◎ By Liu Chunxiong 01 I have always been optimistic about FMCG B2B, but I am also a critic of the mainstream B2B model. B2B will surely succeed, but who will succeed is not necessarily the current giants. Last year, I said that if Retail Link and New Access weren't backed by giants, they would have failed long ago. Now, Retail Link seems to be calling itself new retail. If B2B does not connect manufacturers (F-end) and retailers (R-end), it is not true B2B. B2B that plays the role of secondary wholesalers will always be marginal. The predicament of B2B is self-inflicted. Using B2C logic to do B2B, dreaming of becoming the next Alibaba, is the root of the predicament. An early B2B founder once said: I think I am the next Jack Ma. Jack Ma created a new business model, B2C, which did not exist before. Even Ma himself transitioned from C2C to B2C. The B2B business model has always existed, but moving from offline to online is a transfer of existing stock, unlike the incremental model Ma created. Where does the mainstream B2B model go wrong? It fails to consider the interests of brand manufacturers. It fantasizes about forcing brands to comply through intimidation ("the era of XX has come") and coercion (price inversion, store rebranding). Because B2B without brand manufacturer participation is basically untenable—it is just a disruptor. In 2017, many brand manufacturers were ready to comply, and most major brands were piloting, but the B2B platforms and capital side lost confidence instead. B2B was a good game, but the layout was wrong, and it was played badly. What a pity! However, B2B's efforts have yielded three major results: first, channel digitalization; second, integrated warehousing and distribution; third, community group-buying e-commerce. 02 B2B is also channel digitalization, but not complete or high-coverage channel digitalization. Digitalization that starts from the manufacturer and covers "brand → distributor → retailer" is full-channel digitalization. This is channel digitalization led by brand manufacturers. Previously, many brand manufacturers had channel information systems, but informatization leaned toward management. Channel digitalization is transaction-based, and through big data and AI, it can match the backend with the frontend. Some people call the original SaaS systems B2B, but information-thinking SaaS cannot compare with digitalization. Some have already transformed from SaaS logic to digital logic. For example, I always thought Field 365 was a SaaS system, but after communicating with founder Liu Zhao in August, I realized they have turned to digital logic. What is the difference between informatization and digitalization logic? Traditional deep distribution relies mainly on "human chains," with informatization as a supporting system. Future channel digitalization will rely mainly on "technology links," forming a "strong backend, precise frontend" channel ecosystem with big data from technology links. Technology links are the norm, while human chains are the exception. Human chains are "precision strikes" under data guidance. Channel digitalization also solves the manufacturer-distributor relationship. In the past, each managed their own segment, with mutual gray areas. Under channel digitalization, all transactions and behaviors are transparent. The proliferation of technical tools is a prerequisite for channel digitalization. I know of some channel digitalization systems, such as Chain-e-Chain, One-Item-One-Code, and mini-programs, which can support channel digitalization in a relatively simple way. I believe 2019 will be a year of great development for channel digitalization. B2B originally intended to force brand manufacturers to comply, but instead forced them to find alternative paths. Channel digitalization is the fruit of B2B's efforts. 03 Unified warehousing and distribution, which was not valued in early B2B, now seems to be the only verified business logic of B2B. Chinese distributors are typically small but comprehensive. "Small" is the result of manufacturers "killing the big players" after 1998, leading to distributor downsizing; "comprehensive" is because distributors lack professional division of labor. Chinese distributors carry four major functions: promotion, ordering, warehousing and distribution, and financing. For some major brands, manufacturers control promotion and ordering in central cities, leaving distributors with only warehousing and distribution and financing functions. In 2016, we proposed that B2B is an efficiency system. Efficiency comes from two aspects: order density and average order value. Looking back, that view was only half right. Order density and average order value actually reflect warehousing and distribution efficiency. That is, when orders are separated from order delivery, it is warehousing and distribution efficiency that determines B2B efficiency. I proposed "regional dominance" for B2B at the time, which was misunderstood. What I meant by regional dominance is mainly that B2B efficiency is unrelated to total GMV but related to regional delivery efficiency. Since few current B2B platforms can achieve regional order density, platforms like Yijiupi, which focus on high-value, high-margin products like liquor, have an advantage, while FMCG products do not. B2B once left distributors at a loss because B2B was doing the work of distributors. Early on, some distributors wanted to build B2B platforms, which was nearly impossible. Later, some began to do regional unified warehousing and distribution, which is asset-heavy and platforms were unwilling to do. Now, there are technology systems like Youshang helping distributors transition to unified warehousing and distribution, and new warehousing and distribution platforms like Wanchaobang. When B2B self-operated was thriving, I said that matching (撮合) was the logical approach. Zhao Bo, founder of New Distribution, recently chatted with me and said that warehousing and distribution platforms like Wanchaobang are true matching. That is, warehousing and distribution platforms inadvertently complete B2B matching. This is a platform that poses no threat to manufacturers or distributors but rather helps them. For unified warehousing and distribution, does the regional warehousing and distribution transformed by distributors have an advantage, or does the innovative system with national layout have an advantage? Either way, two issues must be solved: first, delivery efficiency. Traditional warehousing and distribution systems have not been studied in the past; second, national layout. No brand manufacturer or platform is willing to find a warehousing and distribution platform every time they enter a new place. The combination of brand-led channel digitalization with third-party warehousing and distribution platforms, with mutual interfaces, one completing orders and the other completing delivery, marks the beginning of channel specialization. This outcome was also unexpected by B2B initially. 04 Community group-buying e-commerce is very popular this year. Is it related to B2B? Of course it is. From a transaction logic perspective, any community retailer can engage in community group-buying e-commerce. However, most FMCG products are not suitable for group buying. Products suitable for community group buying must first be able to become hit products; second, they must have sufficiently high gross margins; otherwise, there is no room for price concessions in group buying. Group buying is essentially scale-based price concessions. The reason Changsha has become the storm center of community group buying is precisely because Changsha's B2B is the most mature in China, such as Furong Xingsheng and Xingaoqiao's "Kaola Select." The formation of community group buying has two prerequisites: first, supply chain advantages. Changsha's B2B has been built over a long time. Although it participated in the B2B boom in recent years, it did not violate business logic like many B2B models; it is relatively healthy. Second, Changsha's B2B was relatively early in "rebranding" (翻牌), and the rebranding was relatively benign, not a follow-the-crowd rebranding. Take Xingaoqiao, which I know, as an example. They have gone through three generations of franchise stores, from Kuailehui to Xingaoqiao to Kaola Select, and are relatively mature. Some say community group-buying e-commerce might end up like the "thousand-group war" of the past, leaving only a few survivors. I believe community group-buying e-commerce is a baptism of new retail models for traditional stores. It may have a greater impact on the development of new retail than the new retail initiatives of Tencent and Alibaba. Because the Mas can revitalize some large stores, while community group-buying e-commerce revitalizes a large number of small stores. Precisely because Changsha's B2B is relatively mature and has supply chain advantages, Changsha's regional B2B did not expand outward in the past two years, but with community group-buying e-commerce, it may actually expand outward. -END-