Distinction between self-operated and matching The self-operated model, as the name implies, means the B2B platform handles everything from procurement to distribution. Since many matching models are also highly involved in transactions between both ends, such as Alibaba Retail Link, there are also many self-operated platforms that adopt a consignment model, such as JD New Route. The boundary between the two is increasingly blurred in the backend: consignment, transaction control, unified warehousing, and socialized resource co-distribution have basically become standard for all B2B platforms. The simplest way to distinguish them is to see whether the platform issues invoices to small Bs. If it does, it means the platform touches the goods, making it self-operated. If not, the platform does not touch the goods, making it matching. Currently, there are not many self-operated platforms in the domestic FMCG sector. Representative self-operated platforms include: Huimin Wang, Yijiupai, 51 Ordering, JD New Route, etc. Common problems in the self-operated model:

  1. As mentioned in previous articles, B2C platforms like JD and Tmall connect factories to consumers, defeating a chain that goes from factory to distributor to second-tier wholesaler to retail store to consumer. The online chain is short, while the offline chain is long. A short chain can save significant intermediate costs, so it eliminates the long chain. In the FMCG industry, mainstream categories such as beer, instant noodles, ham sausages, beverages, daily chemicals, and condiments have relatively concentrated upstream suppliers. Production enterprises have deeply cultivated the channel for many years, compressing the chain to be sufficiently short, with stable supply relationships and extremely transparent prices, leaving almost no compressible margin space. Therefore, self-operated platforms find it difficult to obtain price difference profits in these mainstream categories.
  2. A typical small retail store has 3,000-4,000 SKUs. When multiple retail stores are combined, the demand for goods becomes an endless long tail. Too many and too varied SKUs place extremely high demands on the platform. If the platform does not meet the one-stop shopping needs of stores, it cannot control the stores; if it meets one-stop shopping, then the inventory SKUs in a single city may need to be on the order of 100,000+. Long-tail demand corresponds to long-tail supply, plus other operating costs, possibly leading to losses on every order. The self-operated model of FMCG B2B has large fixed investments, invoicing, and operating costs that cannot be compared with local distributors. The break-even point is too high, making profitability difficult.
  3. Self-operated platforms touching goods leads to severe capital occupation, which places extremely high demands on the turnover rate of goods. High turnover of A-class goods is the best trading target. However, due to years of deep cultivation by production enterprises, the distribution channel layout is already relatively complete, forming channel barriers. It is difficult for platforms to obtain stable factory-priced supply.
  4. The traditional chain is highly efficient, and every link has its value. Warehousing and logistics, finance, sales, public relations, and services are the five essential elements for FMCG from factory to small store. These functions were originally handled by distributors and second-tier wholesalers. Since self-operated B2B replaces distributors and second-tier wholesalers, it needs to take on the channel functions carried by them. For example: First-line beverage manufacturers, in order to stagger the peaks of production and sales, generally start collecting payments from terminals in November, collect payments from second-tier wholesalers and distributors in December, produce in January, press distributor warehouses in February, press second-tier warehouses in March, press store warehouses in April, and do terminal displays (terminal freezing) in May. Distributors and second-tier wholesalers in the channel carry the crucial inventory transfer function. The transfer of time and space needs to be carried by channel merchants. If a platform wants to replace distributors, it must solve the problem of moving inventory between off-season and peak season for beverages. In fact, no platform has yet been able to solve this industry-wide problem. Summary: The long-tail demand for goods is too long, operating costs are high, profitability is difficult, stable supply from first-line brands is hard to obtain, and the functions of distributors cannot be fully undertaken by self-operated platforms. These major problems make it extremely challenging for self-operated platforms to succeed. Of course, despite many problems, one must also see that there are still huge opportunities in this industry, and there are solutions. In response to the above problems, the author proposes some viewpoints to solve them: 1. Control goods in A-class categories In retail stores, A-class goods account for 50-60% of transactions and have extremely high turnover rates. They are key categories that any platform must face. As mentioned earlier, A-class goods mostly have stable supply relationships with stores. Therefore, to ensure stable supply of A-class goods, it is necessary to control goods upstream. Direct cooperation with brand owners is the best way, but for goods that cannot be obtained, consider acquiring and holding controlling stakes in some distributors. By acquiring and holding controlling stakes, merging some distributors with quality supply, and transferring transactions, indirect control of goods can be achieved. Eternal Asia controls domestic A-class goods through acquiring and holding controlling stakes in distributors. The benefit of controlling goods is mastering the supply of A-class goods, building trading barriers, and making it difficult for competitors to obtain corresponding A-class goods resources. 2. Enter from a vertical industry, break through at a single point, then extend categories Due to the complex SKUs in retail stores, it is almost impossible to meet all store product needs at once. However, you can start from a single category with a relatively long chain, high profits, or controllable goods, do it deeply and thoroughly, achieve leadership or monopoly, and then gradually extend to other categories. This way, you can attack or defend. Other categories can be tackled one by one based on conditions, increasing the likelihood of success. Speaking of this, we must mention Yijiupai and 51 Ordering. Both platforms started from a single category and gradually extended to other categories. Currently, many vertical industries have potential for vertical trading. Fresh food, condiments, mother and baby, and daily chemicals are all opportunities to intervene in small store transactions. Principles for choosing an entry point: First, rigid demand; second, differentiation, becoming the first in the segment or even monopolizing; third, aligning with the overall retail direction, with a scalable business model that can extend from a small entry point to a large track. 3. Downward integration of small stores, reaching C-end, preparing for O2O The FMCG industry as a whole has overcapacity and is an absolute buyer's market. Whoever controls the purchasing power controls the voice. The best way to control purchasing is to integrate small stores downward, carrying out brand conversion or managed franchise management for small stores, similar to the Meiyijia model. By providing a series of services such as brand/value-added services/management output, supply chain finance, etc., to traditional small stores, the platform can control stores and reach the C-end, achieving end-to-end supply chain integration and truly realizing O2O. Self-operated platforms, due to higher operating costs than ordinary distributors, find it difficult to profit unless they reach a certain scale in a single market. However, this does not mean that self-operated platforms have no opportunities. At this stage, platform self-operation is still one of the easiest paths to achieve B2B in the consumer goods field, but how to achieve it depends on the level and capability of each platform. -END- The best domestic learning platform for FMCG distributors Focuses on providing professional, practical, and applicable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation | [Long press QR code to follow]