Recently, the report '2023-2024 China FMCG Distributor Operating Conditions Survey Report' released by New Distribution contained a set of data worth attention. Among over 300 survey respondents, offline channel distributors accounted for 60.3%, while distributors with integrated online and offline operations made up 38.7%. Large distributors showed a higher degree of integration, especially those with sales over 300 million yuan, where the proportion reached 76.2%. Looking at sales target achievement rates, 60.7% of integrated distributors met their sales targets, with an average achievement rate of 101.1%, and they outperformed single-channel distributors in both revenue and profit growth. The data shows that although offline channels remain mainstream, an increasing number of distributors are focusing on integrated online and offline operations. In the past, New Distribution has reported numerous practical cases of distributors, mostly focusing on offline business. However, in an era of shrinking volumes, a single model can no longer sustain continuous performance growth. During visits to distributors, the author has also seen many distributors experimenting with online business and doing quite well. ****Offline channels have stopped growing In the past, most distributors relied on offline channels as their primary business, and offline channels were always a 'battleground' for manufacturers. But the market environment distributors face today is twice as complex as it was a decade ago. On one hand, channels are diverse and fragmented. In the past, doing well in one major channel could generate decent sales, but today, with multiple retail scenarios and channel combinations, a single channel is no longer sufficient to support sustained growth. On the other hand, product supply is excessive, with too many homogeneous products, giving consumers more choices. This is why it's now difficult for the FMCG industry to produce super bestsellers, and it's increasingly hard for distributors to rely on brands for growth. Significant changes have occurred in China's FMCG market, particularly in total online and offline sales. According to NielsenIQ data and analysis, in 2023, online sales in China's FMCG retail market grew by 10.2% year-on-year, far exceeding the overall market growth of 1.9%. The share of interest-based e-commerce (such as Douyin and Kuaishou) rose from 6.4% at the end of 2022 to 9%. When the offline base can't find growth, or is even shrinking, trying online becomes a necessary choice for many distributors to maintain their business. From a distributor's perspective, online business can be divided into two types: local online business, such as community group buying, instant retail, and private domain traffic; and national e-commerce business, such as platforms like Taobao, JD.com, Pinduoduo, and Douyin. Local online business Local online business, simply put, is same-city online retail, including O2O, front warehouses, community group buying, etc. Same-city online retail directly cuts into regional market share, having the most direct impact on distributors' business, but it's also something distributors can directly participate in. One of the core values of the distributor community is 'localization'. Local product supply and delivery fulfillment are distributors' strengths, such as supplying to local front warehouses and community group buying platforms. When distributors engage in same-city retail, they usually don't operate it themselves but participate in product supply. Essentially, it's still a B2B business, without direct interaction with consumers, so it's relatively less difficult. For this type of same-city online retail, timing is crucial: understand it first, connect first, and cooperate first. Recently, the author visited a condiment distributor whose traditional offline business scale was around 80 million yuan. He keenly seized opportunities for multi-channel expansion, actively laying out community group buying channels, and nearly doubled his annual sales. Although he encountered many problems in the early stages of community group buying, such as severe losses and consumer-only refunds, these losses had to be borne by the supplier. But this distributor told New Distribution that in the early stages of any business model, one should not focus solely on short-term profitability but rather on long-term development potential. If there's a long-term opportunity, such as substantial order volumes, one can adopt reasonable pricing strategies to offset operational losses. Secondly, it's important to keenly identify potential special same-city online retail opportunities locally, which can be done by having salespeople pay extra attention during store visits. For example, a condiment distributor in Shanxi proactively negotiated cooperation with a well-known property management company, supplying products through the property's app, integrating community group buying models, with property staff acting as group leaders to sell products. Finally, let's focus on instant retail. Instant retail is the only track that will continue to grow in the next five years. Many distributors have already started paying attention, especially to front warehouses, which require localized product supply. Distributors should pay immediate attention. Previously, I visited a distributor in Shenzhen specializing in instant retail. By working with one brand and one channel (Pupu Supermarket), his annual business scale exceeded 100 million yuan. To enter this track, distributors must maintain good communication with various platforms and strive for optimal resources. Each platform has its own rules; distributors need to promptly understand and capture traffic changes, and adjust product promotion strategies based on platform characteristics and dynamics to maximize product exposure. National online business National e-commerce business, such as Taobao, JD.com, Pinduoduo, and Douyin. This type of e-commerce is difficult for distributors because their past offline business experience is basically not reusable on these platforms. Many distributors have tried e-commerce, opening stores on Pinduoduo or Taobao, hiring a clerk to manage it, but most end up failing, with no sales and no profit. In the end, online e-commerce seems to have low entry barriers, but in reality, it's highly competitive with high barriers. It's important to dive in personally, especially with a professional operations team. From a distributor's perspective, if you don't have a clear organizational structure, an online operations team, data insight capabilities, or resource reserves, it's better not to touch it. If you really want to do online e-commerce, are there other ways? Recently, I communicated with a distributor who shared a roundabout way to do e-commerce that achieved good results. The method is simple: partner with mature e-commerce merchants, without building your own team. For example, cooperate with a store specializing in snack foods. The distributor acts as the main entity of the new store, providing products and procurement support, while the partner merchant uses existing operational resources to handle sales. Both parties share profits and risks according to a certain ratio, without paying additional service fees. By clearly defining the store's ownership, it also avoids the partner terminating cooperation once the store is on track. There's a viewpoint worth considering: 'Service providers who charge service fees don't really aim to run the store well; most are after the fees, and such cooperation models are hard to sustain.' Distributors provide product capabilities and warehousing logistics, while service providers offer operational capabilities. Both parties cooperate for mutual benefit, effectively reducing risks. Partner merchants don't bear inventory pressure, and because the store already has an operational foundation, the operational cost of adding new products is minimal, and profits further dilute costs. In essence, distributors still don't do it directly but let professional teams handle it, while the sales belong to the distributors. Of course, besides traditional e-commerce platforms, focusing on emerging short-video and live-streaming platforms like Kuaishou, Douyin, and WeChat Channels, through daily live-streaming sales, can directly reach consumers. This includes adding 'same-city hourly delivery supermarkets' on Douyin, integrating product matrices to enhance user experience and market response speed. These are all development directions distributors can explore in depth. Final Thoughts The industry is undergoing unprecedented changes, and market uncertainty has put pressure on distributors with declining sales. When the external environment becomes uncontrollable, you can choose to start from yourself: if a single channel declines, expand into more channels to improve your risk resistance and build and strengthen your core competitiveness. Innovation is key; adapt to changes and dive in personally to sustain development.