Building warehouses for consumer goods B2B is the same as for B2C: as long as you want to ensure the efficiency and cost of platform operations and improve user experience, warehousing and distribution are indispensable. Take JD.com as an example: to ensure user experience, JD built its own warehousing and distribution. With tens of thousands of employees, couriers alone account for 50%, which is a huge challenge for an internet company's management. That's why outsiders call JD a retail company rather than an internet platform. Currently, domestic B2B platform warehousing and distribution generally fall into two forms: self-built or outsourced. Self-built warehousing and logistics include Huimin, Yijiupi, and JD; those choosing outsourcing include Alibaba Retail Link, Zhanghe Tianxia, etc. Regarding the pros and cons of building warehouses, both sides have their own arguments. Self-builders' view: The reason for self-built logistics is that the commercial purpose of logistics is to increase the number of handling times, which runs counter to the efficiency and cost of the internet. Only by insisting on self-building can the entire supply chain's efficiency, cost, and experience be optimized. Opponents' view: As a platform, you should focus on core business, integrate resources and data, and outsource projects that require large capital, are heavy, or are non-core. If most capital is invested in warehousing and distribution, and business throughput doesn't increase, you'll be in long-term losses. You might even be dragged down by the warehouses. The author believes both views have merit. The purpose of building warehouses and the platform's goals should be deeply combined with the platform's positioning and industry characteristics. At the current stage, platforms don't have enough GMV, and building warehouses might indeed drag them down! In fact, most platforms' warehousing operations are indeed not optimistic. Why insist on self-built warehouses despite the pessimism? 1. It's a last resort: Because there is no highly concentrated urban distribution logistics system like Weijie or Yishang in various regions across the country. Self-operated platforms can't build their own because infrastructure is insufficient. 2. Urban distribution is a vast blue ocean market: Currently, C-end logistics like S.F. Express and the Four Tong and One Da have been highly developed, and last-mile delivery is a huge ecosystem. However, urban distribution logistics has not yet formed a large-scale logistics provider nationwide. The better-performing ones, Weijie and Yishang, are only focusing on local markets. Regional urban distribution warehouses have certain entry barriers. If you lay out nationwide early, as long as you build first and cargo throughput reaches a certain volume, scale advantages will immediately appear, making it easier to form barriers. It will be very difficult for external urban distribution logistics providers to enter later. Consumer goods B2B platforms have no technical barriers; heavy capital in warehousing and distribution is the biggest competitiveness! This competitiveness is not simple low-level repetition, but through intensive and efficient logistics systems, maximizing user experience, turning efficiency and cost into your advantage. Therefore, the urban distribution logistics industry will definitely see BAT-level giants before B2B platforms! Is self-building always wise? Huimin's warehouses are probably the largest distributed warehouses in consumer goods B2B in China. If I'm not mistaken, they should also be the most loss-making. Why the loss? Because this type of warehouse is built to serve the platform and rely on it, using platform traffic to drive profits and losses, rather than figuring out how to be self-sufficient. Its original design was to save money, not make money. If the platform doesn't have enough traffic and profit subsidies, this type of warehouse will always be in loss. In fact, it should be that warehouses use extremely low logistics costs to pull the platform forward; not that extremely low product prices bring traffic to support the warehouse's break-even. That's putting the cart before the horse. C-end warehouses and B-end warehouses are fundamentally different. The C-end market is a new industry, and logistics warehouses are built on a vast blue ocean. From B to C, the markup rate of over 50% can offset part of the high logistics costs. But B-end platforms are transforming traditional industries. The traditional consumer goods supply chain already has certain efficiency advantages offline. If the average markup rate for B-end platforms is 15-20%, that's good. The cost reduction from unified warehousing and distribution doesn't give them a high competitive advantage in the market. Platforms like Huimin, because they have a competitive relationship with distributors, find it hard to get competitive prices for quality goods. As long as they don't subsidize product prices, there's no traffic, warehouses are underutilized, logistics costs don't come down, and it's hard to talk about competitive advantages in logistics. Conversely, if the warehouse's logistics has no advantage, it can't help reduce logistics costs for products on the platform. B2B platforms that self-build warehouses all risk being dragged down by them. Warehouses should be controlled by the platform but independently operated and responsible for their own profits and losses. Only then can warehouses absorb social cargo flow and share costs. If they only serve the platform, what's the difference from a distributor's warehouse? Moreover, if consumer goods B2B platforms do their own warehousing and distribution, they can only go deep vertically, digging into efficiency and service within their own industry. Logistics costs will definitely not beat horizontal logistics companies, because logistics still depends on scale. So, for urban distribution logistics, the wider the category, the lower the cost; the more segmented the category, the better the service. For consumer goods B2B platforms, supply sources and small stores are more important than warehouses. Platforms with capital and technology should do more valuable things: control the industry chain through capital, integrate upstream, acquire and hold distributors; rebrand downstream small stores; then use the platform to connect, open up data, and provide value-added supply chain services. The general trend of consumer goods supply chain is indeed toward efficiency improvement, but efficiency improvement is not doing everything yourself; it's through social division of labor, being independent yet interdependent. That's the foundation. If you always want to do it yourself, efficiency won't improve, and costs won't decrease. Of course, if you're JD or Alibaba, with enough money to burn, and the money is truly used for warehousing and distribution construction, and you also integrate upstream brand agents and downstream small stores, and through your efforts maximize efficiency, minimize costs, and provide the best experience, then burning that kind of money will indeed create competitive barriers. That's truly scary. What opportunities does urban distribution bring to local distributors? I've always emphasized that for distributors transforming to the internet, unified warehousing and distribution is the main direction, but just unified warehousing and distribution is not enough. To develop further, they need to expand to more categories and develop into regional urban distribution. For example, even if you have unified warehousing and distribution with high efficiency, if you're only delivering to street-side small stores, if you become urban distribution, you'll be delivering the entire commercial street's cargo flow. Who has lower costs? Urban distribution is a huge business opportunity for local distributors. It doesn't conflict with existing business models, will become the infrastructure for future internet platforms, and won't be disrupted by internet platforms. The benefits and prospects are very promising. So, distributors shouldn't dwell on whether existing stock business is profitable or not, but should see the broader market space and opportunities. That's going with the trend. -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and actionable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales volume improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation | [Long press QR code to follow]