Click to read the original text for details. Any transaction between a wholesaler (distributor, big B) and a retailer (small b) is B2B. Actually, it would be better to call it B2b. In China, B2B has a specific context, namely digital B2B. Therefore, traditional channel transactions are not B2B. This is only the digital B2B of FMCG. In China, there is another group of people studying B2B. If FMCG B2B is the distribution chain B2B of end products, the other type of B2B is the supply chain B2B of end products, such as factory networks. These are two completely unrelated types of B2B. This article only discusses FMCG digital B2B. American-style B2B China has a booming B2C, while the US has a booming B2B. In China, B2C delivery is third-party, and in the US, B2B delivery is third-party. The difference between Chinese and American B2B first stems from differences in channel functions. The American channel is an "information chain and physical chain," while the Chinese channel is a "people chain." The information chain and physical chain mainly solve commodity transactions, while the people chain first establishes interpersonal relationships, then promotion, and only then transactions. China has 80 million marketing personnel, who constitute the Chinese channel. The US basically does not have a salesperson team similar to China's. China's channel seems to be first-tier and second-tier distributors, but the channel system is formed by the people chain composed of salespeople (including salespeople from manufacturers and distributors). Because the channel is a people chain, "guanxi" (relationships) is particularly important. In American marketing, the roles of front and back office are clearly defined. The back office (marketing department) solves the cognition problem (brand), and the front office (sales department) solves the transaction problem. In Chinese marketing, the back office is weak, and the front office is strong. The front office is a people chain, forming a "trinity of cognition, transaction, and relationship." American B2B has several characteristics: 1. Originated from the information age. China's B2B originated from digitalization, relatively late. The US originated from informatization, and it was already well done in the PC era. 2. Integrated orders. China's digital orders have natural integration capabilities inherent in the platform. The US's informatized orders require a more complex back office. Fortunately, Americans are already proficient in informatization. Integrated orders also stem from the high concentration of the American supply chain. China's "channel sinking" that began in 1998 was actually "cutting off large distributors," resulting in channel fragmentation. The US has no more than 20 mainstream supply chain companies, with high concentration and scale advantages. Even large retailers outsource their supply chains to third parties. 3. Integrated delivery. American traffic regulations strictly control delivery vehicles; not anyone with a vehicle can deliver. Delivery is concentrated in the hands of a few delivery companies. Because of integrated delivery, delivery costs are low. Delivery is highly dependent on personnel, and Americans are relatively lax. If it were not for high-density, high-integration order delivery, delivery costs would be very high. 4. Stable channel relationships. The US does not have the phenomenon of cross-coverage of supply chains like China, nor does it have the phenomenon of B2B low-price poaching customers. 5. Small stores in the city, large stores outside the city. In the US, large retailers are concentrated in rural towns and satellite cities, while small stores are in the city center. Because Americans work in the city center and live in towns and satellite cities. Brand B2B Zhao Bo, founder of New Distribution, wrote that "the logic of self-operated B2B is not valid." I think it may eventually be forced to admit that "brand B2B" is logically valid. The promotion of B2B has awakened brand owners. They have discovered that the greatest value of channel digitalization may not be obtaining orders, but "empowering" salespeople. Chinese channels emphasize promotion. B2B empowering salespeople means using channel digitalization to solve the problem of efficient promotion by salespeople, which is precisely the issue brand owners are most concerned about. Because brand B2B is essentially "digitalization of the distribution chain," turning manual orders into digital orders. A viewpoint repeatedly emphasized in this article is the difference between Chinese and American marketing and channels. The US has entered "1P marketing," typically brand-driven. The brand is the back office, and the channel is the front office. Once the back office is mastered, the front office can be handed over to efficient third parties. In Chinese marketing, channel-driven is superior to brand-driven. Channel-driven relies on the people chain, where people are the main body of the channel, and digitalization empowering the people chain is more important. From this perspective, the logic of brand B2B is valid. 1. B2B empowers channel promotion. Given that the Chinese channel is a people chain, digitalization providing support to personnel may be more important than obtaining orders and delivery. Even for large brand owners, Chinese marketing still uses both brand and channel. Channel-driven, promotion is key, and orders and delivery are the results of promotion. Although brand B2B does not have integrated orders and delivery, digitalization provides support for channel promotion, and its effect will exceed the effect of order integration and integrated delivery in the short term. The support of channel digitalization for brand owners' channel-driven approach is mainly more precise channel promotion and management. Early deep distribution relied on a sea of people tactics. Now labor costs are high, but channel promotion is highly dependent on people, and channel digitalization alleviates this problem to some extent. 2. Brand owners have alternative solutions for order integration and delivery. Because current B2B has no advantage in order integration and delivery integration, brand owners' current delivery can still make do. Even if B2B delivery costs decrease in the future, brand owners can interface order data with delivery B2B. Brand owners obtain orders, and the integration of orders and delivery is solved by delivery B2B. Third-party B2B The FMCG B2B that started in 2015 was third-party B2B. Early expectations were high, but now breakthroughs are difficult. I have always been a constructive critic. My consistent view is: B2B will definitely succeed, but what model of B2B will succeed at what time is unknown. 1. Difficulty in obtaining orders. China's channel functions include: promotion, orders, delivery, and finance. Among them, promotion is the channel driving force, and orders and delivery are just derivatives of successful promotion. If brand owners are responsible for promotion and third-party B2B is responsible for orders and delivery, it may mean a reduction in contact points between brand owners and terminals. Promotion relies precisely on the customer relationships created by salespeople's contact with terminals. Third-party B2B precisely lacks the promotion function. Therefore, orders can only rely on brand owners' promotion, and then obtain orders at low prices. This subsidy-based order cannot be sustained. Some say B2B can also do promotion. As a temptation, it can be done. As a universal function, it cannot be done. 2. Without order scale and delivery density, third-party B2B is actually less efficient. There was once a dispute between regional B2B and national B2B, where the key point was order density. With a fixed gross margin, order density determines delivery efficiency. B2B efficiency is ultimately determined by delivery density. Yijiupi, which supports national B2B, has a clever approach. First, they start with baijiu (white liquor), which has relatively high gross margins and is suitable for customized products, but this is not suitable for most FMCG categories; second, B2B finance is Yijiupi's profit tool, which can support B2B to live a bit more comfortably. 3. The future of third-party B2B depends on the driving model of Chinese marketing. The prosperity of American B2B is premised on marketing back-office driving. The front and back offices can be handed over to third parties, becoming an efficiency system. Chinese marketing relies more on channel driving, which is the "integration of promotion and orders." Only with promotion are there orders; orders originate from promotion. Promotion is a cost, and orders are revenue. Promotion is borne by brand owners, and orders are obtained by B2B platforms, which cannot be achieved in the short term. Even if some brands with strong brand power hand over some products or orders to B2B platforms, it is just a trial, not "all in." Retailer B2B Since Lingshoutong and Xintonglu began "franchise stores," they are no longer typical third-party B2B but have evolved into "retailer B2B." Retailer B2B is actually just an internal supply chain. Most Chinese chain stores have internal supply chains, and some internal supply chains are externalized, becoming market-oriented B2B. There are quite a few such B2Bs. Lingshoutong and Xintonglu doing "franchise stores" is equivalent to doing small store chains. Once they do small store chains (although control is not as strong as chains), orders become internal orders. If this approach can succeed, the credit is not due to B2B but to small store chains. I once said that when B2B platforms turn their attention to "franchising," it means the failure of B2B as a platform. You should know that doing small store chains is far more difficult than B2B. Solving the difficult problem of B2B with an even more difficult thing means this is no longer a pure B2B issue. If the franchising strategies of Lingshoutong and Xintonglu succeed, it would be more appropriate to call them new retail. B2B is just a supporting function in new retail. Distributor B2B The ideal B2B model in China should be "brand B2B + distributor B2B." Unfortunately, this path may be very long. Brand B2B solves promotion and order problems, and distributor B2B solves order integration and integrated delivery. Using two sets of B2B systems forms a social B2B system. Distributor B2B is based on three cognitions: First, B2B efficiency is determined by delivery efficiency; Second, the order system and delivery system can be two separate systems; Third, brand owners obtain orders and hand them over to third-party delivery, and brand owners can be assured. Third-party B2B obtaining orders may disrupt brand owners' price order, but handing orders to third-party delivery has no impact on channel order. The operating logic of distributor B2B is: brand owners obtain orders, and the order system interfaces with the delivery B2B system; delivery B2B integrates orders from many brand owners, obtains order density, and thus obtains delivery efficiency. The order source of distributor B2B is different from third-party B2B. Third-party B2B orders come from the platform's integration of retail-side orders. Delivery B2B orders are divided into two steps: first, brand owners (distributors) obtain orders from the retail side, and then the delivery platform integrates the orders of brand owners (distributors), forming order density. The benefits of distributor B2B are, first, it makes brand owners feel at ease and willing to cooperate; second, because of order integration, delivery costs are reduced. The characteristic of internet business is: aiming at A, but hitting B. The outcome is beyond the plan. This is a normal phenomenon in the dark period of business. Because China's business innovation no longer has a benchmark. The endgame of B2B may be completely different from what entrepreneurs imagined at the beginning. Author: Liu Chunxiong | Source: Teacher Liu's New Marketing