1 Recently, I exchanged views with executives from several leading domestic beer brands. I found that the problems they face in B2B cooperation are very specific and far beyond the current capabilities of B2B. Beer is a category in the FMCG industry that requires heavy deep distribution, characterized by wide channels, low value, heavy logistics, and the need for saturated coverage of all outlets and deep services such as bottle and cap returns. At the same time, facing fierce market competition, a large amount of promotional spending is required, which involves ground-level business signing, promotion, and maintenance. However, current B2B platforms, whether in terms of outlet coverage density, logistics costs, or terminal service levels, basically cannot meet the actual needs of the five major beer brands. Moreover, once in-depth cooperation is established, it will affect their existing distribution systems. Given the rapid development of B2B in the past two years, beer companies cannot ignore its existence. Since cooperation is necessary, it cannot just be verbal "strategic cooperation." It requires practical actions, but from the current actions of B2B, they can only "pick peaches" in their mature markets, which puts all deep distribution brands like the beer industry in a dilemma: On one hand, the offline stock is huge, and a small change can affect the whole, so they dare not try easily; on the other hand, channel digitalization is a trend, and cooperation with B2B is necessary, but there is no good way to cooperate. The above problem is not only faced by typical categories like beer; almost all deep distribution brands face this issue. This leads to two general attitudes towards B2B cooperation: One is direct refusal; the other is "strategic" cooperation, but the so-called strategic cooperation only stays at the surface level of "virtual warehouses," with few in-depth collaborations. 2 Is this problem unsolvable? I think there are solutions, but not just at the business level; there must be deep thinking from external market demand to internal organizational structure. B2B is, in a sense, a core part of the future supply chain distribution for brand owners, but to interpret this core part, we must first start with changes in consumer demand. At the City Distribution Logistics Conference hosted by New Distribution in October, New Distribution expressed a viewpoint: China's consumer goods market is beginning to show significant stratification, and demand is becoming increasingly diverse. Currently, three types of consumer demand coexist in the market: The first type is demand that needs to be satisfied; the second type is demand that needs to be catered to; the third type is demand that needs to be co-created with consumers. Different consumer demands require different capabilities from brand owners: The first type corresponds to production capacity; the second type corresponds to marketing technology; the third type corresponds to imagination for life. This change in consumption stratification is particularly evident in the beer industry. China's beer industry currently has three forces: the first force is the five major beer giants, who have absolute market share and firmly grasp the first type of consumer demand. However, in recent years, imported and domestic short-shelf-life differentiated beers have risen, gradually occupying the second type of consumer demand. Meanwhile, craft beer has begun to become the favorite of young people, firmly grasping the third type of consumer demand. From the perspective of consumption scenarios, the three forces occupy three consumption scenarios: "to store," "to home," and "to come to store." To store: This generally refers to the mainstream consumption scenario for beer, i.e., dining establishments. The product characteristics in this scenario are: huge consumption volume, mainly lager flavor, little product differentiation, low price, and highly intense terminal competition. This scenario is perennially occupied by the five major beer giants: Budweiser, Snow, Tsingtao, Yanjing, and Carlsberg. To home: The so-called "to home" generally refers to all scenarios where beer is not ordered and consumed on-site in dining channels. From consumption behavior, it includes online ordering, O2O, specialty store purchases, or gifts from others. Consumers may also go to dining channels, but they usually bring their own. This type of product has obvious differentiation, relatively small consumption volume, higher prices than drinks in restaurants, and generally not available in restaurants. This scenario is mainly occupied by imported wine merchants and domestic brands that do short-shelf-life or differentiated beer well, such as some imported beers and representative domestic brands like Taishan Beer. To come to store: This refers to craft beer bars. Craft beer currently has a very small market share, and strictly speaking, the market is just beginning to form. This type of consumption is usually consumers coming specifically because of reputation. The products are less packaged and mostly consumed on-site. In summary, because three types of consumer demand have emerged in the market, three consumption scenarios have been created. Brand owners need to use three different types of products to meet the needs of three different consumer groups. But the new demands have three very notable characteristics: Brand decentralization: It is impossible to meet the personalized demands of all niche groups through a unified brand tone. Single product, multiple sales, small volume: It is impossible to reduce production costs through small-scale SKU industrial production. Dispersed consumer groups: It is impossible to achieve large-scale channel coverage through original channels, thereby reducing distribution costs. In other words, the traditional deep distribution model, which uses one brand, mass-produces SKUs through industrialization, and then saturates all channels through a nationwide high-density deep distribution system, is basically ineffective for new demands. For brand owners, the marketing model must shift from the deep distribution model (deep distribution) that only satisfied a single consumer group in the past to a multi-distribution model (multiple distribution) that meets the needs of different groups. This means not only preserving the existing volume through the original model but also using innovative products and channels to meet new consumer demands and create new increments. New Distribution believes that this is the core demand for brand owners to do B2B. 3 As mentioned earlier, personalized demands cannot be met by the traditional deep distribution model. Fortunately, the emergence of internet technology has brought some new technical solutions: The path of entry Who he is What his browsing trajectory is What he searched for What he collected and liked What questions he asked What he put in the shopping cart What he took out What he is comparing What he is looking at in association ... Internet technology, through tools and means, can not only achieve large-scale dissemination and connection with users but also capture user behavior in full volume, full process, automated, low-cost, and high-efficiency. This means that brand owners can use digital technology to achieve precise user profiling. Therefore, new technology gives brand owners the opportunity to upgrade from deep distribution to precision distribution. We believe that B2B is a turning point for brand owners to move from deep distribution to precision distribution, and it is one of the mandatory options. First, B2B can achieve shared warehousing and centralized distribution. In terms of logistics costs, the per-unit logistics cost for single products is indeed higher than for large-scale distribution, but for small categories, the cost is lower. Second, in terms of point selection and distribution, targeted and precise product placement can be achieved. For example, products specifically for primary school students, middle school students, and high school students can be pushed through B2B tags, targeted information, and targeted promotions. Third, online transactions can provide real-time feedback and precise data analysis... Of course, you can also do digital marketing through social media, and you can do consumer interaction through one-code-one-product, but in the retail field, large-scale precise coverage and online digital transactions are currently only possible with B2B. From the perspective of technology and market demand, B2B is not for high-density coverage of deep distribution products, but rather it is more friendly for precise distribution of personalized niche products. Therefore, we believe that B2B can only meet the second type of user demand. Because the best way for the third type of demand is currently B2C, or more niche channels like social e-commerce or content e-commerce. I once suggested to Snow Beer: separate the Super X brand, not only in terms of brand tone to continue to be trendy, but also in terms of SKUs, it should be more diversified, launching more personalized niche-flavored beers, such as various flavor series, Pilsner, Ale, Porter, IPA, etc., through young independent brand appeals, diversified flavors, and digital channels to quickly reach young consumers. These niche flavors cannot be distributed through the traditional dealer system. Because the traditional distribution system is only suitable for selling branded, good-selling, low-priced, and heavily promoted products... 4 Many brand owner friends have asked me whether B2B will charge us tolls in the future, and to prevent them from controlling channels, can we build our own B2B? Unfortunately, what brand owners fear and hope for will both happen and be destroyed. There is no doubt that B2B will become oligopolistic in the future and will definitely charge you channel fees. Do not harbor illusions of exclusive cooperation. Retail channels will become increasingly closed, and channel control by channels is an inevitable result. But you must be clear that you cannot stop doing B2B because of this, because if you don't do it, your competitors will. This is a prisoner's dilemma. Some people will say that I will cooperate with B2B in my weak markets, but in my home base market, where I am strong, I will operate it myself and not let B2B in. My answer is: that is too naive. In your strong market, your competitors are weak, and they will follow B2B into your market. Moreover, because they are weak in the local market, they are more willing to try more possibilities. The cooperation strategy with B2B should not be black and white, either fully blocking or fully opening. Give up the idea of control and learn to influence and influence the behavior of partners through resources and strategies. Game playing and influence are the effective strategies. Do not try to build your own B2B, especially many brand owners want to put existing volume online, but you must know that there are historical reasons why existing volume became existing volume. Let me give a few simple examples. Isn't the core of B2B online transactions? But just having online transactions, do you know how complex the scenario is? First, you must ensure that all small stores can install your company's APP; Second, all dealers' inventory must be real-time online, and it must be accurate inventory, which requires you to connect all dealers' inventory management systems; Third, store credit, payment delays, credit sales, special prices, promotions, and half-sell-half-return must be handled online; Fourth, you must ensure that all dealer transactions are real-time online, otherwise inventory will not match; Fifth, you must achieve different prices for different regions, channels, and stores; Sixth, you must also achieve... If you cannot do this, and the data is incomplete, inaccurate, or polluted, then the meaning of your company's B2B will cease to exist. In general, for brand owners to build their own B2B, transactions basically cannot solve the online problem, which is itself a false proposition. 5 As mentioned at the beginning of the article, the market has three types of demand coexisting. For brand owners, in terms of channel strategy, deep distribution is deep distribution, and precision distribution is precision distribution. Essentially, it is different products being distributed through different channels. Continuing to do deep distribution for existing volume does not mean that the traditional dealer system does not need to be upgraded. On the contrary, in the digital era, brand owners must use digital tools to achieve digital upgrades of deep distribution products, thereby improving efficiency. Three ways to empower existing volume: Use new technology to improve the dissemination efficiency of existing products: Douyin, WeChat Moments ads, localized official accounts, etc. Use new platforms to increase the coverage of existing products in blank markets: B2B, B2C, content e-commerce, social e-commerce, O2O. Use new models to improve transaction and service levels in existing markets: WeChat groups, coupons, mini-programs, etc. The digital upgrade of existing volume inevitably involves the topic of social division of labor. Let dealers hand over logistics to third parties and focus on marketing, doing local markets deeply and thoroughly. We believe this is a very important trend in the transformation and upgrading of traditional trade. For increments, doing precision distribution well cannot rely solely on B2B. Brand owners must also form national special small teams to achieve targeted channel distribution and targeted consumer group breakthroughs. Learn to use all available digital tools and resources, such as self-media, Weibo, H5, mini-programs, and other innovative technologies, to develop a comprehensive digital promotion plan suitable for your category, brand, and product. Final Thoughts: Reflections on Innovation in the Digital Era from the Gulf War Information Warfare In the late 1980s, Iraq's military was known as the "world's fourth military power." Saddam had reason to be proud: after eight years of the Iran-Iraq War, the Iraqi army had rich combat experience and a total strength of one million. It had the strongest army among Arab countries, with impressive book strength: 950,000 regular troops, 480,000 reserves, 5,600 tanks, 7,500 armored vehicles, 3,800 artillery pieces, and 770 combat aircraft... The Iraqi army was armed to the teeth with Soviet weapons. In addition, Iraq had the most complete modern integrated air defense system in the Middle East. Its "KARI" air defense system included: 4 regional air defense operation centers, 16 interceptor guidance centers, and over 70 air defense command and reporting centers. The Iraqi fighters, surface-to-air missiles, and anti-aircraft artillery formed a three-dimensional fire network that basically covered all airspace. Moreover, after eight years of the Iran-Iraq War, the Iraqi army had rich practical experience. Behind the main positions, a large armored reserve was deployed in depth, ready to push the Americans into the sea at any time. Saddam thought he would give America another Vietnam-style lesson. Although he anticipated a large-scale air strike, he believed his war-hardened troops would make the Americans cry over body bags shipped home. Based on past war experience, in the contest between air strikes and air defense, the loss rate of combat aircraft was 1%-2%. With the multinational forces flying 7,000 sorties a day, losses would be 70 to 140 aircraft. Given the total of 109,876 sorties flown by the multinational forces in the Gulf War, losses could reach 1,000-2,000 sorties. But under the suppression of America's superior electronic warfare capabilities, all this did not happen. At the start of the war, Iraq lost in the first wave of information warfare and electronic warfare. Even though its weapons appeared powerful on the surface, it had completely lost the initiative in combat. The U.S. first carried out comprehensive electromagnetic suppression, relying on Tomahawk cruise missiles and powerful precision air strikes. The Iraqi command system collapsed, communications collapsed, air defense collapsed, logistics collapsed. With everything gone, how could Saddam play? The Iraqi air force could not take off to fight, and all air defense equipment became useless. Missiles and anti-aircraft artillery could only fire blindly, and the losses of the multinational coalition air force were negligible. After losing complete air superiority, the imagined ground decisive battle turned into a one-sided slaughter by the U.S. military. Facing the overwhelming bombing, the Iraqi army could only hide and passively take hits, unable to organize any complete resistance. The few Republican Guard armored divisions tried a few counterattacks, but you couldn't see the enemy, while they could strike you precisely; whether in artillery range or tank duels, your tanks were picked off one by one before they even got into range. The night fighting we once prided ourselves on was also impossible; many U.S. main battle equipment were equipped with night vision systems, and Iraq had a generational gap, almost transparently slaughtered. Night fighting became the U.S. military's trump card. Under the firepower of air-dropped sensor-fused weapons and Apache helicopters, Saddam's proud Republican Guard armored divisions were wiped out without effort. The subsequent "Highway of Death" was shocking to the world, a sight too tragic to behold. This war produced a brand new mode of warfare in human history. The U.S. military almost overnight opened a gap with other traditional military powers. By February 28, Iraq, known as the world's fourth military power, collapsed, and the war ended in just over a month. The Gulf War was completely different from previous wars. The gap between the two armies was not just in the mechanical performance of weapons and equipment, but in combat concepts and the generation of warfare! If people's thinking was still in the era of mechanized warfare, then the Gulf War showed the arrival of information warfare—it was not a simple generation gap in weapons, but a gap in the form of warfare and the civilization of warfare! Integrated air-space-ground operations based on informatization had become a new model. Electronic warfare, electromagnetic warfare, and information warfare would combine with traditional forms to form a complete combat system. With these, it meant the ability for long-range strikes and precise strikes with asymmetric contact; early detection meant you already had the ability to destroy the enemy and were in an invincible position. It was increasingly difficult to imagine that combat will could decide the outcome of war; insufficient capability could only be countered with a sea of blood against a sea of steel. If the Gulf War had been fought by our army, it would only have increased U.S. casualties, but it would not have changed the course of the war much. The Gulf War became the trigger for the comprehensive transformation of Chinese military thinking. The impact of that war is obvious. The gap between Iraq's weapons and equipment and the U.S.-led multinational forces was no different from Sengge Rinchen's fearless Mongolian cavalry charging at the British troops with guns at the Battle of Baliqiao. It was a gap in military civilization; this cold weapon play against hot weapon play was almost an insurmountable chasm, predestining the tragic outcome of the war. Concepts are soft power, but they are decisive power. Military theory advances rapidly. The U.S. military has always been at the forefront of military theory innovation, from sea power to information warfare, from air-land battle to full-spectrum operations, launching a new military doctrine every few years. The "rapid decisive operations" thinking based on the "shock and awe" theory reflected in the Iraq War was a bold negation of the "overwhelming force" theory of the Gulf War. Changes in the military field are faster than imagined, perhaps the fastest among all fields. Because the cutting-edge technology and ideas of each era are most easily applied to military purposes. When you touch the essence of war, you may have already lost the war. -END-