Industry Turning Point: The Dealer Supply Chain Revolution Officially Begins!
This year, dealers are all complaining about their hardships.
Small brands are too risky to take on, big brands are hard to secure; new channels are inaccessible, old channels are being segmented; offline business is shrinking, online business is difficult to succeed; wanting to transform, yet the path ahead is uncertain...
In this new environment, what role should dealers play? How can they transform to survive?
A Letter from Li Lei, President of Pinyinhui Yanxuan & Haojiayi: 'Cost-Effectiveness' and 'Disintermediation' Become Industry Focus
Looking back at the entire year from the year-end perspective, 'cost-effectiveness' and 'disintermediation' (removing dealers) have become the focus of industry discussions.
As the keywords of this consumption cycle, 'cost-effectiveness' has brought about the booming trend of discount stores, the continuous evolution of instant retail, the prevalence of white-label products, and has made 'reverse consumption' a central topic in public discourse this year.
The reason lies in the 'evolution' of consumer behavior. With diverse purchasing channels, consumers have more options and no longer simply believe that 'expensive means good.' They pursue quality while also valuing cost-effectiveness — consumers are trying to find a consumption path with lower cost but higher quality in discount stores, flash warehouses, community group buying, and other discount formats.
◎ Source: Internet
Take the bulk snack channel as an example. As consumers become more price-sensitive, bulk snack stores, by sourcing directly from manufacturers, offer consumers more cost-effective purchasing options at prices far below market rates. Products like 1.99 yuan sparkling water, 2 yuan cola, and 2.99 yuan Evian have become mainstream in bulk snack stores.
Bulk snack chains such as Liangpin Youming, Liangpin Henmang, and Zhao Yiming are all striving towards the goal of 10,000 stores.
If consumers' focus on cost-effectiveness has led to the rise of new formats like bulk snacks, live-stream e-commerce, and content e-commerce, which have carved up market share from traditional channels, then the repeatedly mentioned 'disintermediation' has further intensified the anxiety of traditional dealers.
Some say: "The explosive growth of bulk snack stores is nourished by hundreds of thousands of dealers." After all, emerging channels like bulk snacks, live-stream e-commerce, and platform e-commerce bypass dealers to cooperate directly with manufacturers, compressing various costs in the intermediate links and lowering terminal retail prices.
In this state, the value of dealers is increasingly diminished. Even if platforms need dealers for supply, typically, for a category or brand, only one dealer is needed, but the coverage area is vast, inevitably eating into the market share of other dealers.
Therefore, for dealers in traditional industries, they now stand at a historical turning point.
Becoming the Supply Chain: Turning Dealers into Manufacturers
In reality, whether online or offline, making good products cheaper has become the mainstream trend. But how to make good products cheaper puzzles most dealers.
Traditional dealers, as middlemen, are often seen as 'movers' in the eyes of manufacturers and brand owners—a laborious business of delivering products to various channels and earning the price difference.
Li Lei, President of Haojiayi, stated in an interview: Offline competition is a naked price war. In the past, the distribution model of manufacturer → distributor → secondary wholesaler → terminal → consumer inevitably involved significant labor and material costs. Therefore, under the impact of the new business model of direct supply from manufacturers (manufacturer → terminal → consumer), the traditional distribution model no longer has strong competitiveness and universality.
◎ Development direction of China's business models
For dealers, how to reposition themselves amidst the business model transformation is crucial.
"We are thinking about how to make dealers' business easier, which brings us back to the essence of buying and selling—sell-through." Li Lei said that Haojiayi hopes to establish a supply chain alliance, allowing dealers to become source manufacturers themselves, compressing product prices, and by providing low-priced, high-quality products, drive sell-through in the terminal market.
Take the 'Wo Ai Jiao' flavored yogurt as an example. Based on 100% raw milk with 3.0g high protein, and relying on Haojiayi's supply chain alliance, dealers can obtain products at bare price (ex-factory price), then push to terminals at a distribution price 30%-50% lower than competitors, with an extreme price of 9.9 yuan for 2 cups, making it a best-selling explosive product in terminals.
A dealer in Hebei Xin Yulou purchased over 20,000 units in 3 months, with single-store consumption up to 1,000+ cups, ranking TOP1 in the same category; a Dalian customer purchased 10,000 units in one month, selling 7,000+ units, with a sell-through rate as high as 70%; a Hohhot, Inner Mongolia customer accumulated over 15,000 units in 3 months, with each shipment averaging 2,000+ units...
Wo Ai Jiao flavored yogurt has become a best-seller among similar products through extreme cost-effectiveness. By using a definite super explosive product to solve dealers' poor sell-through issues, and leveraging an extreme supply chain to comprehensively address dealers' pain points of low product profit and low competitiveness, the combination of 'super explosive product + extreme supply chain' creates a new growth path for 2024. Li Lei said that individual dealers often lack bargaining power with manufacturers and find it difficult to build their own supply chain systems. By establishing a supply chain alliance, Haojiayi integrates supply chain resources for dealers, provides products at cost price, and only charges supply chain service fees, allowing dealers to directly become manufacturers and no longer work for others.
Embrace the Supply Chain, Embrace the New Era
Now, the supply chain revolution has begun.
For dealers at this historical turning point, embracing the supply chain is imperative. Through supply chain advantages, dealers can reconnect with the times.
Offline, relying on supply chain advantages, dealers improve operational efficiency, reduce intermediate links, and while ensuring profits, can provide consumers with high cost-performance products, also enhancing competitiveness in channel price wars.
With supply chain advantages, dealers are no longer confined to traditional channels. They can expand into online channels such as live-stream e-commerce, interest-based e-commerce, and community group buying, broadening potential customer groups and creating more sales opportunities and profit space.
The editor believes that future competition will definitely be supply chain competition. To cope with the rapid development of the times and seize the initiative in the changing landscape, attention to supply chain layout cannot be ignored. The 'Haojiayi Supply Chain Alliance' launched by Haojiayi not only brings dealers a new win-win cooperation model between manufacturers and dealers but also allows them to enjoy the dividends brought by the supply chain. From the information available, the new business model launched by Haojiayi has, to some extent, indeed changed the traditional distribution theory of manufacturers to dealers to terminals, each layer earning price differences, and has cross-era significance in the FMCG industry, also providing guidance for dealers at the turning point of this great era. On November 16, Haojiayi, together with Huangshi Group Zunyi Dairy, will hold the "Hao+1 Supply Chain Alliance and Zunyi 20,000-ton Cup Yogurt 120 Million Cups Grain Lid Factory Production Ceremony" in Zunyi, the "turning point" of the Red Army's Long March, and simultaneously announce the new 'Haojiayi Supply Chain Alliance' model, which has industry-innovative significance for dealers. Let us gather in Zunyi to witness the 'power of turning points' together.