---
title: "How Are Distributors Being Killed by B2B?"
description: "Recent media reports have highlighted incidents of B2B platforms engaging in cross-regional selling, disrupting local distributors' sales and prompting extreme reactions such as blockades and complaints. The article argues that this trend will intensify, with B2B platforms increasingly bypassing traditional distribution channels, undermining regional protections, and ultimately squeezing distributors out of the market."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-11-11"
language: "en"
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---

# How Are Distributors Being Killed by B2B?

> Recent media reports have highlighted incidents of B2B platforms engaging in cross-regional selling, disrupting local distributors' sales and prompting extreme reactions such as blockades and complaints. The article argues that this trend will intensify, with B2B platforms increasingly bypassing traditional distribution channels, undermining regional protections, and ultimately squeezing distributors out of the market.

Recent media reports have highlighted incidents of certain B2B platforms engaging in cross-regional selling (channel stuffing), which has disrupted the normal sales of local distributors' products. Some distributors have resorted to extreme measures, such as blocking the entrances of Yijiupi (易酒批) offices, and Niulanshan distributors filing complaints with the manufacturer, leading to official statements from the manufacturer. On the surface, it seems that B2B platforms are disregarding the rules and disrupting the market. However, few distributors see through the surface to the essence: **In the future, more and more B2B platforms will join the cross-regional selling trend. Cross-regional distribution will gradually become the norm for B2B operations. Manufacturers' regional agency protections will become increasingly ineffective, the market pricing system will be undermined, and the survival environment for distributors will become increasingly difficult!**

> Most distributors will think this is impossible and will raise some questions:
>
> 1. I have been deeply rooted in my local area for many years. With my local influence, they can't even get a foot in the door of my market!
> 2. Many small supermarket owners still use basic phones. Are you kidding me by asking them to order and pay via mobile?
> 3. In the FMCG industry, distributor margins are already razor-thin. I'm losing money. How can they make a profit with higher costs than mine?
> 4. We are also reforming ourselves, implementing unified warehousing and distribution, and route sales. Even if they come in, their efficiency won't necessarily be higher than ours.

The above questions are valid, and at this stage, few B2B platforms have succeeded through cross-regional selling alone. The purpose of this article is to make distributors understand that over time, the trend of the traditional FMCG industry transforming towards the internet is pointing towards improving efficiency and saving links. Distributors and secondary wholesalers, who connect upstream and downstream, are precisely the core targets of B2B platform transformation.

**Distributors Are Not Irreplaceable**

Manufacturers cannot distribute their products quickly to China's 6.5 million retail terminals on their own. They rely on local distributors to help distribute, get products on shelves, compete with competitors, and ultimately generate sales. To ensure distributors work hard to sell their products, manufacturers need to protect distributors' interests.

But when a future B2B platform says it has hundreds of thousands of terminal stores ordering on its platform daily, and it doesn't need the 30% profit margin from manufacturers, it can quickly help distribute products nationwide—wouldn't manufacturers be tempted? Wouldn't they be willing to try new products with them?

**Conclusion: The function of distributors is not irreplaceable; they are just the optimal solution under current market conditions.**

**What Money Does B2B Make?**

It's important to recognize that B2B platforms engaging in cross-regional selling are not relying on selling these marked-up goods to make money. For the platform, by establishing connections with small stores and consumers through best-selling products, once this transactional relationship exists, there will be infinite possibilities for future profit-making.

Relying on price differences for profit might be the most primitive and lowest-level approach. Now we need to consider how B2B establishes connections with stores and consumers. What is their business logic?

Remember the battle between Didi and Kuaidi? The two apps, backed by Tencent and Alibaba, poured billions into the market to grab consumers. They used subsidies to get consumers to order online, and Didi helped call taxis. When consumers gradually got used to ordering online, Didi launched express services, offering high subsidies for express rides while stopping subsidies for taxis. With order allocation in Didi's hands and huge subsidies, consumers quickly favored the better service and lower prices of express rides.

The result is known to all: when taxi drivers nationwide were almost out of business, **Didi became China's largest taxi company.**

**Does Didi own any cars?**

**No!**

**How does it make money?**

**Is it just sharing revenue with express drivers?**

**Far from it.**

The initial transformation of the FMCG industry by B2B follows the same basic logic: **Move existing volume online → Create incremental volume → Destroy existing volume → Provide value-added services**

Simply put:

**Forced demolition and relocation**

Now that you understand the above, let's delve deeper into the specific path by which FMCG B2B kills distributors:

**Phase 1: Establish connections with small stores through best-selling products**

Path: **Move existing best-selling product transactions online → Eliminate price differences → Control purchase transactions → Control purchase transaction data**

B2B platforms establish relationships with small stores by selling best-selling products online. When transaction volume reaches a certain scale and break-even is achieved, the benefits of unified warehousing and distribution become apparent. At this point, they only need to buy and sell at the same price, eliminating price differences, to quickly gain significant market share.

Since online transactions allow them to capture data on the quantity, frequency, and product mix of small store purchases, they can analyze this data to understand the stores' operating and financial conditions. This enables them to assess the value of small stores and create complete profiles.

Some may say that small stores are different from consumers and won't be bought by subsidies. That's true, but it doesn't matter. As long as B2B eliminates the price difference on best-selling products, distributors will find it hard to survive.

**Phase 2: Provide value-added services and incremental volume to small stores, destroying existing volume**

Path: **Provide value-added services to small stores → Create incremental volume → Destroy existing volume → Supply chain finance**

Once the platform eliminates price differences on best-selling products and consolidates its relationship with small stores, it will help them increase in-store sales and profits. Methods include offering value-added services such as lottery sales, phone top-ups, laundry services, and express delivery. It can also assess the creditworthiness of small stores based on transaction history and provide corresponding financial services.

This strategy has already been seen in the home appliance industry. When LeEco TV disrupted traditional home appliance companies, it sold products at zero profit, acquired a massive user base with extremely low prices, and then made profits by providing value-added services to these users.

FMCG distributors still rely on product price differences to make money, but B2B platforms use price parity to drive traffic and make money through value-added services for small stores. How can distributors compete with that?

The rules of the internet game are cross-industry disruption, where wool comes from dogs and pigs pay the bill.

And who pays for your business?

**Phase 3: Control order allocation**

Path: **→ Absorb small stores →**

B2B platforms, using a comprehensive evaluation system that includes transaction data, will assess the commercial value of small stores and begin to absorb these mom-and-pop stores. They will persuade them to join by offering store image renovation, POS system integration, management output, unified procurement, and other benefits. They may even acquire them at a premium to make them franchise stores. Once small stores are absorbed, the B2B platform controls their purchase orders. Imagine if a platform has 20,000 franchise stores—wouldn't that be attractive to manufacturers?

Do you see it now? B2B platforms are not revolutionizing distributors by bypassing them to directly reach terminals; they are transforming small stores, leaving distributors with no terminals to serve!

**Phase 4: Consumer value-added services and finance**

Path: **Control store transactions → Move consumer transactions online → Consumer value-added services → Consumer finance**

After controlling small store transactions, B2B platforms will use these stores to promote their apps or membership services. Through these services, they will establish deep connections with consumers by combining online information with offline store consumption content, providing value-added services and financial services based on consumer purchase records.

The above is the business logic of FMCG B2B platforms. Let's connect the dots:

Move existing best-selling product transactions online → Eliminate price differences → Control purchase transactions → Control purchase transaction data → Provide value-added services to small stores → Create incremental volume → Destroy existing volume → Supply chain finance → Absorb small stores → Control store transactions → Move consumer transactions online → Consumer value-added services → Consumer finance

How many FMCG B2B platforms do you think will do this?

The answer is all of them.

Platforms that don't do this are either clueless or just fooling you.

Distributor friends, check the community supermarket downstairs. Has anyone come to renovate it recently?

**Can Distributors Do Internet+ Themselves?**

Internet+ and +Internet are fundamentally different. Gome and Suning started internet e-commerce not much later than JD.com, but why haven't they done as well as JD.com?

Gome and Suning's starting point is based on existing business, using internet tools to arm themselves. This is traditional industry + internet, and the premise is that they cannot revolutionize themselves.

JD.com, on the other hand, is based on internet + traditional industry, with no existing business to protect, so it can break existing rules without hesitation, breaking the price systems of Gome and Suning. Therefore, JD.com can succeed, but Gome and Suning cannot.

**Traditional distributors are the same. If you only plan to use internet thinking to arm your business, sorry, but there will be too many people with no baggage who will do internet+ to break the rules and then rob you.**

> Answering the initial questions:
>
> 1. For national B2B platforms, is sourcing a problem?
>
> 2. If you feel a crisis, don't you think small stores do too? Why wouldn't small stores want internet+?
>
> 3. Facing a B2B that doesn't rely on price differences to make money, how can you compete?
>
> 4. Look at the beer industry. Can local brands beat national companies?
>

Summary of B2B platforms' three killer moves:
1. Unified warehousing and distribution to reduce logistics costs and improve competitiveness;
2. Eliminating price differences to further compress distributors' space;
3. Through franchising and value-added services, cutting off connections between small stores and distributors;
4. Finally, establishing deep connections with consumers to perfect the entire supply chain ecosystem.

**And distributors are killed during the B2B platform's supply chain transformation.**

**How long will this transformation take? I don't know. I only know that this is the future, this is the trend......**


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