Click "Read Original" for details. Distributors are organizations with high social value but low valuation. They are scattered across the country, playing a crucial role in supply chain organization and delivery for consumer goods, with immense social value. They are considered low-value because they neither own products nor retail stores. Investment institutions fund manufacturers and retailers, but rarely distributors, and even then at low valuations.

It is precisely because distributors are undervalued that many so-called new enterprises tried to eliminate them with "price" in recent years. Unfortunately, they failed, confirming the saying: "If it exists, there must be a reason!"

Although existence has its reasons, we must also consider: what is the core competitiveness of distributors today? Or, what is the winning formula for distributors to sustain growth?

Whenever I visit a city, I communicate with local leading distributors, asking why they have become so large locally. Four years ago, the answers were basically "large team," "large warehouse," "well-known products," and "many logistics vehicles," relying on "scale" to support market position and competitiveness. Hence, we call leading distributors "big merchants."

Previously, "large scale" easily led us to think that a distributor was wealthy and profitable. But today, when you see a large traditional enterprise, the boss will tell you that costs are rising, profits are shrinking, and risks are increasing with policy changes. Why this contrast? The underlying logic is that a company's competitiveness changes with market shifts.

Like Yang Guifei, in ancient times appreciating her "plumpness" was a beauty standard, a symbol of wealth. If she were appreciated today, she might be considered overweight. The logic is that the "market of appreciation" has changed.

Therefore, in the internet era, distributors urgently need to find a new competitiveness. What is new competitiveness? It's not having many logistics vehicles, but having faster delivery vehicles; not having a large warehouse, but having a warehouse with quick turnover; not having many people, but having a team that strives for goals; not having many products, but having the products customers need and delivering them quickly.

Behind these competencies lies a contest of efficiency and cost, a battle of wisdom. High efficiency and low cost will be the underlying competitiveness of distributors.

How to create new competitiveness? This requires multi-dimensional changes in models, methods, and technology, all indispensable.

01 Integrate Online and Offline to Build New Competitiveness in Platform Services

Platform services refer to providing more comprehensive services to terminal stores through the integration of offline and online methods such as salespeople + ordering platforms + mini-programs + WeChat + Douyin, primarily product services currently.

When distributors integrate online and offline, they will naturally evolve gradually: first offering online and offline ordering, then publishing various marketing activities online and offline, then evolving to zero-inventory ordering... Gradually, you will find yourself moving towards platform services, with increasing sales but not significantly higher indirect costs, and stronger terminal stickiness. The reason is that the platform services built by distributors aim to provide better services to terminals, not to spend money for the sake of platformization.

Distributors must also shift their mindset from agent thinking to service provider thinking, focusing on what terminal stores need and when, from the customer's perspective rather than the product's perspective.

02 Leverage New Technologies to Build New Competitiveness in Efficient Logistics and Distribution

When manufacturers visit distributors, they most want to see the warehouse; distributors learning from each other also hope to learn warehouse operations. Why? Because a distributor's logistics is their "half-life."

Currently, most distributors' warehouses are inefficient in operations. When SKUs exceed 1,000 and orders exceed 200, the warehouse becomes chaotic, and the more orders, the more people, typically relying on a manpower-intensive approach.

In recent years, with the popularity of new retail, the phenomenon of split-case picking has increased and is on the rise. Distributors accustomed to full-case shipping resent split-case delivery, but this resistance ultimately leads to more returns later.

Therefore, efficient, low-cost logistics with scientific split-case delivery capabilities will widen the gap between distributors, becoming a new competitive advantage and a trump card for expanding new models and businesses.

For example, under normal business operations, your efficient logistics can partner with national B2B platforms as their joint warehouse; in the booming group-buying business, cooperate with your supply chain and warehousing; in the future, as more new retail emerges, become their backend logistics...

Conversely, if your warehouse remains traditional in management and operation, first, your costs remain high and uncompetitive; second, your logistics exists only for your own commercial flow, closed and worthless. Only by being efficient and open can you seize new market opportunities and realize "strong alliance" opportunities.

How to make logistics efficient? It's not just implementing WMS software; it requires reforms in the following key points:

1) Warehouse Hardware Planning: Re-plan warehouse locations and flow lines based on warehouse characteristics (single or multi-story, low or high ceiling), SKU characteristics, order characteristics (repeat rate, split-case rate), and store characteristics.

2) Intelligent Software Implementation: WMS software may look similar on the surface, all with location management and PDA receiving/shipping, but the core difference lies in the "algorithm." For hundreds or thousands of orders a day, it needs to quickly calculate how to "collaboratively" arrange each worker's tasks to achieve overall efficiency, like navigation software planning the fastest route.

3) Warehouse Performance Assessment: Establish a scientific and fair performance assessment system based on each worker's data, converting each operation into points, e.g., points for shelving a pallet, picking an item, replenishing, etc., linking every action to points to digitize each person's work. Then convert points into "money," enabling a contract system later.

4) Establish a PK Mechanism: Without competition, there is no progress; this is an eternal truth. More and more post-80s and post-90s young people are joining; they need money but won't strive for it as hard as the post-70s. However, everyone needs "face." By digitizing each position, internal competition can be implemented in the warehouse. What to PK? PK picking speed, accuracy, completion rate, hygiene, etc. In short, any position that can be "digitized" can be PKed.

The above 1-2-3-4 are like pipeline principles; only when all four links are done well can the effect be achieved. Conversely, if any one link is not done well, efficiency cannot be achieved.

03 Use Data Applications to Build Competitiveness in Managing the Business with Data

All enterprises must be digitized, and digitization requires "data" as the foundation. Currently, the most effective way to reignite traditional enterprises is to activate people's motivation through "data." So-called partnerships, Amoeba management, or performance management all need "data" support.

Traditional distributors mostly use data only for sales volume, inventory, expenses, and gross profit, staying at the "statistical accounting" level.

In the internet era, distributors need to upgrade data application to the "management" level, i.e., using data to manage, especially to manage "people." The warehouse points and PK mentioned in point three are an example of using data to manage people.

For example, suppose last year's data shows you achieved 100 million in sales, but the "return rate" reached 4%, i.e., 4 million, plus logistics costs, the annual loss from returns is significant. At this point, you need to dig deeper into the data to identify which brands, stores, salespeople, and reasons (near-expiry, damage, refusal) contribute to the 4% returns. Then, in the next year, without reducing sales, work with the entire company to manage this 4%, aiming to reduce it to 2.5%, and the company will share 30% of the 1.5% reduction with everyone.

Working together for "benefits," everyone cares about "data," which is an effective means for enterprise development towards platformization. We will share more methods of using data to manage enterprises on March 15 afternoon!

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