--- title: "Returning Offline in 2023: Channel Digitalization Takes Center Stage" description: "After the 2023 Spring Festival, leading FMCG companies launched large-scale channel digitalization, becoming the most notable phenomenon in digitalization and marketing. Channel digitalization, also known as full-chain or long-chain digitalization, involves all four channel links: F (manufacturer), B (distributor), b (retailer), and C (consumer). The prerequisite for full-chain digitalization is deep offline distribution, a strength of FMCG leaders. This article explores the drivers, obstacles, principles, and best practices, including Coca-Cola's experience." author: "刘春雄" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2023-08-09" language: "en" canonical: "https://xinjignxiao.com/en/articles/returning-offline-in-2023-channel-digitalization-takes-center-stage-614fd0d3/" markdown: "https://xinjignxiao.com/en/articles/returning-offline-in-2023-channel-digitalization-takes-center-stage-614fd0d3.md" original_source: "https://mp.weixin.qq.com/s/5E37xmMTrFlBjpUbQPsY_A" translation: "https://xinjignxiao.com/zh/articles/2023%E5%B9%B4%E5%9B%9E%E5%BD%92%E7%BA%BF%E4%B8%8B-%E6%B8%A0%E9%81%93%E6%95%B0%E5%AD%97%E5%8C%96%E6%98%AF%E4%B8%BB%E6%97%8B%E5%BE%8B-614fd0d3.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/returning-offline-in-2023-channel-digitalization-takes-center-stage-614fd0d3/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Returning Offline in 2023: Channel Digitalization Takes Center Stage > After the 2023 Spring Festival, leading FMCG companies launched large-scale channel digitalization, becoming the most notable phenomenon in digitalization and marketing. Channel digitalization, also known as full-chain or long-chain digitalization, involves all four channel links: F (manufacturer), B (distributor), b (retailer), and C (consumer). The prerequisite for full-chain digitalization is deep offline distribution, a strength of FMCG leaders. This article explores the drivers, obstacles, principles, and best practices, including Coca-Cola's experience. After the 2023 Spring Festival, leading FMCG companies launched large-scale channel digitalization, becoming the most noteworthy phenomenon in the digitalization and marketing fields in 2023. Digital training for channel departments, organizational development, and trial-and-error of digital models have been very active. **Channel digitalization here, also known as full-chain digitalization or long-chain digitalization, is the digitalization involving all four channel links: F (manufacturer), B (distributor), b (retailer), and C (consumer).** **Leading FMCG Companies** **Driving Channel Digitalization** The prerequisite for full-chain channel digitalization is deep offline distribution, which is precisely the strength of leading FMCG companies. Therefore, when platform e-commerce and other digitalization paths face obstacles, leading FMCG companies have declared a "return to offline," making channel digitalization the main theme. Specifically, there are several reasons: **First, channel digitalization is the main battlefield for FMCG digitalization.** Leading FMCG companies have been diligent in digitalization, but e-commerce typically accounts for no more than 10% of total sales, with a few reaching 20%. Meanwhile, new retail, private domain, and other digital models account for even less. If a company has about 90% of sales not digitalized, it means they haven't found the main battlefield. Once they recognize channel digitalization as the main battlefield, corporate investment becomes substantial. **Second, the success of mid-chain digitalization provides inspiration.** Since 2018, mid-chain digitalization (F2b2C) has been successful, roughly in three categories: local dining and entertainment (e.g., McDonald's, Xibei), chain retail (e.g., Qian Dama), and short-channel brands (e.g., apparel). If the mid-chain F2b2C model works, the long-chain F2B2b2C model has promise. **Third, sales departments face digitalization pressure.** Currently, overall digitalization in leading FMCG companies is advancing rapidly. Supply chain digitalization is relatively easy; smart manufacturing digitalization is also straightforward as it's a controlled system. Only channel digitalization involves many uncontrolled factors and progresses slowly. In summary, in 2023, the atmosphere for channel digitalization is set, and the climax is imminent. Amid this industry trend, Tencent Smart Retail's "Retail Masters Talk · Tech Roundtable" recently held a discussion on "Channel Digitalization." I was invited to join Feng Ke, General Manager of Digital and Information Technology at Swire Coca-Cola China; Song Xing, Founder and CEO of Fenxi Consulting; and Li Youxiang, Director of Vertical Industry Solutions at Tencent Smart Retail. We conducted in-depth analysis and discussion on obstacles, principles, and successful case experiences, hoping to provide actionable insights for FMCG companies undergoing or considering channel digitalization. Click to watch highlights. **Two Major Obstacles to Channel Digitalization** For channel digitalization, we believe it has completed its taxiing and acceleration phase and is entering takeoff. However, large-scale advancement still faces two major obstacles. **First, cognitive obstacle: digitalization that eliminates intermediaries.** In B2C, new retail, and private domain digitalization, there was advocacy for removing intermediaries. Such "burning bridges" actions have left many distributors (B) and retailers (b) wary. This creates a paradox: channel digitalization requires B and b to cooperate in traffic generation, yet also aims to eliminate them and deny them profits. This mindset leads to widespread reluctance among channel partners to cooperate. **Channel digitalization is full-chain, so intermediaries must participate and cooperate. Only by breaking this cognitive barrier can channel digitalization return to normal track.** **Second, logical obstacle: fragmented channel digitalization.** This obstacle concerns who leads the transformation. Because of the de-intermediation narrative, not only do intermediaries resist, but traditional FMCG sales departments also resist. Thus, early channel digitalization tasks were assigned to IT departments. In general, IT departments are proactive, while sales departments are passive. IT-led channel digitalization may be F2B+F2b+F2C, with point-to-point connections but no full-chain integration, which we call **fragmented channel digitalization**, mainly due to lack of offline methods to connect B2b and b2C. But channel digitalization requires full-chain integration. Additionally, IT-led digitalization can lead to conflicts over traffic between IT and sales, preventing online-offline integration. We believe that **to better advance channel digitalization, IT and sales departments will merge into a stronger department.** **Three Principles of Channel Digitalization** Of course, the advancement of channel digitalization has broken many taboos in the digitalization field. Based on long-term observation and practice, we summarize three principles: **online-offline integration, incremental thinking, and traffic profit sharing.** **Principle 1: Online-Offline Integration** Channel digitalization is not two parallel systems (offline + online) but a fusion into one whole. This means online and offline are indistinguishable: one team, user orders online or offline are equally important, and sales from both are equally valued. Traffic can be directed from online to offline and vice versa. **Principle 2: Incremental Thinking** In digitalization, there have been instances of online and offline competing for traffic, even "robbing" traffic through pricing, causing internal friction. This stems from the split between traditional and digital, and excessive reliance on price or policy in online transactions. **Successful channel digitalization focuses on launching new and premium products. This is due to online-offline integration, the cognitive role of digitalization, and changing digitalization goals.** As long as sales grow and structure improves, profits increase, and it no longer matters whether transactions occur online. With integration, there's no competition for GMV between departments, making incremental thinking easier to implement. **Principle 3: Traffic Profit Sharing** According to this principle, whichever b-end connects and activates users contributes to orders. Once a transaction is completed, traffic contributors must be rewarded; otherwise, no one will contribute traffic in the future. **The solution is traffic profit sharing: whoever contributes traffic gets a share of profits, even if they don't participate in the transaction or delivery.** The traffic source is the b-end, so they receive a share. Similarly, if a b-end is maintained by a B-end (distributor), that B-end also gets a share. **Under this principle, B and b are assured profits for contributing traffic. All channels are willing to entrust users to the manufacturer for operation, and with offline cooperation, overall channel interests are maximized.** These three principles break many B2C digitalization taboos, opening up a larger main battlefield. **Swire Coca-Cola's Benchmark Experience** Swire Coca-Cola is one of the early adopters of channel digitalization and a benchmark in transformation. Its demonstration effect is crucial for the industry. I have long followed its transformation experience, having been invited twice in 2020 to exchange ideas. In this roundtable, Feng Ke shared practical experiences in implementing channel digitalization. Feng Ke emphasized: first, formulate strategy—strategy is crucial; Swire Coca-Cola made digitalization a core corporate strategy in 2019. Second, invest sufficiently in channel digitalization. Third, quickly run MVPs in small areas to test methods, then scale after success. On specific methods and tools, they collaborate with Tencent Smart Retail: **Youma + Mini Program + DRTM.** Specifically, Swire Coca-Cola uses Tencent Youma to first connect with C-end, then via LBS positioning, find nearby b-ends, achieving bC integration. Tencent Youma is an upgrade of one-code-per-item. Youma integrates Tencent's full-platform capabilities, providing a one-stop solution from product management to marketing efficiency, leveraging Tencent's cloud services, WeChat ecosystem, and big data. This enables retail stores to better connect with users, perceive user behavior, and formulate marketing strategies or subsequent user operations. The Mini Program is also a key tool in Swire Coca-Cola's channel transformation. As an efficient and convenient service carrier, it serves both b-end ordering and C-end consumers, completing bC linkage and enabling positive cycles and reverse upstream flows. Swire Coca-Cola uses the Mini Program to connect b and C ends well and open up full-channel data. DRTM mainly helps Swire Coca-Cola achieve market layout and penetration management in retail channels. Feng Ke believes DRTM addresses the "under the lamp" problem, solving common pain points like incomplete market understanding, poor data timeliness, severe decision lag, and slow sales strategy response. Li Youxiang added that DRTM's essence is formulating product distribution strategies based on consumer big data. It helps companies objectively understand the market landscape, quickly discover market opportunities, scientifically formulate strategies, and manage implementation, improving **identification, decision-making, and execution** efficiencies. **Identification:** Includes identifying overall and segment market outlet expansion opportunities, high-potential served outlets, and uncovered high-potential outlets. **Decision-making:** Improves decision efficiency, including precise execution of thousand-store-thousand-face success images and precise placement of offline marketing activities. **Execution:** Includes optimizing sales rep efficiency and precise new product distribution. Additionally, Li Youxiang noted that **Tencent Smart Retail has been exploring channel digitalization capabilities for FMCG since around 2018, continuously integrating internal and external resources and leveraging Tencent's ecosystem connectivity advantages.** Beyond tools like Youma, Mini Program, and DRTM, Tencent Smart Retail promotes bC integration, using WeCom to connect SFA, combining B-end and C-end community operations, and applying consumer data to channel performance growth. With the rise of AI, Tencent Smart Retail is leveraging its years of AI accumulation in scenarios like AI storefront recognition, AI display recognition, AI quality inspection, and transparent factories. Meanwhile, Tencent provides stable and reliable cloud infrastructure for many FMCG companies, allowing them to move core business systems to Tencent Cloud, forming a stable and scalable technical foundation. **Final Words** The past of digitalization was B2C; the future is C2B; the transition, the current main battlefield, is channel digitalization and bC integration. In previous years, no one dared to bet on this. I think this year we can. If companies hesitate this year, they will miss the main battlefield. For leading FMCG companies, channel digitalization can be done wrong, but it cannot be left undone. Completing it eliminates the biggest blank spot in digitalization. I believe that this year or next, or even this year, many benchmark companies in channel digitalization will emerge, with numerous mid-tier companies following. Click to watch the full roundtable. **About "Retail Masters Talk · Tech Roundtable"** In recent years, China's retail industry has gradually shifted from traditional retail to consumer-centric, online-offline integrated omnichannel operations. A new wave of digital transformation is underway. With changing consumer behavior and emerging technologies, retail enterprises face unprecedented challenges. How to achieve online-offline integration, enhance terminal customer experience, and use digital tools to empower channels and activate omnichannel growth are pressing issues. Therefore, Tencent Smart Retail launched the sub-series "Retail Masters Talk · Tech Roundtable" under its "Retail Masters Talk" column. Each episode invites 3-5 guests to discuss themes centered on omnichannel operations, focusing on cutting-edge digital applications and trends in retail, sharing experiences and results of new digital products and solutions in leading enterprises. Through this series, we aim to guide more retail enterprises in their omnichannel digital upgrade and drive sustained industry growth. --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671