---
title: "After Three Years of Losses, Why Do Traditional Distributors Still Abandon Supermarket Business and Fully Shift to Local B2b?"
description: "Starting as an agent for Yili in 2011, Yu Xiuwei has been in the FMCG distribution industry for over a decade, during which he tried cross-regional operations, O2O, and multi-category, multi-brand management. At the end of 2019, he launched his own B2b platform. Initially, he only wanted to use system tools to help his team manage multiple brands, but as more small stores chose to place orders independently on the platform, he decided to give up the supermarket business and focus on building a supply chain platform that serves local small stores. After nearly three years of operation, he has developed deeper thoughts on B2b."
author: "任文青Andy"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2022-09-20"
language: "en"
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---

# After Three Years of Losses, Why Do Traditional Distributors Still Abandon Supermarket Business and Fully Shift to Local B2b?

> Starting as an agent for Yili in 2011, Yu Xiuwei has been in the FMCG distribution industry for over a decade, during which he tried cross-regional operations, O2O, and multi-category, multi-brand management. At the end of 2019, he launched his own B2b platform. Initially, he only wanted to use system tools to help his team manage multiple brands, but as more small stores chose to place orders independently on the platform, he decided to give up the supermarket business and focus on building a supply chain platform that serves local small stores. After nearly three years of operation, he has developed deeper thoughts on B2b.

Starting as an agent for Yili in 2011, Yu Xiuwei has been in the FMCG distribution industry for over a decade, during which he tried cross-regional operations, O2O, and multi-category, multi-brand management. At the end of 2019, he launched his own B2b platform.
Initially, Yu Xiuwei only wanted to use system tools to help his team manage multiple brands, but as more and more **small stores chose to place orders independently on the platform**, he decided to give up the supermarket business and focus on **building a supply chain platform that serves local small stores.**
After nearly three years of operation, he has developed deeper thoughts on B2b.
Consumer habits are changing, the competitive environment is changing, and distributors' trading business must also change. But how exactly?
In his communication with Yu Xiuwei, he not only systematically reviewed the past practices and thoughts of Tangshan Yihe Trading, but also shared his judgment on future opportunities for the industry.
His sharing will surely inspire you!
**01**
#### **From Agent for Yili to Multi-Brand Management**
After graduating in 2006, Yu Xiuwei joined Mengniu as a salesperson and worked there for five years. At the end of 2011, he left Mengniu and began to act as an agent for Yili milk, starting his trading business.
Besides milk, Yu Xiuwei kept trying to expand his business. From 2016 to 2018, he made several attempts, but none were very successful.
First, he expanded into the low-temperature category, but because manufacturers invested heavily in promotions to gain market share, everyone slashed prices to meet targets. Small distributors couldn't survive, and large distributors relied on subsidies. Yu Xiuwei quickly withdrew.
Then he tried frozen products, but on one hand, the freezers in supermarkets were mostly invested by distributors, and on the other hand, the previous store-distributor relationships were very stable. Yu Xiuwei found that even though he had the brand, he couldn't get into the terminals, so he had to give up.
Since low-temperature and frozen didn't work, Yu Xiuwei turned his attention to other brands.
In 2019, he was simultaneously representing over 70 brands, including not only milk but also snacks, beverages, condiments, and non-staple foods, mostly new-generation second- and third-tier brands.
At this point, he encountered several problems.
First, some brands had weak product strength; goods were distributed but hard to sell, leading to massive returns and warehouse withdrawals.
Second, some brands saw market circulation after efforts, but then faced issues like second-tier distributors selling at low prices and cross-regional dumping. **As a distributor, you have no way to make the manufacturer truly restrain competitors and rectify market order.**
Besides market issues, there were also internal organizational capability problems. At that time, the team had over 90 people, divided into the milk business unit and the standard products business unit (all categories except milk). Yu Xiuwei clearly felt that the team's capabilities were lagging; facing so many brands, the team was exhausted.
At that time, Yu Xiuwei thought: if a store manager can manage many brands well, why can't our salespeople? He kept pondering this and finally concluded: **With good system support and a talent training system, it is entirely possible to manage multiple brands and categories well.**
In the following two years, he did two important things.
**02**
#### **Building B2b to Better Manage Multiple Brands**
#### **The first was building his own B2b platform.**
Yu Xiuwei is a distributor boss who loves learning and trying new things. When new retail began integrating online and offline businesses in 2015, he tried an O2O platform, but stopped shortly after.
Through learning, he came across Zhongke Shangruan and learned about B2b. In two months, he flew from Shijiazhuang to Guangzhou, from Nanning to Xi'an, extensively learning from other distributors' B2b experiences.
In November 2019, his B2b platform "Dianjiatong" went live.
Yu Xiuwei admitted, **the initial purpose of building B2b was to have a system that could handle multiple brands.**
The products listed were all his own agency brands, and he only tried to let some customers understand and become familiar with it. The platform interface served more as an information display. Yu Xiuwei thought that with so many salespeople in the Tangshan trading industry, they could provide thoughtful service to store owners. Was it time to let them use your platform to place orders themselves? He thought it wasn't the right time yet.
But soon, the pandemic broke out, and "Dianjiatong" suddenly took off.
With offline services restricted, store owners placed orders through the platform. To meet customer needs, Yu Xiuwei quickly listed a large number of products and fulfilled orders promptly. Everyone felt that Yihe's service was reliable.
Yu Xiuwei said, **launching B2b was just to find a way out for immediate problems; initially, he only wanted to use it as a tool, but unexpectedly, it became the start of a series of subsequent changes.**
First, the pandemic helped Tangshan Yihe accumulate about 900 loyal online customers, laying the foundation for B2b development.
Second, to match the new business, the company underwent structural adjustments, dividing into a product center, operations center, and warehousing, distribution, and sorting center. **Driven by front-end business, the back-end organizational efficiency improved, and system processes were continuously optimized.**
But soon, Yu Xiuwei faced new problems.
One was that many products were listed hastily, leading to high procurement costs. As the pandemic eased and market supply gradually normalized, customers felt the platform prices were high. This problem was easy to handle. Yu Xiuwei sorted out products, negotiated with suppliers one by one, and optimized costs.
In addition, there was pressure from manufacturers. Manufacturers wanted to achieve their own goals. As it developed, some brands represented by Tangshan Yihe required distributors to have more professional teams, even independent teams, to operate.
These problems, including the inability to control market disorder for brands that had grown, triggered **his deep thinking about how distributors should reposition themselves in the future development of the industry.**
**03**
#### **Providing Business Advisory Services to Small Stores**
If launching B2b was an important decision Yu Xiuwei made in the past three years, this thinking led him to make a second important decision—**providing business advisory services to small stores.**
He has his own thoughts on this.
For distributors to do well in the distribution business, there is a service triangle:
**First, respect, regular visits, and zero loss for stores are the foundation of doing business.**
**Second, branded products. If you represent well-known first-line brands, customers are willing to cooperate with you.**
**Third, scarce profit-making products. Products that bring profit to your business and to the stores.**
In the past, it was enough to do the service triangle well, but now distributors must add one more thing: providing business advisory services to small stores.
Why?
Yu Xiuwei said that most store owners actually have no idea how to run a store well. Most of their business knowledge comes piecemeal from manufacturer salespeople and their neighboring competitors.
But do manufacturers help small stores operate? They only think about getting their goods distributed and occupying good shelf space. No one stands in the shoes of small stores to think about how to do business well.
Most distributors follow this logic from basic services to branded products to profit products. While launching B2b, an industry expert happened to join Tangshan Yihe, and under his leadership, the team began researching how to provide business advisory services to small stores. For example, telling some stores how to upgrade layout and optimize categories.
Yu Xiuwei said, if you walk into chain convenience stores like Lawson or 7-Eleven, you know their level of category refinement. But a small store, for example, might sell 8 different peanut products. A large number of homogeneous products are piled up in terminal small stores. Consumers look left and right, find they are all the same, and think, "I might as well buy online!"
B2b is essentially a supply chain business. With supply chain capabilities, you should empower small stores. Tangshan Yihe organizes training camps to cultivate qualified business advisors and help small stores improve operations. Currently, two-thirds of their salespeople have passed the business advisor certification exam!
**On one end, do B2b well and build a full-category supply chain; on the other end, extend B2b to C, empower terminals, and provide business advisory services to small stores.**
Among these, doing B2b well remains the foundation.
**04**
#### **Building a Supply Chain Platform Serving Small Stores**
Currently, the B2b team has 63 people: 18 store-end business staff, 20 responsible for sorting and delivery, and the rest for procurement, sales, and administration.
Yu Xiuwei said that in the past two years, he mainly focused on front-end business and operations. It wasn't until the end of last year and the beginning of this year that the company officially presented itself to the industry as a B2b platform. He also put his main energy into the warehousing and distribution end, trying to improve efficiency. Now they can achieve next-day delivery, with two shifts for sorting, and maintain redundant service capacity to handle sudden growth in demand. After all, if fulfillment capability doesn't decline, you can retain new customers.
Yu Xiuwei admitted that the past two or three years of B2b have not been profitable. The main issue is not B2b itself, but that the company has been losing money on the supermarket business. Now he thinks clearly: **In business, you must make trade-offs. Resolutely give up what doesn't make money. In the future, focus on serving small stores well.**
The platform now covers 2,400 outlets, with 1,500-1,600 monthly active users.
The platform offers 3,000+ SKUs, with category structure: snacks 70%, beverages 15%, and others 15%. Among them, self-agency accounts for 30%, and external procurement from local wholesalers and distributors accounts for 70%.
One issue for distributors doing regional B2b is that local distributors and second-tier wholesalers worry about future business security and may be unwilling to supply, or even jointly resist.
Yu Xiuwei has his own thoughts on this.
He said, **industry change and development evolve in the game between new forces and old forces, which inevitably goes through a process of falling into chaos and then establishing order.**
In the past few years, the industry has been continuously impacted by new models like B2b and community group buying. The entire distributor group has been weakened in this process, and everyone finds that local distributors cannot form a joint force. Distributors have actually gone from resisting B2b to accepting it. As regional B2b integrates into the local supply chain, everyone will gradually accept it.
Yu Xiuwei said that one of the company's current key tasks is to **unite more local suppliers to build a full-category supply chain platform serving small stores.**
**05**
#### **Establishing a Store-Centric Business Philosophy**
Through years of exploration, Yu Xiuwei has developed his own unique thinking about the positioning of distributors in the future industry.
He believes that **distributors should establish a new business philosophy centered on stores.**
Why?
In the past, the market was dominated by manufacturers. Brands, as the source, treated distributors as reservoirs and middlemen to distribute products. But the problem is that products are now highly homogeneous, and truly good products are rare. A large number of manufacturer products are placed on shelves, but consumers almost don't see them.
Competition should be viewed from the perspective of the entire industry, from the dimensions of offline vs. online, and different retail models, rather than store vs. store or distributor vs. distributor.
Yu Xiuwei said that based on full-category supply capabilities and small store business advisory capabilities, the next step for B2b is to achieve B2b2C. He wants to empower stores that can continue to work with them for the next 5-10 years.
**In the past, the focus was on distribution and shelf placement. Distributors and small stores were interest communities. Establishing a store-centric business philosophy means helping small stores with product selection, sales promotion, and serving consumers well. Distributors and small stores should become a community of shared destiny.**
This is an opportunity for distributors.
But not for all distributors.
Because it requires not only a shift in cognition and thinking. Most critically, it's like entering a new world from the old one. Do you dare to invest? Can you make trade-offs? Do you still have the courage and willingness to start a new venture?
This is the real test for distributors.
**06**
#### **Summary**
We have always said that distributors can be divided into three categories: brand distributors, category distributors, and channel distributors. This can also be seen as three stages of distributor development. The development of Tangshan Yihe Trading exactly fits these three stages.
From representing a single brand to introducing multi-category operations, from building B2b to develop supply chain capabilities to providing business advisory services to small stores, Tangshan Yihe has been constantly changing. Behind this change is Yu Xiuwei's continuous learning and thinking, trade-offs, and investment.
Distributors need to change. This "change" is not a "sudden change" but an "evolution," a process of combining thinking and practice, solving problems, discovering opportunities, finding direction, and then moving forward in that direction.
In this process, finding the right direction is crucial.
**No matter how the times change, benefiting consumers is the task of business. Replacing inefficiency with efficiency is always the direction of business progress.** In this sense, Yu Xiuwei's practice of B2b and then the attempt at B2b2C is a very promising sample of distributor transformation.
We will continue to follow this, and hope this article inspires your business.
**Further Reading:**


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