
title: "Interpretation of New Distribution's 2022 Survey on Brand Manufacturers' Cooperation with New Retail E-commerce"
description: "In the post-pandemic era of new retail, the continuous evolution of retail formats is driving brand manufacturers to seek new growth opportunities. New Distribution's survey of nearly 90 brand manufacturers reveals that new retail e-commerce has become a crucial channel for business breakthroughs, with live-streaming e-commerce and community group buying leading the way."
author: "李文君Wendy"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-11-11"
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# Interpretation of New Distribution's 2022 Survey on Brand Manufacturers' Cooperation with New Retail E-commerce

> In the post-pandemic era of new retail, the continuous evolution of retail formats is driving brand manufacturers to seek new growth opportunities. New Distribution's survey of nearly 90 brand manufacturers reveals that new retail e-commerce has become a crucial channel for business breakthroughs, with live-streaming e-commerce and community group buying leading the way.

**01**
**Follow the Trend, Cash in on Trend Dividends** In the post-pandemic era of new retail, as the "field" continues to become more retail-oriented, new retail formats are emerging one after another. From Hema's "quality discount stores" to Meituan's "flash warehouses" and JD.com's "Dongdong Tuan," innovative forms are changing with each passing day, with players from various industries entering the fray, constantly refreshing consumers' eyes and impacting manufacturers' perceptions. Retail formats are continuously innovating, and retail transformation is forcing manufacturers to undergo continuous change. The logic of sustainable development and profitability for enterprises is to constantly seek new dividends in trends. Looking back at 20 years of channel transformation, whether it's B2C e-commerce, FMCG B2B, O2O, or community group buying, whenever new formats and platforms rise, some enterprises always discover new opportunities and create new dividends. **The deep integration of digital technology with the real economy to build a unified national market is the current major trend and another wave of dividend opportunities for the next 5 to 7 years. In the transformation of FMCG channels, this trend manifests as "continuous channel diversification" and "accelerated channel integration."** Three years of the pandemic and anti-epidemic policies have not only changed consumer shopping behavior and impacted players' channel strategies but also restructured some enterprises' distribution systems and subverted survival models. **In mid-year, New Distribution, in conjunction with nearly 90 brand manufacturers, conducted a "Survey on Brand Manufacturers' Cooperation with New Retail E-commerce" aimed at gaining insights into how brand manufacturers in the post-pandemic era of new retail are leveraging new retail e-commerce business to seek business breakthroughs.** We now share the survey results with friends to help those entering or observing the new retail e-commerce business gain a more objective and comprehensive understanding of industry trends and uncover growth opportunities.

**02**
**Is New Retail E-commerce Business Important?** The pandemic has changed many people's consumption habits. The "anxiety" and "homebound life" have stimulated the digital survival needs of Chinese people. "Everything to home" has become a daily routine for residents in first- and second-tier cities. With the sinking of logistics infrastructure, online shopping for daily necessities is gradually penetrating lower-tier cities. As of June 2022, China had 1.051 billion internet users, with an internet penetration rate of 74.4%, and 80% of consumers are mobile internet users. According to the National Bureau of Statistics, from January to September, national online retail sales reached 9.5884 trillion yuan, a year-on-year increase of 4.0%, of which physical goods online retail sales were 8.2374 trillion yuan, up 6.1%, accounting for 25.7% of total retail sales of consumer goods. Nielsen's August survey data shows that online (including online-offline integrated new retail) share in the FMCG retail channel structure has reached 40%, while Kantar Worldpanel predicts that by 2025, online share of China's FMCG will reach 45%. **With the increasing maturity of internet-related technologies and applications, coupled with the government's determination to implement the regular "dynamic zero-COVID" policy, the shift to online consumption is clearly an unstoppable trend.** In the e-commerce landscape, although comprehensive e-commerce still holds a mainstream position, **the total share of new e-commerce business reached 36% in 2021 and leads the overall e-commerce growth rate, with O2O and live-streaming e-commerce both growing by over 50%. Community e-commerce (including community group buying) is the main track of new e-commerce, accounting for over 50% of its share.** **Although offline business remains the basic market, holding 60% or more of the share, online-offline dual-store operations have almost become the standard for modern physical retailers.** According to CCFA (China Chain Store & Franchise Association) data, in 2020, about 73% of traditional convenience stores had opened online business. **In the next 5 years, FMCG channels will continue to transform and upgrade. Specifically, new online e-commerce is rapidly rising, while offline retail is advancing "transformation" and "modernization" through cooperation with new e-commerce and supply chain upgrades.** New e-commerce plays a paramount role in the transformation of FMCG channels.

**03**
**Survey Report on Brand Manufacturers' Cooperation with New Retail** New Distribution's 2021-2022 "Survey on Brand Manufacturers' Cooperation with New Retail E-commerce" involved 84 brand manufacturers, covering private enterprises, foreign enterprises, and state-owned enterprises. Categories involved 8 major categories: beverages, snacks, personal care, household cleaning and paper products, dairy, maternal and infant, grain and oil condiments, and alcohol. The survey was mainly conducted through questionnaires. Based on the results of this survey and continuous insights into new retail channels, New Distribution summarizes the characteristics and trends of brand manufacturers' cooperation with new retail e-commerce as follows:

**1. Brand manufacturers have extensive cooperation with new retail e-commerce, with live-streaming e-commerce leading the way.** In this survey, we found that the cooperation rate between mainstream brands and new retail e-commerce platforms is almost 100%, with all categories except baijiu engaging in various forms and degrees of new retail e-commerce cooperation. **Live-streaming e-commerce, community group buying, and community e-commerce (Dingdong Maicai/Miss Fresh, etc.) are the most widely cooperated new retail e-commerce by brand manufacturers. The scope of cooperation between brand manufacturers and group-buying e-commerce (Pinduoduo/Kuaituantuan/Exiangtuan, etc.) surpasses that of FMCG B2B platforms.** Channel digitalization is an important opportunity and pathway for FMCG enterprises to transform and upgrade. New retail e-commerce platforms that can master channel and consumer data have become important handles for traditional enterprises to achieve digital transformation. This is also one of the reasons why B2B, community group buying, O2O, and other new retail formats have received increasing attention from brand manufacturers in recent years.

**2. Building self-operated new retail platforms has become a new trend for brand manufacturers, with DTC malls being the mainstream.** **The survey results show that 41.7% of brand manufacturers have self-built new retail platforms, with DTC malls being the mainstream model, followed by self-built B2B, self-built O2O, self-built community group buying, and self-built live-streaming platforms.** **The DTC platform has become the mainstream model for brand manufacturers' self-built platforms because through the construction of DTC systems, brand manufacturers can not only establish close relationships with consumers but also maintain complete control over the value chain of DTC channels.** Therefore, DTC channels are not only a shortcut to success for emerging brands but also a convenient path for many traditional old enterprises to transform. As for self-built B2B platforms, after 10 years of dedicated involvement, brand manufacturers and distributors have indeed gained tangible value in the cooperation and exploration of the FMCG B2B track, with significant improvements in channel sinking, channel efficiency, supply chain, and digitalization. However, B2B ultimately cannot solve C-end problems, and deep distribution is gradually losing efficiency. The deep distribution and retail store data obtained by platforms are not as expected by brand manufacturers, and price chaos and cross-regional selling are frequent. In addition, **brand manufacturers are unwilling to cede terminal dominance to B2B platforms, so some leading brand manufacturers choose to build their own B2B platforms (malls) that suit their business models, allowing direct dialogue between manufacturers and terminals, while also making prices, promotions, and market expenses more transparent.** **For self-built O2O, community group buying, and live-streaming platforms, the greatest significance for brand manufacturers at this stage, besides building private domain traffic, is to have close contact with consumers and obtain precise user profiles, thereby providing direct information and timely feedback for developing products that meet different consumption scenarios, achieving diversified and precise matching of people, goods, and scenes.** At the same time, brand manufacturers can strengthen their binding to terminals through self-built systems, enhance store activity and sales capability, and achieve dominance over channels and terminals.

**3. Brand manufacturers generally recognize the positive role of new retail e-commerce business in sales, with community group buying having been particularly effective.** **Brand manufacturers basically unanimously agree that new retail e-commerce business can effectively help enterprises avoid sales declines during the pandemic and even achieve counter-trend growth. In the "lockdown economy" of the pandemic, the new retail e-commerce format that most effectively drove sales was community group buying.** The 20th National Congress of the Communist Party of China concluded successfully, and the post-pandemic era was officially announced. After two years of running-in, a relatively efficient operating model and solution for people's livelihood operations, supply chains, and intra-city logistics under normalized epidemic prevention policies has gradually been found. **With the recovery of intra-city logistics capacity, fresh food e-commerce has shrunk to stop losses, and consumers have become increasingly mature, jointly promoting community group buying to return to rationality and fresh food consumption to return offline.** Recently, Meituan Select announced that its category positioning will shift from "community group buying" to "supermarket arriving tomorrow," expanding from fresh food to high-margin packaged food and daily chemical household cleaning products. This giant with 5 million delivery riders is determined to achieve "everything to home" to the extreme. JD.com launched the Dongdong Tuan mini-program to enter the community group buying track and compete with Kuaituantuan. Unlike Meituan and JD.com's focus on retail strategies, Alibaba's Taocaicai and Duoduo Maicai continue to steadily advance in community group buying, focusing on building backend agricultural supply chains and continuously creating supply chain barriers from farm to table. **After the great wave of community group buying, its increasingly mature social division of labor system and professional group leader community have empowered extended tracks such as "online supermarkets," "new retail integrated community stores," and "independent group leaders."** Although the community group buying war has ended, the community group buying format has not reached its ultimate form. Players' new retail thinking and innovation around developing community economy will continue for a long time, and brand manufacturers and distributors need to maintain continuous attention.

**4. The overall scale of brand manufacturers' new retail business is still limited but maintains a high growth trend.** **This survey found that about 60% of brand manufacturers' new retail e-commerce business share is within 10%, still at a limited level. However, it cannot be ignored that the business growth rate of new retail e-commerce channels is leading all channels with double-digit growth.** Over 30% of brand manufacturers saw their new retail e-commerce business growth rate exceed 50% in 2021, and the vast majority expect that in 2022, their new retail e-commerce business will maintain a similar growth rate to last year.

**5. Brand manufacturers generally agree that O2O channels will continue to grow, and the B2B track has returned to rationality.** The surveyed brand manufacturers generally believe that the O2O track is in a period of sustained growth, while the B2B industry has entered a stage of rational development. Practice has proven that B2B can help brand manufacturers achieve efficient B-end distribution sinking, and O2O can enhance the effectiveness of distribution sinking. But B-end problems are ultimately C-end problems. With the continuous decline in the efficiency of deep distribution, to solve C-end problems, **online-offline integrated operations represented by O2O home delivery business have gradually become an important pathway for brand manufacturers and intermediaries to implement BC integration and empower small stores in sinking markets.** This is also an important reason why brand manufacturers continue to increase investment in O2O channel construction. In the past two years, brand manufacturers' willingness to cooperate with FMCG B2B platforms has shifted from rapid growth to a significant slowdown. After experiencing a downturn during the pandemic, the FMCG B2B industry has begun to return to rationality and business essence. Leading FMCG B2B platforms have stopped expanding investment, and offline maintenance has basically stalled. Internet giants, responding to the Ministry of Commerce's call to build a 15-minute convenient living circle, have shifted their main energy to community economy construction and launched a new round of competition in the instant retail track. But at the same time, we are pleased to find that **due to the strategic contraction of leading platforms in regions, it has instead driven a new round of development for regional platforms: some platforms have expanded geographically, and most platforms have achieved profitability.** Many local B2B platforms have extended their chain supermarket store business through direct operation, franchising, acquisitions, etc., integrating upstream and downstream resources and upgrading into new retail comprehensive service platforms. The FMCG B2B industry has developed for nearly 10 years since 2013 and has become an important distribution force in China's FMCG industry, and it will continue to develop in the future. **The significant advantages of B2B e-commerce platforms in reducing circulation links, lowering terminal procurement costs, and improving transaction efficiency are shortcuts for brand manufacturers to achieve rapid scale in certain regions, markets, and special product lines.** B2B platforms empower terminal stores, providing one-stop services such as product procurement, pre-sales and after-sales services, and supply chain finance, and will continue to compete in terminal penetration and stickiness. With the continuous improvement of labor costs and information technology, one day FMCG B2B will make a comeback and become the main form and tool for ordering in China's retail stores.

**6. On the DTC channel side, brand manufacturers generally are optimistic about the development of live-streaming e-commerce and group-buying e-commerce.** **This survey found that nearly 70% of brand manufacturers believe that the live-streaming e-commerce industry will maintain high growth, and over 90% believe that the group-buying e-commerce industry is still in a period of sustained growth.** **Live-streaming e-commerce is a discovery-based e-commerce that stimulates users' potential needs, can shorten consumers' decision-making cycle, and has significantly improved sales conversion rates compared to traditional e-commerce.** According to CNNIC, as of December 2021, 930 million people in China watched short videos, 840 million shopped online; 700 million watched live streams, accounting for 68.2% of netizens. Among them, the number of e-commerce live-streaming users was 460 million, accounting for 44.9% of netizens, an increase of 75.79 million from December 2020, bringing a 19.5% annual growth. **Live-streaming e-commerce is gradually becoming a more "normalized" and well-known trend, with the market expected to exceed 3.5 trillion yuan in 2022.** On October 24, Q3 GDP data was released, with a growth rate of 3.9% in the third quarter, significantly better than the 0.4% in the second quarter, but not yet recovering to the 4.8% growth in the first quarter. The pandemic is still clearly suppressing consumption recovery. Accenture research shows that compared to global consumers (50%), more Chinese consumers (57%) believe that the pandemic has prompted them to re-examine their consumption habits. **The consumption downturn has prompted national consumption to gradually return to basic living needs, with non-essential spending significantly reduced and consumers continuously seeking high cost-performance products. Overcapacity has also driven the rise of offline warehouse membership stores and discount stores, boosting the vigorous development of online group-buying e-commerce and discount e-commerce.** According to Nielsen data, compared to 2020, e-commerce group buying grew by 49% in 2021, and social e-commerce grew by 51%. Especially after the strict lockdown period in the second quarter of 2022, the group-buying e-commerce track, represented by Pinduoduo and empowered by Kuaituantuan, has become a focus of attention. **At the beginning of 2022, capital groups in community group buying began large-scale strategic contraction, and the track extended a new faction—independent group leaders.** Independent group leaders are mainly composed of a new generation of group leaders, with relatively advanced cognition, experience, and comprehensive quality. Some have IP attributes of big group leaders, platformizing themselves through resource docking and linking supply chain services to corresponding communities. The independent group leader track has not only nurtured the development of local group alliances but also attracted capital groups such as Kuaituantuan and Dongdong Tuan to increase investment, with each player striving to catch the group-buying e-commerce express again and reap industry dividends. **The differentiation and intensive cultivation of the independent group leader track have catalyzed the rise of some group brands, and some brand manufacturers have begun to test the waters again to open up group-buying e-commerce channels.**

**7. Brand manufacturers will continue to increase investment in new retail e-commerce, with live-streaming e-commerce being the primary channel for increased investment.** **Seventy percent of surveyed brand manufacturers said they will increase investment in new retail e-commerce in the future, with live-streaming e-commerce, O2O, and new retail integrated formats being the top three channels for increased investment.** With the recurrence of the pandemic and the uncertainty of epidemic prevention policies, especially during lockdown periods, enterprises urgently need to build direct-to-consumer operating models. Live-streaming e-commerce further highlights its advantages with DTC + private domain traffic operation functions. At the same time, live-streaming e-commerce is currently the only channel with high "brand and effect integration." According to iResearch, the sales conversion rate of live streaming is as high as 66.2%, making it a hot pursuit for brand manufacturers. **Moreover, with the rising cost of public domain traffic, in 2023, "private domain + live streaming" may become the standard configuration for more and more brands.** Since 2013, new retail has gone through 10 years. Now, FMCG B2B has settled as infrastructure, community group buying has returned to rationality, the O2O track has basically taken shape, and live-streaming e-commerce has become a powerful moat for building private domains. The roles and functions of various new retail tracks in brand manufacturers are becoming more differentiated and clear. Those "first to eat crabs" enterprises that entered early and ran in early have completed their own iterative upgrades, eating channel dividends earlier than competitors, and some have even built channel barriers, continuing to occupy a dominant position in the track in the future.

**04**
**Trends Are Irreversible but Can Be Used for My Benefit** Looking at the 10 years of rapid development of new retail, each new retail format has gone from germination to rapid development, from integration to rational review. This necessary path has become the standard cycle of the industry. **Channels are always changing, the "invisible hand" is the eternal pursuit of efficiency, and cost reduction and efficiency improvement are the unchanging trends.** Current retail innovation is very active, with retail technology, new concepts, and new forms constantly emerging. New retail innovation and development bring significant transformation opportunities to the entire FMCG industry. Brands and distributors need to pay attention to new retail, integrate into new retail, and actively innovate and practice new retail. "All those incredible pasts seem so natural today." In the channel upgrade where brand manufacturers bravely pursue efficiency through omnichannel layout, the current new retail e-commerce channels will eventually settle into standard configurations in the future. Of course, uncertainty always exists. We cannot predict the future, but we can grasp trends. When facing every channel change, the most correct approach for enterprises is to face uncertainty with openness, actively embrace major trends, plan with professionalism, and make every channel change an opportunity for curve overtaking and transformation and upgrading.

Finally, I wish all old and new friends of New Distribution, amidst the great changes in China's FMCG industry and before the new cycle, can seize trends and create their own dividends.

**About the Author:** Li Wenjun (Wendy Li), currently a partner and senior consultant in the channel research and consulting division of New Distribution, providing channel research, consulting services, and channel strategy solutions for many well-known domestic and international enterprises. With over 20 years of experience in the FMCG industry, she has been dedicated to retail, FMCG brand channel marketing and sales development, and FMCG channel research and consulting. She has held middle and senior positions in several Fortune 500 multinational companies. She holds an MBA from Hong Kong University-Fudan University.


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