Keyword Interpretation: Brand Owner Industrial Internet Marketing Platform Distributor Transformation and Upgrading The process of China's economic development, consumer upgrading, and changing times is also the process of transformation, upgrading, and evolution for Chinese distributors. The topic of distributor transformation and upgrading is a perennial theme in the distribution sector. Before analyzing how distributor enterprises can transform and upgrade with the help of brand owners' industrial internet marketing platforms, we must first clarify: What is a brand owner's industrial internet marketing platform? What is distributor transformation? What is distributor upgrading? 1. Brand Owner Industrial Internet Marketing Platform: —A brand owner's industrial internet marketing platform refers to a marketing platform built by powerful brand manufacturers using mobile internet and big data technology to enhance the competitive advantage of the entire industry chain. It is used jointly by distributors and retailers and has the following characteristics: Utilizing mobile internet and big data technology to connect offline, online, and social spaces, meeting consumers' anytime, anywhere shopping needs, as well as the enterprise's own omnichannel marketing needs with downstream distributors and retailers. Connecting the entire industry chain, achieving interconnection among brand manufacturers, channel distributors, retailers, and consumers. Through seamless links between "people-to-people, device-to-device, and process-to-process," it truly realizes integrated operations between manufacturers and consumers. Based on the principles of "openness, sharing, and empowerment," it builds distributed, SaaS-based mobile internet tools. In operations, it does not distribute traffic but shares it with downstream distributors and retailers for their independent use, while also possessing marketing functions such as distribution, promotion, sales assistance, decision-making, and analysis. 2. Distributor Transformation: —Distributor "transformation" refers to: Distributors may use their original capital, hardware, network, and other resources to develop a new business or project that is not directly related to their original business operations, to increase new income. It may also involve distributors starting from scratch. For example: Distributors extend upward along their original sales channels to become brand owners, extend downward using upstream supply chains to open retail stores, use original warehousing and distribution for third-party logistics, or use existing channel communication carriers for advertising business. These are all examples of distributor transformation. Although these businesses still appear to be in the distribution industry, they have actually deviated from the essence of distribution and become another node in the original ecosystem. 3. Distributor Upgrading: —Distributor "upgrading" refers to: Introducing a new element (such as a technology, model, or management system) into the distributor's existing enterprise to improve efficiency, reduce costs, and expand scale. For example: Distributors restructure distribution channels by introducing the internet, shifting from a single offline channel to omnichannel operations (offline and online), thereby expanding their sales scale. Another example: If the warehouse is chaotic, upgrading to high-efficiency output through AI software technology or shelving. Or, if original sales personnel are poorly managed, inefficient, and fail to execute terminal actions thoroughly, introducing visit-sales software to strengthen management can improve terminal display effectiveness and reduce labor costs. These all fall within the scope of distributor upgrading. 4. Necessity for Distributors to Transform and Upgrade with the Help of Brand Owners' Industrial Internet Marketing Platforms The question of whether distributors need to transform and upgrade is no longer in need of elaboration or debate. In today's mobile internet and new economic normal, the transformation and upgrading of the entire distributor community has become an inevitable topic. That is, the issue is not whether distributors should transform and upgrade, but how to do so. This article focuses on why distributor enterprises should leverage brand owners' internet marketing platforms, why they should join brand owners' operating systems, and the necessity of implementation. First, it is an inevitable outcome of market economy development and a realistic choice for the distributor community for distributors to transform and upgrade with the help of brand owners' industrial internet marketing platforms. Since 2014, with the advent of the new economic normal, market competition has transitioned from the "demand satisfaction stage" to the "market grabbing stage." Driven by survival pressure, market competition has escalated into a "life-or-death" battle, commonly known as "substitution competition" or "replacing competitors." Competition manifests as price wars, promotion wars, channel wars, and public opinion wars. Intense competition has led to the failure of existing distribution models and marketing tactics. Ultimately, market competition must transition from "resource consumption wars" to "value chain competition." Market competition is no longer between enterprises and enterprises, or distributors and distributors, but between entire industry chains. In terms of competitive form, it is "brand owner + distributor + retailer" competing against another "retailer," "distributor," or another "brand owner." Ultimately, it is competition between two ecosystems. The outcome of such competition is clear: no single enterprise or distributor can withstand the strong impact of another manufacturer alliance or ecosystem. In the ecosystem competition stage of the value chain, brand owners, distributors, retailers, and even ecosystem node service providers are no longer engaged in simple product transactions. Instead, they assist distributors, retailers, and service providers in doing systematic work such as "distribution, sales assistance, and promotion." Distributors choosing upstream brand manufacturing partners no longer only look at products but also value the ecosystem behind the product and the enterprise's marketing management model. Only by allying with upstream brand manufacturers, uniting downstream retailers, and forming alliances with non-competing peers can distributors build localized internet marketing platforms (localized ecosystems) to develop rapidly and establish a foothold in the local market. Second, distributors in the new era are no longer satisfied with the identity of "market intermediaries." Becoming "masters of the market" is an urgent need for modern distributors. In the process of manufacturer-distributor cooperation, distributors often have various concerns: those who fail to meet sales targets may be eliminated by the enterprise; those with excessive sales scale are often split by the enterprise; and personnel changes at upstream factories can be fatal to distributors. In daily operations, distribution networks are controlled by downstream customers or sales teams, who may rebel at any time. Therefore, distributors often feel a sense of crisis, worrying about becoming stepping stones in the market. The "industrial internet marketing platform" not only facilitates the transformation and upgrading of distributors but also sorts out the future development strategy of distributor enterprises, actively promoting alliances with upstream, downstream, and middlemen. Through the implementation of the "industrial internet marketing platform," distributors will become true interest communities with brand manufacturers, retailers, and cross-industry alliances, transforming distributors from market intermediaries into masters of regional markets. At the same time, it builds the enterprise's ability to continuously make money. 5. How Distributors Can Transform and Upgrade with the Help of Industrial Internet Marketing Platforms Whether distributors transform or upgrade, they revolve around the three goals of "improving efficiency, reducing costs, and increasing revenue." However, for each individual distributor, a general transformation and upgrading cannot be interpreted uniformly, nor can it be solved simply by introducing a brand owner's industrial internet marketing platform. For individual distributors, we will answer how to achieve transformation and upgrading with the help of brand owners' industrial internet marketing platforms through three questions and case studies: Which distributors are suitable for transformation? Which are suitable for upgrading? What is the order of transformation and upgrading? Based on the keyword interpretation, we know that transformation involves distributors using their own resources to develop new businesses and increase new income. Large distributors with mature and advantageous resources are more suitable for transformation. Small distributors have incomplete networks, no product portfolio, and tight capital, so how can they have funds for new businesses? At this point, talking about transformation is premature. Upgrading, on the other hand, involves implanting a new element to improve efficiency, reduce costs, and expand scale in the existing enterprise. The traditional procurement, distribution, warehousing, delivery, and management models of distributors are inefficient, high-loss, repetitive, high-intensity, and labor-intensive. This mode of operation not only keeps costs high but also makes them higher. It cannot meet the needs of new product iteration, old product distribution, and brand communication. It also creates difficulties in recruiting, using, and retaining talent. Therefore, all distributor enterprises need upgrading, and they urgently need it. Therefore, distributor enterprises should follow the principle of upgrading first and transformation second. After upgrading and transforming the existing enterprise to achieve healthy operation, they can then proceed with transformation. For small distributors, they should first leverage the brand owner's industrial internet marketing platform, achieve upgrading and optimization with the help of upstream manufacturers, thereby achieving the goals of improving efficiency, reducing costs, and increasing revenue, consolidating and expanding their market resources, and then use those market resources for transformation to add new income. Large distributors, based on their current situation, should leverage the ideas, resources, and technology of upstream manufacturers to achieve transformation, increasing the success rate and reducing the risk of transformation. How to transform through the industrial internet marketing platform? How to increase new income? Traditional distributor operating models are sales-oriented, centered around warehouse inventory management, with resources primarily used for their own use. According to the new distributor model proposed by the author, achieving distributor transformation mainly involves three steps: Step 1: Refine the distributor's core resources and identify business innovation directions. Based on the distributor's characteristics and existing resources, re-sort and optimize, extracting nine major resources: warehousing, distribution, capital, distribution network, supply chain, advertising carriers, personnel, and public relations. Based on resource advantages, identify usable advantageous resources. Step 2: Introduce the new distribution model and industrial internet marketing platform (internet + distributor tools) to build a localized internet marketing platform (i.e., regional B2B platform). Use the advantageous resources extracted from the nine major resources for business innovation, achieving eight types of innovative income: 1. Warehousing income, 2. Distribution income, 3. Advertising income, 4. Self-operated price difference, 5. Internet finance, 6. Transaction flow commission, 7. Promotion commission, 8. Operation services. It should be noted that these eight businesses are not all innovated simultaneously but are promoted in an orderly manner based on the distributor's own situation, one by one. Step 3: Carry out actual operations, promote the platform, and successfully build a regional industrial internet marketing platform (i.e., regional B2B platform). This achieves a shift from the profit model of earning "single purchase-sale price difference" to a new profit model of earning "market operation commissions," from making money from downstream customers to making money from market services, while building the distributor's ability to continuously make money. How to upgrade through the industrial internet marketing platform? Achieve the goals of improving efficiency, reducing costs, and increasing revenue. Looking at the development history of China's distributor community, it is not difficult to see that distributors have undergone two large-scale upgrades. The first upgrade was from "state-owned monopoly product supply" to "private wholesale sourcing," which promoted the rise of wholesale markets across the country and eliminated many distributors transformed from traditional state-owned enterprises. The second upgrade was from "sitting merchants" to "traveling merchants," which promoted the rapid development of deep distribution and led to the decline of wholesale markets. Now, facing consumer upgrades and the rapid development of mobile internet, payment, information technology, and modern logistics, the retail sector is undergoing a reconstruction of people, goods, places, and warehouses. The third upgrade of the distributor community in the distribution field has become urgent. So, what methods can distributors use to upgrade to achieve efficiency, cost reduction, and revenue increase? First, introduce the industrial internet marketing platform to improve two efficiencies: The first is to improve the external collaboration efficiency of distributor enterprises: by introducing the industrial internet, improve the collaboration efficiency between distributor enterprises and upstream manufacturers and downstream terminals, enabling synchronized execution of promotions, sales assistance, distribution, and communication. The second is to improve the internal operational efficiency of distributor enterprises: by empowering distributors and retailers, reduce work difficulty, improve operational efficiency, reduce back-office personnel, increase frontline personnel, and maximize human resource efficiency. Second, on the basis of improving efficiency, expand the scale of the local marketing platform, achieving positive improvements in order density and average transaction value, thereby reducing four costs: procurement costs, warehousing costs, logistics and distribution costs, and marketing management costs. Finally, increase two incomes: The first is to rely on distributor upgrading, expand scale to increase income: after introducing the industrial internet marketing platform, expand the existing product portfolio, number of outlets, channel categories, and administrative regions, bringing income growth through scale expansion. The second income is to rely on distributor transformation, using the eight business innovations to add new income. In other words, distributors leverage the brand owner's industrial internet marketing platform to achieve the goals of transformation and upgrading, building the ability to respond quickly to local market changes and the ability to seize the market, forming the core competitiveness of distributor enterprises, and promoting the rapid rise of distributors. The above is the author's humble opinion on distributor transformation. Welcome industry peers to comment and provide guidance.
About Teacher Wang Huanzhi: Director of Hebei Lvling Group, CEO of E-commerce Division.
Teacher Wang Huanzhi has 19 years of frontline marketing practice and management experience in the FMCG industry, specializing in research on internet+ transformation and profit model innovation for brand owners and distributors. He has served dozens of enterprises and hundreds of distributors, including Liuge Walnut, Nanjing Weigang, Sanlu Group, Beijing Sanyuan, Henan Chaohui, and dozens of other manufacturers. Editor's PS: Famous marketing expert Teacher Wang Huanzhi will attend the FDIC 2018 China FMCG Digital Innovation Conference held by New Distribution in Shanghai from August 22-24 as a guest speaker, where he will share more pioneering insights. Interested friends should not miss this conference. -END-