What is Deep Distribution? Deep distribution emphasizes building integrated manufacturer-dealer relationships, extending operational reach through distribution to retail, and gaining competitive advantage through partnerships with distributors and retailers. Deep distribution addresses China-specific issues:

  1. 1-6 tiers: multi-level, three-dimensional market
  2. 6.8 million: extremely numerous channels (retail/wholesale)
  3. Lack of large-scale logistics and supply chain systems
  4. Highly fragmented mom-and-pop retail model
  5. Asymmetric capabilities between manufacturers and distributors
  6. Information asymmetry: consumers' independent awareness is low, influenced by channel behavior

Thus, brand owners launch a series of solutions:

  1. Refined terminal layout (distribution rate, tiered management)
  2. Terminal visualization (placement of various visual materials, used to standards)
  3. Terminal activation and interception (using sales promoters, promotions to intercept users)
  4. Terminal incentives (sufficient profit margins to stimulate channel distribution)
  5. Rapid sell-through (high turnover, fast capital recovery)
  6. Partner enablement (professional skills training for partners)
  7. Off-premise proactive marketing (breaking retail space limits, activities in high-traffic areas)

The deep distribution described above includes both "distribution" and "selling," involving both B2B and B2C actions: Distribution: A series of supply chain management and transaction behaviors to place goods at terminals (B). Selling: A series of actions to get consumers (C) to buy. In the past, all marketing was memory-based: consumers saw ads, remembered, and bought offline. For brand owners, all offline efforts were to make products readily available. This was based on an era of information and supply asymmetry and relative scarcity, where brands could influence consumer purchase behavior through a series of terminal interventions. Because users were disconnected and offline, media and channels were separated, so brand owners had to place products as close to consumers as possible and maintain a relative competitive advantage to win on homogeneous shelves. This statement has two background premises: offline, homogeneous competition. It also has two keywords: close enough, relative competitive advantage. Have these keywords failed today? No! But the importance of "distribution" and "selling" is not equal. In the past, when supply chains were underdeveloped, whoever could effectively drive distributors to distribute goods had already won half the battle, so distribution was far more important than selling. I believe the rent-seeking issue raised in Mr. Liu's article is a means for manufacturers to solve the "distribution" part, not an end. Many misunderstand marketing's purpose as giving consumers a reason to buy. Let's re-examine this: From the 4P brand perspective, marketing is: Product: What to sell? Pricing: Who buys? Place: Where to buy? Promotion: Why buy? From the 4C user perspective: Customer: What problem do I need to solve? Cost: How to buy at the lowest cost? Convenience: How to buy conveniently? Communication: Who is most worth buying? Combining 4P and 4C: Product vs. Customer: What problem can the product solve for me? Price vs. Cost: How much am I willing to pay to solve this? Place vs. Convenience: Where is it most convenient to solve this? Promotion vs. Communication: Which product is most suitable? The ultimate goal of marketing is to bring people, goods, and places together, giving consumers a consumption scenario associated with the product. Think about why you drink Red Bull when thirsty or tired, Wanglaoji when eating hotpot, and Six Walnut when using your brain? Marketing's purpose is to tell consumers when, where, and why to consume a product. So, whether deep distribution or BC integration, the core issue is to complete consumer communication at the fastest time and nearest location, and complete transactions and consumption with the lowest cost transaction method. In the past, costs didn't allow large-scale near-field communication with consumers; only limited communication and promotion were possible at specific times, products, channels, and scenarios. So, undeniably, sales promoters and demonstrators do have rent-seeking behavior in hijacking traffic, but the more important purpose is to persuade and communicate with consumers. Deep distribution, undoubtedly, today's infrastructure is well-developed, "distribution" is easy, but "selling" is increasingly difficult. As store foot traffic declines, marginal benefits are diminishing, but terminal displays, visualization, promoter interception, and promotions are all still necessary. There's no choice; Chinese FMCG is so homogeneous and involuted. As long as consumers still enter stores, in-store actions are indispensable. Especially for categories like beer and beverages with extremely low online penetration and immediate consumption, deep distribution cannot be replaced and may only be improved at the technical level for a long time. We see many SFA applications like photo scoring, TMS, and B2B online transactions, which only solve distribution efficiency, not the competitive display issue of sell-through. Of course, there are also mini-programs with coupon promotions under WeChat social, robots replacing promoters to communicate with consumers. Tools can improve transaction efficiency, but essentially, the steps haven't been reduced, and people are still irreplaceable. So, Mr. Liu and I share a consensus: BC integration is an upgrade of deep distribution. However, I have doubts about driving traffic from C to B. B is physical space; whether or not brand owners do C-end promotions to drive store traffic, consumers still need to go to stores. But if you drive traffic, you're just spending the money you would have given to the store directly on consumers. But with such low average order values in FMCG, can this traffic-driving become a large-scale, normalized distribution method? If not, and it's just for promotion, then it's essentially no different from setting up a promotional display outside a supermarket with two promoters and special offers. Because both B-end marketing and C-end promotions rely on community LBS traffic to complete the business. Moreover, if it's periodic and completes market promotion, but doesn't do displays, visualization, or relationship visits, competitors will undo all efforts. Because consumers won't buy on the brand's mini-program daily, but they will go to the supermarket daily. What does BC integration's C-end marketing actually solve? As the previous article said, C-end marketing solves new customer acquisition, repurchase, promotion, activation, and referrals, essentially shifting from mass media communication to fragmented communication under small channels. That is, communication and transaction are integrated. With mass media failing, small communications must be done. Whether it's building ads, Moments posts, O2O planning, or in-store experiential promotions, all are necessary. Regional market integrated marketing has shifted from single-army land warfare to special forces plus joint operations across sea, land, and air. From managing store owners and shelves to also managing consumers' 10 minutes, 30 minutes, 2 hours, a day, at home, in-store, goods moving without people, people moving without goods—all transaction scenarios. And note, the money given to terminals cannot be reduced. Some tactical C-end stockpiling can be done during regional market attacks, but strongholds are strongholds; if supplies to the blockhouse are insufficient, it may fall. Summary: Technology improves deep distribution efficiency, allowing brand owners to extend and improve efficiency in time (24 hours), space (offline + online), and depth (C-end consumers). But all of this is based on ensuring stores can sell stably long-term. Driving traffic to stores and periodic promotions are tools and means, driven by brand-side interests to stimulate consumer purchases, essentially not departing from the 4P and 4C dimensions of place & promotion, convenience & communication. And as long as mom-and-pop stores exist, people are needed for terminal maintenance. Without people, no matter how loud Genki Forest's online presence is, offline harvest still goes to Nongfu and Coca-Cola; this can't be avoided. But Genki Forest using these methods can beat competitors with efficiency on the technical front, which is an opportunity.

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