In 2016, a hot topic in the FMCG industry was the disruption of the industry by the B2B model. Nearly a hundred platforms have entered the field of FMCG supply and marketing, and distributors have been on high alert, unsure how to respond to the internet's transformation of existing channels. From the distributor's own perspective, I will discuss whether B2B platforms can truly disrupt distributors and change the original supply and marketing model. Currently, there are two background conditions for the transformation of China's FMCG supply and marketing industry: The first is consumption upgrade. This upgrade is not about quantity but quality. The total consumption has not grown; instead, it is shifting to other channels. This has led to companies that relied on natural market growth being completely unable to adapt to the new market environment. When sales decline and companies protect profits, they inevitably squeeze the interests of channel partners. This year, the pressure on inventory from major companies has been particularly evident. The second is the rise in business operating costs. This public account once conducted a "Survey on the Survival Status of Distributors." Among the 2,559 distributors surveyed, 71.7% said their operating expense ratio increased compared to the same period last year. However, the problem is that 47.3% of distributors saw a decline in sales revenue year-on-year, 64.8% saw a decline in net profit, and 70% said their capital was tighter than last year. The survey results show that high investment and high costs do not yield proportional increases in profit and sales. Faced with consumption upgrades and rising operating costs, declining sales will force manufacturers to transform towards higher efficiency and lower cost operation models. This transformation is unrelated to B2B; for manufacturers, B2B is just one of the options. Whether it is the final or best choice depends on whether the efficiency and market coverage of B2B platforms can meet the needs of manufacturers. Of course, we must also clearly understand: the general trend of social progress is unchanged. The internet may not necessarily eliminate distributors, but high-efficiency operation models will definitely replace low-efficiency ones. Note that the replacement of low efficiency with high efficiency has a premise: rated operating costs. For distributors, there are three states between rated operating costs and efficiency: Distributors with sales scale below 10 million: Small distributors with sales below 10 million, being family-run stores, operate at low cost. Although inefficient, their costs are low, and they still have profit margins, so they are unlikely to disappear in the short term. Their operation is a model of low operating cost and low distribution efficiency. Distributors with sales scale between 10 million and 80 million: The most painful are distributors between 10 and 80 million. Most distributors in China are stuck at this stage. On one hand, they are affected by brand and market environment; on the other hand, the core issue is that the distributors' own ideology and management capabilities have reached their limits. Operational efficiency has not been improved through good organizational management, but operating costs are rising sharply. If they do not achieve breakthroughs in management, operations, and market dimensions, they will basically fall into this "middle class" trap and cannot climb out. Their operation is a model of high operating cost and low distribution efficiency. Of course, we need to further subdivide into two stages: 10-30 million and 30-80 million, which face different problems. I will not elaborate here. Distributors with sales scale above 80 million: Distributors with sales above 80 million have relatively standardized operations. Although their operating costs are high, they drive efficiency through standardized organizational management, achieving relatively high operational efficiency and a certain monopoly position in the regional market. So in the short term, they are doing okay. Their operation is a model of high operating cost and high distribution efficiency. What is the distribution efficiency of B2B platforms? Because B2B platforms operate in a standardized manner, with a large number of technical, operational, warehousing, customer service, and other professional staff in the backend, as well as huge fixed investments (warehousing and distribution), their operating costs are much higher than most distributors. However, due to their ability to handle large-scale batch order processing, once a B2B platform is running, it is also a high-efficiency operating system. Therefore, B2B platforms are an operation model with high costs and high transaction/distribution efficiency. I have taken a long detour to explain the relationship between scale, efficiency, and cost for distributors and platforms. I just want to tell readers that at this stage, whether B-end can break and replace traditional channel models depends on the efficiency and cost of the B-end compared to which stage of distributors it is more competitive with. B-end e-commerce is undoubtedly a high-efficiency operating system, but high efficiency does not necessarily mean good competitiveness, because B-end platforms are also a high-cost operating system. Therefore, for B-end e-commerce to leverage its advantages, it must have a certain scale of traffic, using large-scale orders to offset its extremely high backend costs (order density must be high enough, order amounts large enough, logistics can be bus-like, and transaction flow can support supply chain finance). So, whether B-end e-commerce can replace the existing traditional channel model is hard to say, but personally, I think it is a good solution to help distributors with sales scales between 10 and 80 million break through sales and management bottlenecks. Because of the current business awareness, corporate thinking, and market stock of domestic distributors, B-end e-commerce will still coexist with distributors for a long time. They will integrate. Large distributors will themselves become B-end e-commerce; medium-sized distributors will either be eaten by platforms or transform themselves. Small distributors, I believe, will still do well. For distributors themselves, as market competition intensifies and operating costs continue to rise, improving their own operational management and efficiency is a must. Internet transformation is also an option and a backup plan for distributors. Of course, one must be strong oneself. The improvement of distributors' own thinking, professionalism, and vision is the real foundation for enterprise development. -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, brands | 016 Distributor B2B transformation | [Long press QR code to follow]