FMCG B2B Second Half: Who Can Dominate? Only Those Who Control Store Chains Every time we look back at the first half, the most common discussion is "How does FMCG B2B make money?" Indeed, with 6 million small store users, a market size of nearly one trillion yuan, and complex transaction levels, all the grand promises have been made, and the big money has been raised. If you don't believe it, try taking a business plan to a VC now. The author has experienced a tough but rewarding time through participating in developing B2B systems, starting regional chain stores, and building national B2B platforms. I remain cautiously optimistic. I believe that in a few years, an app that remains frequently used by small store owners will inevitably form a powerful FMCG entry giant. Let's look at the second half: Viewpoint 1: Under the current trend, blindly expanding nationwide is the most dangerous! Because B2B has strong regional factors, unless you have natural national basic resources. At the same time, the market is too large and complex, and no amount of money is enough to burn. The model of using capital to achieve rapid industry mergers and monopolies through burning money is not applicable here. Those who want to invest in something like OFO can go to sleep. Phenomenon 1: Direct operation or matching? Currently, more and more companies are choosing the self-purchasing direct operation model. Although it is heavy, it still has vitality. Pure matching and price comparison platforms do not intervene in the supply chain, and users on both sides have no stickiness. In the end, they may become tools without bargaining power. This is all a battle for existing stock. Direct operation and self-purchasing, while removing intermediaries, will bear a large number of responsibilities and obligations. In the face of new product incremental markets, without strong control over channel points, they can only rely on bundling sales to drive growth. Compared to traditional dealer models, there is little innovation and limited value, requiring continuous innovation and exploration. Phenomenon 2: Unified warehousing and shared distribution, generating value from vertical professional links. One of the hottest topics in the FMCG B2B field in the second half of this year is unified warehousing and shared distribution. The most typical model is to integrate several dealers in a regional market, reorganize and share their warehousing and distribution resources, upgrade the backend information system comprehensively, and build a joint order platform. Pain points are clear:

  1. Service providers: Provide full-chain services such as systems, order information, and management optimization.
  2. Integrate local suppliers, share order resources, optimize warehousing and distribution costs, thereby improving competitiveness.
  3. Strong alliances gradually encroach on the market share of other non-cooperating suppliers, defend against giants, and eye the surrounding areas, potentially redividing the regional cake. This is typical of regional dominance and intensive cultivation. There are many benefits, but also many problems: The battle of human nature: Cooperation and coordination among local suppliers is not easy. It is necessary to find the most suitable partners, not necessarily the strongest. Forming a demonstration effect as early as possible and finding the right people is key. The battle of habits: In the early stages of model operation, everyone from top to bottom is not used to it. Costs will not only not decrease but may even increase. The pain period of transformation requires special persistence. Neither hurdle is easy to overcome. But once a case effect is formed, it will quickly blossom across the country, because this is a light-asset model that is closer to overall management output and service optimization. It is indeed "Isn't it a joy to have friends coming from afar?" Phenomenon 3: Supply chain finance is lukewarm Every B2B project's business plan includes supply chain finance income in its profit section, but in reality, no one has found the right approach. I observe three reasons: 1. Whether cooperative dealers have capital needs, and what financial costs they can accept. The answer is yes, but we find that small and medium dealers have more short-term needs, and the total amount is relatively small. Such small and medium dealers lack credit endorsement capabilities, often requiring B2B platforms to provide related guarantees, further reducing such business. 2. Category issues: Conventional FMCG products have low unit prices, fast turnover, and low gross margins. Cold chain products have a series of supply chain finance service values: strong sales cyclicality, high capital pressure, and relatively high gross margins, which are worth attention. 3. Store owners: Providing supply chain credit services to physical retail store owners is well recognized by high-quality bank funds, but each store's demand is small. A few tens of thousands of yuan for purchasing goods can be handled with a credit card's interest-free period, so participation willingness is low. Viewpoint 2: The core point is the data value of B2B platforms. Through the accumulation of complete and real transaction chain data, find good products, suitable users, and achieve risk control endorsement through guaranteed sales channels. Find high-quality targets for capital providers. After all, it is physical transactions. With good risk control, although there is no huge profit, it is very popular and scale is expected. This is a very valuable data analysis service and the core value behind the huge transaction volume of B2B platforms. Phenomenon 4: Controlling channels is the king One of the trends that all B2B platforms and dealers are most concerned about: since users are not sticky, find ways to make them sticky. If you don't buy my goods, I'll open my own store! Roll up your sleeves and work hard, if you don't accept the challenge, come and fight. This also aligns with this year's big trend: the battle for comprehensive offline traffic. During this period, many traditional offline retail people will lament: these online platforms lack respect for the traditional retail industry. At the same time, they secretly rejoice that headhunters are sending messages to poach them, and the offers can still rise. The huge value of controlling stores, for B2B platforms, is primarily in two aspects: 1. Higher average order value, more stable order frequency, and more predictable delivery routes: Sales increase, delivery costs decrease. These are so attractive for low-margin B2B platforms. 2. Strong ability to push new products: Undoubtedly, this is the most charming part of offline self-built channels. It is the best choice to truly help brand manufacturers launch new products or create high-margin own products. In fierce product competition, face-to-face contact with consumers, find the possibility of creating new hit products. Recently, the Ant Business Alliance, established by 12 regional leading supermarkets, aims to cooperate in joint procurement and own-brand product development to increase the scale of own-brand product launches and improve success rates. How to achieve store control: direct operation, franchising, and rebranding. Direct operation and franchised convenience stores are very mature offline business formats, with their own operating rules and management experience. The author, who has been engaged in the chain convenience store business for many years, also agrees with the industry's self-deprecating saying of "picking up steel coins." Traditional chain convenience stores are a relatively heavy and slow model, and from the specific business form and management characteristics, they can be subdivided into several forms: This article will first discuss the "rebranding" form. The impact of rebranding on B2B sales: Platforms have continuously broken through tens of thousands of stores, but how much have the tens of thousands or even future hundreds of thousands of stores increased their ordering data from the ordering platform after rebranding? Based on my observation and understanding, if in-depth service and management are not provided, the answer may be zero! It will not affect the willingness and amount of small store owners to purchase goods just because they hang a free sign. The factors that determine small store owners' decisions are still the most basic ones such as price, delivery, and after-sales service. Cultivating small store owners' loyalty to the brand and forming a fixed APP ordering habit still revolves around the core of "profit." The impact of rebranded stores on the brand: The more signs are hung, the more natural advertising effect is formed, because each store chooses the location with the best foot traffic. It is a means of overnight brand influence for consumers, but such influence also brings dangerous factors: counterfeit goods, dirty and messy environments, poor service experience. Due to lack of control, a simple promise of "one counterfeit, ten times compensation" cannot prevent it. For consumers, it is likely to cause great harm to the brand itself. The impact of rebranding on small store owners' sales: A brand will definitely have a certain impact on small store sales, stemming from consumers' trust in the brand. If it is a new brand for consumers, the impact is small, and the shopping experience determines the perception of the brand. If it is a mature brand, and consumers choose to enter the store because of the brand, then this is the real sales boost for the small store. So shouldn't such a sign be charged to the small store owner? Therefore, simple rebranding is meaningless. It must be a complete set of management system output including brand, supply chain, information system, and value-added services, which is the most mainstream chain convenience store management model. Currently, new retail is prevalent, and the battle for offline traffic has brought a new round of development opportunities for convenience stores. The battle for locations has started again. Haven't you noticed that commercial rents in the city have risen again? Whether it is rebranding or franchising, the essence is to empower stores, and improving store efficiency and profitability is key. Arming mom-and-pop stores and serving suppliers is the value embodiment of B2B platforms! Editor's note: Wang Jun, Director of Brand Marketing Center of Quanshi Group, will attend the 2017 (Third) FMCG + Internet Conference held by New Distribution on November 8-9 in Chongqing, where he will share more pioneering views. Interested friends should not miss this conference. 2017 (Third) FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting 1000+ dealers, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to jointly explore a new chapter of cross-border integration! Click the link below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum -END-