---
title: "New Brands Going Offline: It's a Street Fight!"
description: "As new consumer brands face a turning point, many are moving offline, but the offline market operates on a different logic. This article shares insights from two industry veterans on how to succeed offline, emphasizing the importance of regional dominance, unified sales teams, practical tactics, and strategic pricing."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-11-23"
language: "en"
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# New Brands Going Offline: It's a Street Fight!

> As new consumer brands face a turning point, many are moving offline, but the offline market operates on a different logic. This article shares insights from two industry veterans on how to succeed offline, emphasizing the importance of regional dominance, unified sales teams, practical tactics, and strategic pricing.

Recently, many people are talking about new consumption, including the 11.11 rankings and the cold reception of some brands. Now, new consumption seems to be entering a watershed.
In the past, most new consumer brands started online. With changes in online traffic structure and rising costs, more and more new brands are looking to go offline. But the offline market is completely different from online, and many brands have faced closed doors.
In September, at the 2021 China FMCG Conference organized by New Distribution, a salon forum was held on how new consumption can go offline, full of valuable content.
This article excerpts some of the viewpoints from Shi Yonggang, Deputy General Manager of Qingdao Beer's Innovation Division, and Wu Hao, founder of Kouwei Quan, hoping to provide inspiration and thoughts for new consumer entrepreneurs and managers.
**Offline KA and CVS are still the cheapest channels in China**
Many executives of innovative consumer brands are afraid of offline channels because of high channel costs: "You have to pay before selling, including entry fees, slotting fees, display fees, etc." But in the eyes of Shi Yonggang and Wu Hao, **offline traditional channels are still the cheapest channels in China.**
Wu Hao pointed out that online traffic seems to follow "brand and effect integration," but traffic is constant, and with intensifying competition, traffic will only become more expensive. Offline, although there are huge upfront costs, as sales grow, the cost per store decreases.
For example, if you buy a one-square-meter display in a KA store for 500 yuan per month, and you sell 500 yuan of products in a month, the cost is 500 yuan. If you sell 10,000 yuan, the cost is still 500 yuan. The cost does not increase with your sales growth; it may even decrease because of your popularity.
Frankly, entering offline channels is not easy. You always face the risk of being removed if there's no movement for three months, losing hundreds of thousands in entry fees, and losing display fees in ordinary stores. But precisely because of the high costs, there are barriers.
**But once you establish yourself in a channel, growth is sustained year after year. Even if there are historical decision issues, the decline is very slow.**
**The survival rule in the market: Lancaster's Law**
**Doing offline market is a long-cycle process. The first thing when entering offline is not national coverage or East China/South China coverage. The most important thing is to become a local leader in a prefecture-level or county-level city.**
Shi Yonggang mentioned using "Lancaster's Law" to measure a brand's competitive position in a regional market. Simply put, **when a brand reaches a 26% share in a regional market, it can be considered to have survived; when it reaches 41%, it is relatively comfortable; once it reaches 71%, competitors need three years and three times the funds to shake it.**
Many brands go straight to Beijing, Shanghai, Guangzhou, and Shenzhen when they go offline. On the contrary, the most suitable approach is to start from the market you know best, even if it's a county-level market.
Start by achieving a 26% market share, sustain the war with war. When you have 26% market share in one regional market, replicate and expand. Push the first market to 41% share, let the city's person in charge summarize the model, and then go out.
Cadres are made through battles. Only after winning a county-level market can you manage a city; after winning a city, you can manage several cities; after winning half a province, you can manage a province.
Win one market, then expand outward. Before planning for the whole country, if you haven't even taken your own regional market, how can you talk about the whole country?
**When entering the offline market, use a regional market as a foothold, establish a base, and make it profitable from the start. Even if you have ideals and visions, you must first survive, sustain the war with war, and build your profit model from the first battle.**
**Offline sales organizations need a unified "language system"**
If online is a traffic monetization battle, offline is a real sales battle. Facing the complex offline market, many entrepreneurs will poach sales managers from mature brands, but in the eyes of Shi Yonggang and Wu Hao, poaching offline sales talent must be done cautiously.
**"Sustaining the war with war is not only for building the market but also for building the organizational system. From the first battle, intentionally establish an offline sales organization system. Many new consumer brand founders go offline and poach people from Coca-Cola, Qingdao Beer, or Budweiser. It's easy to poach, but Coke people have Coke's model, Budweiser people have Budweiser's model, and in the end, you often have no model at all,"** Shi Yonggang explained.
Wu Hao also mentioned that although money can solve many problems and bring in many talents, you'll find that the offline channel managers you hire easily clash in meetings.
For example, regarding the handling of old-date products, a person from Nongfu Spring might say to give them as a bonus to clear them; a person from Wahaha might say to let the distributor handle it themselves, since they've already made money, why should they care about old dates? A person from Budweiser might say to bring them back and consume them at a nightclub.
**Different methods, different cost efficiencies, and ultimately the market is a mess, unresolved. Sales managers are just employees; if things get tough, they can leave.**
When Kouwei Quan established its offline sales system, Wu Hao required that at least 70% of offline staff come from the herbal tea system. Why? Because the communication language system is consistent.
When talking about displays, sales activities, or data analysis, there's no need to explain repeatedly or guess the leader's intentions. Officers are officers, soldiers are soldiers. From channel distribution to consumer pull, the top and bottom are unified, quickly forming synergy.
**Offline markets need more down-to-earth, practical methods**
Many entrepreneurs come from the internet and believe in "beauty is justice" and the emotional and value consensus of Generation Z. But in reality, when you go offline, you might need more practical methods.
Online, you can precisely target your exact users, but offline is an open shelf. You can't say, "Middle-aged people, don't come; only young people can come."
Wu Hao recalled an experience of selling JDB in the winter in Henan and Shandong. In summer, herbal tea is usually in coolers, telling consumers to drink Wanglaoji/JDB to prevent heat. But in winter, we would make the words "herbal tea" very small, even invisible. We made gift boxes with big words: "Bring Wealth and Treasures," sending JDB for a lucky New Year, displayed in bright red and fiery colors.
To better sell and push inventory, we even hired someone dressed as the God of Wealth to say it brings good fortune. This way, sometimes at the terminal, we could sell over 100 boxes at once. In the freezing winter, consumers carrying a box of herbal tea to visit relatives would be gladly accepted.
Shi Yonggang also mentioned a suggestion for an innovative brand in the sesame ball subcategory: make a bright red and purple gift box, start from rural markets in Henan and Shandong, don't aim for Beijing, Shanghai, Guangzhou, or Shenzhen right away. Occupy consumer minds and the world's high ground.
**Start from the rural gift market, do it well, then move to the southern market where there's awareness of black sesame. Step by step, guided by sales profitability, first become a "famous brand" in a county-level market.**
**When can you advertise in the offline market?**
When innovative consumer brands go offline, to accelerate distribution and sell-through, they often place products in some KA stores and CVS channels, find a few good distributors, and then start large-scale elevator advertising.
When should you start advertising offline? Shi Yonggang's logic is: **When you reach 41% market share in a specific offline regional market and have visibility, then advertise.**
Nowadays, more and more brands advertise extensively without any offline presence. Often it's not that the air force is weak or incompetent, but that the ground troops haven't achieved the necessary distribution and market share. Consumers see the ads but can't buy the products.
Many innovative brands find good distributors offline, complete initial store coverage, and think they're done, waiting for sales to rise. They're often at the top of Tmall category rankings and frequent guests in Li Jiaqi and Viya's live streams. With such brand awareness, how could consumers not know them?
**Sorry, even if you're great online, offline you still have to do consumer pull and interception actions, and the brand must do it itself.**
Wu Hao shared his feelings: offline distributors treat new products like a romance. After three months of freshness, they lose interest. If there's no sell-through, they might lose a few thousand yuan, and some manufacturers even promise distributors they can return unsold goods.
Once a new product enters the offline market without consumer pull, and distributors don't care, reopening that channel or market may cost 3 to 4 times the original effort to restart and break through.
**Offline consumer interception requires a system, whether it's weekend roadshows, tasting promotions, or bundle offers. A complete methodology is needed. Online awareness does not equal offline awareness.**
**Reasonable pricing: benchmark against the mainstream price band, one step higher**
There's a saying in the traditional market: pricing determines life or death.
Regarding pricing, Wu Hao's logic is: **Play it safe, never skip levels, just one step above the mainstream price. Currently, the mainstream price band for soy sauce is 10 yuan. Based on consumption upgrade and healthy consumption concepts, launch a 15 yuan product.**
Offline people are smart. When there's a trendy product priced at 20 yuan, if it's exposed offline, before you even go offline, factories in Henan and Shandong have already copied your product and undercut you. They might be cheaper and have packaging more suitable for offline. How do you fight? Take Genki Forest as an example: no fewer than 20 companies can imitate it, and the taste isn't bad either.
Therefore, when your product is good enough, your pricing must be scientific and must be a choke point that others can't follow.
In the past, salespeople told Wu Hao, "Boss, you should make a cheap price to occupy more market." Wu Hao would reply: What is a cheap product? Haitian soy sauce ranges from 3 to 15 yuan. Should we make a 2-yuan soy sauce?
**The pricing of new consumer brands must be positioned at the mainstream price point. In the process of consumption upgrade, if you can position between one and two steps, and position accurately, that's the best.**
Of course, to position at this price, it depends on your supply chain and R&D capabilities. Going offline requires comprehensive strength. It's not that with a creative idea and good packaging, you can set a high price. Packaging can be imitated, and concepts can be copied.
Behind a scientific price, there must be a complete supply chain, with production costs firmly controlled. If costs are on par with competitors, even 10% higher, and pricing is 20% higher, it's reasonable.
**Summary:**
Both are veterans in the FMCG industry. Shi Yonggang previously handled offline regional markets at Qingdao Beer and now serves as Deputy General Manager of the Innovation Division and E-commerce Director. Wu Hao previously worked at JDB and Special Forces Coconut Juice, and now runs a new consumer brand.
As witnesses and practitioners, they shared their views and summaries on new consumer brands going offline. We can clearly feel: **The offline market is truly a series of street fights!**
Markets are won one by one. The Generation Z we often talk about, diverse consumption, brand innovation, iterative testing, people-goods-scene, etc., are important as strategic directions and top-level design. But when it comes to the actual business, to get sales and profits, you have to seize bit by bit, do ground promotion, intercept, and fight.
Focus on FMCG distributor new distribution/innovative consumer brand cases
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