Nowadays, traffic at KA hypermarkets and offline supermarkets has declined significantly, with traffic shifting to communities and convenience stores. In reality, all competition is gradually moving to communities and convenience stores, and the role of distributors is also changing. In the face of such drastic market changes, how should distributors respond? How should they reform? How should they transform? Based on this, Li Feng, head of New Distribution and dean of the Distributor Academy, and Qin Xian, founder of Rongcheng Yigou, conducted a live broadcast on distributors' digital transformation and how to build their own B2B. They discussed the opportunities and challenges of distributors building their own B2B. At the beginning of the conversation, Li Feng and Qin reached a consensus: the supply chain platform business will be an inevitable trend for distributors' future development.

In June 2015, Rongcheng Yigou was launched; in 2016, the front-end and back-end systems were fully integrated, and it was renamed the fourth-generation distributor, starting rapid development; in 2018, efficient coordination between people and systems enabled 24-hour warehouse operations, achieving the supply chain service upgrade of orders placed before 24:00 being delivered the next day; in September 2022, Rongcheng Yigou's smart retail was launched, exploring the F2B2b2C supply chain service system to further serve terminal convenience stores and research the supply chain system.

As of 2023, it serves over 40,000 terminal stores, with 10,000+ SKUs, 4,000+ daily orders, and an average order value of 1,000+ yuan.

Seeing these figures, I imagine you might be surprised at the speed of this trading company's business development. In just eight years, from launch to over 4,000 orders per day, how did they achieve this? With surprise and curiosity, let me formally introduce this trading company—[Rongcheng Yigou] located in Chengdu, Sichuan. Qin gave a very accurate description of Rongcheng Yigou's positioning: Rongcheng Yigou sells value, bringing users a sustainable value. It always adheres to the corporate mission of "Helping thousands of brands spread, empowering millions of terminal stores." Today, Rongcheng Yigou's warehouse covers over 20,000 square meters, with more than 10,000 SKUs, including all categories except tobacco and fresh frozen products, such as snacks, grain and oil, daily chemicals, and general merchandise, with over 600 partner brands. It offers broken-pack sales, with a minimum order of one bag, starting at 199 yuan, and next-day delivery within a 150-kilometer radius, providing customers with an ultimate ordering experience. With efficient coordination between systems and people, technology empowers full digitalization of orders, warehouse picking and distribution, and operations management. Over the past eight years, Rongcheng Yigou has essentially been a supply chain platform business, combining traditional distributor business with platform business. It has explored and built smart retail to further serve terminals and reach consumers, just like building a highway for brand operations. According to Qin's judgment, in the future, the fifth-generation distributor business model will be a supply chain platform plus retail model. Qin has been a distributor for 19 years and positions himself as a serial entrepreneur in distribution. He insists on doing one thing well for life, adhering to "being a good distributor, researching distributors, and serving distributors," continuously exploring and iterating distributor development models, and innovating in distributor digitalization and intelligence. From the second-generation distributor to the fourth-generation distributor, and exploring the fifth-generation distributor, Rongcheng Yigou has always been a natural product manager. Next, Rongcheng Yigou will invest heavily in building its own core technology, using the power of technology to better empower more brand owners and distributors.

The main reason distributors fail in B2B: lack of talent. In 2022, Qin proposed establishing the Rongcheng Yigou Digital Distribution Advanced Research Institute, positioning it as the "Whampoa Military Academy" for cultivating talent in the distributor industry, training generals and non-commissioned officers for the industry, and truly liberating bosses. Why do distributor bosses find their work tiring? A key core issue is that each department has not formed a self-operating mechanism. Rongcheng Yigou's eight major departments have now formed a self-operating mechanism, providing ultimate service to distributors, brand owners, and terminal stores.

B2B is the best choice for distributor transformation What else can we do if we don't do B2B? Currently, for distributors, the most scalable and largest volume is community retail small stores, with over 6 million nationwide. This volume is huge, but the sales of individual stores are generally not large and even declining. In this situation of small and declining sales, it is very competitive. At this stage, if you want to survive, you have to compete for existing market share. How to compete for existing market share? How to reduce costs and increase efficiency? Then you must undergo digital transformation. In the past, using traditional methods, relying on a sea of people, and relying on people's non-standard operations, is definitely not feasible now. You must rely on three aspects:

1. Digitalization reduces dependence on people, achieving "cost reduction." 2. Intelligence solves the transition from "not relying on people" to "not needing people," achieving "efficiency improvement." 3. Sustainability means having a future, requiring continuous iteration and innovation.**

One mountain cannot accommodate two tigers; a city does not need too many supply chain platforms. The window for distributors to build their own B2B platforms is within 3 years for provincial capitals, 3-5 years for prefecture-level cities, and 5-8 years for county-level cities. After that, the window will be missed. In the future, supply chain platforms will be basic urban infrastructure, serving as a platform from factory products to B-end, to small b-end, and then to c-end.

From business to career!

The necessity of B2B transformation Traditional distributor pain points: dependence on a certain brand, dependence on sales personnel, no say, being forced to stock up and promote by manufacturers, and no initiative. Upstream is restricted by manufacturers, downstream lacks bargaining power with customers, and in the middle, they are constrained by the sales team, unable to recruit or use people well. Based on this, what are the benefits of distributors turning to B2B? First, it can turn a distributor's business into a distributor's career. Traditional distributors often grow from small to large, but they are large but not strong, and strong but not lasting. When a supply chain platform is established, it can attract a large number of brands and acquire a large number of customers, thus having a very stable foundation, and only then can it achieve being large and strong, strong and lasting. Second, after building the platform, there will be more profit space, with non-price-difference profits. For example, slotting fees, advertising fees, rebates, etc., these income sources will provide effective support for the platform's continuous operation and provide users with better services and more benefits. Finally, it can accommodate a large number of products and serve a large number of users simultaneously. Digital distribution is not just about using a tool or a program; it should actually be a model, a subversion of thinking. How to make a sector or a team achieve self-operation is what bosses should research and think about.

Misconceptions about doing B2B

1. Unclear strategic positioning. If you hold the attitude of "try it first," you might as well give up. Building a B2B platform is destined not to be a trial; you need to have a clear plan for the future, such as what performance you hope to achieve in three years, what your profit, team, and market position will be. After reaching a certain stage, should you continue to invest? What is the investment budget? This actually needs to be built as the second growth curve of the enterprise, and this strategic positioning must be very clear, not just patching up on the original basis.

2. Cannot equate using digital tools with digital transformation. Digital tools are only part of digital transformation. Some traditional digital software, such as some financial software, can only be considered a component of digital transformation. In terms of digital tools, from front-end OMS ordering to market-side CRM management, to back-end ERP, WMS, TMS as a whole system, including retail POS and B2B mall, it is a matrix, a system, not a digital island. So using digital tools does not mean you are a digital distributor.

3. Blind exploration in the context of accelerated market changes. In the past decade, the pace of market change was relatively slow. Now the market changes very quickly. If you choose to explore on your own, you might find after three years that a leading platform has already emerged locally, which is very sad. It is better to choose "taking" and adopt a mature system for your own use.

Conditions for doing B2B

1. First, as a boss, do you have the intention and determination for a second startup? Digital transformation is a top-level project; the boss must personally engage, which is the most critical point.

2. Investment budget. It requires updates and investments in software and hardware, as well as building a professional team.

3. Brand resources. The more brand resources, the greater the advantage. If starting with 100 SKUs, there will inevitably be a sedimentation process.

4. Professional team. You need a professional procurement team and operations team. The team can be entirely new, but core backbone members must have sufficient loyalty. In addition, warehouse conditions, turnover rate, corporate values, etc. are all issues distributors need to consider when doing B2B.

Final Thoughts

Due to space limitations, it is impossible to elaborate on all the business methodologies of how Rongcheng Yigou built its own B2B. For this reason, 「New Distributor Academy」 will organize an in-depth study tour on October 15-16, where Dean Li Feng of the New Distributor Academy will lead everyone into Rongcheng Yigou to have in-depth discussions with founder Qin Xian on local commercial circulation business changes, discussing Rongcheng Yigou's business model, development path, and the latest business strategies. The purpose of Li Feng's study tour is to enable distributor bosses nationwide to keep up with the development trends of the times, seize the opportunity of digital transformation, learn and replicate, avoid detours and pitfalls, and truly become the strong players in their local areas!

October 16: Compensation and Performance Implementation Course: