Zhongshan Wanrong Marketing Co., Ltd., founded in 1992, has 15 branch companies, achieved sales of 2.5 billion yuan in 2017, covering over 24,000 offline retail outlets, and represents more than 40 brands including P&G, such as Head & Shoulders, Pantene, Rejoice, Vidal Sassoon, Gillette, SK-II, Whisper, Pampers, Safeguard, Olay, Tide, and Ariel. Recently, New Distribution exclusively interviewed Yang Su, Chairman of Zhongshan Wanrong Marketing Co., Ltd., to see what measures this FMCG veteran with nearly 30 years of distribution experience has taken to support Wanrong's growth, and how Wanrong is thinking about the digital transformation of FMCG distribution channels. 01 Three Key Measures That Drove Wanrong's Development 01 Established for Less Than 2 Years, Averaging 2 Branch Companies per Year In November 1992, Wanrong was established in Zhongshan. A year and a half later, Wanrong set up a branch in Panyu, followed by branches in Zhuhai, Doumen, and Shenzhen. By 2004, Wanrong had established 15 branches, becoming the largest distributor of P&G in China. In 2007, Wanrong became P&G's largest distributor in Asia and the fourth largest globally, covering 15,000 customers. Yang Su told New Distribution that Wanrong's approach to expanding regional markets differed from other distributors. In the past, distributors typically "played freely" when expanding, treating each city as an independent market. At that time, Wanrong adopted the concept of "chain" to replicate markets. Yang Su recalled that after establishing a relatively mature and stable business model in Zhongshan, Wanrong quickly replicated it with unified operating models, standardized service quality, management processes, and information systems, then expanded to surrounding cities. To promote this model, Wanrong adopted a structure with headquarters as the management core and branches as business execution units, ensuring smooth market advancement and implementation. In addition to replicating the business model, Wanrong also developed a proven and effective visit process in its business execution, which internally is called the "Eight Steps of the Dragon." 02 P&G Issues 200 Promotions Monthly, Wanrong Only Executes 30 Around 2000, the marketing department might have been just a concept or a term for many domestic brand owners and distributors, but it had already become a core organizational component for Wanrong. Yang Su told New Distribution that upstream brand owner P&G designs over 200 promotional activities every month. In this case, if every branch or sales team executed all 200 promotions, the effect would inevitably be greatly diminished. The purpose of Wanrong's marketing department was to manage these 200 promotions as resources, integrate the resources behind them, combine them according to the actual needs of regional markets, and establish a set of promotional forms suitable for market execution. Finally, the marketing department streamlined the 200 promotions from P&G into 30. Through this approach, sales personnel's efficiency in daily promotional execution was greatly improved. Perhaps in the minds of distributors, the marketing department is for planning, research, and analysis; they never imagined that their own trading company would establish a marketing department. At a fundamental level, distributors never viewed the promotional activities planned by brand owners as a resource. Not only did they not embrace and support them, but they even scoffed at the promotions issued by manufacturers, believing they wasted the time and energy of business personnel. In the view of New Distribution, Wanrong's marketing department is actually a "fusion device" for promotion supply and demand. It treats the many promotional activities supplied by upstream brand owners as a "resource pool." The marketing department screens and integrates within this pool, combines it with the actual needs of Wanrong's local market, and designs effective promotional activities to drive product sell-through in the local market. 03 Establishing a Third-Party Logistics Company, Transforming a Cost Center into a Profit Center As Wanrong's market expanded and its scale increased, from 2008 to 2010, Wanrong began upgrading its internal warehousing, taking the lead in using high-rise three-dimensional shelves. Three years later, Wanrong boldly innovated by spinning off its warehousing department into an independent third-party logistics company with independent accounting. In addition to its own business, it opened to the public, turning past costs into a profit center. Yang Su told New Distribution that in the past, the warehousing department was subordinate to the frontline business department, so it was difficult for the warehousing department to break through, and its growth was limited by business needs. Because the business needs themselves were uncertain, there was a contradiction between the two departments. When business needs arose, the warehousing department often couldn't keep up; when the warehousing department developed ahead of time, it found that business needs couldn't keep up with warehousing capacity, while warehousing costs increased. Based on this contradiction, Wanrong spun off the warehousing department in 2013 to establish a third-party logistics company with a warehousing area of 33,000 square meters. The above three key measures helped Wanrong grow rapidly and become a giant in FMCG trading. Perhaps being vigilant in peace is a trait of every business owner. Yang Su told New Distribution that in 2014, Wanrong began a new round of upgrades, introducing Songxing Bainian service provider to comprehensively promote digital business concepts. Currently, of Wanrong's 24,000 outlets, 60% place orders independently through the platform, and 40% place orders with the assistance of salespeople. 02 Transforming to Digital Operations, Making Salespeople Data Analysts What is digital operations? Literally, it might mean moving business data to computers and networks, then accessing it anytime you want... I think that's what most people think. On this point, Yang Su told New Distribution that in the past, Wanrong was the same; it seemed to have all kinds of data, but it was just a string of numbers that could be retrieved at any time. How to read data, how to use data to discover problems—these actions were rare. What is digital operations? If there is a criterion for successful digital operations, I think it is this: see if your salespeople are data analysts! Yang Su told New Distribution that in the past, Wanrong's salespeople might have "hated" data reports because these reports were like exam papers, assessing salespeople's performance indicators: achievement rate, visit rate, sales targets, promotional expense ratio, etc. In the past, these reports were often held by department heads as a tool to check salespeople's work. Now these reports have transformed into communication tools in the hands of salespeople, tools to persuade store owners to place orders. Because the tools include the store's historical sales, distribution display, and promotional activities, salespeople use this data to diagnose and analyze the store. Previously, data was an exam paper for salespeople; now it's a calculator. This is the biggest change in Wanrong's digital transformation. At the same time, the function of the organization has also changed. In the past, the headquarters' function was more about management, supervision, and urging branches and frontline business execution. Now the headquarters' function has also changed, with more work focused on empowerment. It establishes analysis models or data pivot models to more efficiently discover problems, sets standardized and unified operating standards for products, outlets, and business organizations, and helps branches make better business decisions. Through a series of measures, branches understand their own business better than headquarters. If digital operations solve the problem of internal cost reduction and efficiency improvement, enhancing the soft power of business operations, then how does Wanrong respond to the industry-wide distribution transformation? 03 How to Cope with the Impact of National and Local B2B Platforms? In Guangzhou, in addition to national B2B platforms like Alibaba Retail Link and JD New Channel, there are also local B2B platforms represented by 1 Life and Palm Quick Sale. Facing many strong competitors, Yang Su frankly told New Distribution that if they don't transform, distributors have no future. Whether B2B platforms or distributors, they are essentially doing supply chain efficiency, connecting products and channels through services, ultimately forming transactions. This is the main model for Wanrong and all distributors, and the only model. In fact, facing the invasion of B2B platforms, distributors have no advantage because behind supply chain efficiency is capital; distributors don't have hot money or venture capital behind them. Yang Su believes that the future transformation of distributors, including Wanrong's own future transformation, should move toward marketing efficiency, which is backed by "precision and delight." Yang Su told New Distribution that Wanrong has operated in regional markets for over 20 years, building deep trust relationships with store owners, which is a rich asset. In the future, Wanrong will establish closer social relationships with these outlets beyond transactional relationships. Behind marketing efficiency, Wanrong itself will no longer be a supplier of a certain category, but a platform that unites small store owners to precisely reach target consumers with suitable products. Not only will it provide products to small stores, but it will also help them attract traffic and sell products. In Yang Su's view, the current mainstream B2B platforms still focus on supply chain efficiency, with a business logic of standardization, normalization, and modeling. But marketing efficiency pursues social relationships, using communities as bonds, products as support, and channels as entry points, selling suitable products to suitable people. Here, the products are no longer just those represented by Wanrong, but those needed by consumers in the community. Final Thoughts

  1. On distributor transformation. Yang Su told New Distribution that with the advent of B2B, distributors have room to survive in the current stock market, but if they continue to operate along supply chain efficiency, there is no room for development. Distributors must transform, or there is no way out. Many people reading this want to see: how to transform, what is the path. But in fact, business operation is not like taking an exam, doing multiple-choice or math problems with standard answers, right or wrong. Transformation has no standard answer. If you blindly pursue a standard answer, you probably haven't thought seriously. Although life is hard, you can still get by; the crisis hasn't forced you to the point of transformation. Yang Su told New Distribution that there is no one-size-fits-all path to transformation; markets are diverse. In the field of FMCG distribution, the distribution model we often talk about is based on South China or Guangdong, which may be an average description, not the true picture of the market. In fact, in each specific city, the business formats vary greatly, and there is no so-called unified standard way of operation.
  2. On unified warehousing and distribution. Unified warehousing and distribution has been a hot topic in distributor transformation in recent years, but Wanrong started it in 2013. At that time, the concept of unified warehousing and distribution might not have appeared. For Wanrong at that time, the starting point was simple: there was a supply-demand contradiction between its own business department and warehousing and distribution department, which could not be effectively balanced. So it simply spun off, changing from a "superior-subordinate relationship" to an "equal cooperative relationship," each developing independently. The warehousing and distribution department found its own business path. Many distributors talk about warehousing and distribution with "impure motives," not looking at the process, only seeing the profitable results, and ultimately losing the watermelon to pick up the sesame. Before warehousing and distribution is successfully explored, the main agency business has been completely abandoned. Extended Reading: Review the exciting reports of New Distribution 100 People [Click to View] -END-