The following is the core content of the speech delivered by Liu Zhao, CEO of Field 365, at the '2016 China FMCG + Internet Summit' held on October 16. New Distribution has organized the key points as follows: At the meeting, Liu Zhao, CEO of Field 365, delivered a keynote speech titled 'The Survival Path for Traditional Enterprises in the Internet Era.' Liu emphasized that efficiency is the lifeblood of an enterprise. However, due to low domestic labor costs, traditional enterprises generally do not attach importance to efficiency, resulting in a series of problems such as low personnel management efficiency, low order processing efficiency, low warehousing and logistics efficiency, and low logistics vehicle efficiency. But now, the Internet has intensified competition among enterprises, and rising labor costs have reduced corporate profits. Field 365 starts with sales personnel management to help enterprise customers comprehensively improve efficiency in the five dimensions of channels (stores), products, orders, and inventory management. By helping traditional enterprises 'improve offline sales efficiency,' they achieve transformation and upgrading. The following is the full text of the speech. Dear guests, good morning! I am honored to gather with you in Fuzhou. Why can Field 365 host this meeting? Among the attendees, there are brand owners, distributors, and those engaged in B2B e-commerce. As a software provider, Field 365 should play a neutral role in the industry. Today, I also hope to speak from a neutral perspective on how we view this B2B revolution. In the Internet era, what is the survival path for traditional enterprises? A while ago, a survey asked whether everyone's living conditions are better or worse. The results were very pessimistic: the vast majority of enterprises said their living conditions have become worse. But is this survey biased? Because in the past two years, apart from real estate companies in China, which have been relatively comfortable, all other industries have been living in pain. (Laughter) For every enterprise, why has this change occurred? Is the Internet playing the role of a demon in this matter? Actually, we don't need to demonize the Internet. It is just a tool that makes information in society more symmetrical. It has brought three significant changes to the business environment. The Matthew Effect is more pronounced: polarization, the strong get stronger If you manage to create a new product like Kvass, or a new product like steamed cake, because of information symmetry, if the product sells well in the market, it will quickly spread across the country. Strong manufacturers will then produce such single products because it is easier to succeed. The same is true in the Internet industry: with BAT (Baidu, Alibaba, Tencent), the strong have advantages in capital, talent, distribution channels, and brand, so it is easy for them to get better and better, and polarization becomes more serious. More opportunities: mass entrepreneurship and innovation Do new entrants have no chance? We don't think so. It is precisely because the Internet has brought many changes and uncertainties that innovation has become the mainstream of this era. The country encourages mass entrepreneurship and innovation for a reason. Our work in B2B and SaaS is innovation; using new Internet technologies to improve efficiency and help enterprises with sales is innovation. However, innovation is a high-probability event, but successful innovation is a low-probability event. More refined social division of labor: specialization and high efficiency Many of you here are distributors. Everyone is thinking: Is the Internet going to revolutionize distributors? My understanding is this: distributors are engaged in trade. Many of our company names are 'XX Trading Company'; everyone is doing trade. JD.com also said it is just a mover of goods; it is also doing trade. Trade is a long-term business. However, with information symmetry on the Internet, competition is becoming increasingly fierce. What you did in one region can easily be seen by other regions. How to survive in competition? You need to make what you do more professional. We believe that in the future, the division of labor in society will become more refined: those who specialize in production will focus more on production, and those who do trade will focus more on trade. Trade itself is a good business. For example, Apple has the strongest brand value and its products sell best. But Apple's direct stores account for less than 10% of sales; Apple's sales mainly rely on distributors and agents, while its direct stores mainly focus on brand and offline experience. Social division of labor is a major trend; those who are most focused often get more returns. How can you be more focused on what you do? The most important thing is to improve efficiency: producers improve production efficiency, and traders improve trade efficiency. Everyone feels that times are tough, right? Many people attribute it to the economic downturn, but data shows that the total retail sales of social consumer goods increased by 10% year-on-year, which is what we call consumption upgrading. Some also say that e-commerce has had too much impact on us. In fact, no matter how large e-commerce is, it only accounts for about 13%, while offline retail accounts for 87%. Although we can feel the impact of e-commerce, from the data, the impact of e-commerce on offline is actually very small. Because e-commerce also has costs: to get traffic, attention, and purchases on e-commerce, you need traffic. How does this traffic come? You need to spend money on Tmall, Taobao, and JD.com. And this traffic cost is gradually leveling off compared with the cost of offline stores, including rent and labor costs. In the future, the competition between the two will be balanced. Is competition intensifying? Looking from the Internet industry back to traditional industries, we find that traditional industries are actually quite good. Most of us in distribution have exclusive distribution rights; at least in this region, this brand is handled by one company, which is actually a form of protection. In our Internet industry, it's not so lucky; competition is fierce and bloody. You see Didi and Uber competing by burning money. In the group-buying war, 3,000 companies did group buying, 300 got investment, and only one survived, which is Meituan-Dianping (New Meituan). Society as a whole is progressing. If an enterprise's progress is slower than society's progress, you will feel that times are tough. When your enterprise's progress exceeds society's progress, you will feel that others are far behind. Especially when traditional distributors fail to perceive and accept Internet changes quickly, they feel that life is getting harder day by day. There is a very interesting example: In the 16th century, Spain and Portugal dominated; in the 17th century, the Dutch dominated. Why did the Dutch rise during this period? If you study this history, you will find that the Dutch built a ship with a small deck and a large hull, capable of carrying a lot of cargo. The deck was small because taxes were levied based on the width of the deck. This ship had a large cargo capacity, very thin hull, basically unable to withstand cannon fire, but the construction cost was very low, 50% lower, and the loading capacity was 50% more. We all say we are sellers; how can we sell goods better? The Dutch formed such a competitive advantage in the 17th century. It seemed they did many inappropriate things, such as having few cannons on the ship, almost unable to defend against pirates, but if the ship was lost, they would just build another one. Efficiency is the life of an enterprise, but unfortunately in our country, domestic enterprises generally do not attach importance to efficiency; they attach importance to cost. Because labor costs in China are low, domestic enterprises generally do not pay attention to efficiency issues, so warehousing and logistics are inefficient, order efficiency is low, and personnel management efficiency is low. Our distributors pay salespeople; if performance is poor, they only pay a few hundred or a thousand. Anyway, if your efficiency is low, I will pay less, but we never think about how to improve enterprise efficiency. Now times have changed. We see that the national labor cost increases by 16% every year, which is very fatal. Why? If it continues to grow for two or three years, if enterprise efficiency does not improve, your profits will be completely eaten up by labor costs. So improving human efficiency must be the first priority. Improving efficiency is the survival path for enterprises in the Internet era. What is '+ Internet'? It means traditional enterprises use Internet technology to improve efficiency. A typical example is Germany's Industry 4.0, which incorporates Internet and big data factors. If you, as a traditional enterprise, do not move up and do not '+ Internet', then someone will definitely do 'Internet +'. Didi is 'Internet +'. We call '+ Internet' reform, and 'Internet +' revolution. For everyone, we must think about whether we reform ourselves or be revolutionized by others. Here is an interesting fictional story: One day, Kang Youwei and Li Dazhao met. Li Dazhao said to Kang Youwei, 'Your theory of reform doesn't work, right? We need revolution.' Kang Youwei said, 'Revolution is good, but revolution requires bloodshed.' Finally, let me introduce Field 365. We are a tool for improving efficiency. Starting with sales personnel management, we help enterprise customers comprehensively improve efficiency in the five dimensions of personnel, channels (stores), products, orders, and inventory management. Field 365 has now accumulated over 200,000 enterprise users. Many of you here are our customers. We are very grateful for your support to Field 365 and for your support to this grand event. Thank you all. -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and actionable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brand | 016 Distributor B2B transformation | [Long press QR code to follow]