---
title: "The Private Domain Dilemma of FMCG Brands in New Retail"
description: "Why should water sellers and tissue paper sellers engage in private domain operations? Many FMCG brands have such doubts, as they traditionally provide products and services through channels or supermarkets. However, with the rise of the new retail concept, many FMCG brands have entered new retail and private domain operations. This article discusses whether it is valuable for FMCG brands to do private domain, and if so, how to proceed. On November 27, Youzan held an event themed 'Meet the Leaders', pushing the topic of new retail to a new climax."
author: "秦淮"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-11-29"
language: "en"
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# The Private Domain Dilemma of FMCG Brands in New Retail

> Why should water sellers and tissue paper sellers engage in private domain operations? Many FMCG brands have such doubts, as they traditionally provide products and services through channels or supermarkets. However, with the rise of the new retail concept, many FMCG brands have entered new retail and private domain operations. This article discusses whether it is valuable for FMCG brands to do private domain, and if so, how to proceed. On November 27, Youzan held an event themed 'Meet the Leaders', pushing the topic of new retail to a new climax.

**Why should water sellers do private domain? Why should tissue paper sellers do private domain?**
Many FMCG brands may have such doubts, because for brands in the FMCG industry, they typically provide products and services to users through channels or supermarkets. However, with the rise of the new retail concept, many FMCG brands have entered new retail and laid out private domain operations.
Is it valuable for FMCG brands to do private domain? If so, how should they proceed?
On November 27, Youzan, with the theme 'Meet the Leaders', pushed the topic of 'new retail' to a new climax as the year-end approached.
Unlike the past, when the subjects of new retail discussions seemed to be more on the retail side, whether offline retail entities or online retail platforms under the internet, today we are talking about the new retail of brand merchants in the new environment. To be more precise, it is the new retail transformation of enterprises across various industries.
At the conference, Youzan New Retail disclosed its performance report after becoming an independent business for the first time: **So far, more than 63,000 stores have used Youzan's products, and in the first three quarters of 2021, the transaction volume of chain store merchants exceeded 10 billion yuan.**
The data and growth behind this clearly show the importance that various industries place on new retail, as well as the value of business growth brought by practice. As Youzan CEO Bai Ya said at the meeting, 'Nowadays, social e-commerce private domain economy and new retail are not only the key directions for Youzan and its merchants, but have also become the focus of the entire industry.'
As an industry observer focusing on the FMCG field, 'New Distribution' can also clearly feel that compared to the past, the attention of various FMCG companies to new retail practice has undergone a significant change.
Borrowing the words of Youzan COO and Co-President Huan Fang, 'Enterprises' attitude towards new retail is shifting from 'whether to do it' to 'how to do it?'
Regarding the question at the beginning, whether the FMCG industry should lay out private domain, the answer is already clear.
So this article focuses on the practice of new retail private domain transformation in the FMCG field, and also combines Youzan's empowerment and leading cases in the FMCG field to discuss the breakthrough points of new retail private domain practice.
**The Private Domain Dilemma of FMCG in New Retail**
In the FMCG field, when it comes to private domain, there is often a hard flaw: **A bottle of drink, a bottle of milk, a bag of chips, a box of tissues, etc., although high-frequency and rigid demand, due to low value and impulsive consumption, massive consumers come and go without a trace, making private domain operations often lack a starting point.**
Is it a sales increment position? Or a brand communication position? Or a demand insight position? Or a digital transformation position? It is unclear.
It is precisely because the goals are unclear that although the practice and exploration of new retail private domain have been carried out, with investments ranging from millions to tens of millions, the result is often a futile end. This is the first dilemma.
The second dilemma is organizational. Even if the direction and goals of private domain are clearly defined, compared to the traditional organizational system, it is difficult to effectively undertake and integrate, and may even cause direct conflicts, especially the contradiction between traditional market sales and new retail sales.
In addition, another reason for giving up halfway is lack of patience. The operation of new retail private domain is not as simple as the previous layout of distributors and coverage of retail stores; it requires long-term accumulation and precipitation of direct C-end users. Because the cycle is long, it is often stopped midway, which also happens from time to time in enterprises.
The third dilemma is strategic path. When there are goals and organization, the next difficulty is the path of implementation strategy. This can easily become a constraint for many FMCG companies in practice. Why?
The core reason is that changes are too fast. The rapid iteration of new technologies and new demands, as well as more direct changes in various platform rules, are not measured in years, but in months and weeks. In the midst of rapid changes, practitioners in enterprises are exhausted.
These are the three main types of dilemmas that FMCG companies currently face in practicing new retail private domain. How to effectively avoid or solve these dilemmas?
**Clear Goals, Top Leader Project, Tool Selection**
First, let's talk about the dilemma of goals. Frankly speaking, each enterprise's goals for exploring new retail private domain are different. Some are for direct business growth; some are for consumer demand insights, for new product testing and iteration; some are for optimizing existing channel links, reducing costs and increasing efficiency, etc.
For example, the cooperation between Hengan Group and Youzan New Retail aims to promote the digital transformation of Hengan's distributors, build a three-level channel system of 'headquarters-region-distributor', achieve effective reach from production to consumers, and agile feedback from consumption to production.
For FMCG categories like paper products, it is difficult to directly reach users in most cases. Instead, they must go through regional distributor groups, who then cover small shops on various streets, and finally reach consumers.
Therefore, facing such a hierarchical structure, Youzan New Retail adopts this three-level architecture to help Hengan Group improve the efficiency of the channel link. At the same time, it allows distributors across the country to have their own mini-program malls, empowering distributors to operate terminal stores, and ultimately achieve consumer connection.
**The three-level architecture like Hengan Group is very common in the FMCG industry. Without self-operated direct stores, it is more often necessary to achieve overall digital transformation through multiple channel roles to achieve the goal of cost reduction and efficiency improvement.**
Another example: New Hope Baidi Dairy used 'Youzan WeChat Work Assistant', and in just half a year, the number of WeChat Work friends increased by 790%, and online mall sales increased 8 times, from 1 million to 9 million, achieving incremental fresh milk subscription business; Luzhou Laojiao's cooperation with Youzan New Retail, through private domain layout, transformed to new retail, and successfully fissioned 6,000 new users through Youzan's 'lottery group buying' tool, achieving business growth while revitalizing the old brand.
Different sub-categories, different scales, and different business models of FMCG companies have different goals to achieve in new retail private domain. Since the goals are different, think from another dimension.
What is the biggest business pain point for enterprises today? Is it efficiency, cost, new product launch, or growth? First think about and define your own key issues, then combine with the topic of new retail private domain to think about how to break through.
**Starting from key issues, rather than from the new retail trend, makes it relatively easier to clarify your goals.**
Second, organizational issues. On this point, the roundtable dialogue at the Youzan Ecosystem Conference provided us with good food for thought. Regarding organizational issues, Zhang Wei, General Manager of Nongfu Spring Sesame Store Division, and Yan Yanrong, General Manager of New Hope Shuangfeng, both said that 'new retail is a top leader project.'
Facing the conflict between new and old businesses, the two also gave similar solutions.
**Zhang Wei said, 'Integrate the old business, then bring new concepts to the old business, accept and promote it. Never directly confront.'** Yan Yanrong suggested that even if businesses are different, goals should be consistent. When two departments have common goals, conflicts will relatively decrease.
With a top leader project and common goals, the two believe that in organizational capability building, it is necessary to use continuously iterated KPI assessments as the starting point, with high-frequency adjustments. For example, New Hope Baidi Dairy's approach is to double-count performance to avoid internal competition.
Another example: Nongfu Spring's approach is that although the division focuses on GMV and active user numbers, this is not static. Adjust every three months, rather than annual, completely fixed assessments. Based on the achievement of sub-goals, continuously adjust direction and improve corresponding capabilities.
More specifically, for the implementation of frontline employees, Youzan WeChat Work Assistant has also launched two major features: one-click publishing of Moments and group portraits, simplifying the operation execution process, and three major data dimension analysis and insights to help merchants improve operational efficiency.
Third, strategic path issues. Here, I have to mention that Mr. Liu Run asked New Hope Baidi about two insights on private domain operations: organizational guarantee and tool selection.
Organizational guarantee has been mentioned above, so I won't repeat it. Regarding tool selection, efficient tools are the key to the implementation of strategic paths. New Hope Baidi mentioned that before cooperation, the various platforms of New Hope Baidi had no data interoperability, like crossing a river by feeling the stones.
But after cooperating with Youzan New Retail, Youzan's WeChat Work solved the key problem of user transaction visualization, achieving real-time interoperability of consumer behavior data, and enabling targeted analysis and immediate measures based on each customer's status.
Youzan New Retail uses omni-channel marketing, shopping guide distribution, and member operations as the three growth engines, empowering the FMCG industry through WeChat Work Assistant, Shopping Guide Assistant, and Youzan CRM.
These three aspects can effectively solve the problems in the FMCG industry, such as unsmooth channel links, data silos, insufficient channel interest driving, and waste from repeated investment in target users.
**The market is too fast, the FMCG industry needs a 'guide'**
In fact, the issues of goals, organization, and strategy just discussed will appear in any new thing, new environment, or new market.
In the FMCG field, attention to and practice of the new retail industry has only been a few years. Therefore, when facing new retail transformation, it is natural to encounter various goal, organization, and strategy issues.
**Facing these problems, in addition to having clear awareness and judgment, enterprises should also appropriately go out, stand at a higher dimension, and look at the industry perspective. At the same time, learn from excellent brand cases to bring inspiration and thinking.**
Although Youzan New Retail only became independent in May 2021, since 2017, Youzan has been assisting enterprises in building and operating private domains. Over the past four years, Youzan New Retail has accumulated a large number of cases and corresponding methodologies. That is why brands like Nongfu Spring, Hengan Group, and New Hope Dairy Group chose to cooperate with Youzan New Retail.
It is reported that Youzan New Retail has successively released more precise and detailed indicators and methodologies for various industries during transformation. At the same time, in response to the shortage of talents in the new retail field, Youzan has also launched courses such as 'Private Domain Economy Evolution Camp' to help enterprises and brands cultivate new retail talents.
Strictly speaking, as a practitioner and leader of new retail, the services provided by Youzan New Retail are not just tools and corresponding methods and skills, but a complete set of operational methodologies formed based on many industry practices, and deep companionship with enterprises in the direction of new retail transformation.
**Are you 'watching' me?**


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