--- title: "Good Times Are Here, but B2B Is Not Ready" description: "In the second half of 2017, the B2B sector suddenly turned around. Previously, B2B platforms struggled to promote themselves, but now both brand owners and retailers are embracing B2B. However, it has become clear that B2B is not ready. According to Zhao Bo's New Distribution research, over 70% of terminals in provincial capitals have downloaded B2B apps, indicating a tipping point has been reached." author: "刘春雄" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2017-10-17" language: "en" canonical: "https://xinjignxiao.com/en/articles/good-times-are-here-but-b2b-is-not-ready-08393807/" markdown: "https://xinjignxiao.com/en/articles/good-times-are-here-but-b2b-is-not-ready-08393807.md" original_source: "https://mp.weixin.qq.com/s/4ub4p6GvOF7OwJSpLuTXPA" translation: "https://xinjignxiao.com/zh/articles/%E5%A5%BD%E6%97%A5%E5%AD%90%E6%9D%A5%E4%BA%86-b2b%E5%8D%B4%E8%BF%98%E6%B2%A1%E5%87%86%E5%A4%87%E5%A5%BD-08393807.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/good-times-are-here-but-b2b-is-not-ready-08393807/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Good Times Are Here, but B2B Is Not Ready > In the second half of 2017, the B2B sector suddenly turned around. Previously, B2B platforms struggled to promote themselves, but now both brand owners and retailers are embracing B2B. However, it has become clear that B2B is not ready. According to Zhao Bo's New Distribution research, over 70% of terminals in provincial capitals have downloaded B2B apps, indicating a tipping point has been reached. Good times are here, but B2B is not ready! **In the second half of 2017, the B2B sector suddenly turned around.** Previously, B2B platforms were aggressively promoting, but both ends (brand owners and retailers) were indifferent, making promotion difficult. In the second half of 2017, both ends suddenly opened up, with a strong willingness to embrace B2B. Yet, it was suddenly discovered that B2B was not ready. **According to Zhao Bo's New Distribution research, the proportion of terminals in provincial capitals downloading B2B apps exceeds 70%, already breaking through the critical point and showing explosive growth.** From what I understand from brand owners, major brands have set up internal B2B departments and are continuously experimenting with cooperation with B2B platforms. But overall, they are very disappointed and dare not entrust their channels to B2B. Although many brand owners have expressed support, it was only taking sides; in actual practice, they are not resolute and are seriously waiting and seeing. **Skilled at 'Long Tail', but Helpless with 'Big Head'** **So far, B2B has strong capabilities in integrating categories of 'long tail' products, becoming a powerful weapon to 'conquer' terminals.** 'Long tail' products were previously concentrated in wholesale markets, with low industry concentration, weak brand loyalty, high gross margins, and manufacturers lacking complete channels. At the same time, terminal stores also lack integration capabilities. The emergence of B2B, leveraging big data and upstream resource integration capabilities, can rapidly increase terminal sales and profits. This is the most successful aspect of the current B2B supply chain and also a powerful weapon for 'store control'. **However, for branded 'big head' products, B2B is powerless.** Because 'big head' products are essential for terminals, have high price transparency, and brand owners have complete networks. Forced by circumstances, B2B can only act as a secondary distributor in the 'big head' product area, becoming what brand owners see as channel violators. Channel violations inevitably lead to price chaos. Some B2B platforms initially thought that price chaos could force brand owners to act, but later found it couldn't. Now they think 'store control' can force them, but actually it can't, because 'big head' products are essential. Don't have a forcing mindset. Forcing cannot succeed. **Without 'Big Head', B2B is a Lame Walker** **The overall attitude of brand owners towards B2B is: B2B is not yet worth fully entrusting.** First, B2B platforms still have not achieved normalized sales for branded FMCG products. Normalized sales refer to selling at normal prices, not subsidized sales. Non-normalized sales are essentially price chaos. Brand owners are not at ease with market price chaos. Second, B2B platforms currently lack the capability for new product promotion. For example, a new product layout may need to be planned years in advance, with small sales during that period, but continuous promotion is necessary. B2B currently only has immediate promotion capabilities. 'Big head' products drive sales, 'long tail' products make money. This has always been the unspoken basic strategy of channels. B2B is no exception. Without normalized sales, it means unstable sales, which means maintaining both offline and online channels, which means doing B2B actually increases channel costs. **Brand Owners Should Have a Voice in B2B** In the current B2B architecture, brand owners have no voice. Currently, B2B platforms need brand owners, but once brand owners collectively join the platform, according to the current B2B architecture, they will definitely lose their voice. **Brand owners will not willingly lose their voice.** B2C already has no voice; B2B cannot lose it either. The Chinese market can be channel-driven or both brand and channel driven, but it cannot be only brand-driven. Without the cooperation of brand owners, the order density and average order value of B2B remain unsolvable. This is the key issue currently troubling B2B platforms' efficiency and cost rates. Without brand owner cooperation, normalized sales cannot be achieved, and the problems of order density and average order value remain unsolvable. **B2B's current orders are more opportunistic orders.** Ordering only when there are subsidies is an opportunistic order. Because it's impossible to subsidize all brands, only cross-subsidization is possible, so average order value is a problem. **B2B's subsidy measures were both a powerful tool for early promotion and now an obstacle to normalized sales.** Because orders are placed only due to subsidies, and terminals are already accustomed to repeated ordering, ordering from different platforms, making 'one-stop ordering' difficult. Therefore, B2B platforms' order density and average order value have not been effectively improved, causing B2B's efficiency to be lower than offline. **B2B Has Structural Defects** The above problems can only be alleviated under the current B2B structure, not fundamentally solved. Whether self-operated or matched, B2B has an initial defect: becoming an internet-based channel distributor. So, no matter how well they talk about reducing links and improving efficiency, they haven't grasped the essence of the internet. **The essence of the internet is to reconstruct business: reduce dimensions to form platforms, and build ecosystems around platforms.** So, the current B2B status is typical tool-oriented thinking, not internet thinking. For example, WeChat is a social platform, Google is a search platform, Alipay is a payment platform, Didi is a ride-hailing platform, Meituan is a food delivery platform, Alibaba is a trading platform, and SF Express is a logistics platform. **The basic business model of the internet is: platform + small operating units.** I believe that according to the logic of reducing dimensions to platforms, traditional channel links will be reconstructed into three major types of platforms: * Order platforms * Promotion platforms * Warehousing and distribution platforms **B2B's goal should be to become an order platform.** B2B warehousing and distribution are becoming self-contained, which is currently a trend, although many B2B platforms still build their own warehousing and distribution. The following question is: Should B2B become a promotion platform for all brand owners? Actually, as long as B2B is a trader, it inevitably becomes a promoter. There is no such thing as 'no sowing, only reaping'. **Should B2B Become a Trader?** This question is equivalent to: Is the self-operated model viable? Without self-operation, B2B cannot move forward. With self-operation, B2B is shackled. **Becoming a trader means:** You are prepared to become an agent for all brand owners. **Becoming a trader means:** You are prepared to take over all channel functions of brand owners, especially strategic functions, such as new product promotion laid out in advance. **Becoming a trader means:** B2B holds the lifeline of brand owners, and brand owners will always be at B2B's command. Such a phenomenon will not happen. **B2B Ecosystem and Profit Model** As long as there is traffic to form a platform, an ecosystem can emerge. Transactions are only the source of traffic; the ecosystem is the profit model of the internet. **Advice** * B2B will definitely succeed, but the current mainstream model can expand, yet it is still far from success. * B2B is not an internet-based channel, but a reconstructed channel. * B2B should not force brand owners into a corner; it should give brand owners a voice. * B2B should not claim to be omnipotent and take on everything for brand owners. * B2B should not become too heavy, or it will be overwhelmed. * B2B is a marathon; don't do subsidies with a sprint mentality. Don't try to take on all functions of a channel distributor; instead, work with brand owners to transform the channel, allowing brand owners to control their own lifeline while providing them with as much service as possible. (I am a constructive critic of B2B, firmly believing B2B can succeed, and resolutely pointing out problems I see) Editor's note: Mr. Liu Chunxiong will attend the 2017 (3rd) FMCG + Internet Conference held in Chongqing on November 8-9 as a keynote speaker, where he will share more pioneering insights. Interested friends should not miss this conference. **2017 (3rd) FMCG + Internet Conference** will be held in Chongqing in November 2017. The conference will closely focus on the theme 'New Forces, New Ecosystem', inviting domestic **1000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions** to jointly explore a new chapter of cross-industry integration! Click the links below to review the highlights of the first and second FMCG + Internet conferences: [2016 'FMCG + Internet' Summit Forum]() -END- --- ## Copyright and AI use This article is sourced from New Distribution. 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