Last week, the 'China FMCG Digital Innovation Conference' hosted by New Distribution came to a successful conclusion. I read Mr. Zhao Bo's opening speech at the conference on the official account. I strongly agree with the positioning and original intention of this conference. At a time when digitalization is rapidly developing across industries, manufacturers and distributors, as the most important players in the supply chain, are often in a state of anxiety and confusion, unsure whether to advance or retreat.
Their tried-and-true strategies, honed over decades, suddenly seem less effective. Business development is hitting bottlenecks, and they are frequently approached or disrupted by people advocating for 'new retail' and claiming to reform traditional industries. What should they do? I believe the answers will emerge after this conference, and I'd like to take this opportunity to share my own views.
1. Disruption or Opportunity?
Recently, I had the chance to interact with the General Manager of Alibaba's Retail Link operations and the director responsible for integrating brand owners with Retail Link. They were in the process of negotiating cooperation with a first-tier FMCG brand. I was fortunate to participate in the communication meeting. From their perspective, we can glimpse the future of distributors.
Actually, the process of bringing the two parties together was quite tortuous, filled with both love and hate. This brand, after more than 20 years of hard work, had become a leading Chinese brand in its sub-category. It is now a household name with its own traffic, making it a favorite among distributors and terminal store owners.
However, starting from the second half of 2017, discordant voices emerged in the brand's core market: low-priced products ran rampant, channel goods flow became chaotic, the price system faced serious threats, and customers and factory sales staff were full of complaints. This was actually the first intersection between Retail Link and this brand.
Retail Link has a powerful backend and ample funds. As the first company to propose the 'new retail' concept, it naturally demands a faster pace and refuses to lag behind. Moreover, besides Alibaba, many other internet companies are aggressively expanding in the new retail space with high investments, adding significant pressure. Therefore, during the offline promotion phase, to quickly win over small terminal stores, Retail Link would choose products with high brand recognition and high value in the local area, using its strong backend endorsement and financial support to offer prices lower than the original channel supply prices, quickly gaining favor with small stores. This approach was immediate, somewhat like how Didi and Kuaidi competed for users—both had money to burn, and the goal was more users, which in today's society is best achieved through benefits.
However, this approach clashed with the interests of traditional distributors or secondary wholesalers. Seeing their half-stocked warehouses, they had only two choices: either cut their own margins to follow the price cuts or confront the manufacturer for a solution. So, the factory sales staff, full of dissatisfaction, approached the regional Retail Link head.
The price system is the foundation of a product's survival. If prices become chaotic, it will severely damage the interests of channel customers. Over time, the product will be ostracized by channel customers, and its value will plummet. But Retail Link, with its 'retail revolution' halo, could hardly give up this product that held the top spot on their platform. The first direct communication with the manufacturer did not yield progress. So, the manufacturer issued a 'ban order,' strictly controlling regional customers from cooperating with Retail Link.
Of course, for Retail Link, supply was not an issue—the country is vast, and there are plenty of options. But the brand manufacturer was not to be underestimated either: 'This product is made by me; to cut off supply, I'll mobilize the whole country.' If one simply thought Retail Link was just borrowing the hen to lay eggs, they would be underestimating its parent. Ma Yun's (Jack Ma's) vision is not limited to this.
Facing the tense frontline relations, Retail Link did not rush to respond, even though the brand's sales on the platform had declined. Through internal connections, Retail Link's executives contacted the brand's senior management to seek a high-level meeting.
Thus, the roundtable meeting mentioned at the beginning of the article came about. Retail Link's intentions gradually became clear: to play hard-to-get, directly hit the manufacturer's pain points, emphasize the trend, and advocate proactive cooperation and win-win value creation. They could provide brand owners with precise promotional pushes directly to terminals, conduct flexible and diverse promotional activities, and offer powerful backend sales data, allowing clients to better understand the effectiveness of promotions, consumer buying habits, and regional market sales trends, providing accurate decision-making basis for leadership. Additionally, they were developing more products to help terminal store owners and brand manufacturers improve business management efficiency, fully assisting them through more powerful features.
The brand side also fully recognized the win-win cooperation approach but had reservations about the rough methods used during the expansion phase. As an industry-leading brand, they needed more support in niche and weak markets, and sought a tripartite win-win approach with their existing customer marketing network and Retail Link, aiming to maintain brand value and strengthen the existing sales network. So, negotiations continued, and other platforms were also actively promoting themselves for deep cooperation...
2. Passive Response or Active Embrace?
Currently, with consumption upgrading and rapid internet technology development, the FMCG industry is undergoing a new round of reshuffling. The days when a brand could be built simply by distributors paying and stocking up, advertising, and posting posters are gone.
Consumers' personalized needs have exploded in this era. Whether brand owners, distributors, or terminal store owners, if they do not deeply understand changes in consumer behavior and needs, and do not engage in profound self-reflection in the new environment, they will soon be abandoned by consumers.
Looking at the development of the retail industry, from traditional channels that initially met basic living needs with low entry barriers and low management requirements, to modern channels with higher management complexity and technical thresholds, and then to e-commerce that emerged with the rise of the internet after 1990, the underlying pattern is consumer change. Economic and technological development have greatly released people's consumption needs, and the evolution of business formats is about continuously 'meeting people's growing material and cultural needs.'
Now, the direction of the social environment has been updated to 'continuously meet people's growing needs for a better life.' Therefore, new retail has erupted. This pan-retail form, driven by consumer experience and data, built on internet technology, is now demonstrating its unique advantages.
For manufacturers and distributors, we must first see the big picture. Like mobile payments—years ago, no one would have thought that vegetable vendors in the market would put up QR codes. But once all consumers got used to this fast, convenient, and efficient method, no matter what you sell, you need a QR code; otherwise, you might lose customers. So, it's a trend. Those who seize the trend are visionary!
3. Each Takes What They Need, Distinguish Pros and Cons, and Embrace New Things
For manufacturers, first, they must clearly understand the advantages of their sales network: Is it reliant on channel customers or do they have strong control over terminals? Do they have precise sales data to aid decision-making? Are regional markets balanced? What about the ratio and execution capability of sales staff? Compared to main competitors, what are the disadvantages? Will they enrich the existing product line in the future, and do they have enough experience in launching new products? List these and prioritize them by weight.
Next, analyze B2B platforms. Currently, the first tier mainly includes JD's Zhanggui Bao, Alibaba's Retail Link, and Hui Xia Dan (recently invested by Tencent). The second tier includes Hui Pei Tong, Zhang Shang Kuai Xiao, Ai Bian Li, etc. These platforms have different advantages and focuses. It's essential to understand their financing backgrounds, number of covered terminals, advantageous sample markets, sales data accuracy, minimum order requirements, logistics efficiency, promotional costs, after-sales service, etc., and then compare them with the manufacturer's own situation. For example, do the platform's advantageous regional markets align with the manufacturer's own? Can the tracking and analysis of sales data effectively compensate for their shortcomings, and is it of significant practical importance for future development?
After gaining some understanding, conduct a period of practical research. Visit the market to see which system terminal store owners prefer, understand their actual evaluations, and whether the platform delivers on its promised advantages.
Of course, since the concept of new retail was proposed less than a few years ago, software development can instantly meet various innovative ideas, but the integration of distribution details, cultivation of usage habits, and analysis and application of big data all require full adaptation from all links in the supply chain. After all, upgrading the business methods accumulated over years of traditional business takes time, but the attitude of keeping pace with the times is essential. Whether or not you decide to test new retail technology, you need to view the industry's development from a higher dimension to stay proactive in increasingly fierce competition.
4. Control Advantages, Fill Shortcomings, and Build Core Competitiveness
In fact, many manufacturers and distributors realized the importance of big data and precision marketing years ago and have internally launched management systems like SFA and DMS, hoping to capture more granular sales data from terminals to channels to improve sales staff efficiency and aid marketing decisions.
However, compared to the marketing data provided by current B2B platforms, internal systems have some shortcomings. The most obvious is the authenticity of data collection, because the basic data sources are entered by sales staff themselves, and these data are linked to their sales performance. Therefore, data authenticity requires a tracking and verification system. Some companies' systems do not form a complete supply chain closed loop, lacking mutual constraints, greatly reducing system efficiency. In contrast, B2B platform data comes from terminal orders themselves, with delivery tracking interfaces similar to Taobao and JD, and are integrated with other brands online, greatly improving terminal ordering efficiency.
Internal systems are clearly insufficient in terminal promotions, unable to conduct efficient and flexible promotional methods like supermarkets or e-commerce. This leaves manufacturers or distributors lacking momentum during peak sales seasons or new product launches. These are B2B platforms' strengths. But at the same time, they may also be weaknesses: large-scale promotions integrating multiple products could destabilize price structures, and if too aggressive, could cause price inversions for secondary wholesalers, affecting distributor profits. Everything is a double-edged sword. For example, the recent Didi Hitchhiker incident amplified safety risks while facilitating passenger travel.
So, any cooperation must start with each party taking what they need. For manufacturers and distributors, the ultimate goal is to use new technologies and concepts to fill gaps in their marketing systems, achieve efficient coordination and incentives across the supply chain through precision marketing, and ultimately maintain the best positioning of their products in consumers' minds. For the platform, you are a weapon to enrich their product line, rapidly expand cooperation networks, and seize market share in new retail B2B.
During cooperation, note that you must turn disadvantages into advantages and advantages into strengths, never losing control of your core channels and customers. By collecting and mining precise big data early on, find core channel outlets that match target consumers. While leveraging the platform to complete sales targets through flexible promotions, invest more effort in these core outlets to regularly analyze their sales patterns and dedicate personnel to carefully visit them.
Use the platform to track service to distribution customers, evaluate regularly, and reserve core channel customers who have a service concept and identify with the company's development direction.
If launching new products, fully utilize the platform for precise distribution in the early stages to reduce trial-and-error costs, continuously improve the core customer information the company needs to control, and build your own core competitiveness.
Do not blindly rely on the platform to bear sales targets, completely rely on the platform to serve terminals, or stop traditional displays or promotions. Remember that traditional manufacturers and distributors still hold the dominant position. Platforms are in an expansion phase, and channel customers are in an adaptive observation period under the new retail background. The future has come, but not fully; there will be a considerable transition period. Whether channel customers bound by short-term low-price promotions can maintain high efficiency in the long run remains to be verified. Once the platform's product line matures, will it become as powerful as hypermarkets, requiring you to pay higher costs if your products don't bring traffic? Nothing is set in stone, but it's crucial to seize the time, use this tool well, and build your brand's core advantages as early as possible.
5. Follow the Trend, Step by Step, and Forge a New Starting Point
Whether it's the 'half-hour people-goods-place' concept proposed by a JD vice president or the Retail 4.0 era proposed by marketing expert Wang Xiaofeng, these are precise explanations of the core elements of new retail. Facing diversified consumer needs, whoever can quickly discover and satisfy them, providing more personalized services and experiences, will seize the initiative and win the final victory.
The collapse of Kodak and Nokia serves as a warning: not following the trend leads only to death. Many factory personnel or distributors often complain that the company is failing and they need to find a new job or switch industries. In fact, there are no failing companies, only failing concepts. Look at those failed companies—did they truly deeply understand their target customers and provide the best service and experience? Absolutely not!
Facing the so-called 'disruptors,' the attitude should not be defensive but first to study and understand them. Disruptors are likely to be changemakers. 'Disruptors' are looking for our pain points, but they also have pain points. Seek cooperation at an appropriate distance, because they represent innovative concepts and customer-service-oriented innovation. In cooperation, adjust and integrate with each other, step by step, build your product advantages and core competitiveness, and encourage more 'disruptors' to join the ranks of promoting industry development, working together to solve the contradiction between 'people's growing needs for a better life and unbalanced and inadequate development,' and jointly promote social progress.
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