A few days ago, I discussed Facebook's rebranding to Meta with Max, the owner of Zhoupu. As an early Facebook employee, Max's perspective was intriguing—he didn't dwell on grand theories. He told me that Zuckerberg's move, from a business perspective, was all about 'growth.'

Because Facebook is nearly monopolistic globally except in China, further growth at such a scale is extremely difficult. As a leading global tech company, it must consider growth. But he has already brought all internet users worldwide under his network. To grow further, he needed a larger imagination space. So Zuckerberg decided to shift Facebook from the physical to the virtual, rebranding as Meta to enter a new virtual world and find survival space.

Growth, I think, like Zuckerberg, is what all manufacturers and distributors think about daily. But in the consumer goods sector where growth is nearly peaking, where is the growth space? This is a problem all manufacturers and distributors must face.

Adjusting product structure, increasing agency numbers, optimizing operational capabilities, and intensifying competition—these growth methods are limited and easily lead to severe industry involution and significant industry divergence. Many manufacturers and distributors achieve growth mainly by eliminating outdated capacity and small and medium players, thereby gaining growth in regional markets where total volume hasn't increased.

But this squeeze-style growth, I believe, is painful for everyone. Especially for large distributors, achieving substantial growth solely within the physical space is nearly impossible.

Therefore, for large distributors or big brands, finding new survival space and the next stage of growth is a crucial topic.

We see many distributors trying various model upgrades and transformations for development, such as city distribution logistics, B2B, warehouse-style supermarkets, etc. Today, let's use a broader temporal and spatial perspective to compare the development of foreign distributors with that of our country, to find how distributors should develop in the next stage.

1. United States

The U.S. has vast land, sparse population, and developed transportation. So we see that the U.S. retail landscape is typically a large retail format, with consumers usually shopping in bulk on weekends. This leads to supply chain companies behind U.S. retail being typical large supply chain companies. To reduce logistics costs, distributors represent everything, aiming for one-stop supply to stores. Over time, U.S. trading companies have become ultra-large supply chain companies, but they develop slowly, taking nearly a century to reach their current scale.

2. Japan, South Korea, and Taiwan, China

Japan and South Korea are countries rebuilt from ruins after WWII. They have small land areas and dense populations, but their development speed is too fast. So we see that chain modern retail is highly developed in these countries, driven by conglomerates, typical of oligarchic economies. They do branding upstream, supply chain in the middle, and retail downstream.

For example, Lotte is known to us for retail, but it also does products and supply chain behind the scenes—a typical full industry chain player. This is closely related to their economic history and land area. Not only South Korea, but also Taiwan's Uni-President and Japan's Itochu are of this type.

3. European Countries

Last year, I talked with the largest beer producer in Portugal about commercial circulation in some small European countries. Europe also has characteristics of Japan and South Korea: small countries, dense populations, and developed retail. But unlike Japan and South Korea, these countries industrialized earlier, so agency models have strong continuity. This is similar to the U.S., but unlike the U.S., these countries have small land areas, and their retail models are more fragmented with complex service scenarios. As a result, distributors in these countries are not very large, but they are family-run, with close cooperative relationships with local brands and retailers, often spanning generations. This is significantly different from the U.S., Japan, South Korea, and Taiwan.

4. China

China's economy has characteristics of Japan and South Korea: rapid development, uneven economic growth, and huge urban-rural differences. It has U.S. characteristics in land area: very large, but transportation is not convenient. Retail has European characteristics: many, fragmented, small, and scattered. So we see that Chinese retail, from the start, is different from the U.S., being very diverse and complex.

In such an environment, China has developed a deep marketing model with Chinese characteristics: manufacturer-distributor integration and deep market operation. But if the story ends here, it would quickly show U.S. commercial circulation characteristics: when the market develops to a certain stage, capital intervenes, and with a large land area, big ponds raise big fish. In the future, ultra-large supply chain companies will definitely emerge.

However, China's development is too fast. The internet develops rapidly, and mobile payment is unique globally. This means that China's supply chain and retail landscape, before reaching the integration stage, has entered another round of differentiation: online, social, physical, O2O same-city, etc. Retail scenarios have become extremely fragmented and complex. This makes it impossible to draw any lessons from foreign commercial circulation models.

China's retail scenarios develop too fast and are extremely complex, while China's commercial circulation has only developed for a little over 30 years—just one generation. The learning ability, corporate governance, and capital integration capabilities that require several generations to develop must be concentrated in this generation. Honestly, I lack confidence in this transformation.

The first batch of distributors after China's reform and opening up are mostly in their sixties, and the second generation has just taken over. Facing such drastic changes, the challenges are enormous.

Today's Chinese retail market can be described as extremely complex. But in such an environment, it is impossible for distributors to start from scratch and completely abandon their decades-old businesses. We must find a development path for distributors that fits current Chinese characteristics.

From a macro perspective, retail complexity brings a complex challenge to brand owners. Especially in local markets, facing same-city social, new retail O2O home delivery, and Douyin same-city traffic, relying on self-managed supply chain and market management is no longer possible. Brand owners must delegate authority to distributors.

Similarly, expecting distributors to fully complete localized operations is also a huge challenge!

Previously, New Distribution proposed that distributors must transform into operators, and for this viewpoint, we proposed four directions:

Coverage → Reach Service → Operation Transaction → Relationship Efficiency → Experience

Why make such a transformation? Meituan Flash Delivery provides a great case. Wangzai Milk usually sells only a few dozen boxes a day on Flash Delivery, but on June 1st (Children's Day) this year, it sold 80,000 boxes in one day!

Why such a consumption surge? On one hand, consumers find online shopping convenient; on the other hand, the new generation's emotional consumption is becoming an important reason for consumer goods purchases!

If distributors are not good at deepening same-city operations locally, it is difficult to access such sales opportunities. Moreover, not only emotional consumption, but also addictive, social, and health consumption—under different scenarios, consumer consumption logic is significantly different from before!

Therefore, distributors must deepen regional market operations, gain insights into consumer consumption habits, emotions, scenarios, and logic, to grasp business opportunities.

However, for regional distributors, the space for maneuver is limited. What should they do to find new survival and development space?

At this year's Snow Beer channel partner conference, I proposed four directions to Snow's channel partners:

1) Downward: Further penetrate and refine channels, achieve full coverage of physical stores, further squeeze competitors, and deepen single-store operation efficiency through SFA + mini-programs.

2) Upward: Achieve reach in local network space, covering community group buying, vertical communities, Meituan, Ele.me, Douyin same-city, Hema, Taoxianda, PUPU, and other localized social and e-commerce traffic.

3) Forward: Leverage small store KOC relationships, use mini-programs to directly connect with consumers, operate consumers, build private domain relationships, and complete the construction of local social retail networks.

4) Backward: Fully digitize yourself, open up completely to brand owners, embed yourself into larger organizations, become part of the organization, and thus gain organizational support for the local market.

Make yourself a vital ecological partner in same-city retail, achieving consumer reach, operation, relationship, and experience through links.

Distributors must understand that to achieve growth, they must open up their patterns in time and space, create and join new spaces, find new groups, and only then can they have new increments.

Undoubtedly, today's sales complexity is increasing, and omnichannel operation has become the core work for manufacturers and distributors.

But with severe industry involution, to gain continuous repurchase from consumers, completing these alone is not enough.

Users have enough choices, user value is differentiated, and consumption is emotional. We cannot infinitely satisfy all user needs. We must establish certain value consensus between products and users. Only by establishing value consensus can consumers be willing to continuously buy our products.

Therefore, deepening consumer operation is the core for future competition between manufacturers and distributors.

And BC integration will become an important way for us to deepen user operation in regional markets.

BC integration, in essence, is to extend our operating targets from small store owners to consumers through community small stores and mini-programs, shifting from product price consensus to value consensus.

With deep links and value consensus, distributors must become operators.

Here, I want to emphasize mini-programs.

Mini-programs are currently the core tool for distributors to deepen regional market operations. On one hand, they can serve B2B, solving functions like online transactions for small store owners, expense verification, promotional support, and terminal inspection, ensuring the authenticity and accuracy of small store online operations.

On the other hand, manufacturers and distributors can also use mini-programs to reach consumers, complete consumer promotions, build membership systems, private domain operations, user profile management, and other B2C businesses.

In summary, using mini-programs well has four major advantages:

  • Save costs
  • Real experience
  • High efficiency
  • Fast connection

BC integration, as Teacher Lin Feng puts it, can solve three problems:

  • Manufacturers solve the problem of consumer value
  • Distributors solve the problem of channel organization
  • Terminal stores solve the problem of consumer organization

It can be said that operating mini-programs well is the first battle for manufacturers and distributors in same-city BC integration! Teacher Lin Feng has many insightful viewpoints in New Distribution's live interview "Discussing BC Integration," which I won't repeat here. If interested, you can click the video below to watch:

Fortunately, we have seen a large number of brands starting to use mini-programs for various 2C or 2B operations. Unfortunately, most brands are still in the trial stage, with few signs of large-scale application.

Summary:

Future marketing will inevitably be deep marketing, a process from selling to operating. The market environment is becoming increasingly complex. Omnichannel operation will be the core focus for every brand owner. Deepening consumer operation is the key to win-win cooperation between manufacturers and distributors.

At the same time, distributors across the country must also be prepared to expand their business capabilities and development opportunities around growth, ultimately achieving a transformation from mass communication and mass distribution to small communication and small distribution. Based on their regional markets, they should complete the shift from terminal store coverage to deep consumer operation.

| Founder of New Distribution Expert in FMCG industry channels, with over 400,000 words of original research on the FMCG industry For communication, you can add WeChat by long-pressing. Please indicate your company, position, and name when adding.