Preface: Deep distribution is a tactical system, not a strategic system! Whether for traditional FMCG companies or internet companies (ground promotion), deep distribution is a sales accelerator and a powerful offensive weapon. Once it falls into a prolonged war or is used for defense, with excessive coverage and long battle lines, not only does management difficulty increase, but it will inevitably decline after prolonged warfare. The controversy over deep distribution has never ceased since its inception, with various voices of support and doubt. In recent years, with the advent of the internet era, there have been many voices predicting the decline of deep distribution, especially as many traditional companies with deep distribution expertise have seen performance decline, further stirring up debate. I: The Background of Deep Distribution Deep distribution is a sales operation system based on terminal control. The main component of its performance is the number of controlled terminals, i.e., distribution rate. The increase in distribution rate comes from the visit and communication of frontline sales representatives. At the end of the last century, when the wholesale market had just declined, modern channels such as supermarkets (KA, CVS) were not yet strong, and traditional retail terminals (individual mom-and-pop stores) dominated the urban market. Deep distribution, as a linking tool characterized by a human-wave tactic, became popular. Almost every major FMCG brand used this technique, and it was extremely powerful! In summary, deep distribution is an organizational system that links fragmented individual terminals, and its establishment must have the characteristics of low cost and high efficiency. II: Key Factors in the Decline of Deep Distribution Deep distribution has strong capabilities in capturing and integrating fragmented terminals, but it is often powerless against KA, CVS, e-commerce, and large terminals. Especially since sales representatives are divided by small regions, individual representatives cannot handle large terminals or cross-regional chain terminals, and invisible terminals are even more unreachable. The modernization of commercial terminals starts from cities top-down, meaning deep distribution first fails in cities; the more developed the city, the higher the proportion of modern terminals, and the weaker the power of deep distribution! In addition, personnel costs and management logistics costs are proportional to urban modernization, so deep distribution is often driven to marginal areas or lower-level markets. Moreover, the sales management system of enterprises often updates slowly, making deep distribution a system with high cost and low efficiency. III: The Essence and Core of Deep Distribution Offensiveness is the most essential function of deep distribution. For enterprises, incremental contribution is the root of its popularity. The path to increment mostly comes from increasing the number of terminals, promoting new products, and improving single-store sell-through rates. In the dimension of increment, deep distribution is a low-cost and high-efficiency tool because as distribution rate, sell-through rate, and product count increase, incremental performance dilutes costs. But once it falls into a defensive battle for existing volume, once distribution rate decreases, sell-through rate decreases, and the survival rate of new products cannot be guaranteed, deep distribution will fall into a systemic vicious cycle: performance decline, personnel loss, and territory shrinkage. Traditional individual terminals do not have the unified control system of modern chain terminals. Due to the strong autonomy of individual terminals, there is great arbitrariness from purchasing to selling, and the price of the same brand may vary, causing trouble for enterprises. Deep distribution, as an organized management system, appropriately solves these problems by having sales representatives visit and manage fixed areas, gradually standardizing these individual terminals. Why are ground promotion teams based on deep distribution thriving? For example, Didi, Meituan, and even B-end e-commerce! Many internet companies not only have advantages in technical resources but also have large offline promotion teams. Their management operation logic is no different from deep distribution! More and more young people are moving to cities, but the overall trend of deep distribution is contrary to urbanization! IV: The Impact of the Internet Era on Deep Distribution and Its Future From the perspective of commercial evolution, terminal fragmentation is further intensifying. From the unified supply and marketing system to individual mom-and-pop stores, wholesale, supermarkets, e-commerce, social channels... the terminal classification in enterprise sales management systems is becoming increasingly complex, requiring higher capabilities from sales representatives and the sales system's coverage. Whether it is deep distribution, deep co-marketing, or brand-driven customer agency models, the core sales volume comes from terminals. Opening the sales report of an enterprise, many companies' majority of sales come from traditional terminals, and many also come from deep distribution systems! Despite various criticisms of deep distribution, few traditional FMCG giants benefiting from the increment tool have announced withdrawal from this system. The huge existing volume of tens of billions makes it difficult for giants to easily abandon it. From another perspective, no other system can replace the defense of such a large existing volume. Once output becomes low, costs cross the red line, personnel performance declines, and management efficiency cannot be raised, deep distribution will inevitably fall into the mire! For traditional FMCG companies, a safer approach is to have two teams fighting: one to capture mainstream sales, and one to layout future trend brands! One team uses human-wave tactics in channel terminals; another is a special force of fans and mouse clicks! From a brand perspective, the marketing department has a team to guide online fan aggregation. From a sales perspective, one team captures mainstream sales, and another captures trend sales! From a channel layout perspective, incremental brands (varieties) should re-layout distributors! Aggregate fans online, capture terminals (channels) offline! Online can shout, offline can do! Trends attract attention, mainstream repairs the earth! Update your channel classification standards, sweep the streets offline, sweep the net online! Offline terminals still rely on deep distribution (co-marketing) street-sweeping iron army; online terminals establish supplementary networks, and new terminals such as platform e-commerce, urban distributed e-commerce, and community e-commerce are handled by another team! Traditional FMCG success is mostly built on channel terminal teams constructed through deep distribution or deep co-marketing models. For large brands, this team is often tens of thousands or even hundreds of thousands, guarding mainstream sales! The transformation of this group is a huge project, and directly transferring to the increment competition in the information civilization era is extremely difficult! Many voices believe that the factor for deep distribution exiting the historical stage is the internet impact. From sales data, offline terminals still account for 95% of sales, but the impact of online on traditional FMCG comes from traffic robbery. In traditional marketing, the understanding of traffic is vague, but in the internet world, traffic is not only the mother of sales, but also attention! Traditional marketing's methods for capturing traffic come from two dimensions: one is media (TV, newspapers, billboards, etc.), and the other is the terminal's three-arrival principle: see it (vivid display), hear it (terminal recommendation), and buy it (distribution rate). V: The Transformation and Boost of Internet Tools for Deep Distribution In the deep distribution system of traditional FMCG companies, managing the whereabouts and performance of sales personnel is a huge workload. Many visit-sales software emphasize these basic tasks, some add order transmission and distribution rate indicator analysis, and vivid display indicator monitoring. These tools improve management efficiency within the deep distribution system and appropriately boost enterprises to introduce or improve terminal management systems. It is also one-sided to think that just a tool system can achieve a mainstream marketing system for an enterprise, or fundamentally solve the root problems of deep distribution for existing-volume enterprises. The basic logic of deep distribution is people management. Whether it can improve unit output and reduce operating costs is an effective dimension to test the advancement and applicability of a tool. The marketing history of FMCG over the past decade or more is largely the history of deep distribution, which has achieved countless victories for enterprises that dared to go down. The improvement or transformation of deep distribution for existing-volume enterprises is a systematic improvement issue. The coexistence of chain and fragmentation in the commercial system also determines that the means of capturing sales must be diversified. The era of relying on just one or two methods to win is over!
Liu Chunxiong's Comment
Excellent FMCG companies in China have basically all done deep distribution. This is determined by the fragmentation of China's distribution channels.
The fragmentation of Chinese channels means that even multinational companies with strong brands, such as P&G and Coca-Cola, have done similar work to deep distribution, let alone local Chinese companies.
Deep distribution actually relies on human-wave tactics, which are inefficient and costly. When the industry is growing and labor costs are cheap, this is not a problem.
Now, the FMCG industry as a whole is declining, labor costs are high, and deep distribution can no longer be sustained. Therefore, the once-marginalized "second-tier wholesalers" have made a comeback.
In the internet era, is deep distribution still needed? I agree with Mr. Fang Gang's view: It is not about abandoning deep distribution, but about deep distribution evolving with the internet era.
Since deep distribution is beneficial for terminal coverage, the goal of deep distribution must be achieved. Since human-wave tactics are too costly, can the internet era provide new tools to solve this?
I think the current SaaS systems and B-end platforms can be regarded as internet-based deep distribution tools. Their advantages are: First, precise deep distribution; second, efficient deep distribution; third, low cost.
Now, the situation for deep distribution is different from the past. In the past, deep distribution was used to "eliminate blank spots"; now, it is used for "precise service." The goals are completely different, so the methods and tools are also different.
It can be understood that SaaS or B-end platforms are a data-based, efficient deep distribution system.
Precise deep distribution can also solve another practical problem: the promotion of upgraded products. In the past, salespeople from both manufacturers and distributors were deeply involved in channel distribution, shelf management, and promotions, with their main energy not on new product promotion. If internet tools can free up marketing personnel to focus on promoting upgraded products, it can solve both product upgrade and operational efficiency improvement. -END- The best learning platform for FMCG distributors in China Focusing on providing professional, practical, and applicable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent Article Selection | 002 Distributor Market Operation | 003 Terminal Visit Management | 004 Sales Supervisor Skills | 005 Sales Improvement Techniques | 006 Channel Expansion | 007 Managing Distributors | 008 Distributor Development | 009 Distributor Internal Operations Management | 010 Team Management | 011 Efficient Distribution Techniques | 012 Sales Manager's Eighteen Skills | 013 KA Operation Methods and Strategies | 014 First Lesson for New Salespeople | 015 Internet, Brand | 016 Distributor B2B Transformation | [Long press QR code to follow]