A few days ago, a Master Kong distributor friend suddenly asked me on WeChat, "I want to build my own platform. Do you have any reliable company to recommend?" I was surprised. As a Master Kong distributor, why would he suddenly want to do B2B? I immediately called him and we discussed his ideas. Later, I learned that he had attended a New Distribution conference where a beverage distributor shared her experience of transforming into a B2B platform, which inspired him.

The distributor he mentioned is Yan Lu, General Manager of Daqing Tao Daqing E-commerce Company. As a distributor of non-tier-1 beverage brands, she has been experimenting with "+ Internet" or "Internet +" since 2009, continuously growing and strengthening her business through transformation and upgrading. She has a "classic line" about her transformation journey: "On the road of transformation, every step is a pit, the pit is filled with water, and the water has nails."

Recently, New Distribution interviewed Ms. Yan Lu to discuss her experience as a beverage distributor transforming into a B2B platform. We hope her insights and thoughts can bring some inspiration and reflection to our readers.

01 Continuous Experimentation and Innovation

The predecessor of Tao Daqing E-commerce was Aohai Huadu Trading, established in 1994. Before 2009, Huadu Trading was a traditional distribution business, representing local and regional beverages. At that time, the business was small, with annual sales of around 20 million yuan and only six or seven salespeople. With the advent of the Internet, e-commerce companies, typically in the form of B2C malls, began to emerge, and regional B2C malls sprang up like mushrooms.

At that time, Yan Lu saw the opportunity of the Internet and established Kekefa Network Company that same year. Yan Lu told New Distribution, "At that time, we wanted to build Daqing's own 'department store' relying on the Internet. We invested a lot of manpower, material resources, and money, but after a period of operation, we realized it wasn't that simple. The Internet in 'Northeast' seemed a bit far from consumers." Eventually, "Kekefa" ended in failure.

Although it was a failed attempt, for Yan Lu, using the Internet for business planted a seed in her heart. She was convinced that future business must be equipped with the wings of the Internet.

After 2010, she focused on trading, expanding terminals, serving terminals, and broadening scale. Subsequently, she represented brands such as Kaiwei Wild Hawthorn and Qiulin Kvass.

By 2014, Yan Lu told New Distribution that she clearly felt the distribution business was becoming increasingly difficult. At that time, O2O was on the rise. In Yan Lu's view, Huadu served supermarkets, so they could build an online micro-mall platform (registered as Tao Daqing) to empower supermarkets. They would put supermarket products online, and consumers could order online, with nearby supermarkets handling delivery. To this end, Yan Lu even held a promotional conference at the local Sheraton Hotel.

But after a year of operation, consumer demand from the C-end was far from sufficient to support the delivery willingness of the outlets, and the O2O project was shelved again.

In 2015, B2B platforms for FMCG distribution were "blossoming" across various regions. Yan Lu, having experienced two Internet entrepreneurship attempts, naturally couldn't miss this opportunity. In July of the same year, Tao Daqing partnered with Zhongke Shangruan. In June 2016, they officially launched the "Baimi Cloud" online ordering APP.

After continuous experimentation and innovation, Tao Daqing finally got on the right track of Internet-based distribution business.

02 New Product Promotion: One Salesperson Sold 300 Cases in 2 Hours

To date, Tao Daqing's annual sales are nearly 80 million yuan, covering nearly 8,000 outlets in the urban area of Daqing, including convenience stores, restaurants, internet cafes, billiard halls, bathhouses, hotels, enterprise canteens, and various special channels. Unlike other regional B2B platforms, Tao Daqing does not pursue massive SKU counts. According to Yan Lu, the Baimi Cloud platform currently has fewer than 400 SKUs, mainly beverages.

During the 2017 Double 11 period, Tao Daqing planned a platform-wide promotional event, achieving sales of 1.28 million yuan in just two days. Yan Lu recalled, "The night before the event, it was snowing. After returning from a business dinner, on the way back to the company, I looked at the row of buildings in the park, and only Tao Daqing's office was brightly lit. Also, every time I refreshed the phone, the order count changed. I was overjoyed."

Yan Lu told New Distribution that after building the B2B platform, the most intuitive feeling was that the trading business never sleeps, no longer relying solely on salesperson visits. Previously, on Sundays, when salespeople were off, there were no orders. Now, even during regular holidays, there is still 10,000 yuan in revenue on Sundays, totaling 500,000 to 600,000 yuan a year.

In addition to real-time order acquisition, Yan Lu also fully utilizes the Internet for new product promotion. In July 2018, Yan Lu represented a new product under Huiyuan. Before the product arrived, Tao Daqing began online promotion and preheating, including APP homepage displays and extensive promotion via WeChat Moments and WeChat groups. Tao Daqing has 30 WeChat groups for outlets alone. When the new product arrived, salespeople began visiting stores one by one, with the highest salesperson selling 300 cases in 2 hours. In just two days of distribution, they sold 2,000 cases (one truckload).

Yan Lu told New Distribution, "This is the power of the Internet, completely breaking the original sales model." Tao Daqing uses the Internet to promote online and offline ordering meetings. For example, outlets can purchase a 5,000-yuan ordering voucher on the platform to participate in corresponding gift activities. According to Yan Lu, during the online ordering meeting organized in 2017, daily sales reached over 6 million yuan, with zero outstanding payments.

After two years of development, Tao Daqing has now become the leading one-stop beverage distribution platform in the local area.

03 Salespeople with Zero Base Salary: Reward First, Work Later

In addition to business upgrades, Tao Daqing also actively explores internal organizational changes. She told New Distribution that the future relationship between employees and bosses is not "employment" but "partnership," and the premise of partnership is transparent company operations and open finances. In July 2017, Yan Lu began piloting a zero-base-salary system with transparent product gross margins.

For salespeople, zero base salary means losing basic security. To smoothly implement this and ensure employees have no worries, Yan Lu implemented a "dual-track system" during the pilot period, with two salary standards: one retaining the original base salary plus commission, and the other zero base salary plus gross profit commission.

After six months of pilot operation, the results were significant. Both the company and individual salespeople saw substantial increases in revenue and salaries. In January 2018, Tao Daqing officially implemented the zero-base-salary plus gross profit commission salary standard.

In addition to salary, Tao Daqing also stands out in business incentives: starting in June, at the beginning of each month, employees report their income (personal salary) target plan for the month, and when they reach corresponding reward levels, they receive prizes. For example, an 8,000-yuan target earns a Haier small freezer; a 6,000-yuan target earns a treadmill. Yan Lu told New Distribution, "Previously, distributors designed rewards that were only given after achievement, but we are different. We hope this is more of an incentive, an expectation." Tao Daqing also organizes on-site "award ceremonies" and delivers prizes to employees' homes via company vehicles, even installing and debugging them. "We hope Tao Daqing is a company with 'temperature.'"

Finally, Yan Lu revealed to New Distribution, "Distributor transformation is not simply transforming into a B2B platform or simply changing organizational incentives. Distributor transformation and upgrading is a protracted battle, and you must always maintain a sense of crisis." In September this year, Yan Lu also actively ventured into the current hot project: community group buying - Keke Selection. To date, Keke Selection has been piloted in the Longfeng and Ranghulu districts, recruiting 100 group leaders in one month. The next step is to continue replicating and expanding to other districts.

Final Thoughts

In the past, many distributors asked me, "I currently represent... products, with annual sales of... How do you think I should transform...?" But when I asked them what B2B specifically is, or what unified warehousing and distribution specifically is, they were at a loss. (Don't disbelieve it; there are quite a few.) In the past, distributors read an article and thought the interviewee was doing well, hoping to operate like them. But little do they know that any excellent distributor, before becoming 'excellent,' has stepped on many pits, and may even still be on the road of stepping on pits.

Regarding transformation, distributors must not misunderstand it as changing industries or abandoning the distribution business, nor should they purely understand it as high-sounding "innovation," technology, intelligence, etc. To understand transformation, we specifically looked up what enterprise transformation means: Enterprises achieve improved business performance through structural changes in business and management. Transformation has characteristics of systematicness, leapfrogging, and staging. It often goes from top to bottom, involving a series of changes in concepts, organization, processes, and personnel capabilities. Relying on experience and intuition is no longer effective; a scientific methodology is needed.

Simply put, distributor transformation means using scientific methods to change your business approach. The past inefficient and disorderly distribution needs to be upgraded, using Internet tools, even WeChat Moments, to improve distribution efficiency. In layman's terms, it's like fighting monsters in a game. Transformation is like changing your equipment to make it easier to fight monsters and defeat more of them.

The fundamental reason many distributors are unwilling to try transformation is: They think of themselves as individual businesses, as "contractors" working for brand owners. They believe external business changes have nothing to do with them. The manufacturer leads us forward, and we do as much as the manufacturer's profit allows. If the manufacturer gives 6 points, we can only earn 6 points. They never consider themselves an independently operating enterprise. What should an enterprise do? It should pursue sales maximization and expand territory, not be limited by the manufacturer.

Think about it: if distributors consider themselves enterprises, how could they let their fate be controlled by others?

Specifically, how to transform: First, go out, change your circle, learn from others, and see how others do it on the ground. Second, analyze your own advantages: do you have money, people, or outlets? If you have nothing, think about what you can do well. First, elevate your distribution business volume. In today's environment, if you can grow sales by more than 30%, at least it shows you haven't fallen behind. Third, transform business and organization, add Internet tools, make information and data transparent, and change employees' work mentality. At least let employees have a clear understanding of their work contributions and value to the company.

************On October 23-24, during the Autumn Sugar and Wine Fair, New Distribution will host the "2018 FMCG City Distribution and Logistics Conference." At that time, New Distribution will invite industry experts, FMCG warehousing and distribution specialists, and distributors who have transformed into unified warehousing and distribution platforms to discuss and answer questions about future trends in FMCG city distribution and logistics, as well as practical cases of distributor transformation to unified warehousing and distribution, under the theme "New Distribution, New City Distribution." We hope it will bring you different inspiration and thoughts! The specific conference topics are as follows:

List of Participating Companies

In no particular order

Hunan Zonglan Diandan Network Technology Co., Ltd. Jingbang (Wuhan) International Freight Forwarding Co., Ltd. Mengniu Dairy Qinghai Hanxiang E-commerce Co., Ltd. Unilever Service (Hefei) Co., Ltd. Shanghai Branch Huicong Hunan Xuan'ang Food Co., Ltd. Guangzhou Tongdaoren Information Technology Co., Ltd. Qingdao 888 Trading Co., Ltd. Uni-President Enterprises (China) Investment Co., Ltd. Hunan Province Zhongxiang Gongpei Logistics Co., Ltd. Shenglong Ingredients COSCO Shipping Logistics Warehousing and Distribution Co., Ltd. Guangxi Yongpai Liquor Industry Co., Ltd. Shangqiu Kangrong Trading Co., Ltd. Jinan Dingzhong Economic and Trade Co., Ltd. Liaoning Bimai Agricultural Technology Co., Ltd. Kunming Xiongjia Trading Co., Ltd. Shaanxi Houheng Trading Co., Ltd. Guangzhou Dingwo Enterprise Information Consulting Co., Ltd. Shaodong Jiajiale Commercial Firm Boda Trading Industrial Bank Changsha Branch Wuhan Muchen Convenience Store Chain Co., Ltd. Fujian Fuxing Yuncang Logistics Co., Ltd. Guizhou Yilimi E-commerce Co., Ltd. Jiangxi Xiao Laoer E-commerce Co., Ltd. Jinshan Koufu Shanxi Taihang Yuanjing Supply Chain Management Co., Ltd. Shanxi Dezhun Supply Chain Management Co., Ltd. Shaoyang Tongdeli Trading (Xiangbang Logistics) Huanfu Tongda Express City Distribution Beijing Xinjingxiang Food Co., Ltd. Wuhan Huizhong Tianhong Liquor Co., Ltd. Changsha Paide Biotechnology Co., Ltd. Chao'an Tuqiang Guizhou Yihe Bopin Supply Chain Management Co., Ltd. Jiangxi Kang'en Industrial Development Co., Ltd. Xiangtan County Yisuhe Town Yuhua Paper Store Luoyang Yuanlang Trading Co., Ltd. Tongchuan Yaozhou Huayuan Supermarket Co., Ltd. Hunan Yongfu Jiujiu Trading Co., Ltd. Zhejiang Chengchengtong Logistics Co., Ltd. Chongqing Kaiguo Materials Trading Co., Ltd. Beijing Xianmaixianmai Data Technology Co., Ltd. Hanchuan Qixing Trading Co., Ltd. Tongxin Jiuzhiru Trading Co., Ltd. Guizhou Meiguo Guoguo Network Technology Co., Ltd. Hubei Anjie Logistics Co., Ltd. Hubei Kuaixiao Internet Technology Co., Ltd. ......

Distributor Transformation Representatives (Proposed)

In no particular order

Jiangsu Huashang City Distribution Network Co., Ltd. Chairman, Rong Jun Hubei Yijiaren Logistics Co., Ltd. Chairman, Wang Bo Sichuan Chengdu Xingrenxing Trading Co., Ltd. General Manager, Jiang Shuming Shandong Yunbang Warehousing and Logistics Co., Ltd. Chairman, Liu Jichen Chongqing Lingyu Consumer Goods Supply Chain Management Co., Ltd. Chairman, Tu Mingyu Guangzhou Zhongshan Wanrong Marketing Co., Ltd. Chairman, Yang Su Sichuan Bajie Supply Chain Management Co., Ltd. Chairman, Yuan Xia Hubei Pengdun Meiyitian Supply Chain Management Co., Ltd. Co-founder, Li Qiangyun Henan Xuchang Jiulegou E-commerce Co., Ltd. Chairman, Zhang Jianyong Hebei Changyi Logistics Co., Ltd. Founder, Ma Haichao Hebei (Chengde) Wulian Yuncang Co., Ltd. General Manager, Meng Yucun Xinjiang Urumqi Su'an Jinchi Logistics Co., Ltd. Chairman, Zhang Xun Jilin Sansheng Lian'gou Chairman, Zhang Hailing Hebei Dunjie Supply Chain Management Co., Ltd. Founder, Qiang Huitao Hunan Damei Supply Chain Management Co., Ltd. General Manager, Liao Lei ......

On October 23-24, the 2018 China FMCG City Distribution and Logistics Conference, hosted by New Distribution, will be held in Changsha. Many industry experts have sent their blessings for the conference. Click the video to watch; more details about the conference are below.

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