Returning to offline and the fundamentals are highly popular terms in the FMCG industry this year. Previously, 2C e-commerce optimized the supply chain from brand to consumer; later, B2B optimized it from brand to terminal outlets; and in the past two years, community group buying optimized it from distributor to consumer. Within the entire F2B2b2C supply chain, driven by capital and internet tools, continuous innovation and breakthroughs have captured nearly 30% of market sales, so everyone has refocused on the 70% offline operations. Today, let's explore the most critical mechanism of offline operations: the past and future of channel coverage models. FMCG channel coverage cannot do without distributors De-distributorization is a common tactic used by pseudo-experts to grab attention and sell anxiety. Distributors will always exist, but they need continuous optimization. The essence of channel coverage optimization is the process of improving distributor operational efficiency. Let's break down the basic units of distributor operations. Unit 1: The Boss. He builds the regional market framework through capital, warehousing, distribution, and other basic capabilities, then connects with brand owners, possessing product selection ability. His core value is product authority. Unit 2: The Manager. He is an intermediary, facing the distributor boss above and responsible for operational results, and facing the sales team below and responsible for management results. Large distributors may have managers at different levels, while small distributors may combine boss and manager roles. The core value is operational management authority. Unit 3: The Salesperson. He is purely at the execution level, responsible to the manager, serving outlets, selling and maintaining products. His core value is sales and maintenance authority. This is the sedimentation of decades of FMCG development in China, unchangeable and irreducible. FMCG development cannot do without distributors, and distributor organizational structures cannot do without these three basic units. A Brief History of Coverage Model Development 1. Thirty years ago: Traditional Agency Model Characteristics: Agents do it themselves; enterprises only provide products and management personnel (whose duties are mainly payment, shipping, and communication costs). Relying on demographic dividends, in an era of material scarcity, as long as factories could produce quality products, natural circulation sufficed for small and medium enterprises' outlet coverage needs. 2. Twenty years ago: Deep Distribution Model Characteristics: Enterprise-led operations, distributor delivery. Leading FMCG brands began to lay out, leading operations with distributors following as delivery partners, and deep distribution began. To improve operational efficiency, enterprises recruited large numbers of sales personnel for a human-wave tactic, indiscriminately sweeping streets. The basic requirement was that brands possess a replicable, broadly adaptable operational efficiency. At this time, domestic leading brands' channel coverage became dense, albeit simple and crude. 3. Fifteen years ago: Distributor Contract Model Characteristics: Distributor-led operations, enterprise as coach. As demographic dividends disappeared, incremental markets became stock markets, and brand growth became less easy, bringing profit pressure. Additionally, with labor law standardization and rising prices, labor costs surged, making human-wave tactics unsustainable for many brands. Some brands designed rights and delegated authority to distributors. The basic requirement was that distributors possess high operational efficiency. The model breakdown can be illustrated below: 4. Ten years ago: Jinmailang Four-in-One Model Characteristics: Distributor bosses and frontline salespeople shift from employment to partnership; enterprise as sparring partner. Jinmailang believed that the more decentralized the distribution rights, the stronger the subjective initiative of personnel. Only by stimulating people's primal desires could market competition be invincible. As a result, Jinmailang led FMCG leading enterprises in annual growth for several consecutive years despite market weakness, under the Four-in-One model. The basic requirement was that both the execution team and distributors possess certain operational efficiency. The model breakdown can be illustrated below: 5. Now and future: Separation of Powers Partnership Model Characteristics: Distributor boss, professional manager, and frontline salesperson form a partnership; enterprise provides logistical support. The separation of powers model is the endpoint of channel coverage models as long as distributors exist. It not only fully defines the rights of manufacturers and distributors but also more precisely empowers distributor managers and sales teams in daily operations, using management as the core incentive logic to stimulate subjective initiative at all levels. The basic requirement is that execution, frontline management, and distributors possess operational efficiency. The model breakdown can be illustrated below: Summary: I have repeatedly proposed the concept of operational efficiency. Let me explain: Operations have capability and benefit; efficiency combines the two. For example, the JD Logistics system I encountered recently has strong delivery capability, but delivery costs exceeding 8% of sales make its delivery benefit unsuitable for the FMCG industry (Guangdong regional logistics systems have delivery costs around 2%). This is a manifestation of high capability but low efficiency. Secondly, the shift of sales teams from employment to partnership and the decentralization of distribution rights are inevitable trends in FMCG. Stimulating team initiative is bound to be a core competitive advantage, making this a topic that channel coverage models must study. Three Key Elements of Channel Coverage Models

  1. Know yourself and choose the best matching model: We have analyzed five models for market channel coverage with distributors present. Since separation of powers is the ultimate model, can we achieve it in one step? We need self-reflection: do we meet the requirements of each coverage model? Many leading brands have these problems: a. Long-term "nanny-style" service reduces distributors' independent operational efficiency. When enterprises suddenly "let go," facing market competition, risks are high; b. Long-term "one-stop" management makes frontline teams develop a habit of "heavy execution, light thinking," with insufficient attention to market operational efficiency, unable to work independently. So the optimal solution is: First, improve the enterprise team's operational efficiency; then, the enterprise team improves distributor operational efficiency one-on-one; finally, achieve nationwide channel coverage model upgrade. Understand that history cannot be compressed, but time can!
  2. Distributor authorization level and outlet control can be expressed in one chart. The six dimensions for analyzing distributor authorization are: organizational structure, market development, sales development, terminal service, capital advance, warehousing and logistics. The five levels for analyzing brand outlet control are: full control, partial control, assisted management, supervision and inspection, no control.
  3. For brands, channel coverage models need not be uniform nationwide: Channel coverage models are based on existing markets, which vary in strength, and existing distributor operational efficiency varies. A one-size-fits-all approach is not recommended. In principle, each type of operation model should be redefined based on market conditions: growth markets focus on distribution rate, mature markets focus on resource possession. Whoever has higher operational efficiency becomes the market leader. Key points for channel coverage operations:
  4. Gradually improve distributors' self-selling capability, with enterprise teams transitioning from product sellers to brand promoters and distributor coaches;
  5. How channel coverage enterprises bear the pressure of market management and brand promotion;
  6. Channel coverage must involve orderly interaction and clear responsibilities across every link of the marketing channel, strengthening the enterprise's ability to maintain market order;
  7. The quality of channel coverage is reflected not only in the guidance and control of channel resources but also in terminal maintenance;
  8. Channel coverage promotion should focus on rhythm and stage-specific priorities, establishing marketing networks and management models that match market development stages;
  9. Coverage model promotion should be based on objective market development needs, but also on internal management capability and market control capability as prerequisites. Final Thoughts: Under the baptism of internet ideology, the FMCG field has seen a certain degree of innovation syndrome in recent years. Anything with a new banner must be embraced; anything with old traces must be rejected. The concern of insightful people is that in this atmosphere of "only new is good," our enterprises and organizations may likely head down wrong strategic paths. Entering 2022, the FMCG market has returned from noise to calm, and everyone has refocused on the offline market. The status of channel coverage models is gradually rising. Finally, I offer a sixteen-character motto to relevant departments: Adapt to local conditions, proceed step by step, be steady and sure, and preserve increments.