We talked about companies like Zhongshang Huimin, which, by building their own warehousing and logistics while setting up ordering and inventory systems, incorporate traditional grocery and retail stores into their distribution network, effectively cutting off traditional distributors. For this interception model, Zhongshang Huimin acts as a large distributor. Although it reduces intermediate layers, it doesn't necessarily mean that Zhongshang Huimin's operating costs will decrease, nor does it mean consumers benefit from the terminal retail stores. Because, although the traditional system has an extra wholesaler, the wholesaler mainly plays the role of distribution. The distribution costs employed by wholesalers are very low, and Zhongshang Huimin doing this step itself may not necessarily improve efficiency. Of course, retailers will still benefit in this new system because it reduces the hassle of ordering and inventory. In the future, if traditional distributors cannot provide services comparable to those of distributors like Meiyijia and Zhongshang Huimin, more grocery stores and mom-and-pop shops may switch sides. From the perspective of brand manufacturers, they do not want to see a situation where one distributor dominates. Because once a single distributor monopolizes all grocery and retail stores in a region, the brand's bargaining power will obviously be challenged. So, from the perspective of brand manufacturers, companies like P&G, Unilever, Orion, Luhua, Wrigley, Mars, and PepsiCo will not sign exclusive agreements with distributors like Zhongshang Huimin and Meiyijia. They also hope to cooperate with traditional distributors to counterbalance the influence of Meiyijia and Zhongshang Huimin. From this point of view, traditional distributors still have their necessity. However, it is an undeniable fact that the inventory management and ordering systems of wholesalers and retailers under traditional distributors are very backward. Even if brand manufacturers want to maintain the current distribution system to serve as a counterbalance, the bottom-level retailers may not want to continue under the cumbersome ordering procedures and chaotic inventory management. So over time, more and more retailers will leave the previous distribution system. A very bad fact currently is that under the existing distribution system, a small or medium-sized city generally has 2-3 distributors, and these distributors are unable to invest in improving the ordering and inventory management systems of the wholesalers and retailers below them. So, facing the potentially fragmented distribution system, what should traditional distributors do? Many people hear "Internet+" and "O2O" and think traditional distributors are hopeless. In fact, it's not that exaggerated. It's not like the electric light replacing the kerosene lamp or the car replacing the horse-drawn carriage—a cross-era, irreversible, and unrecoverable situation. What do distributors with "Internet+", "community", and "O2O" wings have more than traditional distributors? They have more advanced ordering systems, more efficient distribution, more comprehensive warehousing, and bargaining power with brand manufacturers. Of course, they also have less, such as fewer layers—the wholesaler layer is cut off. Facing poaching by distributors like Meiyijia and Zhongshang Huimin, traditional distributors can completely transform their current distribution system, improve the system's operational efficiency, perfect inventory management along the entire line from distributor to retailer, improve the ordering system for retailers from distributors, and enhance logistics distribution efficiency. Ultimately, the transformed new system can achieve the same operational efficiency as Meiyijia and Zhongshang Huimin. Then haven't traditional distributors also gained "Internet+" and "O2O" wings? Isn't this also the situation brand manufacturers hope to see? If traditional distributors don't do this due to investment issues, I think entrepreneurs can completely enter from this angle to transform the traditional distribution channels. Moreover, I believe traditional distributors can also see these problems and are eager to transform their existing distribution systems. If startup companies can provide related services and improve the efficiency of the distribution system, then all merchants in the original distribution chain will benefit, and the startup companies will also benefit. It might even be a business that doesn't burn money from the start. Different from Zhongshang Huimin's model, Zhongshang Huimin almost revolutionizes every link of traditional distributors and wholesalers; while cooperating with traditional distributors, providing services to them, and helping their traditional distribution systems increase sales, then in every link, traditional distributors, wholesalers, and retailers will be customers of the new model. Currently, I personally think both Zhongshang Huimin and the model of cooperating with traditional distributors have their rationality, just transforming the traditional distribution system from two different starting points. What Zhongshang Huimin does is like building a city in a barren place, while the model of cooperating with traditional distributors is like renovating an old city. Of course, Kantar Retail Consulting's "2016 China FMCG Internet B2B Market Report" refers to the two models of Zhongshang Huimin and transforming traditional distributors as the self-operated model and the matchmaking model, respectively. Currently, whether it's the self-operated model or the matchmaking model, there are quite a few companies doing it. Zhongshang Huimin in the self-operated model and Zhanghe Tianxia in the matchmaking model have both covered more than 400,000 stores. Ultimately, whether the self-operated model or the matchmaking model will win, we cannot judge at present. However, if both the self-operated model and the matchmaking model can ultimately improve the current distribution system and enhance its operational efficiency, then the final market may be a state where both models coexist. However, the time left for traditional distributors to choose is running out. Driven by capital, both the self-operated model and the matchmaking model have seen explosive growth in the past few years, especially in 2016, when Zhongshang Huimin received huge investments, which will inevitably accelerate its regional expansion. Traditional distributors, facing a group of fierce entrepreneurs and capital, and a fragmented distribution system, how will they choose—joining the self-operated model or the matchmaking model? Source: Sanqian Liangliang (ID: ThreeQian) -END- ★ Click the blue characters below to view this month's popular article selections ★ Click the blue characters below to view this month's original article selections FMCG industry's most professional and practical knowledge base [ Reply with yellow numbers in the background to view the following keywords ] | 001 Excellent article selections | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales volume 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 |