In recent years, discussions about traditional enterprises upgrading through the internet have been ongoing, especially after Ma Yun introduced the concept of New Retail in 2016, making the topic even hotter. Setting aside the impetuous herd mentality, let's rationally analyze from the root: Should distributors transform? How should they transform? Should they operate independently or join a big platform? What advantages do distributors have when competing with big platforms? Four Major Changes Driving Distributors to Transform 1 Customers are changing; the post-80s and post-90s become the main players As times change, the targets of our business are gradually shifting. The post-60s and post-70s are gradually exiting the stage, while the post-80s and post-90s, who grew up with computers and smartphones, are becoming the mainstream. The rise of new customers brings new habits. In the past, customers were accustomed to visiting physical locations, selecting goods themselves, and getting up at five or six in the morning to go to the market to stock up. In contrast, the new generation of customers is more convenience-oriented; they prefer to order online and have goods delivered directly. 2 The market is changing; competition is more intense Once upon a time, our market was extremely monotonous. A major category might have only a few lonely products to choose from, and due to low production capacity, goods were in short supply. Merchants with goods had no worries about sales. That era was called the "golden age" for distributors; all they needed was to obtain the agency rights for goods, and the rest was lying back and making money. But now, even a single type of chewing gum can have a dozen flavors. Goods are extremely abundant, and relying solely on having products is no longer realistic. The era of intense competition has arrived. 3 The environment is changing; costs are soaring, and management is harder In the sluggish economic situation, manufacturers, to protect their own interests, continuously pressure distributors by pushing more inventory, siphoning off the distributors' funds. Meanwhile, terminal customers' sales are getting worse, and the speed of customer payments is declining. They withhold payments to reduce their own risks, leading to longer payment cycles for distributors and a large amount of capital being occupied. A distributor friend once joked to me, "Now I have more bills than money." 4 Competition is changing; opponents are no longer just the neighbor Wang Traditional distributors' businesses are mostly concentrated in a narrow scope, perhaps a region. But now, we find that among our opponents, there are many internet platforms. Retail Tong, Zhang Gui Bao, Zhongshang Huimin, and Diashang Hulian have entered this market with the reputation of giants or hundreds of millions in financing. Self-operated OR Franchise: That Is a Question All these changes are urging traditional distributors to transform as soon as possible. Internet opponents have shown enough goodwill towards traditional distributors, proposing the concept of "integration and win-win" and hoping distributors will join their platforms so everyone can get rich together. No offense to such internet platforms, but for traditional distributor friends, the risks involved are similar. As Jiang Tao, CEO of Dinghuobao, said at the 2017 FMCG + Internet Conference: "No matter how big platforms are packaged, their ultimate goal is to grab the business or profits of traditional enterprises. Platforms are always thinking about revolutionizing distributors or making them work for the platforms." The most essential purpose of Internet + trade is disintermediation, which is a direct substitution relationship, and that's why internet companies always talk about "disruption." But in the field of commercial circulation, achieving this step directly is very difficult. Manufacturers are unwilling to see a single dominant channel The commercial circulation industry has always been at a balance point of contradictory compromise. "Channels hope upstream is their OEM factory, and manufacturers hope channels are their porters." Just in the past 618 shopping festival, multiple brand owners publicly broke with JD.com, claiming they couldn't tolerate the platform's harsh conditions. The exploitation of brand owners by big platforms is nothing new. The earliest examples include Walmart and Carrefour, which not only charge entry fees but also have extremely long settlement cycles, and the promotional costs in stores are also passed on to brand owners. Brand owners are angry but dare not speak out because they cannot give up the customer traffic of these stores and platforms, so they can only be held hostage by these channels. Therefore, manufacturers naturally do not want to support a large channel that might strangle them in the future, especially since the mature offline channels developed over many years cannot be abandoned. If Franchising Doesn't Work, What About Self-Operation? Self-operation but not self-building; self-building is a pitfall for distributors' transformation. What exactly is the pitfall? Scan the QR code at the bottom to enter the live broadcast room and find out. Big platforms are not scary; time is scary First, in the early stages, big platforms are actually very fragile. They can only serve as secondary wholesalers and have no advantage in competing with traditional distributors. They rely on burning money to survive initially, but wholesale is not B2C e-commerce. How much money is needed to survive the initial accumulation phase? On the contrary, traditional distributors, due to years of accumulation, already have many customer resources. We suddenly realize that the initial customer accumulation that internet platforms dream of achieving by burning money is not a problem for traditional distributors at all; it's just a race against time. Internet transformation is not just about installing a system Many distributors have a misconception about internet transformation, thinking that having an online platform where customers do business with them means they have transformed. However, the reality is not that simple. In fact, while we have been seeking transformation, the government has already pointed out the direction in documents. In the "Opinions of the General Office of the State Council on Promoting Online-Offline Interaction and Accelerating the Innovation, Development, and Transformation of Commercial Circulation" (Guo Ban Fa [2015] No. 72), there is a passage: It clearly points out the three stages that traditional distributors must go through for transformation: establishing a supply chain collaboration platform, completing the transformation to supply chain management services, and establishing a joint procurement platform. " Theory is over Time for the big move " I believe that all distributor friends now have a general understanding of the necessity and prospects of self-operated platforms, but they are still confused about the specific operations. Therefore, we will hold an online sharing event at 7 PM on June 29, 2017, to analyze in detail every step of the transformation of traditional distributors with actual cases. Long press the QR code to join this live broadcast! Add WeChat Note: 6.29 Live 🔼 Large Public Class This event is co-hosted by New Distribution and Dinghuobao, and we have invited Mr. Jiang Yulin, Senior Marketing Manager of Dinghuobao, as the speaker. Mr. Jiang frequently visits major distributors and is a practical expert in transforming traditional enterprises to the internet. He has successfully helped hundreds of enterprises transform and has participated in building internet distribution systems for well-known companies such as P&G, Liangmianzhen, Lincoln Electric, and Stiebel Eltron. Live Sharing Content ****(Secrets never told to others) 1. How to quickly establish your own supply chain collaboration platform 2. How to adjust the corporate structure to adapt to the internet transformation 3. How to build the platform operation system 4. How to develop existing customers into online seed customers 5. How to build your own brand to compete with internet platforms 6. How to establish a new profit model to get rid of selling goods for money 7. How to cooperate with other distributors to establish a joint procurement platform -END-