Click the image to register for participation. Transformation is the biggest consensus among dealers in the past two years. But where to turn remains the biggest confusion today. In 2018, whether to transform is no longer a topic for discussion; choosing where to turn is the key. 01 Theoretical Options for Dealer Transformation From past discussions and practices, in essence, all types of dealer transformation require self-revolution, repositioning and selecting the traditional trading function of "integration of four flows" to take a specialized path. Therefore, wanting a completely painless transformation is basically a delusion. Some may want to join the internet giant system, or follow the so-called new retail to complete transformation, but by the end of the year, the probability of becoming a "leek" (being exploited) is not lower than that of Chinese stock investors. Rely on the mountain and the mountain falls; rely on people and people run. After clarifying the theoretical options for dealers to transform through self-reliance, there are roughly only two directions: left and right. To the left is commercial flow: strengthen marketing and promotion capabilities to become a "local strongman" controlling the market; to the right is service: strengthen the service team and upgrade to a unified warehouse and distribution service provider. Of course, many still want to expand both commercial flow and logistics simultaneously. The reason is understandable, as it is human nature, but in 2017, all such attempts ended in failure. The reasons for failure need not be repeated. I once asked a dealer: "Would you let another dealer in this city deliver your orders?" He said certainly not, but naively believed that other dealers might give him their orders for delivery. New Distribution has previously suggested: if you do commercial flow, don't do logistics; if you do logistics, don't touch commercial flow. 02 Transformation Choices Require a Sense of Direction Why is the choice of transformation more important than transformation itself? Because today you cannot afford to make mistakes. Two years ago, the cost of transformation was low, and you had the opportunity to try and err; today, everyone is seeking transformation, and the cost of choice is high. The market will not give you another chance to choose. Some dealers, just because their business is not profitable, want to transform into services, but then they will find it even harder to make money. In this era, there is no easy thing to do. Embracing the internet does not mean handing over your lifeline (commercial flow) to internet companies. If you hand the knife handle to others, you often end up being the first to be cut by the knife they wield. When anxious, making a blind choice is not called trial and error; it's called testing stupidity. Transformation choices first require a sense of direction. Where is the direction? Look at what will be scarce in the next few years and what you can strive to achieve; that is the direction. In the future, what will be scarce are: first, offline brand promotion capabilities, market operation capabilities, or the ability to connect; second, offline professional commercial infrastructure service capabilities. So, is there opportunity in commercial flow? Yes! Is there opportunity in logistics? Yes! But is it your opportunity? Not necessarily! 03 Left or Right Depends on Core Competencies First, look at commercial flow. 90% of Chinese dealers have always been on an unprofessional path, forcing major brands to directly operate terminals in central cities, relying on their massive frontline salespeople to take orders. Brands have become nannies, and dealers have willingly degenerated into porters, earning porter fees that basically require no thinking. But now brands can allocate less and less "porter fees." But have brands had a good time in recent years? Not really. The traditional large-scale deep distribution management model is gradually failing, personnel costs are rising year by year, and the FMCG industry entered a slow decline channel in 2013. In previous years, they still maintained scale and dared not lay off employees, but look at 2017: a large number of frontline teams of major brands laid off more than 20%! Does the remaining market network need to be taken over? Does the brand need promotion offline? Do so many sales points need to be connected? Do key terminals need to be occupied? What a huge opportunity this is! In the coming years, professional marketing companies will have the biggest opportunity. Brands will gradually return market promotion, frontline management, and market expenses to channel dealers, but are you ready? Dealers have natural local advantages and flexible institutional advantages. If you miniaturize the business team, make key business personnel partners, and focus the company on brand promotion and market operation, is there a chance to control the market and earn considerable profits instead of porter fees? If you also outsource warehousing and distribution to third-party service companies, operate with light assets, and at the same time, outsourcing warehousing and distribution can provide more convenient financing channels, and the team is more streamlined and professional, is there a better chance to create higher per-capita output? Now look at logistics: the FMCG urban distribution market will definitely see rapid development of third-party services in the coming period, especially in central cities. But unlike commercial flow, third-party logistics is standardized operations, prioritizing systematization and scale; standardized and scaled markets will eventually become concentrated. Whether the path suits you requires careful consideration. It is important to deeply understand that third-party distribution is not simply delivery. In a sense, it is a large industrial operation model, requiring systematic technical capabilities, large team management capabilities, and standardized implementation and replication capabilities. The Wanchaobang team started operating FMCG same-city warehouse and distribution integration in 2015, including system development, market recruitment, service standard establishment and implementation. The difficulty of the process and the dangers of pitfalls cannot be fully described in words. Objectively speaking, what third-party logistics requires is precisely contrary to the core flexible advantages of dealers. Dealers who can meet those requirements may be less than one in a hundred. Of course, cooperating or even forming joint ventures with professional third-party service companies, by providing existing delivery vehicles or capacity, revitalizing assets and earning good returns, is another viable business. In 2018, whether left or right, dealers must make a choice to see the future. But be cautious before choosing, and persist after choosing. Without caution before choosing, the persistence afterward is meaningless.