Click the image for details. Providing consolidated warehousing and distribution services based on the distributor's business foundation is one of the models for distributor transformation and upgrading. Two years ago, I shared the operational situation of Yantai Yishang Logistics as a case study with distributor friends. After learning and observing, some distributors launched localized consolidated warehousing and distribution either individually or jointly with peers in the same region. After running for a period, everyone basically faced operational obstacles. Among all obstacles, I believe the usability of the software is secondary; the real troubles are first the operational model, and second the pressure of burning cash. In terms of the operational model, Chairman Liu Zhongmin of Yantai Yishang Logistics, before doing consolidated warehousing and distribution, was already a major player in Yantai's FMCG industry. He had accumulated a strong foundation in brand and category mix, capital, logistics, terminal services, and even warehouse space. His initial B2B service platform "Kaimenhong" started as early as 2012. After three to four years of gradual improvement and business growth, by 2105 when he introduced it to everyone, Yishang Logistics' business had basically achieved positive profitability. What everyone saw was his success; the trivial troubles before, including the annoyance of dealing with other distributors and terminals to attract business, are hard for others to appreciate. When introducing the Yantai Yishang Logistics model, two points were particularly important at the time. If you didn't remember them, you would likely encounter major troubles. First, it was emphasized that if you have the strength and plan to build a local large-scale consolidated warehousing and distribution platform, it's best to gradually weaken and give up your own agency business. This way, other distributors you want to bring onto the platform won't worry about their business being swallowed up in the future. General Manager Liu of Yishang Logistics took this route, so other distributors had fewer concerns about cooperating with Yishang Logistics, and the continuous inflow of business volume was relatively guaranteed. Second, it was emphasized that if a distributor wanting to do consolidated warehousing and distribution doesn't have strong enough business volume and hasn't joined forces with other distributors in the same region, then trying to learn from Yishang Logistics' model of only doing platform without agency business will inevitably fall into a big trap. Indeed, this is the reality. I know of several consolidated warehousing and distribution businesses that envisioned doing platforms, intentionally or unintentionally weakening their agency business, while at the same time finding it difficult to quickly bring in other distributors' warehouses, resulting in limited business volume expansion. Meanwhile, high platform maintenance and distribution costs led to overall losses, making operations difficult to sustain. Worse, large-scale platform and distribution companies with strong capital are laying out nationwide, squeezing peers with meager profits or even strategic losses and subsidies, putting enormous operational and psychological pressure on distributors who have just entered the consolidated warehousing and distribution business. The value of a consolidated warehousing and distribution platform comes from the volume of business flow. Therefore, no matter what, for distributors already engaged in this business, maintaining and grabbing business flow is a prerequisite for survival. A single distributor, or even a few distributors joining forces, generally has limited share of the agency business in the region. At this time, if they adopt Yishang Logistics' approach of not doing agency and distribution business, it's like extinguishing their own business first. The correct approach one is to continue strengthening and improving your own agency business, ensuring a basic distribution volume guarantee. If you give up your agency identity and your warehousing and distribution strength isn't exceptionally strong, you can easily be replaced by other distributors wanting to do consolidated warehousing and distribution. The correct approach two is not only to continue doing agency business well, but also to be willing to lower yourself to do second-tier distribution, making the second-tier business bigger and stronger. This is the magic weapon for consolidated warehousing and distribution to survive and accumulate competitiveness. In fact, big players like Zhongshang Huimin are essentially large second-tier distributors doing logistics and distribution, but behind them is a capital game that ordinary or even extraordinary companies can't play. With the guarantee of your own agency and expanded second-tier business flow, the operational costs of consolidated warehousing and distribution can basically be supported. The current pain of burning cash will naturally be alleviated to varying degrees. Relying on local business and customer relationship advantages, further business progress won't be too difficult. Even if big players have already entered the local market, you can still have the "landlord" advantage, earning money in the cracks while designing the "market value management" route for your consolidated warehousing and distribution business. In this way, I can almost see your calm and strategic image. Deng Xuejun Consultant at Junzhong Consulting, Chief Architect of Jinxiang Distribution Long-term strategic consultant for multiple enterprise groups, independent director of listed companies, lecturer on corporate strategy for Peking University and Tsinghua University executive programs, and investment advisor for several industry funds. WeChat public account: Junzhong Consulting (ID: junzhong666) Click the image for details. The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in October 2017. At this conference, New Distribution has invited 1,000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to participate. The theme of this conference: New Forces, New Ecosystem. We will invite well-known domestic B2B industry experts, mentors, and B2B platform founders to discuss the following topics:
********How can the FMCG industry achieve new growth opportunities through B2B
********How to build the new supply chain behind new retail
********How can intra-city logistics help B2B achieve leapfrog development Highlights of this conference: The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"
Case sharing of excellent transforming and upgrading distributors
********Conference + exhibition upgrade, Hall 6 Internet Technology Exhibition strengthens connections
********Leaders from Alibaba Retail Link, ProLogis Finance, Eternal Asia Supply Chain, Best Store Plus, Yijiupi, Unilever, Haiding Technology, and Yunmei Shares will deliver speeches on-site presenting pioneering viewpoints. October 17-18, 2017 Chongqing International Expo Center Registration is now open. Long press the QR code below or click "Read Original" to register. Early bird tickets before September 15 enjoy a 30% discount! Add friend with note "Conference Registration" Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum 2017 (2nd) China FMCG + Internet Conference Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum -END-