On June 25, Coca-Cola China, COFCO Coca-Cola, and JD New Channel signed a strategic cooperation agreement at Coca-Cola China headquarters in Shanghai. Attendees included Marcelo Boffi, COO of Coca-Cola China; Han Xiang, Senior Director of Commercial Leadership at Coca-Cola China; Liu Lidong, General Manager of Sales and Marketing at COFCO Coca-Cola; and Zheng Hongyan, Vice President of JD Group and President of JD Mall New Channel Division.

New Distribution was invited as the exclusive observer media for this signing, and we were honored to witness this strategic cooperation. The author also served as the moderator for the roundtable forum following the signing.

During the roundtable, representatives from all three parties engaged in extensive discussion on how JD's concept of borderless retail can empower FMCG. Some viewpoints shared by the guests are worth exploring and referencing. The author has compiled the on-site insights for our readers.

1. The Impact of Borderless Retail on the Industry

Zheng Hongyan believes that Liu Qiangdong's concept of borderless retail represents JD's ultimate judgment on the retail industry. As consumer demands become personalized and fragmented, companies must produce goods that meet these needs. Coca-Cola has invested significant effort in this area, aiming to make every bottle of Coke unique.

In the past two years, terms like borderless retail and new retail have been frequently mentioned. Although their content differs, both focus on the core of retail—what changes and what remains constant.

Alibaba's new retail emphasizes "change," highlighting how the internet has transformed consumer behavior and fundamentally altered shopping scenarios, leading to the reconstruction of people, goods, and places.

JD's borderless retail, on the other hand, sees that regardless of technological changes, the essence of retail remains unchanged. The core still revolves around cost, efficiency, and experience. These are like two sides of the same hand—both indispensable.

However, whether change or constancy, the core lies in supply chain transformation. Around borderless retail, the FMCG supply chain will undergo significant restructuring in distribution models, transaction methods, delivery efficiency, and costs.

2. The Value B2B Brings to Brand Owners and Traditional Grocery Retailers

Zheng Hongyan stated: In the past, without the internet, brand owners found it difficult to reach consumers directly. Most of the time, they relied on traditional distribution channels—through first-tier, second-tier wholesalers, retailers, and then to consumers. But today, distribution channels are becoming precise and controllable. We can direct products to wherever we want them to go.

We no longer need one to two months to launch a new product in physical stores; now it can be done in less than a week. The efficiency of distribution is self-evident. Additionally, the deployment of in-store promotional resources, such as displays and consumer interactions, was previously difficult and costly. Today, with retail infrastructure and internet technology, these can be quickly resolved. This is the change brought to all manufacturers.

Traditional grocery retailers could only sell products in their stores. Now, with the empowerment of New Channel, they can use online storefronts to sell JD's vast array of products. Previously, consumers had to travel far to a laundry or pet store; now, through a convenience store, they can find all their daily needs.

Moreover, with precise data feedback, brand owners' R&D, production, and distributors can clearly know what to sell, what to produce, and develop new products tailored to different regions. This drives a revolution in retail infrastructure based on service.

3. Brand Owners Facing B2B: Like It or Not, It Will Happen, So We Should Do Better

Liu Lidong, General Manager of Sales and Marketing at COFCO Coca-Cola, believes: COFCO Coca-Cola has been studying the effective combination of B2B and offline retail points, aiming for complementarity in pricing, network, and products for sustainable development. In 2017, after multiple meetings and communications with JD headquarters, we gained a deeper understanding of New Channel's technology, model, and empowerment for brand owners. We hope to cooperate fully with JD New Channel for mutual development! Thus, from partial participation in 2017 to today's full cooperation signing, this marks a qualitative breakthrough for COFCO in the B2B field.

Although many manufacturers still worry about their jobs, orders, and distributors after cooperating with JD New Channel, a deeper understanding of B2B reveals that it is a direction for us to become stronger and faster in the future.

As brand owners and bottlers, we hope to find synergies in building a shared network to meet consumer needs and lead terminal retailers' business. To summarize this upgrade: like it or not, it will happen, so we should do better.

4. B2B Should Be an Open Supply System: Win-Win Cooperation and Joint Rule-Making

Han Xiang, Senior Director of Commercial Leadership at Coca-Cola China, believes: JD's borderless retail should be an open symbiotic system, not a zero-sum game. It is a system where professionals do what they do best. After discussions with President Zheng, I found that New Channel has a vision: to enable any brand owner, distributor, retailer, or consumer who touches it to benefit from its chain. To achieve this, New Channel must systematically optimize the existing supply chain through scale and data effects.

Essentially, all roads lead to Rome—through various means, the ultimate goal is to provide consumers with better products and better consumption experiences.

Coca-Cola is a "young" company with a long history. Amid China's surging digital wave, we all stand before an opportunity to "change lanes" and overtake. We hope to work with JD and other partners to jointly set B2B industry standards, enabling all participants to achieve win-win cooperation and mutual development.

Coca-Cola is willing to cooperate with excellent B2B companies. We have clear expectations for B2B: it should complement and empower existing market channels. We hope to work with B2B companies to grow the incremental market and refine the existing market.

Growing the incremental market means covering retail points that currently lack sales personnel. We can work with B2B to cover these points. Even if their business volume is still small, we hope to provide good service and basic execution with B2B, fully tapping business potential. At the same time, refining the existing market is also important. We believe that consumer goods peers, including Coca-Cola, hope to maintain the stability of current market channels, especially in jointly maintaining market prices, sharing sales information, and jointly planning market activities—together, we can refine the existing market.

5. B2B Should Approach Traditional Industries with Reverence

Regarding the conflict between traditional industries and B2B, Zheng Hongyan, President of JD Mall New Channel Division, told New Distribution: When New Channel was first established, we proposed to offer genuine products and uphold authenticity. Initially, we trusted no one. But later, we truly realized the importance of professionals doing professional work. Distributors and dealers have irreplaceable value. We should help them upgrade rather than replace them. We should bring those who succeed through legitimate means onto this platform and cooperate with them.

Some distributors provide adequate local services, but they lack data capabilities and information collection abilities. When Coca-Cola wants to know where its products go, I empower these distributors to help Coca-Cola by telling them where the products go, allowing Coca-Cola to better manage the market.

An innovative internet company doing something never done before can do it any way it likes. But China's wholesale business has existed for thousands of years—it is a very traditional industry with hundreds of thousands of wholesalers nationwide, emphasizing both inheritance and innovation. If entrepreneurs only use internet thinking to transform this industry without respecting its rules, the cost of trial and error will be very high. Similarly, traditional brand owners and distributors must quickly embrace change and keep pace with the times, or they will fail.

6. New Distribution's Perspective

Coca-Cola, as an established company with the most comprehensive distribution system in China, and as a low-value, heavy product requiring intensive terminal execution, is the least likely candidate to cooperate with B2B. Yet it has fully embraced the internet, showing the keenest perception of the changes of this era.

JD New Channel respects the value of traditional supply chains and, through its technological empowerment, helps brand owners achieve true efficiency gains and cost reductions. This is a win-win outcome for all parties. We believe that brand owners' demands are not to cut the existing cake (incremental market) but to make the cake bigger (incremental market). Those who do not respect supply chain value or fail to form strategic alliances with brand owners will find it hard to gain support from brands.

Brand owners, especially top-tier ones, have mature supply chain systems that they cannot abandon. They will also upgrade. B2B should utilize and share, not disrupt or replace them.

Brand owners are not conservative; the core issue is the lack of good communication mechanisms, leading to misunderstandings. Therefore, in cooperation, B2B should actively maintain communication with brand owners, gain their support, and follow their rules. The more resources B2B follows brand owners' rules, the more resources it may obtain from them.

We believe Coca-Cola can provide consumers with a different Coke in every bottle.

We also believe JD New Channel can sell the "different" Coke to every grocery store in China.

Wishing all three parties a fruitful cooperation.

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