---
title: "Heavyweight: 2019 China FMCG B2B Industry Forecast"
description: "Reviewing 2018, it was destined to be an extraordinary year for the FMCG B2B industry. Looking ahead to 2019, the industry will see reduced financing, accelerated full-industry-chain penetration, clearer B2B2C trends, and intensified industry consolidation."
author: "新经销刘少德"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-12-13"
language: "en"
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# Heavyweight: 2019 China FMCG B2B Industry Forecast

> Reviewing 2018, it was destined to be an extraordinary year for the FMCG B2B industry. Looking ahead to 2019, the industry will see reduced financing, accelerated full-industry-chain penetration, clearer B2B2C trends, and intensified industry consolidation.

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**Reviewing 2018, it was destined to be an extraordinary year for the FMCG B2B industry.**
During this year, the leading star enterprise, Dianshang Hulian, raised over 1.1 billion yuan in total within 4 years, yet still faced an untimely demise at the beginning of the year; Yatang Xiaochao, which claimed to rebrand 50,000 mom-and-pop stores in one year, eventually became a pig falling from the sky when the wind stopped, and its founder ended up in prison; numerous B2B platforms such as Bang Xiaodian, Xingliyuan, and Jinhuobao were successively exposed to difficulties in capital turnover, financing gaps, forced transformation, or even cessation of operations; some media even commented directly that FMCG B2B was only "logically successful"...
On the other hand, we saw Tencent finally enter the game, investing in Hui Xiadan and Yijiupai successively, continuously strengthening its persona as an infrastructure service provider for water, electricity, and coal in the entire circulation industry; Red Bull's injunction pushed B2B to the forefront, but more and more first-tier brand owners began to accept and proactively cooperate with B2B platforms; JD New Channel and Alibaba Retail Link implemented the million convenience store plan more deeply, not only expanding store coverage but also emphasizing online-offline integration with consumers; in September, Retail Link officially announced that it had covered 1 million retail small stores, becoming the industry's leading FMCG B2B platform; RT-Mart began to profit after one year of B2B business layout, which also attracted retail enterprises like Costco and Ting Hsin to enter the field one after another; community group buying became red-hot, crazily absorbing 2 billion yuan within 50 days, and is widely considered a standard configuration for B2B enterprises...
**Looking ahead to 2019, how will the development of the FMCG B2B industry unfold?**
> **1. The number and amount of financing will sharply decrease, and the platform's own造血能力 (self-sustaining capability) will become its core competitiveness**
Since 2013, the entire FMCG B2B industry has experienced several years of rapid development, with a large number of entrepreneurs and capital crazily flooding into this track. According to incomplete statistics from New Distribution, in the first half of 2017 alone, there were 19 investment and financing events in the FMCG B2B industry, with financing amounts reaching billions of yuan.
However, with the entry of internet giants like JD and Alibaba, a large amount of resources began to tilt towards leading platforms. In a situation where capital reserves, brand, and reputation cannot compare with giants, some industry participants began to fall behind.
Entering 2018, the internal and external market environment changed dramatically, the economic downturn became increasingly evident, and investors' attitudes towards FMCG B2B became more rational and cautious. Some investors even bluntly told New Distribution: "**Investment institutions in the market no longer look at the B2B track**". In this context, for most entrepreneurs, especially native B2B platforms, refined operations to optimize product category structure and platform revenue structure become particularly important. **The cold winter has arrived; only by building high walls, storing ample grain, and delaying claiming kingship can one sustain long-term development.**
It is foreseeable that the economic situation in 2019 will remain grim, and the amount of capital entering the FMCG B2B industry will greatly decrease. B2B startups can only survive this long cold winter by forming their own self-sustaining capabilities.
> **2. Full-industry-chain penetration accelerates, and role boundaries become blurred**
**New Distribution believes that the development of the entire FMCG B2B industry will go through three stages:**
> **1. New Platform Stage:** Increase efficiency and reduce costs, use new technology to solve old problems. The notable feature of this stage is moving offline inventory online, with a large number of industry participants flooding in, full market competition, and frequent price wars to seize market share;
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> **2. New Business Stage:** New platforms incubate new industries, characterized by the completion of infrastructure construction, some industry participants starting to fall behind, blurring competitive boundaries, and accelerating full-industry-chain penetration;
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> **3. New Ecosystem Stage:** New industries give rise to new ecosystems, with high industry merger and integration, B2B becoming more underlying infrastructure, thereby empowering the entire industry chain;
Undoubtedly, FMCG B2B has now entered the new business stage. A large number of retail enterprises are breaking through their own business boundaries and starting to radiate upstream in the entire circulation industry chain. For example, RT-Mart, in addition to its hypermarket layout, has implemented an open franchise strategy for small formats and launched the Feiniu Convenience brand; more and more B2B enterprises are also extending downstream, attempting to open stores and develop chain retail businesses, such as Zhongshang Huimin's Hi Family Convenience and Best Store Plus's Best Neighborhood.
This has also led to blurred definitions among the various roles in the entire circulation business chain. Especially when more and more retail-oriented B2B platforms are successively achieving profitability, while native B2B platforms are losing money year after year with no profitability in sight, learning from the former's development experience and using retail business forms to drive the development of the backend supply chain can also be an excellent development path.
**In 2019, full-industry-chain penetration will inevitably accelerate, and more and more retail enterprises will enter the B2B track. Opening stores to upgrade their own business models will also become the choice of more and more B2B platforms.**
> **3. The B2B2C trend is obvious, and community group buying will develop more rapidly by leveraging B2B**
The rise of Pinduoduo made people see the strong consumption potential of consumers outside the fifth ring, while the popularity of community group buying drew attention to the strong consumption stratification caused by changes in consumption scenarios. **Fresh food as an entry point, high frequency, high gross margin, no middlemen to earn the difference, investors used 2 billion yuan in real money within 50 days to express their enthusiasm for this business model.**
B2B platforms such as Xingaoqiao, Zhongshang Huimin, Meicai, Kuaile Zhanggui, and Rongcheng Yigou successively entered the community group buying track with high profiles, making people suddenly realize that group leaders are not only limited to mothers; small store owners can also do it, and they do it more professionally than mothers, with longer service hours, more convenient store pickup, and the added benefit of attracting traffic. This undoubtedly opened another window of development for B2B platforms.
In the upcoming 2019, **this storm originating from Changsha will inevitably sweep across the country, and more and more B2B platforms will emerge in it.**
> **4. Clarify self-positioning, and B2B will become more underlying infrastructure**
In the early stages of industry development, some B2B platforms considered themselves "disruptors," thinking that relying on the power of the internet could completely overturn the channel structure that had taken decades to form. Overly aggressive market promotion strategies even made them appear as "barbarians" in the eyes of brand owners.
However, after several years of development, more and more B2B platforms have found that brand owners, especially major brands, are at the top of this value circulation chain. Only by serving brand owners well can they obtain sufficient profit margins and industry status corresponding to their market coverage. Although traditional distributors are finding it increasingly difficult to survive, they have not been disrupted or eliminated as imagined, and second-tier wholesalers are still doing well. Only at this point have B2B platforms gradually begun to recognize their role in the entire FMCG circulation channel: they are enablers, not disruptors.
**As retail scenarios become increasingly fragmented, the infrastructure attributes of B2B will inevitably become stronger. Not only will it serve community e-commerce, but it will also provide basic supply chain services for various new retail formats such as unmanned retail and O2O.** This capability of centralized procurement, unified warehousing and distribution, and full-chain digitalization is exactly what traditional distributors and second-tier wholesalers lack.
> **5. Brand owners' channel revolution accelerates, and urban distribution B2B enters a new development window**
The increase in operating costs such as labor and materials has made the tiered profit distribution in the original deep distribution system insufficient to support the existing channel levels. Therefore, we see that traditional distributors, especially those representing major brands, are finding it increasingly difficult to do business. Price differences alone are no longer enough to obtain the same profits as before, and adjusting business models and business structures is imperative.
Brand owners are also making attempts at multiple levels and implementing multi-channel parallel strategies. They not only build their own B2C online malls and test micro-commerce and content e-commerce, but some brands like Coca-Cola, Wahaha, and Nongfu Spring have also begun to intensively deploy vending machines to hedge against the impact of shrinking traditional channel sales.
In cooperation with B2B, more and more brand owners are beginning to pilot another channel reform on a small scale: abandoning the original distribution model, encouraging salespeople to start their own businesses internally, transforming them into distributors with financial support, and completely outsourcing warehousing and distribution services to third-party urban distribution enterprises. Salespeople are solely responsible for market services, which not only reduces the cost pressure caused by rising labor costs but also improves the service quality of regional markets, thereby driving sales growth. **This transformation by brand owners will inevitably push urban distribution logistics enterprises into a new development window.**
> **6. Brand owners become more open to B2B, entering a closer cooperation honeymoon period**
It is undeniable that the entry of giants like JD and Alibaba has greatly promoted the development of the entire B2B industry. Since JD and Alibaba entered this track, brand owners have begun to face up to the significance of B2B platforms in their omni-channel development strategies and have formally launched comprehensive strategic cooperation with B2B. Even to this day, JD New Channel and Alibaba Retail Link remain the preferred platforms for brand owners to cooperate with B2B.
But this does not mean that brand owners have given up opportunities to cooperate with other B2B platforms. On the contrary, **in order to pursue the ubiquity of product distribution, brand owners have proposed different cooperation strategies for different types of B2B platforms, seeking increments in existing markets and finding existing stock in blank markets.** For example, a leading beverage brand effectively compensated for its shortcomings in the catering channel through cooperation with Meicai, and through cooperation with Zhongshang Huimin, using its big data system for precision marketing, it also promoted the full-category distribution of the brand to a certain extent.
In the future, as cooperation between brand owners and B2B platforms deepens, we have reason to believe that there will be more and more cases of brand owners cooperating with B2B, and both parties will inevitably enter a more harmonious cooperation honeymoon period.
> **7. Technology becomes more complete, and technology and big data capabilities will become the main considerations for brand owners in cooperation**
When the tide recedes, people can finally see who is swimming naked. After a round of market elimination, competition among B2B platforms has returned to a contest of hard power such as technology and big data. As an important link in the FMCG circulation chain, B2B can only be more competitive than traditional distribution methods and circulation levels if it empowers upstream and downstream through technology and brings about an overall improvement in distribution efficiency.
The technical capabilities of B2B platforms are not only reflected in the online and visualized full-chain process from procurement, warehousing to order delivery, but more importantly, in using big data systems to accurately label different types of sales points, truly achieving store-specific customization, and thereby realizing the implementation and execution of precision marketing.
In the future, when brand owners choose to cooperate with B2B platforms, big data capabilities and the ability of technology to empower traditional circulation channels will inevitably become an important indicator for selecting partners.
> **8. Distributors' awareness of transformation awakens, and a large number of regional B2B platforms emerge**
On the one hand, operating costs have been rising year after year, and profits have been declining; on the other hand, distributors also need to face impacts from B2C, B2B, micro-commerce, content e-commerce, etc. Under internal and external troubles, transformation is imperative.
With few options available, more and more traditional distributors have chosen to move existing inventory online, complete the online transformation of their own businesses, and ultimately achieve regional platform transformation. In fact, a large number of regional distributors are already moving in this direction, such as Chengdu's Rongcheng Yigou and Northeast China's Tao Daqing.
**With the increasing popularity of new technologies such as informatization and digitalization, more and more traditional distributors will inevitably put transformation on the agenda and upgrade to regional B2B platforms.** In addition, the increasing youthfulness of small store owners, whose lifestyles and consumption patterns have changed significantly compared to the older generation of store owners, further stimulates the platform upgrade of distributors.
> **9. The Matthew effect becomes more obvious, big fish eat small fish, and industry consolidation intensifies**
In New Distribution's 2018 survey of B2B platform competitiveness in 44 mainstream cities across the country, we found that Alibaba Retail Link had already achieved the first place in comprehensive competitiveness in over 45% of the markets, followed by JD New Channel at 13.6%, with the remaining markets divided among platforms such as Yijiupai, Zhongshang Huimin, and Best Store Plus. This means that Alibaba Retail Link has firmly secured the first position in comprehensive competitiveness in FMCG B2B nationwide, and other B2B platforms cannot catch up in the short term.
It is worth noting that in certain markets, regional platforms still performed well, such as Shanghai's Xian Shiji, Changsha's Furong Xingsheng and Xingaoqiao, and Kunming's Yunshangliu.
Returning to the essence, FMCG B2B was still a capital-intensive industry in its early stages. The arrival of the capital winter has led to a sharp reduction in capital entering the FMCG B2B track, which will inevitably cause some B2B platforms to face financing gaps. However, there is still a huge market stock in the existing coverage areas, which is undoubtedly a huge asset for the leading participants in the industry. In this situation, investment or mergers and acquisitions are inevitable.
In addition, B2B platforms with obvious deficiencies in certain categories may acquire vertical category platforms to fill their shortcomings, while national B2B platforms have a high possibility of completing regional market layout through the acquisition of regional platforms.
In the process of acquisition and being acquired, the competitive landscape of China's FMCG B2B platforms in 2019 will inevitably usher in a new round of industry reshuffling.


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