In the FMCG industry, 'involution' has become an undeniable phenomenon. Brands struggle in the quagmire of product homogenization, distributors hover on the edge of thin profits, and retailers seek change in the predicament of declining foot traffic. Everyone is asking: How to break through in this competition? Traditional thinking often confines us to our own perspective, focusing on how to enhance our own competitiveness while ignoring the real needs of customers. However, if we can step out of ourselves and think from the customer's perspective, we may find a new path to break the deadlock. Zhao Qiuhua's story is a model of this mindset shift. He not only successfully rescued his traditional food factory from crisis but also founded a new service company that helped many distributors solve their business problems. What he did was not just solve his own problems; more importantly, he was always thinking about how to help customers solve their problems. By going deep into the market frontlines and standing with customers, he continuously evolved and iterated in practice. How did he achieve this transformation? What insights can his experience bring to manufacturers, distributors, and retailers in the FMCG industry? Let's step into Zhao Qiuhua's story and explore his path to breaking through. Corporate Crisis: 2018-2020, Seeking Change From 2002 to 2018, Zhao's role was that of a traditional production enterprise owner. His company, Sichuan Jiaqing Food Company, was a traditional food factory specializing in the production of hot pot sweet potato starch noodles, with distributors across the country. At the same time, the company maintained long-term cooperative relationships with well-known hot pot chain brands, including Haidilao, Henan Baru Hot Pot Chain, Xiaolongkan Hot Pot, and other famous brands. The company was doing fairly well overall. By 2016, many homogenized products began to appear on the market, product sales started to decline, and profits became thinner. The company felt some pressure. In 2017, things got worse. Due to environmental protection requirements, the factory had to relocate, and a piece of land was allocated to rebuild a new factory. This required a large amount of capital, and the company's cash flow began to have problems, even failing to pay salaries for up to three months. The anxious Zhao could only seek learning opportunities everywhere to find solutions. Once in Shenzhen, he saw that other industries used the ordering meeting model to collect payments effectively, so he planned to replicate this approach. However, before this, he had only managed the factory and had never been involved in sales. According to the company's previous sales model, distributors would pay a certain amount, and the company would give corresponding promotional policies, and the sales task was considered complete. But now, distributors' businesses were also struggling, making it difficult to ask them to pay. Zhao began to think that distributors' concerns were无非: worrying that if they stocked too much, the goods would become unsalable, downstream customers wouldn't want them, and they would be stuck with the goods! So he thought: Can I hold a customer ordering meeting on behalf of the distributor, helping the distributor first collect money from their customers, so they would naturally be willing to pay for goods? From there, he moved from production management to the company's sales frontline. On September 2, 2018, in Xi'an, the company's largest customer market at the time, he launched his first one-to-many sales ordering meeting model. The first ordering meeting was very successful, bringing in a substantial payment of 2.4 million yuan, solving the company's urgent needs. Zhao was very happy, and so were his distributors. Why? Because distributors only needed to gather their distribution customers, and Zhao's company would cover all costs, manpower, and policies related to the ordering meeting. The payments collected on-site would go directly to the distributor's account. After deducting a profit of several hundred thousand yuan, the distributor would then pay the company. Who wouldn't be happy making money so easily? Since then, Zhao continued this approach, helping more distributors sell goods and collect payments. In 2019, the annual revenue for the single product of hot pot sweet potato starch noodles in the Xi'an market jumped from over 4.6 million to over 20 million. The Tibet market grew from over 1.1 million to over 3.5 million. The Qingdao market also grew from over 200,000 to 1 million. The company's overall annual sales increased from over 30 million to over 70 million. After this battle, he summarized: "As long as a company's sales channel sinks one level, its sales volume will increase 2-5 times." The model they explored in 18-19, even if applied today, should still be effective for many small and medium-sized enterprises' sales growth. "After all, first-class enterprises do culture, second-class do brands, and we third-class enterprises innovate in marketing—that counts as growth too," Zhao said half-jokingly. From the outside, this seemed like a common corporate crisis that traditional manufacturing industries often face in a rapidly changing market. Most companies might choose to retreat or accept the outcome. However, Zhao's choice was completely different. He did not give up under pressure but actively sought change, redefining himself and the company's future in a new way. Transformation Opportunity: 2020-2023, Breaking Through Fast forward to 2020, the pandemic broke out, and these three years brought another huge test for Zhao and his team. If ordering meetings can't be held, what other ways can I help my distributors? Zhao fell into deep thought. During the pandemic, with the rapid spread of short videos, consumer habits changed significantly. More and more people used short videos and live streaming as daily entertainment, making it a norm of life. At this time, Zhao also spent time on Douyin watching short videos. Seeing industry leaders like Gree Electric's Dong Mingzhu and Xiaomi's Lei Jun doing short video live streaming to sell goods, he had an idea to build his own short video team to bring traffic and sell products for the company. So, on December 27, 2020, he established a live streaming and short video operation center in Xi'an, the market closest to his customers. In 2021, he began experimenting with new media tactics. Initially, the goal was to attract more distributors' attention through short videos, allowing employees to continue business while at home. They created over 60 matrix accounts on platforms like WeChat Channels and Douyin, including "Zhao Ge's Pitfalls," "Hongbin Network," and "Zishu Manor Factory." Unexpectedly, the ones attracted through short video marketing were not FMCG distributors but many restaurant owners who used the company's products! Traditional terminal stores, due to changes in consumption patterns, can no longer attract large numbers of consumers as they did in the past. Online e-commerce, food delivery platforms, and short video live streaming have taken over a large share of consumption scenarios. Facing this situation, physical stores must think about how to re-attract customer traffic, such as combining online platforms with offline experiences, or introducing community activities to increase user stickiness. At this moment, the wheel of fate began to turn again. If a company's sales channel sinks one level, sales can increase 2-5 times. In 18-19, Zhao sank the sales channel to the level below distributors. If he now sinks directly to terminal stores, helping them attract private domain traffic, wouldn't that be sinking another level? Could sales double again? Without hesitation, he led the new media department to help terminal stores use short video marketing to drive traffic. By the first half of 2023, Zhao's team had helped over 400 restaurant terminal stores set up Douyin short videos. Some stores achieved 400,000-500,000 GMV in 1-2 months. The obvious change was that stores with short video layouts had much better business than those without. Zhao's team gained valuable experience and new inspiration. They found that short videos and live streaming were effective and fast in helping terminal stores acquire customer traffic—what you do today might yield results tomorrow. Thus, he connected terminal stores through distributors, and his new media team solved the traffic problem for stores, thereby feeding back to distributors and then to the factory. This time, it was again channel sinking, but deeper. As the business deepened, in October 2023, Xi'an Hongbin Network Information Service Company was officially spun off from Sichuan Jiaqing Food Company, becoming a service-oriented marketing company. Mature Model: 2023 to Present, Empowerment In the post-pandemic era, the commodity circulation model has undergone another major transformation. Upstream production is overcapacity, downstream terminal store traffic continues to decline, and distributors caught in the middle are suffering. Zhao believes that distributors must break out of the traditional middleman mindset and re-examine their capabilities. In the past, distributors competed in involution with peers, competing on management and efficiency. This inward-looking business model often left them in a passive position. If distributors can step out of the current situation and focus on helping their retail customers, what else can they do? In the era of consumer sovereignty, distributors can no longer rely solely on product influence and delivery services to maintain channel control. They need to re-examine their relationship with terminal stores and find new cooperation models. Zhao drew inspiration from the successful model of chain stores and applied it to the transformation and upgrading of distributors. Chain stores thrive because they not only provide products but, more importantly, the headquarters provides comprehensive empowerment to stores, including traffic, supply chain, and operational support, ensuring stable operations and profit growth. Why can't distributors play this "headquarters" role? Zhao believes that distributors can fully play this "headquarters" role, providing all-round support to terminal stores through an integrated bC operation model of "online + offline, public domain + private domain, traffic + empowerment." Since 2023, Zhao has summarized this model through three years of practical experience during the pandemic, pointing out the direction for FMCG distributors' transformation and upgrading in the next 3-5 years. The specific implementation is completed in three steps: Step 1: Combine online and offline. Set up the distributor's corporate headquarters account on the Douyin platform, and link offline stores under the headquarters account to form associations. Step 2: Build a public domain + private domain operation system. The public domain is responsible for attracting new customers, attracting potential consumers within 2-3 kilometers around the store to visit and consume; the private domain is responsible for retaining consumers who visit the store into WeChat groups, and then professional operators do upsells and repeat purchases to generate profit. Step 3: Traffic + empowerment = continuous fission. Private domain operations require planning and executing activities every solar term and holiday to continuously drive traffic; empowerment targets are employees and consumers in the community. Community operations need to set up mechanisms to encourage employees and consumers to forward and promote fission. All these mechanisms are set up in the backend of their own WeChat store. Through the integrated layout of the bC end, distributors can not only have a large number of stable terminal stores but also use stores as a traffic funnel for C-end operations and private domain accumulation. By co-operating with terminals, sharing traffic, and integrating the supply chain, they can obtain greater long-term returns. This model seems simple, but the operational work is a big challenge for most distributors. Initially, Zhao wanted to teach distributors hands-on, but later found that this path didn't work. The best way is to let distributors do customer relationship management well, and leave everything else to professional teams! Now, Zhao's new company, Hongbin Network, handles all operational work, and Zhao's company charges a certain commission. It is worth mentioning that the profit-sharing mechanism still follows the principle of "help customers collect money first." Only by helping stores sell more goods, making stores profitable, can distributors make money, and only then can Hongbin Network make money. Through this set of operations, he has helped multiple distributors achieve 2-5 times growth goals. In the future, not only his own distributors, Zhao plans to help more traditional trading distributors solve their current difficulties through this relatively "light" approach. Summary A couple of days ago, I heard Liu Run share a sentence in his annual speech: Don't treat customers as problems, but help customers solve problems. He gave an example: Facing a customer's problem, Long Taiji, a beef seller at a stall in Shenzhen Yantian Farmers' Market, helped customers turn "a piece of meat" into "a dish." From simply selling beef to helping customers directly cook it and take it away, Long Taiji accumulated his own private domain community, bringing super impressive repurchase rates and business growth. So, when you encounter difficulties, instead of thinking about how to make customers spend more, think about how to do more for them. This also reminds me of Zhao's company. Isn't it because he first helped customers solve problems that he escaped his own predicament? As 2024 is coming to an end, I hope Zhao's experience can inspire you and help you find your own solution. Finally, if you want to learn more about the specific operation model of Zhao's company, you can contact us.