---
title: "Which Part of Your Sales Are You Losing? Where Will New Sales Come From?"
description: "The market has entered a stock phase, making incremental growth hard to find; your gains are others' losses. So, how do you find your growth source? Where does incremental growth come from? This article discusses two questions: where sales have gone from a macro perspective, and where sales come from from an enterprise perspective."
author: "刘春雄"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-01-11"
categories: "Management & Methods"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/weG60tSNDkiNawJ4YGI11g"
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citation: "刘春雄. “Which Part of Your Sales Are You Losing? Where Will New Sales Come From?.” New Distribution, 2020-01-11. https://xinjignxiao.com/en/articles/which-part-of-your-sales-are-you-losing-where-will-new-sales-come-from-04f17d6e/"
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---

# Which Part of Your Sales Are You Losing? Where Will New Sales Come From?

> The market has entered a stock phase, making incremental growth hard to find; your gains are others' losses. So, how do you find your growth source? Where does incremental growth come from? This article discusses two questions: where sales have gone from a macro perspective, and where sales come from from an enterprise perspective.

The market has entered a stock phase, and incremental market growth is hard to find; what you gain is what others lose. **So, how do you find your growth source? Where does incremental growth come from?**
I bring a practical topic because at the start of the year, achieving sales growth is difficult for enterprises. I want to discuss two questions: **First, from a macro market perspective, where have sales gone? Second, from an enterprise perspective, where do sales come from?**
**-01- Where consumption is, sales are!**
Let's start with some data; data doesn't lie.
**The first data point is total retail sales of consumer goods and its growth rate, which has been declining annually.** In 2011, it was 17.1%; in 2018, it was 9%, halving in seven years. I believe this trend will continue, and the timing of a rebound is uncertain.
Now look at **the second data point: comparison of total retail sales between urban and rural areas.** Data shows that rural proportion is small compared to urban, but its growth rate is slightly higher, though not by much.
**The third is online retail growth rate.** In 2012, online retail growth was 68%; in 2018, although the growth rate declined, the total still grew by 25%. So when the overall growth rate declines, where does the main growth go? I think it goes online, and growth might be higher there.
Now look at offline growth rate; it's not just declining but has entered negative growth since 2018. So if an enterprise only does traditional offline marketing, it's normal to have a hard time.
These data convey two messages: **First, the overall growth rate of social retail goods is declining sharply, and marketing competition has shifted from grabbing incremental growth to stock competition.** My growth is your decline; a large enterprise's growth means the death of a bunch of small enterprises. **Second, online share determines growth speed** because online total growth is much faster than offline.
**-02- Where does incremental growth come from: three growth sources**
Based on this understanding, we move to the second topic: For an enterprise, if total social retail sales are not growing or growing very little, where does your growth come from? In the FMCG industry, I roughly summarize three major growth sources for enterprises:
**1. Growth path one: Structural growth**
Take the instant noodle industry as an example. Before 2013, the industry was growing; from 2014, it began to decline. That year, most FMCG industries declined, continuing until 2017, after which growth resumed.
**Growth before 2013 was strong in quantity but weak in structure; enterprises aimed to sell more. From 2017, quantity declined but structure strengthened; enterprises aimed to sell more expensively.** This truly entered the so-called "strengthening" supported by social conditions.
Between 2014 and 2016, there was the most confusing period for Chinese marketing. The confusion was that quantity didn't grow, structure didn't grow, leading to no sales growth, no profit growth, no structural growth; everything declined. This was also an adjustment period.
Should an enterprise first become bigger or stronger? It's actually a false proposition. Because becoming stronger requires selling value and selling more expensively, but can society accept you selling more expensively? Without a social environment, so-called strengthening doesn't hold because you can neither become bigger nor stronger. So, becoming bigger first and then stronger is what holds.
Using the instant noodle industry as an example, I want to tell everyone: **First, we must acknowledge the existence of an industry sales peak.** This is a rule for most industries; 2013 might be the peak for most industries.
Note it's sales volume, not sales value, so the future value band will lengthen. **Second, in the past, most enterprises promoted to sell more, pulling prices very low.** In the future, this may not be the case; only by selling more expensively might you sell more.
So, enterprises can grasp the two directions and rhythm of structural growth:
**First, maximum sales are in the mainstream price band.** Take a familiar example: In the past, the mainstream price band for bottled water was 1 yuan, so Kangshifu mineral water and Ice Dew sold well.
Five years ago, 2 yuan became the mainstream price band, so Nongfu and C'estbon sales rose. Now 3 yuan is becoming the new mainstream price band, and the brand with the largest sales is Ganten. Of course, there are higher-end ones; in Shanghai, the mainstream price band is 4-5 yuan.
In the product upgrade process, for an enterprise to achieve maximum sales, there's only one condition: **grasp the mainstream price band of a certain period, so you can sell both more expensively and in larger quantities.**
**Second, IP-based products.** For example, in tea drinks, green tea initially retailed at 2.5-3.5 yuan, but Xiao Ming Tong Xue and Cha Pai sell more expensively because they are IP-based, so they can be 1-1.5 yuan more expensive than green tea.
Uni-President's highest sales growth product now is Tang Daren; if Tang Daren were cut, Uni-President's total sales might decline. So, Uni-President is doing one thing: saying goodbye to the past, transforming instant noodles that originally represented convenience rather than quality into providing consumers with lifestyle noodles. The dairy industry and baijiu and beer industries are similar.
Therefore, **enterprises need an important judgment: the upgrade judgment.** Upgrade is abstract; the mainstream price band is concrete. Of course, selling more expensively brings a marketing issue: in the past, deep distribution was used for quantity growth, but now it may not be used for structural growth.
**2. Growth path two: Squeeze growth**
I think deep distribution is no longer viable, but one enterprise gives me hope: Jinmailang. Despite difficult sales growth in bottled water and instant noodles, Jinmailang has achieved high growth for many consecutive years. **
**Jinmailang's approach is the "four-in-one model" of squeeze-style deep distribution: **people, vehicles, areas, and terminal machines.** Even if an enterprise does deep distribution, it needs new methods. Let's look at its logic:
**(1) People - small workers.** In the past, deep distribution targeted terminal store owners. Now Jinmailang tells us that activating the owner's people is most important; those people are called small workers, i.e., distributor salespeople. They treat them as separate operating units, following the internet model of "platform + unit organization" business logic.
**(2) Vehicles.** Once equipped with vehicles, small workers can visit customers frequently. Deep distribution visit frequency has greatly declined in recent years, but under the "four-in-one" model, frequency increases.
**(3) Areas.** Each small worker is responsible for an area, with not only sales commissions but also profit distribution rights. Combining people and areas turns salespeople and small workers into second bosses.
**(4) Terminal machines.** Using internet technology, terminal machines digitize and visualize the marketing process, forming a management closed loop.
In this model, **the terminal machine is core.** In the past, management involved salespeople discovering problems, reporting them, and solving them, but one person's problems cannot be discovered and solved by oneself.
So, to build a deep distribution management closed-loop system, you can use internet technology to digitize terminal channel scenarios. With digitization, managers can make judgments about where problems are and who has problems. This series of management closed-loop systems is formed.
**I believe the biggest role of the internet in channel management is enabling data-driven management, no longer discovering and solving problems by oneself.**
Now, deep distribution channel management has new tools, such as AI and VR systems. In the past, deep distribution was done by people; in the future, it may be data-driven, with people doing precision strikes, making deep distribution more efficient.
**3. Growth path three: Omnichannel growth, three-dimensional connection**
The internet has brought a big impact to offline channels. This impact isn't generated in the system but creates a bunch of small impacts. So traditional enterprises, even hundred-billion-yuan ones, need to think: Can they save themselves with ten billion in sales? Can we save ourselves with one billion in sales? No, so enterprises go into e-commerce.
But we find that doing offline, e-commerce, or WeChat business all have a characteristic: they are single-dimensional. Offline is one dimension, e-commerce is one dimension, social e-commerce is also only one dimension. Of course, some now use two dimensions, like Pinduoduo, with community and network dimensions.
For enterprises with deep distribution as the mainstream sales model, what will the future sales system look like? We thought for a long time and finally used a term to summarize: **three-dimensional connection.**
Up to now, whether doing offline or online, it's all single-dimensional. **Single-dimensional marketing will inevitably lead to one result: traffic costs will rise rapidly as competitors increase.** But if we connect offline communities and networks, transforming from multi-channel to omnichannel, we can achieve sales growth at a relatively low cost.
Three Squirrels, which started online and then went offline, plans to achieve 30 billion yuan in sales in five years, with 20 billion offline and only 10 billion online.
On the first day of a Squirrel store, it sold over 100,000 yuan in a store less than 100 square meters, and during Spring Festival, it can sell over a million yuan. They use a dual-IP strategy, with offline stores, communities, and e-commerce—omnichannel, not multi-channel.
**Community group buying truly connects the three dimensions, having offline, community, and network.**
Another example: Li Du's bottle of guangpingjiu (plain bottle liquor) increased in price four times from 700 yuan at the beginning of 2019 to 820 yuan now, and it's because they really can't sell enough that they raised prices. How did it succeed?
**The reason is that Li Du doesn't assess salespeople on sales volume but only on one thing: scene creation + user experience + fan operation.** The first two are offline, and fan operation becomes community and network space, so many purchases now happen through mini-programs.
When Li Du first connected the three dimensions in January 2019, it sold 2.8 million yuan in 28 minutes. So although Li Du's sales are not large, many domestic baijiu enterprises with billions or tens of billions in sales go to learn from it.
I think the biggest change for traditional enterprises is in organization. **The original offline sales personnel doing deep distribution become air-ground forces. The so-called ground forces do offline; the air force does online; the army does B-end, and the air force does C-end. All employees should become air-ground forces.**
At the same time, the original marketing department should change to a market content department. Because air force communication needs content, a content dream factory should be established to provide communication content for the air force.
Now let's look at this three-dimensional connection: there are those like Three Squirrels that go from online to offline, from C-end to B-end, with community group buying integrating B and C; and there are those like Li Du and Uni-President that go from B-end to C-end. So, **the result of three-dimensional connection is that an enterprise traditionally does B-end offline, does C-end online, and integrates BC operations, becoming the most efficient marketing system.**
Enterprises can fully leverage the three dimensions to maximize efficiency. Because stock may be at the B-end, but incremental growth is at the C-end; sales are at the B-end, momentum is at the C-end; transactions are at the B-end, awareness is at the C-end. We can connect B-end and C-end. Then we find: **enterprises can choose the area with the cheapest traffic to convey awareness.**
**Source: Sales and Market (ID: cnmarket)**
Tips will be paid 400-2000 yuan once adopted.


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## Citation metadata

- Publisher: New Distribution
- Author: 刘春雄
- Published: 2020-01-11
- Canonical: https://xinjignxiao.com/en/articles/which-part-of-your-sales-are-you-losing-where-will-new-sales-come-from-04f17d6e/
- Original source: https://mp.weixin.qq.com/s/weG60tSNDkiNawJ4YGI11g

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