Hello friends. I'm Yuan Lai from New Distribution. This year, dealers are clearly feeling that business is getting harder. In the first half of the year, sales volume dropped directly by 30%, and net profit fell by 50% year-on-year; this is real feedback from many dealers. Facing such a reality, many dealers are confused and anxious, feeling like they suddenly don't know how to do business. After 10-20 years in trade, how has it changed? We survived three years of pandemic, and now that people are starting to move, why is business getting even harder? It's hard to see clearly, hard to understand. Although I've written quite a bit recently about how dealers should think, respond to changes, and what adjustments to make, it's still not enough. We need more people and more perspectives to help the dealer community understand. Behind the difficulty of doing business, I believe this is not just a simple operational challenge, but a massive iteration the industry is undergoing. Recently, I met with Mr. Zou Wenbiao, co-founder of Zhoupu Data (known in the industry as President Zou), and we had an in-depth exchange for over 2 hours. Zhoupu Data currently serves nearly 40,000 active dealers nationwide, with annual GMV exceeding 400 billion yuan. Zhoupu Data co-founder Zou Wenbiao (left) and New Distribution Chief Content Officer Yuan Lai (right) As a leading domestic dealer business system service provider, I think from his service perspective, we can bring another angle of thinking to the trade circulation industry. Additionally, at the first China FMCG Dealer Conference co-hosted by New Distribution and Zhoupu Data from October 9-11 in Shenzhen, China, President Zou will also attend and give a special speech. This article is a prelude to President Zou's keynote speech, offering a sneak peek at some content. It reflects the thinking of industry service providers in the context of the widespread operational challenges facing dealers. Dealers are ushering in a major transformation The dealer community is facing a major transformation—this was the first core viewpoint raised during our meeting. Why? President Zou explained: First, from a macro perspective, the overall macroeconomic downturn is a change every dealer can directly feel as an operator. The high-speed growth of the past 20-30 years has ended; clearly, we are entering an era of low-speed growth. At the same time, the three-year pandemic has indirectly driven the online shift of retail, with community group buying, instant retail, short-video live-streaming e-commerce, and diverse formats rapidly rising, taking away some sales and challenging offline-focused dealers. That's the impact of the external environment. From an internal operational perspective, President Zou said: From the logic of business competition, there's no doubt that competition in this industry is insufficient. In the past, upstream granted you a brand and a region, protecting you. They also provided a set of market operation methods and some market expenses. As long as you were diligent, followed the brand, and rode the wave of high-speed economic growth, you could make money. But now that's not possible: the birth rate is declining, urbanization patterns are set, and consumer demand is oversupplied by products. Relying on natural growth won't work. What chain reactions will occur under such circumstances? In a region, a dealer with 100 million in scale and 3 million in net profit, previously in good shape with 40-50 people, didn't need to think about cross-category or cross-channel expansion; steady growth of the plate was enough. Meanwhile, a dealer with 10 million in scale and 300,000 in net profit could also survive. In the past, both the 100 million and 10 million dealers could coexist peacefully and live well. But now, a 100 million dealer, to maintain profits and stabilize the team, has to think about grabbing business; with limited stock, they can only take from the 10 million dealer's plate. At this point, the 10 million dealer, already suffering from the harsh external environment, plus the competition from peers, eventually has to give up. The curtain on elimination and integration among dealers is slowly rising. So, the "major transformation" President Zou refers to is not just the so-called macro downturn, but the chain reaction among dealers under economic decline. They have to compete for existing stock and inevitably eliminate some. A regional market doesn't need that many dealers; a competitive market inevitably brings integration. This is the initial stage of the major transformation, and it's the beginning of efficiency killing inefficiency. Dealers need scale before efficiency Dealers need scale first, then efficiency. This is the second core viewpoint President Zou raised. The value and meaning of a company's existence are efficiency and innovation. Dealers don't produce a single product, nor can they provide services and experiences around consumers; dealers are companies centered on efficiency. If you have lower handling costs, cover more outlets, and sell more products, you are an efficient company. In the past, dealers didn't pursue efficiency as much because it wasn't a matter of life and death; they could endure and still have some profit. But now competition is fierce and the market is cruel, so they have to consider efficiency upgrades. How to improve efficiency specifically? The core method in the past was adding people and vehicles: for every additional 10 million, add 2 people. But at a certain stage, simply adding people just increases business hours, and beyond a certain scale, the efficiency of adding people diminishes. Because with more people, the cost of management and communication between levels rises. Therefore, when a dealer's business reaches a certain scale, efficiency improvement should consider investing in technical tools and data analysis. To put it bluntly, a dealer with 3-5 people doesn't need to think about using technical tools to improve efficiency. Only when you reach 10-20 people, with management and levels, and business complexity increases, can digital technical tools truly leverage efficiency advantages. President Zou added: The larger the dealer's scale, the more obvious the efficiency improvement from using tools. Managing 30 SKUs in the warehouse can be done by adding one person; but when the warehouse has 1,500 SKUs, it's not something that adding 3-5 people can solve. With processes, systems, flow directions, etc., the higher the business complexity, the more obvious the management efficiency through digital tools. What dealers need is An integrated business operating system What dealers need is an integrated business operating system, not a single module tool. This is the third core viewpoint President Zou raised. Zhoupu Data has served hundreds of thousands of dealers cumulatively and increasingly feels that dealers need a complete operating system. Why? For example, if a dealer introduces a financial tool, the efficiency orientation is finance-centric. If they introduce a visit tool, the efficiency orientation is visit-centric. In President Zou's view, the larger the dealer, the more they need to look from a global perspective: from order acquisition to order fulfillment, from procurement and warehousing to product outbound and logistics distribution, they need a fully integrated operating system. Image source: Zhoupu Data official account. Zhoupu Data provides dealers with a business operation solution from a business perspective. Dealer businesses have clear revenue centers and cost centers. Revenue centers directly create income, including sales activities, marketing campaigns, and product selection decisions; cost centers include warehouse management, distribution management, and product residual value management. Zhoupu Data has built an integrated solution based on Zhoupu Cloud Manager ERP (management system), covering revenue enhancement and cost reduction. Using Cloud Manager, Store Manager (order system), and Zhouyi (decision system), based on comprehensive analysis of dealer's personnel efficiency, product efficiency, store efficiency, and capital efficiency, it can significantly improve revenue acquisition efficiency, while using Warehouse Manager (WMS) and Distribution Manager (TMS) can significantly reduce fulfillment costs. Additionally, platform-based operations offer the benefit of reducing dependence on personnel as scale increases, thereby truly breaking the bottleneck of dealer scale expansion. In one sentence, Zhoupu Data hopes to upgrade, even change, dealers' business management systems through digital tools, making great efforts to help dealers improve efficiency. President Zou emphasized that Zhoupu Data is different from other service providers: over the past 8 years, we have been vertically and exclusively focused on FMCG dealers. The advantage of vertical focus is that we continuously think about dealers' operational scenarios, business drivers, and future evolution trends. As Zhoupu Data serves more dealers and gains more richness, we understand dealer business scenarios better, and the development of system tools becomes more precise. Stick to being a friend of time, and believe time will bring compound interest. Final thoughts Due to space limitations, my exchange with President Zou went far beyond this. For more content, let's look forward to President Zou's speech at the first China FMCG Dealer Conference from October 9-11. New Distribution, together with Zhoupu Data, organized the first China FMCG Dealer Conference. We hope that at a time when dealers strongly feel changes, we can point out some directions for all FMCG dealer partners, set up a lighthouse, and at least ensure that the direction is not blurred or confusing. To this end, in addition to sharing by 15 national benchmark dealers and related executives, New Distribution and Zhoupu Data will also release the industry's first "2022-2023 China FMCG Dealer Business Condition Survey Report". Through this research report, we help dealers see the present clearly and see the future. At the first China FMCG Dealer Conference, we hope to witness it with you!