After a decade of rapid growth, consumer goods companies are facing new challenges. In the past period, the enthusiastic investors who once drove new consumption have fallen into financial difficulties, and once-brilliant star companies have begun to falter. Some brands that were once all the rage are now gradually being forgotten, and their road to listing has been full of twists and turns. It can be said that the entire consumer goods industry is feeling a chill, entering a new market and a new stage. From March 14 to 16, the 9th China FMCG Innovation Conference, themed "Supply Chain Revolution," was held in Chengdu. During the conference, over a hundred sharing guests and more than two thousand manufacturer and distributor representatives from across the country explored how distributors and brand owners can seek growth in the current environment. Among them, Ms. Lu Xiuqiong, Global Expert Partner at Bain & Company, delivered a重磅分享 at the main forum titled "Navigating Cycles, Accelerating Omnichannel Growth," which sparked heated discussions among many manufacturers and distributors present. "New Distribution" specially reports on its essence for the benefit of our readers. ********New Trends in the Consumer Industry High Desire, Low Satisfaction, Extreme Involution The entire consumer goods industry can be summarized by three keywords: high desire, low satisfaction, and extreme involution. Consumer spending during the 2024 Spring Festival showed significant increases in both travel and consumption, yet compared to 2019, consumption during this year's holiday still declined. Meanwhile, changes across various channels have drawn attention, but the channels that truly achieved growth were mainly interest e-commerce and convenience stores. Although consumers still harbor a high desire for a better life, they have chosen a more restrained way of consumption. From the perspective of channels and manufacturers, involution is also intensifying, with competition becoming increasingly fierce. Therefore, the entire industry is undergoing a transformation from 1.0 "channel is king" to 2.0 "traffic is king," then to 3.0 "content is king," and 4.0 "omnichannel is king." However, everyone faces the dilemma of "channels that grow are not profitable, and channels that are profitable do not grow." How to break through? We have recently spent a lot of time rethinking how to navigate cycles, using Chinese philosophy summarized as "soul, path, method." Because brand is the soul of navigating cycles, using "Brand Double Helix" to unify knowledge and action. The path to growth lies in the "addition, subtraction, multiplication, division" method. Division means eliminating noise; subtraction is how to focus on core competitiveness; addition is how to adjust product structure to truly achieve premium pricing; multiplication is finding a small model and then rapidly scaling it. The method is the omnichannel growth of [point, line, surface, body]. In today's highly involutionary environment, merely following platform logic is no longer enough; the real opportunity is how to jump out and become the strategist of omnichannel growth. So we propose the "Connected commerce" omnichannel deterministic growth strategy:
"Point": Start with the consumer and truly penetrate.
"Line": Deeply cultivate the operation of each single platform and channel to achieve deep control.
"Surface": Rethink the product matrix, store matrix, content matrix, and media matrix, while integrating and exerting force.
"Body": Form an external empowerment system and an internal agile testing system, and truly drive it through linkage methods. Omnichannel Growth: Point, Line, Surface, Body 1. Point Let me first talk about the "point." The relationship between Chinese brands and consumers has undergone tremendous changes. In the past, the relationship might have been one-way, with brands solving problems through high-profile advertising or extensive distribution. However, today's consumer-brand relationship is more complex, encompassing cognition, transaction, and relationship dimensions, forming a unified experience. The current challenge is how to create demand on the C-end and achieve the optimal fulfillment model from store to home on the B-end. In this model, successful companies have placed the consumer at the center, which is no longer an empty slogan. For example, a global leader in power banks, with 97% of its business from overseas markets but 90% of its employees in China, has become the number one brand globally. Their success stems from systematizing consumer feedback and actively listening to the voice of the consumer through digital means. More importantly, they use this as a starting point to continuously iterate their products. In their organizational culture, placing the consumer at the core is not just a concept but a practice, the so-called unity of knowledge and action. Whether a product needs iteration or advertising investment depends entirely on the consumer. Therefore, all employees' work is centered on the consumer, and this concept runs through all aspects. Consumer needs and feedback are the core focus of all employees. This concept is not only present in internet companies; we also see consumer goods companies continuously updating and iterating from the consumer's perspective, and distributors are also constantly driving product updates and iterations, redefining the entire brand and marketing strategy. 2. Line What does the line refer to? Different channels have different operational characteristics and consumer behaviors, so the operational strategy for each channel is also different. No matter which channel you choose to operate, it is important to understand the latest changes in that channel, just as we often say, know the what and the why, truly delve into operations, and lead channel growth. Do you understand the differences and operational methods of different channels? The universal approach that worked for all channels in the past is outdated; each channel has its own brand characteristics and operational model. Let me share two examples. The first is the modern retail channel. A common question is: offline sales have declined so severely, how should we respond? In the past period, the modern retail channel has been greatly affected, with many data showing double-digit declines. Although membership systems and emerging discount stores have many highlights, all modern retailers are still striving to transform for growth. How can brands and retailers jointly explore growth points? In short, offline lean operations do subtraction, O2O does addition, and truly achieve end-to-end integration. What does subtraction mean? For some KA (key accounts), they are moving towards smaller stores and reducing SKU numbers. In the past, the KA logic was to sell products through shelf space, but now their operational logic is product-centric. Therefore, we need more core big single products, precise operations, and better simplification of the entire promotion model. A well-known potato chip brand is a good example. They continuously innovate their core products, from core big single products to seasonal limited editions, like the gift box packaging in supermarkets during the Spring Festival, meeting consumers' needs in different scenarios. Their success lies in lean operations and working with KA to drive product operations. The second part is very important: how to achieve addition on O2O? O2O addresses immediate needs, which can be fulfilled within an hour. These consumers are more often sophisticated mothers, leading to a different online O2O assortment. Is the online product still the core big single product offline? Often not, but sales teams simply copy offline products online. So today, in many hypermarkets, online O2O accounts for 40% of sales. How to differentiate online and offline products and integrate online and offline investment is a question everyone must consider. Therefore, for KA to succeed today, we must shift from traditional shelf operation thinking to product operation thinking, cooperating with distributors and retailers. This includes opening supply chain cooperation and simplifying methods to help KA reduce operating costs, thereby forming a true cooperative relationship. This is the way to solve the problem. The second question I am often asked is: Since the concept of "interest e-commerce" was proposed, the first question everyone cares about is: Can you make money selling on mainstream short-video e-commerce? How? Recently, we conducted an in-depth study of the entire beauty industry, which is basically the most involutionary industry among all. For example, since last year, a domestic beauty brand ranked first on Douyin, achieving 4.3 times growth, with profit margins exceeding 5 to 6 percentage points. How did they do it? Their success is not simple; they actually adopted a very lean strategy. What is the entire consumer path of short-video e-commerce? It stimulates implicit consumption needs and follows the logic of "browsing, browsing, browsing." Therefore, only by doing this well can you find a profitable path here. Secondly, regarding content, in the seeding stage, they dare to try new content. Last year, they had 5 viral Douyin dramas, increasing overall viewership by 4 percentage points. They have a very complete method of summarization and iteration, producing hit content daily. Brand store livestreams account for about two-thirds of sales, with an ROI of 2, and they use a multi-matrix approach with over 8,500 influencers and store livestreams, with shelf space accounting for about 30%. Therefore, the beauty brand's success is due to their complete combination of lean operations. Only through this systematic operation can high growth and high profitability be achieved. So, if you want to succeed with short-video e-commerce, do you know the what and the why? Have you considered the three dimensions of people, goods, and scenes? Have you truly connected the entire O to A5 operational path? So to answer today's question: Can you make money using short-video e-commerce? Yes. But you need to change your approach. 3. Surface I just mentioned the "point" and the "line," now let me talk about the "surface." This chart is data provided by Nielsen, looking at the proportion of beauty products by price tier across different channels. Different channels have different platform characteristics and different consumers, so the products they sell are actually different. The most famous practice of a globally renowned beverage brand is OBPPC, which is the occasion-based brand, packaging, price, and channel combination solution. O stands for occasion, B for brand, P for packaging, price, and the entire channel. This theory emphasizes finding the most suitable brand according to different occasions, using different packaging and prices to do well in the channel. The OBPPC theory is still applicable today, but it needs more iteration. With the fragmentation of e-commerce and channels, consumer shopping behavior has also changed. Consumers no longer stock up but prefer to buy and use immediately, especially those influenced by e-commerce who value physical experience. Therefore, in different channels, according to consumers' different shopping impulses and needs, the product matrix needs to be adjusted. For example, a biscuit brand not only promotes its core big single product but also actively promotes other types of single products, such as thin and crispy, mini, and small packages. These products target incremental consumption scenarios, such as afternoon tea and late-night snacking while watching dramas. Therefore, when selling online, the focus is not on price discounts but on how to effectively guide consumers to purchase. For example, emphasizing that you can enjoy a pack of biscuits when craving a snack at night, or linking the product to the pleasurable experience of watching dramas, such as promoting it as drama-watching snacks. I repeatedly emphasize the word "matrix." Even if there are still cases of a single big brand dominating the world, there are many opportunities to readjust your different product forms, packaging, and prices. Here, lean operations and complex thinking are actually very important. At the same time, on this basis, it is also necessary to form a content and media matrix to create a full-funnel application. Consider the front-end and back-end together. The back-end refers to the e-commerce matrix layout, whether it is the single-platform e-commerce layout of short-video or the different product matrices across all platforms, it must be done well. On this basis, think about how the front-end can form "1+N+X" content, so that brand communication achieves a form that is scattered but focused. 4. Body After discussing the comprehensive product matrix, store matrix, content matrix, and media matrix, finally I want to mention the "body." The body refers to a comprehensive system established by the brand internally and externally, including an internal digital testing system, an external empowerment system, and the linkage of public and private domain data. The key here is actually the reorganization of money flow, logistics flow, and goods flow. For example, the "five-code integration" of a domestic old beverage brand is a successful core technology because it achieves the reorganization of money flow, logistics flow, and goods flow, thereby re-stimulating consumers' purchase desire, reshaping the channel value chain, and achieving success. The key to success is establishing an empowerment system that transforms the relationship between the brand, distributors, and terminals into a strong operational system with full control. The second case is a domestic emerging down jacket brand, whose sales grew from tens of millions in 2019 to 10 billion now. The reason for its success is the establishment of professional online stores and a distributor team that understands Douyin, as well as a rebuilt supply chain empowerment system. Through this, they achieved rapid growth. The common feature of these two brands is that they established an empowerment system from front-end traffic to back-end logistics, including money flow, and found key points for improving efficiency and finding premium opportunities through digital analysis. But in such a situation, it poses a great challenge to the capabilities of all distributors. I once had an in-depth discussion with a senior executive in the consumer goods industry, and the other party raised a question: How do you view the problem of online price chaos? My answer is, the problem of online price chaos originates offline. Why? Because the lack of traditional distributor capabilities has caused a situation where they can neither go up nor down. Going down refers to traditional channel intensive cultivation; how many people are still doing it today, and doing it effectively? Going up means thinking it's easy to open a distributor store on Pinduoduo, but actually not operating it well, and it fails after a while. This is the biggest pain point in the entire industry, painful for brands and painful for distributors. In such an era, distributors on the one hand need to regain the ability of channel intensive cultivation, and on the other hand learn new digital intelligence methods, while developing two paths: one is how to develop platformization and supply chain, truly growing from a small distributor to a large one; the other is how to transform from a distributor to a profit distributor, from the original store model to the e-commerce model. Finally, brands need to undergo comprehensive transformation to achieve "unity of knowledge and action." Returning to today's discussion, the entire soul, path, and method, how to truly accelerate omnichannel growth? We need to return to starting with the consumer, truly achieve line penetration, control of single-channel operations; how to do surface integration well, product matrix, store matrix, content matrix, and operation matrix; how to establish a body pattern, external empowerment system, internal agile system, and public-private domain linkage. The above is the practical methodology for creating "true brands" in the digital intelligence era from "Brand Double Helix," a strategic panorama for Chinese companies to achieve lasting success. Click the image to enter the purchase page. PS: Friends interested in the on-site speech content can follow the recent posts on the "New Distribution" WeChat official account. We will organize and publish all guests' speeches for the benefit of our readers. Click Read Original to see more about the 9th China FMCG Innovation Conference and the 2nd China FMCG Hard Discount Conference & 2nd China FMCG Distributor Conference...