---
title: "From B2b Transformation to Discount Retail: The Self-Revolution of Traditional Distributors!"
description: "Discount retail is a hot topic, with snack discount stores expanding rapidly and traditional retailers and brands exploring how to adapt. Distributors are feeling the impact directly, as aggressive expansion of snack stores has led to significant sales declines. Yu Xiuwei, founder of Tangshan Yihe Trading, shares his journey from traditional distributor to B2b platform and then to launching a local discount chain, offering insights on whether hard discount is a challenge or opportunity for distributors."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-11-30"
language: "en"
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# From B2b Transformation to Discount Retail: The Self-Revolution of Traditional Distributors!

> Discount retail is a hot topic, with snack discount stores expanding rapidly and traditional retailers and brands exploring how to adapt. Distributors are feeling the impact directly, as aggressive expansion of snack stores has led to significant sales declines. Yu Xiuwei, founder of Tangshan Yihe Trading, shares his journey from traditional distributor to B2b platform and then to launching a local discount chain, offering insights on whether hard discount is a challenge or opportunity for distributors.

The topic of discounting has been very hot recently, and the industry is discussing this model.
Snack discount stores are considering how to expand rapidly, traditional retail giants are thinking about how to integrate into the discount model, and brand owners are exploring whether to establish cooperation with discount stores.
Of course, distributors are no exception, also thinking about how to cope with the impact of hard discount. However, compared to companies with a larger base, distributors seem to be more directly affected.
Recently, many distributors have reported to New Distribution that their business has declined significantly due to the野蛮 expansion of snack stores. For example, 2-yuan Yibao selling for 0.9 yuan, 5.5-yuan Genki Forest selling for 3.2 yuan, and 3.5-yuan Capico selling for 1.8 yuan...
With capital entering, national discount chain brands are accelerating expansion, and the impact of the discount format on distributors continues.
A few days ago, I had an in-depth exchange with Yu Xiuwei, an old friend of New Distribution, founder of Tangshan Yihe Trading & Dianjiatong B2b & Positive Snack Chain.
Based on traditional trading, he built a local B2b supply chain platform from 0 to 1, and in 2021, he entered the retail field with foresight, founding a local discount chain brand - Positive Snack Chain.
Regarding distributors entering hard discount, how does he think about it? How does he do it? Is hard discount a challenge or an opportunity for distributors?
President Yu is qualified to speak. From traditional distributor to B2b construction, he also opened snack stores and wholesale supermarkets. I believe his thinking and judgment can bring you some inspiration.
**Doing B2b is about breaking the "order"**
In 2011, Yu Xiuwei left his manufacturer job to enter the trading business, becoming a dairy distributor, serving supermarkets and small stores in Tangshan. In 2019, he built the Dianjiatong B2b supply chain platform, focusing on small store business.
The reasons for doing B2b, Yu Xiuwei told New Distribution, are three dimensions.
**From the store's perspective, small store owners have adapted to online ordering and need one-stop supply.**
Since the internet entered in 2017, continuous market education has led small stores to generally accept B2b ordering. Moreover, small store owners can spend more time managing customers rather than dealing with various suppliers.
**From the market dimension, the nationwide expansion of B2b at that time broke the original market order.**
The original manufacturer-led market had strict commodity circulation management because distributors had to comply with manufacturer rules. However, the impact of some large B2b platforms on the local market was significant, making it difficult for distributors to complete tasks, forcing them to break the market order.
**Finally, from a self-dimension, B2b is a business that distributors can dominate themselves.**
In agency business, distributors have low bargaining power, bear inventory pressure from manufacturers, and face delayed payments from supermarkets, with risks mostly borne by distributors. But in B2b, it's not about selling what brands have, but selling what small stores need, with cash settlement, and the business is led by the distributor.
Yu Xiuwei spent three years continuously trial-and-erroring and adjusting, successfully establishing the regional B2b platform model, becoming the largest B2b supply chain platform in the local area.
**Entering discount retail is an "experimental field"**
After doing well in B2b, Yu Xiuwei did another forward-looking thing - opening snack discount stores and wholesale supermarkets.
In 2021, Yu Xiuwei found that his original B2b business was declining. After visiting the market, he found that the business of surrounding small stores was declining because some snack discount stores had appeared, taking away part of the small store business.
At that time, snack discount stores were only in the embryonic stage in the north. To understand this format better, Yu Xiuwei went to the southern market for investigation. After evaluation, he formulated a store opening plan and opened the first store in two months - **Positive Snack Store**.
Why did he start opening stores immediately after the investigation?
**First, seize the market opportunity and establish a foothold.**
The original trading and B2b business had already been partially taken by the emerging discount chains, squeezing the living space. If he didn't act first, waiting for national discount chain brands to flourish everywhere would make business even harder.
Rather than being passively beaten, it's better to take the initiative. Before national discount chain brands make efforts locally, establish the discount format locally first, and the living space remains his own.
**Second, consumers are accepting the discount format, and the business model is valid.**
The underlying logic of discount is selling good products at low prices, not selling low-priced products. Consumers can enjoy good products at lower prices, so they tend to shop at discount stores. This is also the real market phenomenon we see: some small stores we previously served have been impacted by snack discount stores, with business declining by 30-40%.
Yu Xiuwei told New Distribution that opening snack stores and community wholesale supermarkets is also a new "experimental field" for him.
The entire market is essentially a game between online and offline, competing with each other. In this chessboard, the advantages of online are actually expanding, with B2C, live streaming, instant retail, etc., taking away a lot of share.
While offline share is being squeezed, various pieces are also competing, with gains and losses. Who will have more potential in the future?
From his perspective, discount retail will gradually occupy more share. So opening snack stores and wholesale supermarkets is a new "experimental field" because even if this retail revolution is not significant, it won't have a major impact on existing business. But if it is disruptive, the business foundation will be more stable and larger.
**For distributors, if they don't make changes, under this model upgrade, they can only be passively chosen, possibly continuing to live harder, but more likely being directly eliminated.**
Yu Xiuwei took two years to gradually find a path for discount retail. Up to now, Positive Snack Chain has 14 snack discount stores and 2 wholesale supermarkets in Tangshan, with 2 more under renovation and about to open.
How does he do well in the discount format?
**Low price is not a traffic logic, but a pricing logic**
Retail business is about selling "goods" to "people" through "places". In discount stores, the "place" is the store, and the core logic is where, through what method, to sell what products to which consumers.
**First, look at site selection. Adhere to one principle: if it's not a good location, there's no chance of success, so never take it.**
What is a good location?
A "remote place" in a busy area. Busy areas are where people gather, with many target consumers. For example, near universities, large residential areas, core business districts, etc.
"Remote places" are places consumers must pass through to reach the busy area, close to consumers, but with lower costs. Also important: convenient transportation and parking.
**Next, look at the product dimension. How to assemble a good assortment?**
**First, copy.** Any system that has become established, with more than a few hundred stores, its product structure must have been polished.
For a beginner, the first thing to learn is to learn from excellent peers and copy an assortment.
**After having a basic assortment, develop differentiated product capabilities.** Based on local consumer habits, select products specifically.
It's simple: go to the best local supermarket, see what products consumers like, and then replicate differentiated products.
For example, if 250ml Zhen Guoli sells well in supermarkets, it means consumers recognize the product, so you can choose the 100ml specification, which fits the snack store logic and is a product consumers recognize.
Differentiated products should be launched quickly to keep consumers fresh. Continuously provide consumers with high-quality low prices, forming a fixed perception in their minds that this snack store provides high-quality low-price good products.
In Yu Xiuwei's view, **the underlying principle of snack discount store product selection must be good products at low prices.** At this stage, brands are definitely more stable in quality than white labels, so the most primitive method is to find representative brands in each subcategory and find products differentiated from regular market sales.
Positive Snack Store has about 1,300 SKUs per store, with about 500 fixed SKUs and 800 bulk SKUs. 35% of products are directly cooperated with brands, which itself has price advantages.
The other 65% of products, through supply chain optimization, no after-sales, no callbacks, no delivery to stores, by reducing subsequent service and logistics costs, can also achieve price advantages.
**Then look at the marketing dimension. How to achieve immediate success upon opening?**
During store decoration, start creating momentum and preheating. The decoration fence should be as large as possible within the scope allowed by urban management.
The core elements to reflect on the fence: brand concept and activity intensity. The snack store location itself has good foot traffic, and the daily visual impact can create anticipation among consumers.
At the same time, use Douyin's same-city traffic for promotion. Each store opens a dedicated Douyin account, recording the process from decoration to opening, and publishing store activities on the eve of opening, using Douyin same-city traffic to attract customers to the store.
**Finally, service. How to build a friend relationship with consumers?**
For consumers, good products are a necessary condition for repurchase, but not a sufficient condition. What truly makes consumers feel favorable is the emotional value of people.
This emotional value comes from store staff, whether they have empathy for consumers. Many small details can significantly increase consumer satisfaction, such as smiling service, "Welcome" when entering, proactively helping elderly people carry bags, etc.
Building empathy is very important. Therefore, it's essential to do well in store incentive methods and institutional guidance, as well as corresponding organizational culture construction.
**Written at the end**
Today's sharing of President Yu's case is not to encourage everyone to open stores, but to present a potential direction through the case: distributors extending downstream to try discount retail locally.
As President Yu mentioned during the exchange, distributors have always had a hard time. Whether it's changes in upstream manufacturers or downstream channels, ultimately it's the distributor's business that becomes difficult.
Every transformation ends with both pioneers and martyrs. The supply chain revolution brought by hard discount is the same. With better product capabilities, better store operation capabilities, and larger capital investment, how much living space will be left for distributors?
Regarding hard discount, how should distributors respond? Enter or wait? If entering, how?
On December 6-7, at the "New Ecology • Hard Growth - First China FMCG Hard Discount Conference" hosted by New Distribution, Mr. Yu Xiuwei will share and exchange on-site, analyzing the dangers and opportunities of discount retail from a distributor's perspective!
Distributor friends interested in learning and exchanging can scan the QR code to add customer service WeChat, consult the details of the Hard Discount Conference, and join the [Hard Discount] themed community to discuss the development trends and opportunities of hard discount together.


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