Click to read the original text for details. Introduction Ma Yun's New Retail is actually "New Commerce." The people's teacher Ma Yun, who was delayed by Alibaba, has announced his retirement. To be honest, I will miss him. Despite my many grievances with "Ma-style chicken soup" and various remarks by Teacher Ma, he remains one of the business leaders I admire most, and he is a true business genius who has contributed to society. Traditional Chinese culture emphasizes "establishing virtue, establishing merit, and establishing words," known as the "Three Immortalities." Teacher Ma has excelled in all three aspects and can be considered "immortal." The most prominent is, of course, "establishing merit." E-commerce and mobile payments have brought convenience to people, improved social efficiency, and driven consumption growth – truly extraordinary achievements. Teacher Ma, of humble origins, with a far-from-handsome appearance, went from setbacks in creating a yellow pages company to building the Alibaba business empire, serving as an inspirational model for a generation. There's also his youthful feat of "shouting at street thieves stealing manhole covers." This can be called "establishing virtue." Teacher Ma's "establishing words" should be his "Five New" – "New Retail, New Finance, New Manufacturing, New Technology, New Energy." Among the "Five New," only "New Retail" has caused a huge response and been put into large-scale practice. Unfortunately, Ma Yun, a liberal arts student, did not give a precise definition of "New Retail." His explanations are slogan-like and empty: "Pure e-commerce is dead," "online-offline integration," "using big data and AI as main technical means," "centering on consumers to fully integrate payment, membership, inventory, services," etc. The Ali Research Institute once issued a "New Retail Research Report," which seems more like a patch-up job for Teacher Ma. It says the essence of New Retail is "always providing consumers with value-for-money content at all times." I read it as a comedy sketch – I laugh every time I see it, feeling that New Retail is truly a "living Lei Feng," and communism is about to be realized. Another important statement is "reconstruction of people, goods, and places," which is completely correct but useless. Retail's basic elements are "place, consumer, and product." Since it claims to be "new," of course, it must inject new things into these basic elements. This statement sounds high-end but is actually nonsense, equivalent to saying "New Retail is new." So, it's unlikely to gain a correct understanding of New Retail from their remarks. Any so-called "New XX" is itself a transitional concept, often used when old features are about to disappear, old methods are about to fail, and new methods and features have not yet formed, because "new" and "old" are always relative concepts. The traditional hypermarkets that are declining were called "modern terminals" five years ago. So, let's judge from their actions what this New Retail really is, what it wants to do, and what impact it will have on the business environment. How should brand owners cooperate with them? What risks should they avoid? Professor Liu Chunxiong has made a comprehensive summary of the things done under the banner of "New Retail" in the past two years: The first type is new species retail, such as Yonghui and Hema. These are doing vertical integration, from manufacturing to retail, all the way down. Recently, Hema came out saying they don't charge entry fees, promotion fees, or any channel fees, "returning to the essence of retail." Many brand owners were so grateful they almost cried. But this is a misunderstanding. Go to Hema and you'll see the main products are fruits, vegetables, meat, eggs, seafood, and then cooked food and light dining. For the pre-packaged foods that are the mainstay of brand owners, either Hema's private label products, like the "Hema Daily Fresh" milk in cooperation with Fonterra, or imported original-label products. Traditional brand owners have little to do with it. In Hema's own words, what they want to do is not just "New Retail," but "a one-stop comprehensive service provider for New Retail driven by digitalization." My understanding is "eating up the upstream, midstream, and downstream." The second type is various internet bigwigs acquiring stores. For example, the lively RT-Mart, as well as Sanjiang, Yonghui, Bubugao, etc. This is more about strengthening the stores themselves, but KA is basically still KA, and suppliers are still the same suppliers. Some have shown very significant results, like Tianhong, while others haven't seen obvious changes. The third type is using platforms to activate traditional stores, claiming to be "platform empowerment." For example, "Tmall Xiaodian" and "JD Convenience Store" for convenience stores, "Suning Xiaodian," etc. These three types all involve Alibaba. There are also those unrelated to Alibaba that intentionally or unintentionally "crash into" the concept of "New Retail." Luckin Coffee claims to be "New Retail coffee," Heytea claims to be "New Retail tea shop," and Meituan-Dianping, which emerged from the "thousand-group war," is also called New Retail catering. Social e-commerce like Pinduoduo and Yunji also call themselves "New Retail." NetEase Yanxuan and Xiaomi are also said to be other forms of "New Retail." The northwest noodle shop next door, which now accepts online orders for delivery, also calls itself New Retail. I won't dwell on the pyramid-scheme micro-businesses, O2O, and unmanned retail that have already died. There are so many "New Retail" everywhere that the term is clearly insufficient. With so many "New Retail," I wonder if you, dear readers, have noticed any clues. Here, New Retail no longer refers only to the "retail link," but to the entire business system related to retail, including brand owners, distributors, retailers, and service platforms. The ambition of New Retail is not the reconstruction of "people, goods, and places," but the reconstruction of the "production-supply-wholesale-retail" relationship. Whether you produce biscuits, candy, milk, beverages, clothing, books, or distribute tissue, stationery, toothpaste, soap, appliances, or phones, as long as your products reach households through retail, you are all counted in the "New Retail" system. This is not New Retail at all; it's clearly about establishing a new commerce with retailers (platforms) at the core. Is this commercial progress? Of course it is. I have previously criticized the domestic channel chain (now called supply chain in a high-sounding way) for being fragmented, calculating against each other, causing serious internal friction, and low efficiency. In contrast, mature market economies tend to focus on vertical integration, supplemented by horizontal integration. What New Retail is doing now is vertical integration, with itself as the chain leader. Once this vertical supply chain forms, it will greatly reduce channel internal friction: internal friction between brand owners and distributors, and between distributors and retailers, greatly improving channel efficiency. The backward channel links, such as brand owners who treat distributors as customers, calculate against distributors, and only grasp "sixth-hand" market information; and distributors who have degenerated into delivery agents, relying on manufacturer fees – these should all be integrated. If not integrated by New Retail, they will be integrated by other means; otherwise, there is no justice. Is this a scam? Of course, it's also a scam, especially from the perspective of brand owners. How can New Retail become the chain leader? Of course, by leveraging its voice over consumers. Where does its voice over consumers come from? First, it's naturally close to consumers; second, it has a first-mover advantage in new technology applications. This is objective. There's also subjective hype, reflected in two aspects. First, the bigwigs come out to brag. When a new thing appears, it usually shows radical, revolutionary, disruptive expressions, telling everyone "if you don't play this way, you'll die." This is for publicity and momentum, aiming for "winning without fighting." It's understandable, but whether it's true is hard to say. If you get anxious because of this and try to cling to a big thigh and end up in a ditch, that's your own fault. Another kind of hype is that New Retail aims to weaken brand owners' voice over consumers. This is more conducive to the formation and consolidation of New Retail's chain leader position. At Hema's supplier conference, most attendees were agricultural product suppliers or brand owners willing to do OEM. Some traditional big brand owners just came to decorate the scene. In my previous article on New Retail, I mentioned: The original game pattern of production-supply-wholesale-retail has been broken, and a new pattern is forming. This time, the main battlefield is the close combat between brand owners and New Retail platforms. Both sides are competing for control over C-end traffic and voice over customers. What New Retail wants to attack are those brand owners who are too far from the market and have no traffic of their own. For them, there are only three paths: 1. be eliminated by the market, 2. become high-priced traffic buyers, 3. become OEM factories for New Retail (this is said to be "New Manufacturing," "through New Retail platform big data to directly reach consumers"). Hoping that New Retail will come and you can cling to a big thigh and fly together is basically wishful thinking. But Apple won't be integrated by New Retail, nor will Xiaomi, Moutai, or Laoganma. Because these brands naturally carry traffic, and this traffic is built through long-term brand and product communication. On the contrary, these brands can establish a supply chain with the brand owner at the core and become the chain leader themselves. In fact, channel chain integration with brand owners as chain leaders has existed before, such as Wahaha's distribution consortium, but it integrated more of the first and second wholesale links. Traditional channel intensive cultivation is also a channel chain integration initiated by brand owners, but it's a bit crude. Currently, New Retail's layout is mostly in the FMCG field. First, because FMCG brand barriers are relatively low, easy to be replaced and broken one by one; second, because FMCG overall marketing level is low, with years of focus on channel games and low brand communication levels. The ambition of New Retail platforms is not easy to achieve. Even in the weakest FMCG field, a convenience store has thousands of SKUs, a large store has tens of thousands, hundreds or thousands of brands, dozens of categories. Can they all be handled all the way down? That's really thinking of themselves as God. For the New Retail revolution to truly form new commerce, there is still a long way to go. Whether the current "God mode" can succeed is hard to say. In the long run, the relationship between retailers and suppliers must be cooperative. But during the special period of great change, the game between the two is greater than cooperation, and they may even fight fiercely for C-end traffic. Brand owners can choose to cooperate with New Retail, but they must not be "incorporated" by New Retail (euphemistically called "integration"). "Serving Qin with land is like carrying firewood to put out a fire." Building your own brand traffic is the key; don't lose your composure. "Let him be fierce, let him be evil; I have a breath of true energy." This true energy is your brand value, your own traffic, your fan loyalty, and your circle communication power. Some people will cite the early development of KA stores as an example, saying that in the early years, "brands that embraced modern terminals" succeeded, while "brands that stuck to traditional circulation markets" were eliminated. Therefore, they are very anxious about the development of New Retail, feeling that if they don't embrace this change, they will soon die. This is only looking at the surface. In those years, those who "embraced KA" and enjoyed traffic dividends certainly had many successes; but those who were eaten by KA's various fees until nothing was left were also numerous. Those years were precisely when brands like Master Kong, Wahaha, Yili, Mengniu, Dali, Yake, Yinlu were rapidly rising. Which one truly succeeded by "embracing hypermarkets"? It wasn't modern terminals that made them successful; they made themselves successful. Their good performance in "modern terminals" was precisely because of their strong brand pull or strong channel push. Only when you are strong can you occupy a more favorable position in the reshuffling of the channel chain. "Let him be strong, let him be strong; the breeze blows over the mountain. Let him be horizontal, let him be horizontal; the bright moon shines on the great river." That's all. Source: Lao Miao Tears Marketing (ID: yiheyingxiao) October 23-24, during the Autumn Sugar and Wine Fair, the "2018 FMCG City Distribution Logistics Conference" hosted by New Distribution will be held. At that time, we will invite industry bigwigs, FMCG warehousing and distribution experts, and distributors who have transformed into unified warehousing and distribution platforms to discuss and answer questions about the future development trends of FMCG city distribution logistics and practical cases of distributor transformation to unified warehousing and distribution, hoping to bring you different inspiration and thinking! -END-