---
title: "As Giants Like JD and Alibaba Enter Traditional Distribution, Where Should Distributors, the Targets of 'Disintermediation,' Go?"
description: "I want to share my views from two points: 'trend' and 'task.' 'Trend' refers to the development trend of e-commerce, and 'task' refers to distribution. First, let's analyze the essence of e-commerce platforms. Both B2C and B2B e-commerce aim to shorten the channel, but what's the difference? See the figure below: B2C platforms want to shorten the path between brands and consumers, while B2B platforms..."
author: "董阳"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-01-22"
language: "en"
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# As Giants Like JD and Alibaba Enter Traditional Distribution, Where Should Distributors, the Targets of 'Disintermediation,' Go?

> I want to share my views from two points: 'trend' and 'task.' 'Trend' refers to the development trend of e-commerce, and 'task' refers to distribution. First, let's analyze the essence of e-commerce platforms. Both B2C and B2B e-commerce aim to shorten the channel, but what's the difference? See the figure below: B2C platforms want to shorten the path between brands and consumers, while B2B platforms...

I want to share my views from two points: one is 'trend' (势), and the other is 'task' (事). 'Trend' refers to the development trend of e-commerce, and 'task' refers to distribution.
**'Trend' -- See Through the Trend**
First, let's analyze the essence of e-commerce platforms. Both B2C and B2B e-commerce are e-commerce, and both aim to eliminate intermediaries. What's the difference? See the figure below:
Whether B2C or B2B, the ambition of e-commerce platforms is to shorten the channel. B2C platforms want to shorten the path between brands and consumers, while B2B platforms want to shorten the path between brands and retail terminals. So the ambition is the same.
In terms of methods and the resulting situation, it's also the same. B2C platforms burn money to attract consumers to the platform, forming online shopping habits, and then they can 'hold consumers hostage to command brands.' B2B platforms burn money to attract retail terminals to order online, forming online ordering habits, and then they can 'hold retail terminals hostage to command brands.'
It can be predicted that the final consequences will also be the same. After years of B2C e-commerce development, everyone should now understand that online traffic, like offline traffic, must be paid for (e.g., ad slots on Taobao and Tmall need to be purchased; to appear on the first page of search results, you need to pay for detail page optimization, etc.). When e-commerce first emerged, online traffic didn't need to be bought because there were few sellers and many buyers. When all sellers appear online, buyer traffic becomes a scarce resource, and brands must pay the e-commerce platform to get buyer traffic. That's why most Taobao sellers don't make money now. In fact, this principle is exactly the same offline: stores in good locations have high foot traffic, so rent is naturally high.
From the development trend of B2C e-commerce, we can see that online traffic costs gradually converge with offline traffic costs. Because whether online or offline, when sellers are in a fully competitive environment, the cost of acquiring buyer traffic rises. That's why many e-commerce platforms are now opening offline stores, such as Dangdang and Amazon, which have started opening physical bookstores and have coincidentally proposed a 'same price' strategy online and offline. Dangdang announced it will open 1,000 offline bookstores within three years. Also, brands that became famous on Taobao, like Afu Essential Oils, Liebo Clothing, Inman Women's Wear, and Three Squirrels, are also opening offline stores.
So, will the trend for B2B e-commerce be the same? I think the ambition is the same, the methods are the same, and the situation and consequences will be the same, and the trend will also be the same. When most brands use B2B e-commerce platforms as their main sales channel, there will be the same full competition as now. To get retail terminal traffic, they will also need to buy traffic from the e-commerce platform, and eventually, online traffic costs will gradually converge with offline traffic costs.
Let's extend the discussion to another question: Why do B2C e-commerce platforms also do B2B e-commerce? Logically, if B2C platforms have already achieved 'holding consumers hostage to command brands,' they could directly eliminate offline retail terminals. Why are they now turning to B2B e-commerce to serve retail terminals? Actually, it's because 'when online traffic costs converge with offline traffic costs,' online has no obvious advantage. This means B2C platforms have hit a bottleneck, so they change their approach and target the ordering services of offline retail terminals, aiming to eliminate distributors.
By seeing through this e-commerce pattern, I believe distributors can make more rational decisions. Internet development is a major trend, and B2B e-commerce will be as unstoppable as B2C e-commerce. So, for such an inevitable trend, rather than resisting, escaping, or waiting, distributors should embrace the trend and go with it.
**'Task' -- Focus on 'Distribution'**
How to go with the trend? Let's first analyze the essence of 'distribution.' Once we understand 'distribution,' we can see what B2B e-commerce platforms can replace distributors in.
Everyone knows that to achieve regional distribution, brands, due to insufficient funds, personnel, and local resources, find partners in various regions to help. These partners are distributors. So the main function of distributors is to use their own money, people, and local resources to help brands distribute. To achieve distribution, they also handle delivery (which is not the most important). If e-commerce platforms handle 'delivery,' distributors need not worry, because it's not the main thing. 'Delivery' will eventually be handed over to third-party logistics to greatly reduce delivery costs.
Those familiar with distribution know that the core functions of regional distribution are mainly 'distribution' (铺货) and 'promotion' (动销). The essence of distribution is to obtain orders; the essence of promotion is to help terminals achieve retail transactions through promotions. Building relationships, doing promotional activities are promotions; grabbing shelf space, making displays, building end caps, and posting posters are also promotions.
Let's see what JD and Alibaba want to do. From the figure above, JD and Alibaba want to become the largest distributors! They want to be national general agents! According to their current plans, retail terminals don't need to order through offline distributors; they order through online B2B platforms. So JD and Alibaba have taken over the ordering, which is the first core function of distribution: 'distribution' (铺货).
Then, who will handle the second core function, 'promotion' (动销)? Alibaba and JD certainly don't want to do it, because it can't be done online; it must be done offline, and it requires many people, which is too heavy and not the advantage of internet companies. The best way is to find partners to do it for them, so JD and Alibaba are recruiting cooperative service providers.
So whether it's distributors or cooperative service providers, 'promotion' is something that needs to be done, and B2B platforms don't want to do it. If current distributors can do 'promotion' well, why not let them do it? I think they will. Moreover, distributors have ready resources like customer relationships and teams.
Over the years, some distributors have realized the importance of 'promotion' and done it well; some have been helped by brands; some have never done it well. So doing this well is crucial. Distributors should build 'promotion' as the core service content of their enterprises, deliver quality services to retail terminals, and gradually form their own core competitiveness. If you do better than other distributors in a region and your service cost is lower, you will survive well.
So I suggest distributor friends do well in 'promotion,' one of the core functions of distribution. This is a local service capability that internet technology cannot eliminate. No matter how e-commerce platforms develop, as long as there is a fully competitive environment, someone will always be needed to help retail terminals with promotion.
So, how to do 'promotion' well? I suggest distributor friends can start from the following aspects.
**1. Improve Management Level and Achieve Data-Driven Management**
To improve management, first manage employees well. The hardest thing to manage is people, because people's demands change and their behavior is uncontrollable. The best way to manage people is 'not to manage people, but to manage tasks,' standardizing tasks and treating everyone equally. Or, use 'tasks' to manage 'people,' not rely on managing 'people' to do 'tasks.' Specifically, the premise of standardization is to establish work standards for personnel, set corresponding work standards for different positions, use mobile software to collect work process data, supplemented by quantitative assessment and incentives. Such management is effective and sustainable.
Of course, standardization doesn't mean being inhumane. Standardized management is an important idea in Western management, allowing managers and employees to collaborate better and work more efficiently under the same rules. Modern enterprises don't win by individual effort; they rely on unified deployment and rapid scheduling, and standardization ensures strong execution.
The goal of standardized management is to achieve data-driven management. Only through mobile management software can the standardized process and results be digitized. Standardization includes at least standardization of work processes, performance assessment, and sales data. Work process standardization is to standardize employee behavior, such as making visit plans, designing standardized visit steps, managing morning and evening meetings, and designing fixed daily report templates. Performance assessment standardization is to quantify evaluation criteria, such as requirements for customer visit times, visit frequency, product display scores, and daily report scores. Sales data standardization is to structure terminal sales data, such as collecting terminal retail sales, inventory quantities, and SKU categories. Through these data, you can analyze terminal distribution rate, sales trends, and inventory anomalies, and also achieve customer profiling by analyzing dynamic data related to retail terminals, understanding customers more deeply. Data can expose problems in operations and help managers make better decisions, so data-driven management is very necessary.
**2. Transform Operation Model and Build Core Service Capabilities**
As trading companies, distributors should not only focus on the ordering process but shift more focus to services for customers (terminal stores), making promotion the core content of services and gradually forming strong 'promotion' capabilities.
Improving promotion service capabilities means making promotion more refined and professional. There are many methods; here I only discuss the refined management of two basic objects: 'customers' and 'products.'
One is to classify and grade retail terminals. Terminals can be classified by channel type and graded by order volume. The main purpose of classification and grading is to adopt different management methods and set different indicator requirements. For example, KA stores and roadside mom-and-pop stores have different product mixes; special channels like restaurants, internet cafes, and schools have different focus products; key stores should be visited more frequently than ordinary stores; and different promotional activities should be designed for key and ordinary stores.
Another is to manage products by grade, which can be divided by sales volume. Key categories should have better shelf space than ordinary categories; price strategy for key products should be more strictly controlled; key products should have higher distribution rates; inventory for key products should be guaranteed; and sales changes for key products should be monitored promptly.
In general, refined management includes two steps: first, distinguish priorities, and second, do things in detail. Other aspects of refined management can also be considered in this way.
**3. Build a Brand and Form a Good Reputation Locally**
Products update quickly, consumer habits change, and retail terminal formats change. What can stand firm in change is the brand. It's not just manufacturers that need to build brands; distributors also need to build brands. With brand trust, what you sell is not important; who you are is more important. Distributors should establish their brand among retail terminals, letting them know that this trading company is reliable, organized, and rule-abiding, and is a trustworthy company.
Distributors build a company brand, not a product brand, so they don't need to invest heavily in advertising, but gradually penetrate through services. Show the professionalism of services, team management capabilities, and long-term operational commitment to win the trust of retail terminal owners and gradually establish their brand locally.
The above are some of my views. If you are interested in this topic, you can follow the official WeChat of '365 Business School' (365商学院). I will often communicate with you there in the future.
<Place QR code for 365 Business School here>
Dong Yang, Product Director of Waiqin 365, MBA from Nanjing University
Dedicated to sales management research, focusing on the architecture and design of sales management software, aiming to help enterprises improve offline sales efficiency.
**-END-**
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