From March 18 to 19, the 2018 (4th) FMCG + Internet Conference was grandly held at the Fairmont Chengdu Hotel Conference Center. It was hosted by New Distribution, co-hosted by Yunmei Media, and supported by GLP Finance, Wanchaobang, Zhongke Shangruan, and Fengwang, with strong backing from the FMCG Industry Branch of the China Electronic Commerce Association and Sichuan Wenbo Advertising. The following is the keynote speech "The Trend and Opportunities of B2B Digital Channels" by Ni Zhujie, Director of Market Access for Coca-Cola Greater China, compiled and published by New Distribution for our readers: △Ni Zhujie, Director of Market Access, Coca-Cola Greater China Today, for the first time, I have the opportunity to communicate with everyone through Zhao Bo's New Distribution platform about Coca-Cola's views on B2B. First, I want to share a national survey of retail outlets conducted by Coca-Cola and Nielsen two years ago. We found that in first- and second-tier cities across the country, there are over 1.2 million retail outlets. However, in third- to fifth-tier cities, spanning more than 2,000 counties, 40,000 towns, and 560,000 villages, there are nearly 4 million retail outlets. China's fragmented market access structure inevitably makes the traditional grocery channel complex and diverse. Today, we are participating in the Sugar and Wine Fair in Chengdu, which reflects a classic market access model in China. Many brand owners need to sell products to retail outlets through provincial agents, wholesalers, and distributors. B2B emerged in this market environment. We have seen B2B reform the entire market access system, including reducing the complexity of China's traditional distribution system and improving efficiency. B2B's direct-to-outlet activities can activate all links in the value chain. Now, JD.com and Alibaba are also empowering retail outlets to better serve consumers. On the path of B2B growth, there are local platforms, as well as cross-regional and national platforms. In the next three years, B2B's market penetration will increase from 30% in 2017 to 50% by 2020. That means three years from now, more than half of the retail outlets in the market will use B2B ordering. With the increase in activity rates of these outlets, total B2B sales will grow fourfold from the current approximately 60 billion RMB to 250 billion RMB. Given such market capacity and development potential, the B2B industry is worthy of our attention and focus. Here, we view the development of B2B in three stages, as told by the e-commerce trajectory with Chinese characteristics. The first is the expansion stage, where market scale is crucial. B2B does not need profits; it needs scale, and price wars are inevitable. This is why many brand owners are wary of cooperating with B2B. At this stage, B2B outlet activity rates are low, mostly below 20%, so they can only gain market share through such means. The second is the profit-seeking stage, when B2B outlet activity rates rise to 20%-40%, they begin to pursue profits. This is manifested in attention to outlet services and the need for brand owner support. I think most B2B platforms are currently in this stage and actively seek cooperation opportunities with major brands like Coca-Cola. However, this is not the end; it is just the beginning of B2B's mature development. Third, we believe B2B will reach a mature stage, where efficiency is the primary focus. B2B will start to pursue process indicators, not just outlet coverage numbers. They will pay attention to their own development, check whether their field staff execution is good, and whether they empower outlets. B2B will further meet brand needs because they need brand support, need brands not to treat them as wholesalers, and need brands to provide more market activities. At the same time, they are continuously improving their supply chain capabilities to provide more, faster, and more efficient services to outlets. We can clearly see that scale, profit, and efficiency are the three stages of B2B's gradual evolution from immature to mature. In this development process, we have proposed four capability-building areas for B2B: service, product, price, and promotion. These can only be achieved through cooperation with brand owners, and only then can B2B better meet the needs of outlets. In other words, achieving these four points means B2B is a healthy, virtuous, and sustainable business model. The first is service: Does the platform have field staff to visit outlets? Does it provide better delivery quality? Does it offer value-added services to outlets? The second is product: Is the breadth and depth of products sold on the B2B platform sufficient? Is there enough product quantity to supply? Is quality guaranteed? When a brand launches new products, can the B2B platform quickly meet outlet ordering needs? Coca-Cola launched a major product this month, "Sprite Fiber+". Everyone remembers the Coke Plus that sold very well in Japan last year. This year, Sprite is launching the same formula in the domestic market. We very much hope B2B platforms will promote this product together with us as soon as it launches. But so far, only a few platforms have cooperated with us. Why? Because some B2B platforms lack this awareness, still only selling existing products, and have not coordinated with brand owners to promote incremental products. Therefore, B2B must focus on the breadth and depth of the products they sell to maintain outlet loyalty and stickiness. The third is price: Price is still considered by many B2B platforms as the most important way to gain customer loyalty. But I want to say that price is not the only factor, and continuous low prices and price wars cannot truly improve outlet loyalty and stickiness. Outlets need to see whether the price is transparent, fair, and profitable for them. Price information should be transparent and visible. Every boss here knows that low prices are not sustainable. The last is promotion: For this, I believe only by cooperating with brand owners can B2B gain more marketing and promotional opportunities. What I just said is our views on B2B development. Now let me talk about Coca-Cola's market access. Over the past 30 years, Coca-Cola has been doing what B2B does now. In fact, we started doing B2B as early as the 1980s. Under Coca-Cola's market access model, controllability of urban outlets reaches nearly 60%, and rural controllability reaches nearly 30%. Why does Coca-Cola do this? Because we know that just doing product distribution is not enough. FMCG particularly requires attention to market execution. If no one provides services to these outlets, no one helps the bosses organize freezers and shelves, do stack displays, promote new products, or develop business, our business growth is unsustainable. Coca-Cola has a relatively clear strategy for B2B: as a complementary model to the existing Coca-Cola market access, we do not treat B2B as a wholesaler, nor do we want to treat B2B as a purely transactional customer. Instead, we see it as a type of market access. We hope to work with B2B to grow incremental volume and refine existing volume. To grow incremental volume, we are willing to work with B2B to cover outlets that Coca-Cola has not yet reached, empower them together, provide services together, and do basic execution. These outlets do exist, even if current sales are small. We hope to provide services together with B2B. At the same time, refining existing volume is also important. The existing market is one that no one can afford to give up. All first-tier brand companies, including Coca-Cola, will not ignore it. Last year, when cooperating with some B2B companies, I proposed three principles: jointly maintain market prices, share sales information, and jointly formulate market activities. I hope to work together to do well in the existing market. Let me share a case of cooperation with JD.com, Huimin, and Dianjia. We conducted Coca-Cola Super Brand Week with these three platforms. What is Super Brand Week? In the regions where we cooperate, the official websites of these three platforms will use Coca-Cola's brand image overall, and all pages will become Coca-Cola style, promoting sales of the entire Coca-Cola category. Not only mainstream products are sold; we sell the full range of Coca-Cola products on these platforms, with special attention to the distribution of our potential and emerging products. At the same time, we provide these platforms with diversified activity mechanisms. We do customized activities, such as bundling a mainstream Coca-Cola product with a potential product as a package. We even cooperate with other categories, such as snacks, to do cross-category promotions with Coca-Cola products, thereby increasing the depth and breadth of Coca-Cola products on the entire platform. While selling mainstream products, we can also drive sales of potential and emerging products. What is our purpose? We want to tell outlets that Coca-Cola can provide more products, better services, and more complete promotions through B2B. We also want to tell B2B platforms that if you cooperate well with brand owners, you can enjoy the same treatment as hypermarkets and mainstream e-commerce platforms, with brand support. Through these brand activities, the market has been activated, and both sales and the number of active stores have increased accordingly. Next, I want to introduce Coca-Cola's expectations for deepening cooperation with B2B platforms. First, full distribution: We hope all Coca-Cola products can be sold on B2B platforms, not just Coke, Sprite, and Minute Maid. We hope the full range is sold on the platform because only then can we achieve product depth and breadth. Second, no stockouts: There is no reason for outlet ordering needs to go unmet. Third, effective product display: We hope B2B platforms can place each Coca-Cola category product at the front so outlet owners can see them first. Fourth, precise channel activities: Channel activities need to be precise. We continuously track platform promotions, and we also avoid direct price reduction promotions. We hope to focus promotional activities more on potential and emerging products, and use cross-category activities to increase sales. Finally, price management: Since January this year, we have been monitoring the daily price changes of six mainstream B2B platforms nationwide. We know how much mainstream Coca-Cola products sell for on these platforms. We are pleased to see that prices across B2B platforms have remained roughly stable. We will expand this tracking from the pilot six provinces to more than 20 provinces nationwide starting in May this year. We will share this report with B2B platforms monthly. Speaking of cooperation with B2B platforms, I must mention the B2B roadshow week we held internally at Coca-Cola in November 2017. During that week, we invited leaders from five B2B platforms to communicate with our employees across the system. These included Alibaba Retail Link, JD New Channel, Zhongshang Huimin, Meicai, and Hui Xiadan. We were very pleased to see that colleagues in the Coca-Cola system were curious about B2B and had many questions. The B2B company leaders on site communicated with us about what B2B is, the unique advantages of their platforms, potential directions for cooperation with Coca-Cola, and how to establish further strategic partnerships. The effect was very good. We counted that colleagues from various departments, including finance, commerce, strategy, marketing, KA, franchising, public relations, technology, and human resources, participated, totaling over 500 people. After the event, we conducted a survey, and colleagues across the Coca-Cola system highly recognized the value of B2B, especially in improving business efficiency and empowering outlets. This year, Coca-Cola will produce the first practical B2B operations manual for the FMCG industry. Why publish this book? Because we hope to summarize our communications with B2B over the past year and our understanding of the B2B industry, so that all sales management personnel in our 30+ bottling plants can better understand B2B. As long as our business colleagues can sit down and talk with B2B, maintain good communication, and clearly explain both parties' normal policies, expectations for the market, and common business purposes, I believe we can fully cooperate with B2B. This book will introduce how B2B came about, why FMCG needs B2B, and why outlets need B2B. We selected the top ten largest platforms nationwide for detailed introduction, including their management teams and business characteristics. The book will also cover how Coca-Cola should respond to the challenges brought by B2B, how to develop together with B2B, how to start cooperating with B2B platforms in seven steps, and how to make B2B willing to develop the market with us, serve outlets, and share the business growth brought by digital channel transformation. In our internal communications with bottling plants, we often mention that we need to take action and learn how to cooperate with B2B through action. So here, I can also give this sentence to the B2B companies and brand company friends present: Sales growth does not come from waiting; we need to take action. There may be detours, setbacks, and even risks ahead, but only by starting to act can we truly understand what B2B is in practice, build confidence, and develop the ability to cooperate with B2B. Thank you all! Click Read Original to see more highlights of the 4th FMCG + Internet Conference... -END-