---
title: "Why Do Many New Consumer Brands Fail Offline?"
description: "In specific scenarios, whoever solves the consumer's problem becomes their first choice. Many new consumer brands that thrived online are struggling offline due to different underlying logic and the complexity of offline operations."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2022-12-02"
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# Why Do Many New Consumer Brands Fail Offline?

> In specific scenarios, whoever solves the consumer's problem becomes their first choice. Many new consumer brands that thrived online are struggling offline due to different underlying logic and the complexity of offline operations.

**Introduction:** In specific scenarios, whoever solves the consumer's problem becomes their first choice.

Thanks to the dividend of traffic, many new brands have emerged online in the past. However, as online traffic dividends peak, these new consumer brands face limited growth online, making offline expansion an inevitable choice.

"Ideals are丰满, but reality is骨感." These brands, highly sought after online, are lukewarm offline, with most selling poorly.

Many new consumer brands appear to have high sales, but the actual purchasing population is a very low percentage of China's massive consumer base. This means that even if these brands go offline, a considerable number of consumers still don't recognize them.

Of course, brand awareness is only one aspect; the key lies in the different underlying logic between online and offline. New consumer brands must first understand the offline business logic before venturing offline.

**Clarify the Decision-Making Path of Offline Consumers**

Let's recall online shopping scenarios, which generally fall into two types: demand-driven and content-driven.

First, demand-driven, with typical platforms like traditional e-commerce such as Taobao and JD.com.

Before shopping, consumers already have a clear underlying need. For example, when buying mineral water, you search "mineral water" on the e-commerce platform, which quickly filters relevant products, and then you order after comparing and selecting.

Which product a consumer chooses depends not only on clear brand needs but also heavily on algorithmic recommendations. Under a price that meets psychological expectations, the platform's priority recommendations greatly influence consumer choices.

Next, content-driven, with typical platforms like Douyin, Kuaishou, and Xiaohongshu.

Consumer purchases are usually unplanned; they may be sparked by a live stream, a video, or a diary post that stimulates interest, leading to a purchase.

Take an example from a recent Douyin shopping experience. While scrolling videos, Douyin recommended a short clip from East Buy (东方甄选). The content was interesting, so I naturally clicked into the live stream. Coincidentally, Dong Yuhui was selling a bag of rice, and under the "artistic atmosphere," I bought a bag of rice I didn't really need.

There are two key points here: one is content output that attracts users to buy; the other is platform content distribution that reaches users. Both are indispensable.

So, **whether demand-driven or content-driven, at the bottom, they rely on platforms. Essentially, the platform's algorithms and rules determine traffic ownership, thereby influencing consumer purchase decisions.**

Offline, consumer purchase decisions are completely different.

FMCG differs from other industries in that it is extremely high-frequency; consumers come into contact with it almost daily.

Consumer purchase behavior is not on a phone screen but in a real scenario, requiring a better in-scenario experience.

First, understand the purchase scenario for FMCG: how do merchants get products into consumers' hands?

FMCG has a consumption characteristic: random consumption. Especially "on the go" business has great randomness.

Describe a consumption scenario: On a hot summer day, you're walking and thirsty, wanting to buy a bottle of water. Before entering the store, you've basically formed a product need profile.

In this scenario, four factors determine your purchase: 1) category: water or beverage; 2) size: small or large bottle; 3) whether it's chilled; 4) brand.

You'll notice that in this scenario, "whether it's chilled" has a decisive impact on the purchase decision. For example, if the store has Nongfu Spring and another water with similar price and size, but Nongfu Spring isn't in the cooler while the other is, consumers will likely choose the one in the cooler.

**The key factor influencing offline purchase decisions is the scenario; in a specific scenario, whoever solves the consumer's problem becomes their first choice.**

The difference in online and offline consumer decision paths determines the difference in market operation methods. Online, the brand's core is to capture platform traffic and provide good content; offline, the core is scenario creation to meet real needs.

**Grasp the Process of Offline Sales Management**

Online brand operation is asset-light: establish an online operations team, plan and maintain activities daily, and provide content. Management complexity is relatively low.

**But offline market operation, from manufacturer to distributor to store, is very complex. Currently, most traditional FMCG giants operate with heavy assets and labor-intensive models, such as Coca-Cola, Master Kong, and Nongfu Spring.**

We can roughly express offline sales with a formula: **Sales revenue = Number of developed customers (stores) x Average transaction value x Order frequency.**

China's market is highly fragmented with nearly 6 million traditional small stores. To fully cover such a large customer base, manufacturers need a strong sales team. That's why some FMCG giants have tens of thousands of salespeople serving small stores.

Managing such a large sales team is extremely complex. Designing management and compensation systems to activate salespeople, using digital technology to improve execution, etc., are crucial in offline operations. These cannot be solved by brand power alone.

On the other hand, the scarcity of quality shelf space offline makes product distribution difficult.

In the past, supply was short, brands were few, and small stores had no choice. But now products are abundant. An ordinary convenience store has 300-400 SKUs of beverages alone. Missing one or two brands has little impact on sales; even well-known brands aren't necessarily stocked.

Store shelves are limited; typically, each category selects 1-2 brands, e.g., functional drinks choose Red Bull or Dongpeng, sodas choose Pepsi or Coca-Cola.

This means the initiative lies with the store. How to get the store to choose your product? The only way is for salespeople to promote and persuade the store to sell your goods.

During promotion, many steps arise: how to do promotions, how to arrange displays, how to design bundles, whether to invest in coolers, shelves, store signs, etc., and disputes are common.

For example, after negotiating a display position with a store and paying 800 yuan monthly display fee, if the salesperson leaves and takes the fee without it reaching the store, the originally cooperative store becomes an adversary.

For brands, without excellent mechanisms and a strong operations team, such closed-loop management can easily turn good things into bad. The complexity of the entire sales process is hard to grasp without offline experience.

**Find the Logic of Offline Store Operations**

The carrier for offline product movement is the store. For brands, going offline isn't just about awareness; it's inseparable from store operations. Offline, the store is the best way to spread the brand; consumers only develop purchase desire when they see, touch, and use the product.

Let's look at two cases:

Case 1: Taiyang Shen Oral Liquid (太阳神口服液). Over a decade ago, it gained huge awareness through CCTV ads. But while ads brought massive traffic, offline store operations lagged; consumers knew the product but couldn't buy it, and it gradually disappeared from the market.

Case 2: Naobaijin (脑白金). Also a health product, also used catchy ads to become a household name quickly. But while marketing, it also built a large ground force, stocking products extensively in stores. In almost all supermarket health product sections, Naobaijin had the first display position, and sales quickly exploded.

The prerequisite for offline product movement is that the product appears in stores. Marketing only makes consumers aware; if they can't see the product in offline stores, they can't form brand awareness, and once the hype fades, they forget the brand.

Offline, many brands do little advertising but rely on strong ground forces to continuously stock stores and sell well.

For example, Coca-Cola's Pure Leaf (纯悦) purified water. At launch, it basically didn't advertise in media, and most consumers didn't even know it was a Coca-Cola product.

Without ad investment, Pure Leaf did extensive in-store execution activities in Guangdong, such as cooler displays and cut-case displays.

In Guangdong's hot weather, most beverage brands didn't do cut-case displays, but why did Pure Leaf?

First, there's market demand; some consumers don't drink cold water, like the elderly, girls, and children.

Second, to build consumer awareness and lay a foundation for sustained sales. The core purpose of cut-case displays is for consumers to see the product when entering the store. Seeing the same cut-case display in every store, with repeated visual impact, forms brand awareness in consumers' minds.

The product itself is the best advertisement; media ads don't truly reach consumers. Strong brand awareness comes from the product reaching consumers, and through usage experience, consumers proactively repurchase and spread the word.

As the carrier of products, the store is an important place for zero-distance contact between brand and users, and for driving brand power and consumption power.

For brand owners, they may not directly cover stores and need distributors for coverage, but in this process, they must value stores, guide, and supervise distributors in store operations.

**In Conclusion:**

Many online "big brands" have achieved good results online, and entering offline channels isn't difficult. But after going offline, how to get on shelves and prompt purchases is the deep question.

One thing to emphasize: when going offline, you must have reverence. **Offline is not a short-term business but a long-term market; those seeking quick money will come and go in a hurry.**

About the author: Zhou Qun, researcher in the FMCG distribution field, FMCG industry analyst, and chief editor of the "New Distribution 100" column. His industry research includes transformation and upgrading of FMCG distributors, distributor management, and new retail in FMCG.


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