A few days ago, I communicated with a classmate who works as a distributor. He said he feels particularly insecure. Because after all, he sells the brand owner's products. He worries: what if one day the brand owner goes direct, or switches to another distributor? What would he do? Should he consider building a factory and making his own products? Indeed, this sense of crisis, or insecurity, may be shared by many distributors. But we don't need to sell ourselves short. Although we don't have our own products, as distributors, we also have our own scarce capability: the ability to scale reach to potential consumers. This is the essence of channels, and also the value of channels. Today, let's talk about this topic of channels and share my views, hoping to inspire you. -01- Why is the essence of channels the scaled reach to potential consumers? For example, you sell anti-hair-loss shampoo. Distributing flyers at a subway exit is scaled reach to potential consumers. But among the 100 people reached, perhaps only 10 are your target customers. Such a channel can only be an ordinary channel, or an imprecise channel. So what is a good channel? A good channel is low-cost scaled reach. For example, what if you distribute flyers at the entrance of a men's hospital? The working hours are the same, but the users reached may be more precise. Among 100 people reached, perhaps 30 are target customers. So distributing flyers at a men's hospital entrance is low-cost scaled reach. Is there an even lower-cost reach than this? Yes, that is innovative channels. For example, distributing flyers at the entrance of an internet company. Among 100 people reached, perhaps 50 are target customers. This is even lower-cost scaled reach. So, channel innovation is achieving lower-cost scaled reach. -02- Next, as a distributor, you might ask: how should I achieve channel innovation and lower-cost scaled reach? Don't rush. Before answering this question, I think it's necessary to discuss a very important matter: having an unbiased understanding of your core competency. Why discuss this first? Because in the business world, not all companies have clear divisions among product, marketing, and channels. Even distributors now have private labels, such as Walmart, Metro, Yonghui, and other retail stores that have their own private label products. So, if you misjudge your core competency and misattribute the cause, it will lead to huge strategic mistakes. In reality, many people do misjudge their core competency. When I train entrepreneur students, I often ask: Is your team's core competency product, marketing, or channels? Think before answering. Think carefully. At this point, many students, after careful thought, tell me: Our team's core competency is product. Then I ask: Is your R&D team larger or your sales team larger? Does your product team have higher say, or your marketing team? Are the branch offices you open in various places to gather local R&D talent or to gain local market scale? After these questions, many entrepreneurs start sweating and gradually realize that their core competency is not product, but marketing or channels. Why do many companies that are clearly channel-driven hope others see them as product-driven? This may be related to our public opinion environment, where making good products is considered more prestigious. But in the business world, whether it's product, marketing, or channels, if you do it to the extreme, you can achieve great success. The fear is that you clearly have core competency A, but think it's B, and put all your efforts into B. So, to achieve sustained development and success, unbiased self-awareness is very important. -03- After having an unbiased understanding of your core competency, if your company's core competency is channel capability, then how should you continuously build this capability to achieve lower-cost scaled reach? I believe the specific methodologies will vary greatly by industry and local conditions. Today, let me share two suggestions to spark discussion. First suggestion: aggregate offline traffic into your own private traffic pool. Let's take Perfect Diary as an example. Once, on a business trip in Changsha, I was hungry and went downstairs to get something to eat. I entered a shopping mall and happened upon Perfect Diary. Although I was hungry, I still went in to look around. The store was beautiful, and the products were indeed cheap. Many people were browsing. A young woman came over and said, "Feel free to look. Scan the QR code today and get a free cotton pad." Oh, I immediately understood something. Then I searched online. Sure enough. Perfect Diary is adding users' personal WeChat by scanning QR codes to give away cotton pads. In traditional offline retail, location represents traffic; opening a store is buying traffic with rent and then selling goods. But for Perfect Diary, the core of opening a store may not be selling things, but adding WeChat friends. It sounds incredible. How many WeChat friends has Perfect Diary added in total? Millions. What does this mean? It means Perfect Diary can post (theoretically) countless moments in its friends' feeds, showing them to these millions of WeChat friends. Coming to the offline store to buy a lipstick is just one touchpoint. A consumer may only come a few times a year. But once you add them as a friend and manage them in an army-like manner, this touchpoint becomes infinite. This is channel innovation achieved by diverting offline traffic into your own private traffic pool. -04- Second suggestion: in online public traffic, gather people into communities based on a common point. For example, in WeChat's public traffic pool of over 1 billion users, "Logic Thinking" has gathered tens of millions of求知好学的 students; "Kai Shu Story" has gathered millions of young mothers. Another example is ourselves, the Liu Run public account. Why do we insist on writing only content about business insights, management cases, and career advancement? Because we want to gather people who like reading business insights, management cases, and career advancement from the entire WeChat ecosystem into the Liu Run public account community. Why do we want to gather people who like reading these three aspects? Because we want to scale reach to China's high-value人群. Only entrepreneurs and founders like reading business insights; only corporate executives and core management like reading management cases. Only ambitious young people like reading career advancement. We have persisted for years in writing original content on these three aspects, hoping to gather these people and form a capability to scale reach to China's scarce high-value人群. Writing entertainment gossip might get very high readership. But it wouldn't reach the highest-value人群. Increasing followers for the sake of increasing followers would lose the original values and tone. The people we want to scale reach to don't like reading such content and don't have time to read it. The people attracted by such content are not the ones we want to scale reach to. So, there is no shortcut to increasing followers; only by persisting in content. To date, our public account has 950,000 readers. These 950,000 people are all scarce high-value人群 in China. In the past, to reach this group, you might need to broadcast to 9 million or 90 million people, at a very high cost. But today, by continuously outputting high-quality business content, we have selected these 950,000 people from 90 million, helping brands achieve lower-cost scaled reach. We have tried providing this group with high-end luggage, conference speakers, red wine for business banquets, and commercial tea gifts, and they have been received with extraordinary enthusiasm, far exceeding normal levels. This is the result of lower-cost scaled reach. So, my second suggestion is: in online public traffic, gather people into communities based on a common point. Of course, the community carrier is not necessarily a WeChat public account. WeChat personal accounts, enterprise accounts, QQ groups, online forums, etc., can all serve as carriers to gather people with common points. -05- Final Words Finally, let's return to the classmate's initial question. He felt worried because he had no control over the product. Actually, there's no need to worry. As long as you have an unbiased understanding of yourself and know what your core competency is, then just continuously refine your core competency. If your core competency is channels, the ability to scale reach, then what you consider is no longer the product, but whether you can achieve channel innovation and obtain scaled reach capability at a lower cost. Of course, different industries may have vastly different methodologies. I offer you two suggestions to spark discussion. 1. Aggregate offline traffic into your own private traffic pool. 2. In online public traffic, gather people into communities based on a common point. Best wishes. I wish you can find your core competency without bias, and achieve scaled reach capability at a lower cost. Source: Liu Run (ID: runliu-pub), Author: Liu Run Tips will be paid 400-2000 yuan once adopted.