E-commerce cannot easily kill distributors unless there is a major change in the form of production organization. Even if the C2B and C2M era arrives, it would not only be a disaster for distributors but also for e-commerce platforms, leading to mutual destruction. Currently, e-commerce has indeed removed some intermediate links, but e-commerce itself is essentially an intermediate link.

Distributors play four cards: time, space, price, and quantity. Each card is essentially about differences. To put it more elegantly, it's supply chain management plus supply chain finance.

Undeniably, major changes in supply chain organization and division of labor will cause the old supply chain structure to fail to adapt to new demands, but it will not collapse completely because B2B is not that capricious. Among distributors, whoever wakes up early and rises up first may become the leader, but they might also become a martyr. The problem is that many distributors used to make money while sleeping, now they need to make money while sitting, and later standing. It's not impossible that they will be begging on their knees. Posture determines state, and stance determines the situation.

In FMCG, for the current and foreseeable future, supply-side dominance remains. It's undeniable that reverse demand from the consumption end will trigger supply-side reforms, but due to low unit prices, C2B is hard to achieve quickly. It's possible to start with certain products, as seen in the apparel industry with companies like Hling and Handu Yishe, which are driving industry changes. However, these are small-scale, as you can see from their disclosed inventory turnover rates. The industrial era is far from over; advance payment is the best business model, but we must consider the consumption level and capacity of the general public. This involves supply chain strategy and capability.

Distributors can make advance payments and accept inventory pressure. These dirty, tiring, and thankless tasks play a significant role in the supply chain structure, contributing to maintaining its competitiveness and structural strength. This is also a need of the supply chain structure. Just like airline tickets, it seems simple for airlines to sell directly, but why hasn't it worked for so many years? There's no mystery, but rather an unspoken secret. As for logistics, for a long time, centralized models may not be cheaper than decentralized ones. Many platforms that integrate distributors and unify warehousing and logistics have actually increased costs.

If e-commerce wants to kill distributors, it must first take over the four cards from distributors. Assuming distributors are killed, someone still has to do their work. The dirty, tiring tasks, covering up, taking the blame, and paying the bills for manufacturers still need to be done. If the landlord is killed, someone must raise the cattle, farm the land, and pay the government's grain tax. I see that some current e-commerce platforms have killed many landlords and become the big landlords themselves.

If one day distributors are truly killed, which is possible, then e-commerce would also be useless, because e-commerce is also an intermediate link. When we eagerly await highly developed logistics and accurate supply chain predictions and technology, with cloud warehouses and drone delivery, what use would e-commerce be? Either direct connection with manufacturers, or from manufacturers to convenience stores, and then to consumers, delivering to dining tables, living rooms, even bedrooms. That would mean distributors and e-commerce perish together.

Author: Li Haiping, CEO of Shenzhen Zhongpu Network Technology Co., Ltd. Formerly worked at Huawei, Kingdee, Eternal Asia, Ping An Bank, and other well-known enterprises. Specializes in enterprise supply chain platform architecture, service product design, business model refinement, and ERP, B2B, SaaS platform construction. Likes to share insights and thoughts, and was the first in the industry to propose the industrial internet platform model "B2B+SCS+SCF", which has been widely applied and recognized, establishing a good reputation. Currently serves as a special advisor to the chairmen of several well-known enterprises including Xianyi Holdings, Xiongtong Co., Ltd., Dawei International, Yidian.com, Huirui Supply Chain, and Xinjiang Baorong. Source: Shenzhen Supply Chain (ID: lihaiping56)

The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecology" and invite 1000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to explore new chapters of cross-border integration!

Core topics of this conference:

  • How can the FMCG industry leverage B2B to achieve new growth opportunities?

  • How should the new supply chain behind new retail be built?

  • How can intra-city logistics help B2B achieve leapfrog development?

Highlights of this conference:

  • The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"

  • Case sharing of excellent distributors in transformation and upgrading

  • Upgraded conference and exhibition, with Hall 6 Internet Technology Exhibition strengthening connections

  • Leaders from well-known enterprises such as Alibaba Retail Link, GL Capital, Eternal Asia Supply Chain, Best Store Plus, Yijiupi, and Haiding will deliver speeches and share pioneering views.

Registration is now open. Long press the QR code below or click "Read Original" to register. Add friend and note "Conference Registration". Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum -END-