---
title: "Treat Digitalization as a Business Model!"
description: "In 2021, the ranking of China's energy drink industry changed. According to Dongpeng Beverage's financial report, its sales reached nearly 7 billion yuan, with the super single product 'Dongpeng Tequila' contributing 6.592 billion yuan, accounting for 94.66%. By tonnage, Dongpeng surpassed Red Bull for the first time to become the No.1 energy drink brand in China. How did this brand, once called 'copycat Red Bull', achieve such a comeback?"
author: "任文青Andy"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2022-05-05"
language: "en"
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# Treat Digitalization as a Business Model!

> In 2021, the ranking of China's energy drink industry changed. According to Dongpeng Beverage's financial report, its sales reached nearly 7 billion yuan, with the super single product 'Dongpeng Tequila' contributing 6.592 billion yuan, accounting for 94.66%. By tonnage, Dongpeng surpassed Red Bull for the first time to become the No.1 energy drink brand in China. How did this brand, once called 'copycat Red Bull', achieve such a comeback?

In 2021, the ranking of China's energy drink industry changed.
According to Dongpeng Beverage's financial report, in 2021, Dongpeng Beverage's sales reached nearly 7 billion yuan, among which the super single product "Dongpeng Tequila" contributed 6.592 billion yuan, accounting for 94.66%. By tonnage, Dongpeng surpassed Red Bull for the first time to become the No.1 energy drink brand in China.
**How did this brand, once called "copycat Red Bull", achieve such a comeback?**
When it comes to Dongpeng, people often think of the topic that its bottle caps are used by truck drivers as ashtrays, or they talk with relish about the advertising slogan "Tired? Sleepy? Drink Dongpeng Tequila". It seems that Dongpeng's success is more about marketing.
However, there is a crucial factor behind Dongpeng's achievements today—that is, digitalization. The industry's understanding of Dongpeng's digitalization mostly stays at technical operations like "one product, one code" and "one yuan, enjoy it", so few people truly understand the logic behind it.
Zhang Le, CIO of Dongpeng Tequila, said: **The difference of Dongpeng's digitalization is that other companies may just treat it as a tool system, but at Dongpeng, we treat it as a business model!**
"Treat digitalization as a business model"—well, very inspiring! This gives us a very good entry point to understand Dongpeng's digitalization.
But what does it really mean?
First, let's talk about what a business model is.
The essence of business is transaction. And what about a model? It is a structure.
**The so-called business model is the transaction structure of stakeholders. Here, stakeholders are actually the people involved in the transaction.**
For example.
You invested in a beverage factory, producing a drink. Suppose the cost per bottle is 2 yuan, and you sell it to consumers for 5 yuan.
How to sell it?
Can you set up a stall at the factory gate? Yes, but the efficiency is too low; maybe you can only sell 20 bottles a day.
Then someone comes to you and says, sell it to me at 3 yuan, and I'll help you sell it. I'll buy 1000 bottles at a time.
You think, although you earn 2 yuan less per bottle, it's 1000 bottles at once, whereas selling at the factory gate would take 50 days.
Well, efficiency is greatly improved, so you can cooperate.
How does this person sell your drink? Does he set up a stall at his doorstep? Of course not. He will put these drinks in small shops. With 1000 bottles, if each shop gets 100 bottles, he only needs to find 10 shops.
In this transaction structure, how many parties are there?
**You are the brand owner, the person who buys in bulk is the distributor, plus the shop owners, and the final consumers.**
You further think, if you find more such people, won't you sell faster and more?
So you develop more distributors.
At first, sales increase rapidly, but after a while, it slows down. What's going on?
You go to the market to investigate, and the shop owner tells you: Consumers are willing to take another brand's drink when they enter the store, because they often see its ads on TV. I earn about the same no matter which brand I sell, so I have no motivation to particularly recommend your drink.
No wonder the drink doesn't sell well! What to do?
Advertise! You think, take part of the money earned from selling drinks to do advertising, so more people know it, and won't the shops sell faster? The faster the shops sell, the more goods the distributors take from me, right?
Although advertising costs money, you can sell more.
So you start advertising.
**At this point, another party is added to your transaction structure: the advertiser.**
Advertising is indeed effective; sales rise, more shops want to sell your drink, distributors are too busy, so they give some profit to sub-distributors to cover more shops.
At this time, the transaction structure looks like this:
The beverage factory is running well, you buy a big house and a luxury car, and your former classmates ask: **How did you make your money?**
Without thinking, you say, I made money by selling drinks.
Now, think carefully: Did you really make money by selling drinks?
**You make money because you built a stable transaction structure, where each party's participation improves overall efficiency and creates incremental value.**
In other words, the reason you can make money is that you built this business model—a transaction structure with multiple participants. It is actually a system, and each stakeholder benefits (makes money or gets the drinks they need) because of the operation of this system.
Of course, for a company, the real stakeholders are far more than this. For the sake of illustration, we simplify.
Next, let's analyze a question.
Question: **Suppose through this transaction structure, you sell 100 million yuan of drinks a year. How can you quickly increase it to 1 billion yuan?**
First, let's look at this transaction structure. It is a positive feedback system:
**Advertising stimulates potential consumers → Shops sell faster → Distributors cover more stores and stock more → Manufacturers earn more → More advertising**
In this system, there are usually two leverage points.
**One is to advertise more, brand-driven.**
**The other is to cover more terminals, channel-driven.**
In the past, big brands basically grew through these two models, but now they face problems as well.
The problem with brand-driven is that consumers face a flood of information every day, and pepper-spray style advertising is hard to achieve mind penetration. The problem with channel-driven is that consumers have too many choices; even if you can distribute, you can't sell.
In other words, the efficiency of these two methods is too low.
What to do?
Think about it, the real driving force of this system is actually the last link of the transaction: the small shop and the consumer. After all, selling to consumers at the terminal is the real consumption; everything else is just circulation!
**Connecting b (business) and C (consumer) to let more terminals sell to more consumers is the ultimate and most direct driving force to increase sales and expand market share.**
This logic has always been true, but in the past it was impossible to achieve.
Digitalization gives us new possibilities.
Let's talk about Dongpeng.
In 2021, Dongpeng sold nearly 7 billion yuan. Behind this number are 2 million terminal stores and 140 million consumer users.
How did they do it?
**Digitalization, specifically bC integration.**
As early as 2015, Dongpeng used the then-popular "one more bottle" promotion to stimulate consumer purchases, but due to serious counterfeiting, many companies suffered heavy losses, and Dongpeng was no exception.
Starting in 2016, Dongpeng used "one product, one code" combined with WeChat red packets as a means to drive consumer purchases. Later, it launched a "second bottle half price" activity and began to retain consumers.
In 2019, Dongpeng launched "one yuan, enjoy it", where consumers go to terminal stores and spend one yuan to buy a bottle of Dongpeng Tequila. The store gets one yuan and a reward for free, and also gains traffic...
With bC integration as the core, Dongpeng's digitalization continued to grow. Eventually, Dongpeng used its digital system to cover 2 million terminal stores, accumulate 140 million consumer users, and of course, 2000 distributors and 40,000 wholesalers/postmen.
**The process of digitalization improving efficiency is also the process of continuously optimizing the existing transaction structure, or business model:**
1) Consumers can directly receive red packet rewards from the brand, cultivating more consumers.
2) Terminal merchants directly receive cost support from the manufacturer, making them more willing to promote Dongpeng Tequila.
3) The bC linkage injects momentum into the entire transaction system, and the participation of sub-distributors improves efficiency. As sales volume grows, distributors earn more, so they are more willing to cooperate.
4) For Dongpeng, its channel cost allocation is more transparent and precise. The cost of promotion is actually using part of the money that would have been paid to advertisers directly to incentivize consumers and terminals.
5) And **when a company has the ability to directly reach a massive number of users, it actually becomes a platform.**
Can a platform be commercialized?
Very simple: provide the ability to reach users to other brands in a paid way!
At this time, the structure of the transaction system is like this:
**Treating digitalization as a business model truly means using digitalization to optimize the transaction structure, so that the entire transaction system gains overall incremental value.**
#### This may be the logic behind Dongpeng Tequila's marketing digitalization.
What inspiration can we draw from this? Two points: **a systematic perspective and a growth logic.**
What does that mean?
Many brands currently have a misunderstanding, which is **treating digitalization only as a tool to solve single-point problems.**
For example, if there is a problem with salesperson management, they buy an SFA system, expecting to use this tool to improve salesperson efficiency.
For example, when a new product is about to launch, they use "one product, one code" for promotion. For them, digitalization is just a tool and means for new product promotion.
In addition, there is another misunderstanding that is exactly the opposite, **which is over-expecting digitalization, thinking that building a digital team and a whole set of systems can solve all problems.**
Under this idea, once a problem occurs, they hold people accountable, and it is hard to have space for digital trial and error and growth in the organization.
Starting from specific problems is not wrong, but you must have a systematic perspective. Because any problem is within a large, complex transaction system, and only system optimization can preserve the fruits of single points.
More importantly, with a systematic perspective, we can understand the logic of growth.
What is the logic of growth?
**Digitalization is not a state that can be achieved by finding a technical team and bringing in a set of system tools.**
**It is a process of continuous growth, starting from solving specific problems, based on business and organizational logic.**
Take Dongpeng's digitalization as an example.
At the beginning, Dongpeng used "one product, one code" to solve the problem of consumer-side promotion, but found that consumer-side promotion required terminal merchants to verify and cancel, so it gradually improved the mini-programs for consumers and terminal merchants. But mini-programs alone were not enough; it also needed to connect with terminal merchants on the SFA side, and then DMS, and so on, a series of functions emerged.
This is vertical. There is also horizontal.
It found that the bottle code solved the consumer problem, but it also needed the box code to solve the channel-side problem.
The mini-program solved the verification problem, and it found that the mini-program could also be used for channel-side promotions. Thus, from "one product, one code" to the terminal merchant rebate system, terminal merchant online AI display, consumer-side verification system. Then Dongpeng found that SFA also needed to be self-developed to match, and then TPM, OMS/DMS, promoter management system, marketing BI big data system, TMS, smart freezer management system...
**Starting from solving specific problems one by one, it gradually grew into what it is today.**
Behind this is not only systematic thinking, but also giving the team enough space for trial and error and growth.
Therefore, **over-expecting digitalization, thinking that a set of systems can solve all problems, is the biggest misunderstanding of digitalization. The biggest problem this misunderstanding brings is not giving the team space for trial and error and growth, and also rejecting the opportunity for digitalization to grow.**
#### **In conclusion:**
In March this year, I was doing market research in a small county town. I casually walked into a small shop and asked the owner if any brand was doing scan-code promotions. The owner told me: Yes, Dongpeng Tequila.
I asked if there were other brands. He thought for a moment and said, some brands did, but later stopped.
Dongpeng is indeed doing well.
Whether it's "one product, one code" or "one yuan, enjoy it", these specific operations are not complicated, and on the surface, they don't seem much different.
**But what is behind these operations? Is it just a promotional means for new product launch, or part of a systematic effort to optimize the business model?**
Don't just treat digitalization as a tool to solve single-point problems; look at problems from a systematic perspective. Also, don't expect a set of tools to solve all problems. Teams need space for trial and error and growth, and digitalization needs the opportunity to grow.
I hope today's sharing inspires you.


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