---
title: "Omnichannel Operations Case: How C&S Paper Achieved 76% Business Growth in Regional Markets through Digitalization?"
description: "Under omnichannel digitalization in the daily chemical industry, decision-making AI helps achieve structural growth in offline markets. According to New Distribution's analysis of 78 listed FMCG companies' 2023 financial reports, 26 saw revenue declines and 29 saw net profit declines, accounting for over 30%. These companies are all leading brands in their categories, and based on the latest market conditions in Q1 2024, the trend of stagnant market capacity continues. China's population is declining, demographic dividends are disappearing, and consumer spending power and expectations are weakening..."
author: "任文青Andy"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-07-18"
language: "en"
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# Omnichannel Operations Case: How C&S Paper Achieved 76% Business Growth in Regional Markets through Digitalization?

> Under omnichannel digitalization in the daily chemical industry, decision-making AI helps achieve structural growth in offline markets. According to New Distribution's analysis of 78 listed FMCG companies' 2023 financial reports, 26 saw revenue declines and 29 saw net profit declines, accounting for over 30%. These companies are all leading brands in their categories, and based on the latest market conditions in Q1 2024, the trend of stagnant market capacity continues. China's population is declining, demographic dividends are disappearing, and consumer spending power and expectations are weakening...

**Introduction: Under omnichannel digitalization in the daily chemical industry, decision-making AI helps achieve structural growth in offline markets.**
According to New Distribution's analysis of 78 listed FMCG companies' 2023 financial reports, 26 companies saw revenue declines, and 29 saw net profit declines, accounting for over 30%.
These 78 listed companies are all leading brands in their respective categories, and based on the latest market conditions in Q1 2024, the trend of stagnant market capacity continues.
China's total population is decreasing, demographic dividends are disappearing; consumer spending power and expectations are weakening; major FMCG categories are facing severe oversupply and sluggish growth...
In the era of incremental growth, companies could follow the market to achieve natural growth, but now and in the future, companies can only find structural growth opportunities through digitalization.
This makes the omnichannel digitalization initiatives that major FMCG companies have been vigorously promoting in recent years extremely important. Omnichannel digitalization consists of two keywords: omnichannel and digitalization. Different sub-industries and different companies have vastly different perceptions and practical results.
Recently, **Tencent Smart Retail's "Retail Leaders Talk · Technology Roundtable" fifth episode** invited **Zhao Bo, founder of New Distribution; Yang Senlin, CIO of C&S Paper; Chen Dongfeng, Vice President of Guangdong CIO Association; and Wu Chunze, General Manager of Tencent Smart Retail's Vertical Industries**, to conduct in-depth exchanges and discussions on the difficulties and pain points of omnichannel digital transformation in the daily chemical industry, as well as C&S Paper's successful experience in omnichannel digitalization.
New Distribution has long focused on the development of digitalization in the FMCG industry. This article will further analyze and discuss this topic based on the roundtable content, hoping to provide valuable reference and inspiration for daily chemical companies.
Click to watch highlights of the roundtable program
#### **Omnichannel Digitalization**
#### **The Key Is Efficient Matching of People, Goods, and Places to Drive Business Growth**
In recent years, many FMCG companies have invested significant effort in omnichannel and digitalization, but from practical results, few have done well.
Regarding companies' "digitalization performance," Chen Dongfeng cited a set of numbers: among the 40-plus companies they surveyed, only 15% achieved or exceeded expectations in digital transformation performance, while 85% said they fell short of expectations.
The actual situation is similar. Many companies have overly high expectations for digitalization, thinking it can solve all problems. They invest heavily, set up independent digital departments, make many plans, implement many systems, and even spend huge sums on consulting firms, but digitalization and actual business remain two separate lines.
Regarding expectations for digitalization, C&S Paper CIO Yang Senlin's view is very direct: **"The ultimate goal of digitalization is growth; performance growth is our only pursuit."**
The other topic, "omnichannel," is equally misleading. When FMCG companies talk about omnichannel, they mean that wherever consumers go, we appear there, and we want to sell the right products to the right people in the right scenarios.
But in reality, consumers have too many purchasing scenarios, and companies have limited resources. They must consider return on investment. You cannot truly achieve omnichannel operations, or you must have priorities and trade-offs. As Yang Senlin said: "Companies should focus on their core advantages and make breakthroughs in the areas they are best at."
Finding operational priorities and making trade-offs are closely related to the category, development stage, and capabilities of the company. After determining priorities, truly achieving efficient matching of "people, goods, and places" must rely on digital capabilities.
So "omnichannel" and "digitalization" are two closely related topics. **The key to omnichannel is not doing everything, but finding core business scenarios and combining them with digital capabilities to truly bring business growth and profit growth to the company.**
Zhao Bo, founder of New Distribution, believes this is actually "integrating supply chain, consumer scenarios, and business operation capabilities throughout the consumer lifecycle, thereby achieving integrated operations from production to supply to sales."
The logic seems simple, but doing it well is not easy. Companies must solve two problems.
  * **First, omnichannel requires priorities and trade-offs. How to combine industry stage with one's own characteristics to determine the focus of digital operations?**
  * **Second, after determining the focus, how to combine digital tools with organizational and actual business operations to create a replicable model in a more efficient way and seize structural growth opportunities?**
#### **Daily Chemical Industry**
#### **Offline Market Is the Focus of Digital Operations**
To determine the focus of business operations, let's take C&S Paper, a leading daily chemical company, as an example.
C&S Paper is one of the first A-share listed tissue paper companies in China, with extensive sales and service networks in China and globally. In 2023, despite raw material price fluctuations and intensified market competition, C&S Paper still achieved sales revenue of 9.801 billion yuan, a year-on-year increase of 14.37%.
The internet has been an important variable over the past decade. Overall, in the FMCG industry, online business accounts for about 30% of total sales, while the daily chemical industry has a higher online penetration rate, about 50%. However, in the past two years, C&S Paper has shifted its operational focus back to offline.
On one hand, online traffic costs are high, and the market is becoming saturated. Online can bring sales, but profits rely more on offline. On the other hand, considering the return of community commerce and the state's emphasis on physical entities, the offline base is expected to bring more opportunities. But at the same time, offline channels face many problems.
> First, the channel chain in the daily chemical industry is long. Traditional distributors only do distribution coverage, and sell-through mainly relies on the brand's own team, but their capabilities vary. Second, physical stores are numerous and scattered, and with many organizational layers, decision-makers and business levels cannot align on regional potential stores, coverage rates, and actual input-output. Third, consumer demand is increasingly diversified; the era when one or two big single products or a set of product combinations could drive sell-through across all stores is over.
For companies, online is a digital-native market, while the offline market is different, with relatively low digitalization.
**If companies can leverage digital tools and capabilities to discover more potential stores, help more stores sell the right products to the right people in the right scenarios, and achieve efficient matching of "people, goods, and places," this is an effective path to sustained growth after the era of universal incremental growth.**
Chen Dongfeng believes that the ultimate goal of digitalization is the same for all companies, but different companies have different priorities and strategies.
In C&S Paper's view, finding structural growth opportunities in the offline market is a key focus, or core lever, for promoting "omnichannel digitalization."
#### **Combining Digital Tools with Organizational Capabilities**
#### **Seizing Structural Growth Opportunities**
After determining the focus, how can companies combine digital tools with organizational capabilities to create a replicable model in a more efficient way and seize structural growth opportunities?
Simply put, **structural growth opportunities are about solving the problems of where the stores are, what products to provide to which people, and how to implement.**
To address this, C&S Paper conducted a pilot in Hefei after in-depth cooperation with Tencent Smart Retail.
**Where are the stores?**
Based on Tencent DRTM's massive data and its own indicators and dimensional data, C&S Paper selected 900 high-potential stores from more than 16,000 community stores in Hefei, and among these 900 high-potential stores, found 300 stores that C&S Paper had not yet covered.
**What products to provide?**
The user profiles of these stores are mostly non-price-sensitive, willing to pay for high-value products. C&S Paper used data to segment different groups, such as refined mothers, and provided targeted products.
**How to implement?**
Yang Senlin believes, **"All business must have 20% of people responsible for marketing strategy and tactics, and the remaining 80% for execution."**
Which stores to focus on, what resources to allocate, and how much growth can be achieved—C&S Paper uses decision-making AI to create a "smart brain," extracting success factors from the professional knowledge and strategic tactics of the excellent 20%, and then uses tools like SFA to help salespeople execute.
In such a management chain, information is not lost and can reach the front line directly. This is equivalent to giving the front line a clear battle map through digital tools to achieve the commander's intent. It is an efficient, quickly implementable, and replicable model.
C&S Paper's pilot in Hefei was very successful. **In three months, only 100 of the 300 high-potential stores were covered, and regional business achieved 76% growth, and this number is expected to grow significantly by the end of the year.**
Yang Senlin calls it algorithm-driven growth, which is based on the massive, multi-dimensional data of the Tencent ecosystem, combined with the extraction and application of C&S Paper's own capabilities, and through decision-making AI algorithm tools, ultimately achieving efficient matching of "people, goods, and places" and achieving structural growth in traditional markets.
#### **Digital Transformation**
#### **Requires the Combination of Endogenous Capabilities and External Ecosystem Resources**
After the market enters the stock phase, structural growth opportunities still exist. How to combine endogenous capabilities with external ecosystem resources to seize such opportunities is the key. C&S Paper's digitalization practice case has reference significance for many companies.
But it should be noted that C&S Paper's digitalization success cannot be fully understood from the tool dimension alone. **Beyond the application of AI and other digital tools, the combination of C&S Paper's endogenous capabilities and external ecosystem resources is the key factor.**
Endogenous capabilities relate to a company's own cognition and path of digital transformation.
Many companies treat digitalization as just a technical project, but in reality, digitalization is a top-leader project and a systematic change. Only with the full cooperation of the entire organization can business results be achieved.
For example, in the Hefei case, C&S Paper did not rely solely on the linkage of technology and market, but also included organizational coordination. It was a combination punch.
Yang Senlin said that during the pilot in Hefei, not only did the HR department adjust the organizational structure and personnel, but sales, finance, operations, and other departments all gave the digital department a green light. These were necessary factors for success.
Why are external ecosystem resources important?
**Efficient matching of "people, goods, and places" requires massive, multi-dimensional data matching and a full set of business tools to adapt. Currently, any company relying solely on its own strength to achieve structural growth through digital transformation is insufficient.**
In C&S Paper's digital transformation process, Tencent also played an important role.
Yang Senlin said that Tencent's resources and technology are unparalleled, helping C&S Paper solve many problems encountered in digital operations and creating great value for the brand.
Most importantly, digital transformation must truly empower business growth. In addition to tools like cloud services, DRTM, and LBS, Tencent also has a unique ecosystem that can help companies connect online and offline, integrate resources, and truly achieve business growth. This also makes it the preferred digital operation platform for many companies.
According to Wu Chunze, Tencent Smart Retail has long been helping companies digitalize goods, that is, through product QR codes, achieving connectivity from logistics to production to the C-end, making products an important entry point and carrier for digitalization.
In terms of channel digitalization, various tools have also been developed to achieve channel online presence, allowing companies to know where to open stores with a higher success rate.
In addition, based on Tencent's data capabilities, it can also help companies better serve consumers in a legal and compliant manner, achieving the digitalization of people.
"We have been around the three points of people, goods, and places, providing our customers with complete and comprehensive solutions," Wu Chunze said.
Enterprise digital transformation is a long-term process that requires a strong digital foundation to support specific digital implementation projects. Tencent Smart Retail, relying on the powerful Tencent ecosystem, is actually helping companies build a digital foundation more efficiently to support the advancement of digital business.
**Final Thoughts**
Now, the era when companies could achieve growth by following natural market increments is over. **How to find structural growth opportunities through digitalization and truly implement them to bring business growth is the core topic for companies today.**
Companies need to pay attention to digitalization awareness, technology investment, and organizational coordination, combined with the application of third-party resources and tools, to achieve tangible results in digital operations.
Click to watch the full roundtable program


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