Click to read the original text for details The history of FMCG distributors is a business history of daring Some say FMCG distributors are typical businessmen, and if you add a qualifier, they are 'typical small businessmen'! In the context of the recent buzzword 'entrepreneurship', they are a group of persistent entrepreneurs who started early. Their original motivation was the simple dream of 'making money', and as long as they could make money, anything goes! Thus, when we visit distributors, we often hear older distributors recall: back then, I started by selling cigarettes, firecrackers, agricultural products... How I worked from dawn to dusk, how I used wit and courage, how I took the first step, tasted all the ups and downs, and dug out the first pot of gold; how I came into contact with a certain brand, and have been doing it until now. This process reflects the businessman's ability to seize market opportunities, as well as the acumen and business sense to successfully transform at the right time. This also honed the distributors' boldness of 'seeking wealth in danger'! In the FMCG business chain, distributors are responsible for linking brands and terminal stores. In the past, as long as distributors held a few decent brands and were willing to work hard, they could make money. This state could have continued smoothly! The commercial crossroads of the mobile internet era The emergence of internet business models has broken the stable business state that distributors had maintained for years. Decentralization and disintermediation have become a business consensus! This has also stirred waves in the distributor world! Aren't distributors exactly the middle link? Especially with the development of B2B, which directly encroaches on distributors' cheese (terminal store supply). The evolution of mobile internet, community group buying, and O2O has made retail stores feel the power of the internet! Information flows backward to distributors, and suddenly, the pressure is as heavy as a mountain! At the new commercial crossroads, how should FMCG distributors proceed? FMCG distributors are really bold, leaving a mess behind The 'small businessmen' with big guts and a willingness to try—distributors—are taking action again! Local FMCG chambers of commerce are making efforts, launching wave after wave of distributor study tours! Batches of distributors go to Shandong, Guangzhou, Hunan, and Chengdu, becoming more 'resourceful' in the tide of the internet! We also see batches of distributors returning from study tours, taking immediate action, staging one after another case of distributor breakthrough: A municipal distributor in Henan, operating 2 well-known FMCG brands, with sound channels and an annual scale of about 40 million yuan, has considerable regional influence. When they saw that software could improve efficiency, accumulate channel data, and strengthen management, they invested hundreds of thousands to purchase systems and terminal equipment. They rallied a few local distributors to build their own warehouse, recruit staff, and start. Within less than two years, they stopped and disbanded, and their business plummeted! Lost 3 million! A county-level distributor in Anhui, a few newcomers who had just entered the FMCG distributor ranks, raised a million yuan, acted as an agent for a northern beer brand, sold on credit, and simultaneously purchased systems, built warehouses, and built teams. They entered the market with great fanfare, waiting for the market's reward. In less than a year, they shut down the system, closed the business, and after liquidation, lost over 800,000 yuan before disbanding! A household cleaning distributor in Zhongshan invested a million yuan to support their children in starting a business based on the existing business, setting up an online store and developing an APP to expand offline physical stores. Within 3 years, they lost over 2 million yuan and had no choice but to close! A distributor in Miyun, Beijing, with an annual business scale of 15 million yuan, started an online store in 2016, based on not losing money, recruiting a 3-person team. After 3 years of development, online business now accounts for 70%, while offline has shrunk to focus on A and B class stores. They successfully transformed into the brand's online TP in the traffic era, entering the internet ranks. However, with the high cost of online traffic, they are now facing a new dilemma! A household paper distributor in Hangzhou, immersed in the front line of new retail, decisively adjusted, compressed offline investment, recruited staff, started with the brand's online agency operation, entered the billion club, established their own online niche brand, focusing on kitchen daily necessities, and now achieves an annual scale of 300 million! In this process, distributors with boldness and action have opportunities at this commercial crossroads! How to seize them? How to proceed? They think a little and then start immediately, learning on the job, lacking in-depth research and careful accounting. Brand owners also fail to provide empowerment guidance (essentially because the manufacturers themselves haven't figured out how to proceed)! What we see is more failures than successes, leaving a mess! Adding more stories to the distributor world! The dangers and opportunities for distributors in the new retail era The essence of new retail is to use internet tools, be user-centric, and make retail business simpler and more efficient! This can be divided into new retail for retailers (such as Wumart's Duodian, RT-Mart's Taoxianda), new retail for platform companies (such as the retail platforms under large B2C companies like Lingshoutong, Zhangguibao), and new retail for brand owners (various new retail initiatives by brands). Internet tools connect online and offline, giving birth to a large number of new business forms and new species! Distributors, based on offline transaction processes, can be classified as offline platform companies, doing offline B2b business. In the era of people finding goods, the distributor's life gate is the brand owner; in the era of goods finding people, based on the current situation, the distributor's life gate gradually shifts to the retail side. Offline retail stores are upgrading around consumers, adjusting the in-store waiting for customers to proactive service behavior. In this process, changes in retail store behavior will inevitably trigger a chain reaction among distributors! Danger: The dangers brought to distributors in the evolution of new retail 1. Channel loss caused by B2B platforms: B2B platforms cultivate the habit of online ordering among retail stores. Retail terminals have become highly flexible in purchasing. For distributors, if the price is not right, long-term cooperative retail terminals may switch to B2B, and the trend is obvious; 2. The danger of being integrated by brand owners: Brand owners trying new retail trigger integration dangers, such as the integration of regional specific channel operating rights (some online agency operation rights are taken back by brand owners), market cross-regional selling caused by channel prices, annual evaluation of distributor qualifications, etc.; 3. Natural integration dangers within regional markets: With the support of brands/network tools/competition, the development of distributors forms a situation where fast fish eat slow fish, triggering regional market integration trends; 4. Blind investment and ineffective losses: Limited understanding of new retail, blind investment, and hasty alignment can damage the foundation and consume advantages. Opportunity: Distributors have formed their own unique resource advantages The opportunity that distributors can quickly seize is to integrate advantages and improve service capabilities for retail stores and consumers! Breaking down the five major functions of distributors: warehousing, distribution, strategy, capital, and service, we can find: 1. Channel capability: In terms of channel depth and breadth, they have complete channel cooperation, visit services, and multi-category supply capabilities; 2. Logistics function: They have their own logistics teams, covering all-channel distribution in urban and township areas; 3. Warehousing and distribution function: They have their own distributed small forward warehouses in core urban areas and core channels, meeting the demand for delivery within 3 kilometers in half an hour; 4. Operation and maintenance services: Their own teams carry out visits and maintenance, organize shelves, allocate goods, and transmit policies, etc.; 5. Strategy capability: Multi-category combination, flexible one-store-one-policy capability. Concerns of distributors in the new retail era After 4 years of new retail baptism, most distributors feel that business is difficult, and if they toss and turn again, they can't afford the loss! They begin to seek transformation or even transfer their business, and there are not a few distributors who completely leave the FMCG industry. Business evolution means new rebirth and new opportunities, and the evolution of distributors is no exception. The following aspects let us appreciate the hesitant and tangled hearts of FMCG distributors: 1. Is it a pie or a trap? For example, a distributor reported that cooperating with a leading platform, undertaking the regional distribution function of a joint warehouse, and relying on a big name, but the distribution fee given makes it difficult to sustain. Moreover, when their goods enter the platform, they also have to bear a platform transaction fee. The cooperation can bring some new products, but now it seems to be meager profit. 2. Is the business out of control or controllable? For example: A distributor reported that cooperating with a B2B platform, during a big brand's weekly promotion, concentrated distribution, orders surged, disrupting the original distribution rhythm. But the platform has time-limited delivery, so they go all out, short-term distribution crowdsourcing, goods are sent out, but the money hasn't been settled. Waiting for a settlement cycle of nearly a month, helping the platform cultivate store habits, while their own hard work hides the possibility of being undermined! 3. Sustainable profitability of the business: For example: A distributor engaged in agency operation reported that with such large online investment, they achieved 100 million for a single product. Without good product portfolio, without promotional scheduling, without clear support from the brand owner, these seem profitable, but after settlement, there is no profit. Seeing some agency-operated brands around being forcibly taken back by enterprises, who can they complain to? 4. Controllability of upgrade investment costs: For example: A distributor invested in a system for warehousing, distribution, ordering, order splitting, and printing, only to find that they also need to configure sorters, order printers, warehouse managers, forklifts, etc., and the comprehensive cost far exceeds expectations. The transformation path for distributors in the new retail era The 4.1 new policy of Lingshoutong and the joint warehouse system launched by Zhangguibao in April 2018 have increased confidence in our distributor team. The existence of distributor teams must have its reasons! Distributors need to rethink and position themselves! Understand what their current most advantageous capabilities are?
Online store operation capability?
Offline omni-channel operation capability?
Team service capability? (customer relationship)
City distribution capability? (timeliness)
Comprehensive complementary capability of operating brands? For example: the frequency of product purchases at terminals (high/low), whether the city distribution can take into account the combination of volume (large/small), weight (light/heavy), value (high/low), and gross profit (high/low). Achieve economical distribution costs, strong distribution timeliness, and high output per unit vehicle value. The above combinations, starting from advantages, as entry points:
Brand owners empower distributors for new retail upgrade: initiated by large brand owners, with distributor collaboration, to complete the synchronous upgrade of new retail;
Direction of empowering retail stores: For example, leveraging their own channel advantages to empower retail stores to upgrade to smart stores, achieving win-win while establishing data accumulation (data accumulation is not the distributor's strength; software needs a light front-end and heavy back-end);
Become a specialized city distribution service provider, connecting with Alibaba and JD's B2B platforms, while also undertaking community group buying city distribution;
When both product portfolio complementarity and warehousing and distribution capabilities are strong, upgrade tools, drive distributor alliances, establish a regional brand-channel-consumer data system, and become a regional small giant. During the process, distributor bosses should pay special attention to cultivating three abilities: 1. Pattern and direction ability: Most distributor bosses rose from fighting alone. In the new retail upgrade process, what is needed is team collaboration. For partners and employees, distributor bosses need to look at the big picture, tolerate the personality traits of team members, and exercise their own pattern and vision; 2. Ability to select/use/cultivate/retain talent: For excellent talents, dare to use them; those who use teachers become kings! This process is an upgrade of the distributor boss's talent management ability, and it is also a necessary ability for future development; 3. Ability to dive to the bottom: The transformation and upgrade of distributor bosses is a business evolution! Only with deep understanding can they overcome the pitfalls and obstacles. Distributor bosses should go deep into this evolution, like when they first started their business years ago, personally do it to better understand the team and the new retail business! If the above three abilities are still insufficient, I advise you not to try 'unconventional paths' in new retail transformation and upgrade. Instead, calmly strengthen your advantages, accumulate strength, and act when the time is right! Overall, in the new retail era, around users, technology gives birth to tools, tools + scenarios drive new business forms, achieving a commercial data chain with multiple channels, multiple scenarios, multiple touchpoints, multiple brands, and multiple crowd labels. Distributors will no longer be simple 'small businessmen'! With their self-transformation and upgrade, more distributors will be able to achieve integration and win-win, and this is a big chess game! Where there is a world, there are rapids! For any platform, underestimating the distributor team will be the beginning of your disaster! Discard the mentality of 'defeating so-and-so', truly empower distributors and help new retail platforms (tools), help distributors solve the above problems, empower each other, and in the world, there will be more win-win and fewer fatal blows. New retail upgrade is everyone's spring!