Looking back at the evolution of FMCG B2B platforms, it still follows the laws of business history: they start grandly, experience ups and downs, and few survive to the present. From 2013 to 2016, FMCG B2B platforms sprang up like mushrooms across the country, expanding with the banner of national conquest, with various players and capital hype. From 2017 to 2018, closures due to poor management were common, and the industry entered deep waters; from 2019 to now, only a handful have survived, with most platforms returning to their home bases to focus on profitable business. In this round of sweeping transformation, distributors were once considered the ones to be 'eliminated.' However, after the bloody battles, it turned out that local distributors were the ones standing firm and most resilient. As the war ends and we look back at the battlefield, what this transformation has left for distributors, I think, is not only the confidence that their business is irreplaceable, but also the market dividends left after the battle. What dividends? Distributors realize that what national platforms cannot do well, local distributors can do well locally. Distributors with geographical advantages, warehousing and distribution advantages, visit advantages, and customer relationship advantages can transform into local B2B supply chain platforms. Why do I say this? First, nearly one-third of mom-and-pop stores nationwide have accepted and developed the habit of ordering online, adding a new path for ordering that is more convenient, faster, and offers a better experience. The habit of online ordering in stores has been educated to maturity. Second, industry innovation and transformation have spawned a batch of high-quality system tool service providers. Tools are gradually maturing and becoming widespread, and many distributors have begun to use digital tools to reduce costs, increase efficiency, and scale up. If past tools were more about simple inventory management, financial settlement, and office attendance, now more and more tools are truly applied to the actual business itself, achieving a complete closed loop for the distribution business through tools. With the support of mature tools, distributors' businesses have once again become the protagonists in the offline commodity circulation, and the form of business is quietly changing. Regarding system tool service providers, we must mention here Dinghuobao and Hailiantianxia. Dinghuobao, affiliated with Chengdu Ashang Information Technology Co., Ltd., is a member of China Digital Group and the first innovative internet enterprise in China to use cloud computing technology and SaaS model to solve channel distribution business problems for brand enterprises. Dinghuobao is committed to using internet weapons to empower traditional brand owners and distributors' channel distribution platforms, and has provided high-quality services to over 4 million users, including P&G, Taoli Bread, and ISS. Hailiantianxia is a best logistics information service provider focused on the FMCG circulation industry. Headquartered in Shenzhen, it is a national high-tech enterprise with independent intellectual property rights and independent R&D capabilities. Hailiantianxia has multiple senior consultants and R&D personnel with over ten years of experience in retail distribution logistics and supply chain collaboration platform construction. One focuses on front-end channel distribution, the other on back-end logistics warehousing and distribution. Both have absolute professionalism and authority in their respective fields. On August 24, at the 2020 Third 'China FMCG Conference' hosted by New Distribution, Dinghuobao and Hailiantianxia officially launched the 'FMCG B2B Business Overall Solution' for distributors. It connects front-end business and back-end warehousing and distribution, empowering distributors to transform into localized supply chain platforms. After the conference, New Distribution had a dialogue with Mr. Jiang Tao, founder of Dinghuobao, and Mr. Wang Jianjiang, founder of Hailiantianxia, about the industry background, pain points, and solution approach for launching the 'FMCG B2B Business Overall Solution'. -01- What is the B2B Business Overall Solution? The 'industry dividend' just mentioned, in short, is: small stores have gradually accepted online ordering, and distributors can use mature online tools to achieve large-scale distribution of multiple categories and cross-categories. However, from the 'dividends' practiced by distributors in the past two years, there are still many problems. Mr. Jiang Tao told New Distribution that in the past, Dinghuobao solved the problem of digitalizing the front-end business of distributors, improving the efficiency of product distribution, and achieving digitalization of business distribution. But as we helped more and more distributors, we found that with the continuous increase in front-end order volume, the back-end warehousing and distribution could not keep up. Front-end achieved large-scale distribution, but the back-end was still manually processed, prone to errors in sorting, and only upon arrival did we find shortages or omissions. The entire distribution process could not truly achieve data tracking. When some distributors realized this problem and bought some warehousing and distribution software, the actual application was unsatisfactory. The front-end business and back-end warehousing and distribution could not be effectively connected, and only through third parties could some interfaces be developed. In fact, this was still patching, one patch today, another tomorrow. The front-end system upgraded, but the other party's interface did not upgrade. Or if the other party upgraded, Dinghuobao did not have corresponding feedback, and the data transmitted had problems. This kind of entanglement and pulling phenomenon is very obvious, with mutual blame, ultimately preventing distributors from truly realizing the transformation to local supply chain platforms. Therefore, the cooperation between Dinghuobao and Hailiantianxia is based on the value of professionals doing professional work, with both parties cooperating. Dinghuobao does the digitalization of front-end marketing, and Hailiantianxia focuses on the digitalization of back-end warehousing and distribution. The strong alliance provides an overall solution for distributors to achieve overall B2B business transformation. Whether it is front-end distribution or back-end warehousing and distribution, these are highly professional and technical fields. If an enterprise does everything, it may not be deep and professional in many aspects. Jiang Tao emphasized that this alliance is not a simple connection of two systems, but a true re-sorting and development of a new product tool from the perspective of the distributor's business, connecting front-end business and back-end warehousing and distribution, achieving a complete closed loop, and solving the pain points of the front and back ends for distributors. Mr. Wang Jianjiang added that warehousing and distribution logistics has always been a core concern for the distributor community. In the past, due to the limited SKUs and simple order processing, the need for digital tool processing was not obvious; an order had only five or six SKUs. But now, more and more distributors, through business digital transformation, have achieved large-scale distribution of multiple categories. An order may need to include a dozen or even dozens of SKUs. The daily order volume ranges from 500-600 to over 1,000, and the order structure has changed significantly. With more orders and more SKUs per order, a digital warehousing and distribution system is needed to support it. Through cooperation with Dinghuobao, distributors can achieve a complete digital upgrade from front-end to back-end warehousing and distribution supply chain. At the same time, it greatly reduces the usage cost for distributors. In the view of New Distribution, the core of distributors transforming into local supply chain platforms and achieving B2B digital business is two points: first, digitalization of business; second, digitalization of warehousing and distribution. In fact, to digitalize a certain segment or link alone is not complicated, and there are many mature tools on the market. But to combine the two segments, if it is two separate software systems, it is difficult to truly and effectively connect, and cannot truly achieve business online. Mr. Jiang Tao said that through the cooperation of the two parties, for store owners, they can not only view products and place orders, but also see the entire order flow process. For example, when the order is reviewed, when the goods are shipped, and where the goods are, the entire order from placement to receipt is visible. We believe that this is a basic requirement for distributors to achieve a localized digital supply chain platform. -02- The Future of Trade Circulation Business Will Be the Business of Big Distributors Just mentioned, some distributors have seen the emergence of FMCG B2B and are actively trying to transform. At the same time, from the perspective of the entire trade circulation field, we also believe that the future local trade business will be the business of big distributors. Here, 'big distributors' not only refers to the 'bigness' in distribution volume, but also the 'bigness' in distribution structure. Mr. Jiang Tao said that the current transformation of distributors is actually a process of dividing the existing market cake and seizing the business of traditional distributors. In the past, a distributor had a limit of 40 SKUs, but in the future, it is feasible for distributors to distribute tens of thousands of SKUs through tools. Our customer, Rongcheng Yigou, a representative of distributor transformation, has 10,000 SKUs and increased sales from 80 million yuan in 2018 to 390 million yuan in 2019, a four-fold increase. A distributor achieving distribution of 10,000 SKUs locally means the total market size is fixed, so it must be seizing sales from other distributors. The main lever for grabbing the cake is digital capability. Without this capability, you cannot cut the cake. Conversely, if you cannot cut, you will naturally be cut and eliminated. Previously, New Distribution judged the trade circulation field, and we believe that in the future, there will be head distributors who change their business logic, shifting from the past agency distribution business to the business of purchasing and selling for small stores, becoming channel-type distributors, providing one-stop product supply for local circulation stores. To achieve one-stop product supply for small stores, it is necessary to rely on digital system support, change the business model, and build a local B2B online ordering mall. Graphic product management, personalized product information, timely inventory feedback, expanded product display space, and more sales opportunities. -03- Not Just Providing Tools, But Also Methods and Consulting Admittedly, it is not easy for distributors to successfully transform into local supply chain platforms. Business model changes often face huge challenges. On this point, Jiang Tao told New Distribution that both Dinghuobao and Hailiantianxia have been deeply involved in this industry for many years. Our experience is not only the experience of making good tool systems, but also the experience of helping distributors deeply participate in transformation. Why is it called 'B2B Digital Supply Chain Overall Solution'? We not only provide tools, but also a set of consulting services to help distributors sort out their business. For example, how to guide offline orders online, how to change the KPI assessment methods for salespeople, and how to transform the role of salespeople from the past order-taking model to operations personnel when everything goes online. In addition, some distributors may jointly build a local supply chain platform with multiple distributors, which involves the construction of equity structure and new business organizations like regional alliances. We will provide guidance to cooperating distributors based on the successful practical experience of other distributors, helping them complete the transformation more smoothly. After distributors achieve overall platform transformation, there will be deeper cooperation in the future. For example, helping them with value-added services, online marketing platforms, where distributors can not only earn product price differences, but also have data finance income, advertising traffic income, and even marketing fee investment income from upstream brand owners. Regarding the implementation of warehousing and distribution digital transformation, Wang Jianjiang said, logistics warehousing and distribution is an operating system, not a simple logistics launch. To truly achieve efficient warehousing and distribution, Hailian not only delivers tools but also helps distributors with warehousing planning, how to plan warehouses, and design logistics routes. At the same time, in internal operations, it provides distributors with process improvement suggestions. Because the original operating model may no longer be applicable, the internal operating process should be reformed according to the new business model. In Wang Jianjiang's view, truly improving distributors' warehousing and distribution capabilities is not just about giving tools; the same tool may be used by different people with different efficiencies. Some say it is easy to use, others say it is not. What Hailian wants to do is truly realize the value of the tool, not simply throw the tool at you. Summary: Digitalization, I think, is a cliché for every business organization. But how to truly achieve digital operation, frankly, there is still a long way to go. But for FMCG trade circulation distributors, they are lucky. In the past few years, the emergence of FMCG B2B platforms has actually provided a beacon for distributors' digital operation. Distributors with strength and relatively head status have a clear goal for digital operation: based on the local regional market, using digital tools as the starting point, transform into local supply chain platforms, and provide one-stop product supply for downstream small stores!
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