---
title: "Does Playing New Retail Necessarily Mean Eliminating Distributors?"
description: "The competition in the internet era has entered the second half, and 'New Retail' is the focal battle. Since Jack Ma first proposed the 'New Retail' strategy in October 2016, various terminal formats have emerged, and B2B platforms like Alibaba's Retail Link and JD's New Path have entered the fray, raising the question: must distributors be eliminated? The article argues that distributors should not and cannot be eliminated, but they must undergo transformation and upgrading, with examples like Yantai Yishang and Fengwang showing successful models."
author: "爱吃瓜的B2B小咖"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-02-26"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/OhvDKsnjGcv2FRbvc0RZLw"
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---

# Does Playing New Retail Necessarily Mean Eliminating Distributors?

> The competition in the internet era has entered the second half, and 'New Retail' is the focal battle. Since Jack Ma first proposed the 'New Retail' strategy in October 2016, various terminal formats have emerged, and B2B platforms like Alibaba's Retail Link and JD's New Path have entered the fray, raising the question: must distributors be eliminated? The article argues that distributors should not and cannot be eliminated, but they must undergo transformation and upgrading, with examples like Yantai Yishang and Fengwang showing successful models.

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It is an indisputable fact that competition in the internet era has entered the second half.
Undoubtedly, 'New Retail' is the focal battle of this second half.
Since Jack Ma first proposed the 'New Retail' strategy at the Yunqi Conference in October 2016, over the past year or more, various terminal formats such as unmanned shelves, franchised small stores, smart vending machines, unmanned convenience stores, Hema Fresh, and Super Species have entered the battlefield under the banner of New Retail, with media hype and capital chasing, making quite a spectacle.
On the other hand, following the so-called industry consensus that 'B2B is the only way out for traditional retail,' platforms like Alibaba's Retail Link, JD's New Path, Zhongshang Huimin, and Yi Jiu Pi have emerged like mushrooms after rain, eagerly joining the New Retail fray.
As the saying goes, 'The duck feels the warmth of spring water first.' I believe most distributors in the traditional retail industry haven't yet figured out what 'New Retail' really is, but they have clearly felt one thing: these various B2B platforms that have appeared on the market are all here to revolutionize—to revolutionize distributors.
It's not surprising that New Path and its Zhangguibao still follow JD.com's traditional self-operated model; nor is it surprising that B2B platforms like Zhongshang Huimin and Yi Jiu Pi are taking the route of disintermediation. What is most surprising is that Alibaba's Retail Link did not follow the Tmall model: although Retail Link does have joint operations with distributors on a consignment basis, in the end, sales orders and customers are firmly in the hands of Retail Link, making distributors seem like mere suppliers.
Looking at the models of most B2B platforms on the market, we can't help but ask: Does playing New Retail necessarily mean eliminating distributors?
Over the past year or more, the debate on this issue has never ceased. Many industry leaders believe that China's consumer goods market is limited in size, and as B2B scales up and transaction volumes increase, it will inevitably squeeze the living space of traditional distributors, making the revolution against distributors an inevitable trend. Others argue that with a market volume of tens of trillions, even if big platforms like Alibaba and JD take away a few hundred billion, it won't have much impact on distributors. The most interesting viewpoint I've heard is: several internet-born enterprises tried to leverage internet thinking, technology, and capital to shake up the traditional retail industry, but instead of shaking the industry, they woke up the practitioners. These veterans of traditional retail, armed with internet tools, turned those internet companies that tried to take their rice bowls into martyrs of the New Retail reform. This is indeed just a joke, but it also reflects many phenomena in the industry and market over the past year or more.
More than a decade ago, Dell's direct sales model emerged, competing with Compaq and HP's distribution models. Over a decade later, both direct sales and distribution models still coexist in the digital home appliance industry. Dell's emergence only acted as a catalyst, prompting an upgrade of the entire supply chain system for Compaq and HP, but they did not disappear.
As an old rookie who has been in the retail and FMCG industry for over a decade, my view on the aforementioned question is clear: New Retail, or borderless retail, is fundamentally about using advanced technology and concepts to reshape the traditional retail industry. To put it directly, **in the New Retail era, distributors should not and cannot be eliminated, but they will undergo a transformation and upgrading process, during which a small number of distributors who cannot keep up in efficiency and service will be weeded out.**
Compared with platforms like Retail Link, New Path, Zhongshang Huimin, and Yi Jiu Pi, the well-known Yantai Yishang is a classic case of distributors transforming and upgrading with external services in the New Retail era. Unlike the disintermediation approaches mentioned above, Yantai Yishang and its Wanshanggou platform integrate hundreds of local distributors in Yantai by providing services such as unified warehousing and distribution, B2B online transactions, and store ordering platforms. This not only preserves the traditional retail distribution system but, more importantly, significantly improves the efficiency, experience, and service of ordering and delivery in the traditional retail distribution system, while also reducing operating costs for distributors to varying degrees.
Similarly, Fengwang, hailed as the 'upgraded version of Yantai Yishang' in the industry, is also a popular choice for many distributors who want to transform and upgrade to avoid being eliminated in the New Retail era. Unlike Yantai Yishang, which only provides unified warehousing and distribution and a B2B trading platform within a single city, Fengwang has a more advanced SaaS-based open platform and a smart supply chain system applicable to all retail ecosystem scenarios.
People in the FMCG and retail industries know well how important a system and platform that can apply to all retail scenarios is for distributors' transformation and upgrading. The business scenarios of traditional retail are extremely complex. Besides various operating models such as distribution, consignment, and joint operations, each retail terminal—supermarkets, chain convenience stores, restaurants, nightclubs/KTVs, vending machines, and mom-and-pop stores—has different delivery rules. Warehousing and distribution, settlement methods and credit periods, vehicle sales and visit sales, shelf-life management, return and exchange management, SKU quantities, full-case and split-case handling, and so on—the factors involved are numerous and the rules are complex. Without such a system, it is completely impossible for traditional retail to improve efficiency and reduce costs. At the same time, compared with traditional warehousing and distribution systems, B2B platforms, and store ordering systems, Fengwang's Tianfeng system is a fully open SaaS platform, which is very important for protecting distributors' interests and enabling distributors to run their own businesses on the B2B platform.
Category is also an important differentiator. Platforms like Retail Link, Zhangguibao, Yi Jiu Pi, and Zhongshang Huimin decide what goods to sell on their platforms. Therefore, it often happens that a distributor supplies goods to a platform, but the product review fails. So, platforms like Retail Link do have significant advantages in terms of brand awareness, promotional efforts, various subsidies and activities, and offline ground promotion and services, but they overlook the most important point for distributors: a distributor representing a manufacturer's products derives most of its profits from second- and third-tier, or even fourth-tier, brands. However, platforms like Retail Link, in most cases, only sell the 'hard currency' goods from distributors, which generate sales but little profit. In this regard, Yantai Yishang and Fengwang are much better, as they are like a B2B version of Tmall, where distributors open their own stores on the platform and decide what to sell, at what price, and how to promote.
Regarding whether to eliminate distributors, besides the business model mentioned earlier, another differentiating factor is customer ownership. For example, setting aside self-operated platforms like Zhangguibao, Zhongshang Huimin, and Yi Jiu Pi, let's take Retail Link and Fengwang. Neither of these adopts a direct procurement model, so they don't seem to be out to eliminate distributors. But the reason I categorized Retail Link as being in the camp of eliminating distributors is that when a small store orders from Retail Link, the store cannot see which distributor the goods come from, and the price and promotional strength are determined by the platform. Additionally, with Retail Link's ground teams in every city, even if a small store buys goods from a distributor through Retail Link, the customer belongs to Retail Link, not the distributor. Your customers, with your help, gradually become someone else's customers—if that's not eliminating you, what is? In contrast, Fengwang adopts the model of Alibaba's Tmall: Fengwang provides the platform and system, and distributors open their own stores on the platform, deciding what to sell, at what price, and how to promote. Moreover, distributors can accurately grasp real-time information on how much each small store orders.
**Furthermore, there is the perennial headache for distributors: warehousing and distribution.**
Retail Link has Cainiao Network behind it, New Path relies on JD Logistics, and Yi Jiu Pi and Zhongshang Huimin also have self-built or integrated logistics resources. Thanks to platforms like Retail Link, 48-hour delivery after ordering has become the standard in the FMCG B2B industry, which is indeed a benefit of the New Retail era for terminal stores. I think it is precisely for this reason that so many B2B platforms have sprung up in the past two years, as obvious experience upgrades like last-mile delivery are visible to all. However, let's review the e-commerce industry we are most familiar with: over a decade later, only JD.com has survived by building its own logistics system. Many platforms that initially built their own logistics have either died or are on the road to death. This principle also applies to the retail and FMCG industry. The reason is simple: although the market volume is huge, the logistics service system serving this volume has always existed, and most of it is in the hands of distributors and wholesalers. Now, suddenly so many B2B platforms have emerged, all wanting to build another logistics system to serve this market. How could the cost not be high? It would be unreasonable for them not to die.
This is why platforms like Retail Link and Fengwang integrate distributors' existing warehousing and distribution systems, albeit in different ways. Retail Link may set some distributors' warehouses as virtual warehouses, taking on part of the delivery work for other distributors' goods, and naturally receiving corresponding delivery income. However, Retail Link still relies too heavily on Cainiao's warehousing and distribution network under Alibaba. Unfortunately, most of Cainiao's partners come from the e-commerce industry and are almost laymen when it comes to retail and FMCG warehousing and distribution services. Moreover, if a distributor first delivers goods from its own warehouse to Retail Link's warehouse, and then Retail Link delivers to the small store, an extra delivery link increases costs. If it's a virtual warehouse and the distributor delivers directly to the small store, it's even more of a disaster for the distributor: originally, distributors delivered to small stores once a week or every two weeks, but now, with Retail Link, after the 400-yuan minimum order, each distributor might only deliver goods worth a few dozen yuan to a small store, and it must be delivered within 48 hours. If that's not a disaster, what is?
Fengwang's approach is relatively smarter. Fengwang serves capable distributors, providing them with advanced warehousing, distribution, and order management systems, as well as warehousing and distribution operation training or entrusted management services, to build a unified warehousing and distribution system within the city. After all, over the past decade, Fengwang has managed hundreds of warehouses for Alibaba, with a single warehouse handling up to several million orders per day. This upgrade of distributors' traditional logistics systems not only reduces their warehousing and distribution costs but also brings additional logistics income for capable distributors.
Finally, regarding the question at the beginning of this article, let's see if we can find an answer.
Platforms like Retail Link, Yi Jiu Pi, Zhongshang Huimin, and New Path have strong backgrounds, capital, technology, and brand. Over the past year or two, these platforms have continued to grow and expand, which is an indisputable fact. However, if we conclude based on this that distributors will be eliminated by these platforms, I think it is too early. After all, we have seen the success of Yantai Yishang, and there are also players like Fengwang, Haiding, and Zhongke Shangruan in the industry.
**For New Retail, let's wait and see!**


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