Recently, I visited a distributor. In 2013, her annual sales were over 100 million RMB, and last year she did 300 million. She said that over the past three years, she mainly did three things: first, training to export management experience; second, letting her daughter take over; third, building her own B2B platform. Each thing is worth talking about in detail. But due to time constraints, we focused on her B2B business, which connects directly with small retail stores through an online platform, allowing them to order online and helping the company achieve large-scale distribution. This is something many distributors find complex and difficult, but she handled it with ease and did it extremely well: It took four months to go live, and after about six months of operation, online sales accounted for 10% of her overall business, achieving break-even.

This boss is familiar to friends of New Distribution; she is Xu Min, founder of Anshan Hongye Hengda. During our communication, President Xu shared her first-hand experience in B2B and her thoughts on the qualities a good distributor boss should possess.

It was full of dry goods! Today, I will share the content of this exchange with you.

01

How to Prepare in the Early Stage?

Preparation started in July, the new system went live on November 1, salespeople operated online orders, and customers placed orders independently from December 1. After six months of operation, B2B online sales reached 10% of overall performance, achieving break-even. Not a franchise platform, no external guidance, Hongye Hengda's B2B move was almost perfect. How did they do it? To figure this out, I asked President Xu a question: If a distributor launches B2B and fails at the start, what do you think could be the reason? It must be insufficient preparation! President Xu blurted out without thinking. Making an ordering platform is simple, but the key is how to make it work. All the effort is in the early preparation! For B2B, we did thorough preparation based on in-depth thinking. First, why do B2B? In the past, we were a brand distributor doing grain and oil business, but we had reached the limit locally. A single category could not support the growth of company operating costs, so expanding categories was something we always wanted to do. At the same time, over the years, we have been exposed to different business models, including B2B. We also learned and inspected many, and found that B2B matches best with the snack food category. Expanding snack food categories and doing B2B can be combined. We visited many distributors to learn from their advanced experience. When we felt it was about right and thought it through, we officially started the B2B project preparation in July last year. What preparations were made? First, the system. My requirement was that the B2B ordering platform should be integrated with the company's internal logistics and finance, without back-and-forth. The existing system could not support this, so after evaluation, we decided to introduce a new system. In terms of categories, we focused on developing snack foods and represented some brands, such as Xizhilang, or we sourced from agents to enrich our categories. Internally, we prepared for warehouse, picking, and distribution in advance. The new categories are different from grain and oil, so we adjusted shelves, floors, forklifts, and storage locations accordingly. For piece-picking, we used a sorting system, and when goods arrived, we recorded batch, name, and location, and rehearsed first-in, first-out according to instructions. Also, the team. In the past, salespeople sold grain and oil, and they didn't know how to sell snack foods. So we set up a dedicated B2B team, prioritizing hiring salespeople from non-grain and oil categories. Now the team has 12 people. To get retail stores to use our ordering platform, we summarized 10 major benefits. I personally trained the salespeople to promote to customers, and we covered 2,000 outlets at launch. Of course, there was also the ordering platform. With nearly 3,000 products, how to take photos? How to record information? And the price system for 2,000 customers had to be prepared in advance, entered manually one by one. However, you must first ensure you obtain the platform license. October 31 was a key node for switching from the old to the new system. Many companies run old and new systems in parallel for a while, but I required that all operations go through the new system from November 1. Why did I dare to do this? I had gone through all the links in my mind many times. I got up at 6 a.m., commanded on site, and we had fully prepared and rehearsed personnel, division of labor, and processes. I had confidence. Although we did encounter some difficulties at the beginning, such as goods not going out, the new system soon ran smoothly. November was a transition period, with salespeople helping customers place orders on the platform. From December 1, customers began to place orders independently through the platform, and our B2B officially started operating.

02

How to Operate After Launch?

Previously, I met distributors who wanted to do B2B. They first developed an ordering platform, but after launch, it couldn't run. Prices were not smooth, warehousing and distribution had problems, and it conflicted with existing business. So the developed platform was shelved—the B2B business ended before it even began. After listening to President Xu, I thought of three words: steady, accurate, and ruthless. Hongye Hengda did B2B after thinking it through, with strategy, planning, and steps. To put it bluntly, they didn't fight an unprepared battle. But sufficient preparation only ensures a smooth start. How did they achieve 10% of overall business in six months? What experience can be shared? We actually have no advantage in B2B, President Xu said. Why? In the past, we operated grain and oil. In customers' minds, we were just grain and oil sellers. If you ask them to buy snack foods and other categories from us, they don't have that habit. What to do? First, do a good job in business team incentives. B2B business personnel and existing business both adopt a salary structure of "basic salary + dividends + KPI assessment," but I will increase assessment for B2B salespeople on customer activity rate, order amount, and repurchase rate, to motivate them to develop and serve online customers. To avoid conflict with old business, we divided grain and oil and non-grain and oil categories. B2B salespeople are only responsible for new products. Even if customers order grain and oil from the platform, the performance still belongs to the old business. This is a transitional measure, and after a year or two, it will gradually merge into one place. Second, do a good job in platform traffic generation. We did rich promotional activities. Points, coupons, full discounts, flash sales, etc. We have everything that other platforms have, with the aim of attracting customers to use our platform. Currently, except for fresh fruits and vegetables, we basically have everything. Snack foods and grain and oil are our main categories, and many categories, such as water and beverages, are often used as traffic generators. Also, do a good job in customer operation. In this regard, we fully utilized two tools: WeChat Work and live streaming. We pulled customers into WeChat Work. For new product promotions or promotional activities, through WeChat Work, we can greatly improve communication efficiency with customers and enhance platform stickiness. WeChat Work also facilitates live streaming warm-up. Currently, we do live streaming three times a week. Tuesday and Thursday afternoons mainly promote snack foods, and Saturday mornings focus on grain and oil. B2B has greatly promoted our business. The sales it brings are basically pure increment, and it also improves our management, such as using WeChat Work to connect with customers, which we didn't have before. It also enabled us to achieve paperless office work.

03

What to Do Well for Development?

In the future, we plan to use three years to make B2B account for 50% of the company's overall performance. Only then will it be truly successful, President Xu said. If you didn't continue halfway, what do you think might have been done poorly? I wanted to understand, in President Xu's view, what key factors are for distributors to do B2B well. President Xu thought for a while. First is pricing. Pricing on the platform is very important. If your price is too high, customers won't buy. Some of our products indeed have no price advantage, so we can only compensate with timeliness and service. Therefore, product richness is very important. Provide whatever customers need, one-stop service, and minimize the total cost for customers. Second is cost. This is closely related to pricing. If costs are too high, there will be no profit in the end. You need to find ways to reduce procurement costs, and also improve efficiency and reduce costs through refined management. Third is operation. Platform activities should be continuous, such as special prices, flash sales, double points, full discounts. You need to combine current resources, such as manufacturer support, near-expiry products in the warehouse, seasonal demand, etc., to give customers benefits and attract them to continue ordering. Fourth is service. In a sense, B2B is just connecting your existing customers with new tools. It cannot replace salespeople; they still need to visit stores. Compared with other platforms, distributor B2B should show advantages in service. Logistics timeliness, after-sales service timeliness, etc., are all important. Of course, there is also category. As mentioned earlier, we need to enrich the product supply on the platform. I think if you can have 1,500-2,000 best-selling products on your platform, long-term sustainable operation should not be a problem. Therefore, we are now also looking for ways to connect with more upstream product supply resources.

04

As a Boss, What Did You Do Right?

Starting with a loan of 20,000 RMB in 1996, Xu Min spent more than 20 years building Hongye Hengda into the absolute leading distributor in Anshan. Her "dividend mechanism + points system management" model has even become a model for distributors across the country to learn from. It can be said that a solid management foundation, plus thinking things through first, and then advancing with strategy, planning, and steps, is an important reason why she did B2B relatively smoothly. I am curious: The trade business has a high elimination rate. In a third- and fourth-tier city like Anshan, you reached this business volume and can continuously transform. President Xu, what exactly did you do right? I can't say what I did right, but let me share some of my philosophy, President Xu said. I started my business in 1996, doing small buy-low-sell-high business. In 2002, I earned 2 million RMB and then bought 10 mu of land. Why? Previously, I recruited college students, but they left within three days because they looked down on it and couldn't stay. I believe in the saying, "Without a parasol tree, you can't attract a phoenix." So I thought I must build a standardized company, not a small business. After buying the land, I officially named the company Hongye Hengda Trading Company. I recruited cashiers, accountants, etc., and operated as a company. For company operation, the key is using people. "Small bosses do things, big bosses use people." There are too many distributors who, from beginning to end, think about how much to buy, how much to sell, where to find special channels, how much soy sauce to give customers, etc. I did these things for about 10 years, and then my focus shifted to how to find, use, and manage people. Finding the right people, setting goals, and matching salaries—that's what I need to do. Having been a distributor for so many years, I think there are two major difficulties. One is the lack of funds in the early stage; you can't borrow money, so you have to rely on gradual accumulation. The other is that company operations need to be standardized, normalized, and process-oriented. The most difficult part is having to deal with relationships with relatives and friends. Other things, in my opinion, are not big challenges. I have a characteristic: I dare to think and dare to act. You can't be indecisive, or you won't be able to develop.

05

Final Words

How to transform? How to grow business? These have always been topics of concern for distributors, and doing B2B may be one of the directions many distributors are thinking about now. From the cases of self-built B2B that New Distribution has encountered, it is not easy to do well. After all, online operation and traditional trade business are completely different. Moreover, it is related to internal factors such as the distributor's own scale, business categories, and management processes, as well as external environments such as local market capacity, competitive environment, and retail formats. So what is the significance of learning from Hongye Hengda's experience? For example, in the early stage, you need to make full preparations, including platform licenses, systems, personnel, platforms, warehouse picking and distribution, etc., and not fight an unprepared battle. After launch, you need to do team incentives, platform traffic generation, customer operation, etc. In the long run, you need to do well in pricing, cost, operation, service, category, etc. You should know that no one can give sufficient conditions for success. The experience summarized from cases can only be considered necessary conditions. What is the value of studying necessary conditions? Maybe it can help you avoid some detours and pitfalls in the future. I hope this article is helpful to you!