Introduction: Transitioning to B2b is both an opportunity and a challenge. Recently, while visiting the Sichuan market, I found that many distributors are planning to enter B2b, seeing it as an opportunity. However, using their own funds for this endeavor raises many concerns. I'd like to share a few of my views on these issues. Currently, B2b is trending toward rational operations, with both opportunities and challenges. Leveraging internet technology to enhance operational efficiency and optimizing profit through supply chains is an inevitable trend in the FMCG industry. As labor costs continue to rise and consumers seek extreme cost-effectiveness, single-brand deep distribution struggles to support manufacturers' operational costs. Some distributors, leveraging category advantages, do deep distribution within categories to maintain normal operations, but categories eventually expand to more categories. How to manage more categories? A supply chain service provider based on B2b is clearly a good choice.

1. B2b has undergone two rounds of reshuffling The first round was reshuffling by top-tier capital. This can be understood as using deep pockets for unfair competition to acquire customers, violating the laws of FMCG development. Elimination was inevitable, but it had a positive promotional effect—at least it made more store owners aware of what B2b is, and some began to try ordering, completing basic education. The second round was reshuffling among mid-tier players. With a small amount of capital entering, most used their own funds, operations became more rational, focusing on long-term development, and expansion became more measured, shifting from broad casting to targeted fishing, emphasizing operations in first- and second-tier large cities. Many platforms achieved profitability. Meanwhile, self-developed operational systems began to spread to more distributors, advancing their understanding of B2b from awareness to comprehension. Two rounds of reshuffling and two rounds of pitfalls provide vivid lessons; distributors should thoroughly understand these before entering.

2. Opportunities for distributors to enter B2b Personally, I see more opportunities in platform operators at the prefecture-level city level. This market has strong demand, and market capacity can support operational profit needs. Outlets are mainly convenience stores, mom-and-pop shops, and grocery stores. A rough conservative estimate: a prefecture-level city (including subordinate counties) with a population of 4 million, with one outlet per 400 people, would have about 10,000 outlets. If non-tobacco daily sales per outlet are 1,000 yuan, that's 3.6 billion yuan in annual business volume. The market capacity is large enough, meaning different platform ecosystems will emerge. What form will B2b take in prefecture-level cities in the future? Bold predictions include the following types of platform operators:

First: Based on outlet tier classification. Some platform operators serve high-tier outlets (e.g., traditional A/B tier), while others serve low-tier outlets (e.g., traditional C/D tier).

Second: Based on product category classification. Some platform operators focus on food, others on non-food, with further specialization into specific categories like snacks, washing/paper products, or frozen foods.

Third: Based on channel type classification. Some platform operators primarily serve the catering channel, others the circulation channel, and further specialization into government procurement channels, etc.

So, for existing distributors transitioning to B2b, opportunities are significant, but positioning before starting is crucial.

3. Challenges for distributors entering B2b First, understand three phenomena:

First, traditional business and platform business share similarities but are not the same; avoid inertia and empiricism. Second, at the initial stage, it's highly likely that everything follows correct methods (positioning, framework, organization, promotion), but GMV doesn't rise and profits lag, with reasons hard to find. Third, the experience of transitioning from traditional business to B2b digital business is akin to a second startup, which is hard to calm and digest in a short time; the sound of retreat drums often echoes.

These challenges are common for distributors transitioning; mental preparation is needed in advance. Due to space limitations, I'll write a separate summary later.

Six things platform operators must understand

1. Building a platform must be a top-priority project. An important viewpoint: the value of brand owners, like in traditional offline business, still determines your development speed (scale expansion) and depth (profitability). Early on, you can operate with transferred goods, but later you must secure distribution rights for more brands. The logic is simple: for store owners, the greatest value of B2b is wholesale prices even for single items. With price advantages, platform operators must rely on thin margins and high volume. If you're not a first-hand agent but a middleman, profits clearly won't suffice. Of course, not all agency rights are obtainable, but at least for core brands in your platform's main categories, you should have agency rights; otherwise, minimize operations in those categories.

2. Only do cash-flow business. Some distributors ask if they can allow controlled credit periods when expanding stores for rapid platform growth. This is clearly not feasible. First, profits can't support it; B2b's core is rapid product turnover, and profitability hinges on cash flow. Second, it must be distinguished from traditional business models; from the start, it should be clearly prohibited. Once the crack opens, team management and debt collection will become increasingly troublesome.

3. Avoid unreasonable price wars. When two platforms start B2b simultaneously, customer acquisition and retention become crucial. The simplest yet most harmful method is the so-called strategic loss behavior—burning money recklessly to undermine the competitor. A reminder: anything that violates business logic won't last. If the competitor does this, the best approach is to stay still and respond; their three moves will soon be exhausted, so prepare strategies for after that.

4. The essence of B2b is moving C-end business to the B-end. Before transitioning, distributors should understand consumer business. How to acquire users (flash sales, discounts, experiences, scenarios)? How to drive repurchase (coupons for next purchase, points redemption)? How to increase average order value (sell more through product bundling, sell higher-priced through product upgrades)? Think about how to apply these online with B-end customers. A reminder: don't bring C-end promotional items to the B-end; similarly, don't use high-margin products as promotional items. C-end consumers seek practicality, while B-end customers seek quick resale for cash. Many platform operators make similar mistakes; take heed.

5. Positioning is essential. Doing B2b isn't simply moving offline products online. Although all are FMCG, operational logic differs significantly. For example, in terms of categories, food and beverages are high-coverage, high-turnover, high-attention products, while paper products are high-coverage, low-turnover, low-attention products. Their operational requirements and logic differ greatly. How to select products for B2b is a form of positioning. Here are specific positioning methods:

  • Operational advantage positioning: Two days ago, I visited a B2b platform in Chengdu. The owner has over 20 years of experience in washing, daily necessities, and paper products. When transitioning to B2b, the initial positioning was to focus only on several sub-categories in the non-food sector.
  • Value positioning: For example, Dongguan Caihua Trading, which I visited earlier, continuously optimizes its supply chain to provide more and better products to outlets. Its core value goes beyond simple product transactions, focusing more on guiding terminal outlets' daily operations. It's a trading partner while also coaching terminals on how to further optimize their business, empowering small store owners.

Channel positioning: specialize and expand a specific channel Category positioning: specialize and expand a specific category Outlet positioning: specialize and expand a specific type of outlet

Without positioning, you'll grab everything, and GMV may look high, but due to a lack of core competitiveness, it's often inflated and fragile; competitors can easily topple it.

6. Plan the profitability timeline. Transitioning to a platform operator requires upfront investment: improving existing warehouses, optimizing and structuring the team, establishing operational middle and back offices—all cost money. But when will you break even, and when will you achieve profitability? These need planning. Generally, from the first day of operations, if you achieve monthly profitability within one year, operations are excellent; within one and a half years is acceptable. If after two years you're still at break-even or loss, it's time to review all investment aspects and even make major directional adjustments.

Final Thoughts

This year is the first year after the pandemic. Given the current business situation, many distributors are eager to transition to B2b, seeing it as an opportunity. But the greater the opportunity, the greater the loss from failure. It's normal to have concerns; don't be blind. Next, I'll visit more B2b transition platform operators (both successful and failed, some facing confusion, others on smooth paths) and share their operational experiences, whether successful or failed, with everyone.