---
title: "Brand Owners: B2B Wants to Pick the Fruit of Best-Sellers? We Won't Agree!"
description: "After embracing B2B, are brand owners cooperating smoothly with B2B platforms? Why are brand owners reluctant to let go of traditional offline distribution? How should B2B cooperate with brand owners, and where do distributors fit in? In the second half of 2017, major brands began to engage with B2B. Nearly a year later, various channels have announced strategic cooperation agreements between B2B platforms and brands. At this point, most B2B-brand relationships have passed the honeymoon phase and are settling into normal operations. What is the actual state of cooperation? Recently, New Distribution visited several leading FMCG manufacturers to understand the status and conditions of their partnerships."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-10-22"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/brand-owners-b2b-wants-to-pick-the-fruit-of-best-sellers-we-won-t-agree-44b9cebd.md"
original_source: "https://mp.weixin.qq.com/s/Aj6NwlLtf4PNY3vCGCT4AA"
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# Brand Owners: B2B Wants to Pick the Fruit of Best-Sellers? We Won't Agree!

> After embracing B2B, are brand owners cooperating smoothly with B2B platforms? Why are brand owners reluctant to let go of traditional offline distribution? How should B2B cooperate with brand owners, and where do distributors fit in? In the second half of 2017, major brands began to engage with B2B. Nearly a year later, various channels have announced strategic cooperation agreements between B2B platforms and brands. At this point, most B2B-brand relationships have passed the honeymoon phase and are settling into normal operations. What is the actual state of cooperation? Recently, New Distribution visited several leading FMCG manufacturers to understand the status and conditions of their partnerships.

> * After embracing B2B, are brand owners cooperating smoothly with B2B platforms?
>
> * Why are brand owners reluctant to let go of traditional offline distribution?
>
> * How should B2B cooperate with brand owners, and where do distributors fit in?
>

In the second half of 2017, major brands began to engage with B2B. Nearly a year later, various channels have announced strategic cooperation agreements between B2B platforms and brands. At this point, most B2B-brand relationships have passed the honeymoon phase and are settling into normal operations. What is the actual state of cooperation? Recently, New Distribution visited several leading FMCG manufacturers to understand the status and conditions of their partnerships. During discussions, executives frequently mentioned two key topics: **First, the game between B2B and brand owners; Second, the value of traditional deep distribution.**

**I. The Game Between Brand Owners and B2B**
Why have brand owners actively embraced B2B in the past two years? A department director at a well-known brand told New Distribution, "Because B2B has a strong reputation, and many brand decision-makers believe B2B can quickly ramp up sales and achieve instant coverage. That was the initial motivation for brand owners to actively embrace B2B." Additionally, early B2B platforms heavily subsidized products, leading many brand owners to think they could "get a bargain."

Therefore, the initial intention was largely to treat B2B as a super-large distributor or wholesaler. During cooperation with B2B platforms, they gradually discovered that B2B can indeed help brand owners increase sales in the short term, but the platforms' heavy price subsidies caused the market distribution price system to collapse, and distributors complained bitterly. Another brand's business director stated that since signing a strategic agreement with B2B in 2017, the cooperation between the two parties has been "in and out," with no substantial progress.

When asked why, the director gave New Distribution an example:

In a strong market in East China for that brand, the offline distributor system was very mature, and the manufacturer initially refused to cooperate with B2B platforms. B2B approached the local distributor and purchased goods in bulk with cash. For the first two months, the distributor was very happy, and sales grew rapidly. But after two months, they found that the more than thirty sub-distributors below had begun to stop placing orders and their numbers continued to decline. The distributor panicked and visited small shops. The shop owners said: "Ordering from sub-distributors requires phone calls, and the prices are not as favorable as on B2B. Ordering on B2B is more convenient, and there are frequent promotions online. For small shops, since it's the same brand's goods online and offline, we'll order from whoever is cheaper."

The final result: market volume did not drop, but the sub-distributors died.

With no other choice, the brand owner negotiated with B2B, addressing the following issues:

**Brand owner: "Let's give you a blank market first. Help us develop it and see what you can do."**

B2B: "You're giving us such a weak market. How can we build it up? You've been trying for years and couldn't do it. How can you expect us to succeed?"

**B2B: "As long as you give me your best-sellers, we can quickly distribute the goods. Our platform has a big data system that can provide you with precise distribution data analysis and support your business decisions..."**

Brand owner: "If we give you all our best-sellers, can you fully take over our offline volume of tens of billions? If not, today you run a promotion, tomorrow another, and you'll completely disrupt our offline pricing. What happens to our distribution system?"

The director summarized the root cause of the cooperation problems: "Brand owners have spent decades planting the tree, and B2B wants to pick the fruit as soon as they come. We definitely won't agree."

B2B wants best-sellers and core markets, but why would brand owners give them? Whether B2B wants strong markets or best-sellers, at the end of the day, it lacks the ability to launch new products.

For weak markets, best-sellers are new products; for strong markets, non-best-sellers are still new products. **B2B cannot create incremental growth, so brand owners will always be cautious in cooperation.**

**Of course, some international brands that are relatively weak in distribution, or some household and personal care brands whose original channel focus was on KA, it is natural for them to have comprehensive strategic cooperation with B2B.**

**II. The Value and Significance of Traditional Offline Distribution**
From a business logic perspective, B2B is certainly much more efficient than traditional offline distribution. But why can't brand owners seriously cooperate with B2B and grow together? At the end of the day, traditional offline distribution holds more important value and significance for brand owners.

An executive from a beverage brand told New Distribution, "Take our brand as an example. Our distributor and sub-distributor system ensures that before the peak season, funds corresponding to tens of millions of units of production capacity enter the company account in advance. No B2B company, no matter how big, can solve that."

"These tens of thousands of distributors across the country, though individually small, together can achieve sales revenue of even hundreds of millions in a month. Looking at the bigger picture, the overall FMCG market is nearly ten trillion yuan in business, which no single B2B platform can handle."

"For brand owners, the value of distributors is not just helping distribute products; more critically, they allow manufacturers to get tomorrow's money today."

Therefore, under the traditional offline distribution system, many distributors are willing to cultivate the market with brand owners, push new products, and create incremental growth. Additionally, they solve the funding problem for manufacturers. These are two things that B2B cannot currently do.

Since B2B can't do these things, can it be left undone?

**III. Is Cooperation Between B2B and Brand Owners Unsolvable?**
Is cooperation between B2B and brand owners truly unsolvable?

Mr. Li, an executive at a liquor brand, told New Distribution, **"For long-term friendly cooperation between B2B and brand owners, first, there must be a shift in cooperation concepts. Brand owners should change their mindset of treating B2B platforms as just big customers; B2B should also change its 'robbery' mentality and set aside revenue and valuation for now."**

**"We are willing to give B2B strong markets, but we hope it's for personalized or new products;"**

**"We are also willing to give B2B best-sellers, but picking peaches is not allowed. We are willing to work hand-in-hand with B2B to develop the market, with high margins and high investment, and B2B's ground promotion staff will work with the manufacturer to complete market coverage."**

Is this feasible? B2B might find it difficult. Because the platform carries not just one brand, but many. Promoting three brands is fine, but strategically promoting 30, 300, or 3000 brands is almost impossible.

Mr. Jing Shi, General Manager of Alibaba Retail Connect Industry, said in an interview with New Distribution at the FDIC 2018 FMCG Channel Innovation Conference: **"We never consider ourselves a B2B platform; we are a new retail solution."**

Mr. Li believes that based on mutual needs, brand owners, B2B, and distributors can pilot in strong regional markets. B2B gives non-best-sellers full exposure in that region, the manufacturer provides high policy investment, and distributors do frontline ground promotion. Only with smooth tripartite cooperation can the effect of 1+1>2 be achieved.

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