---
title: "Information Disconnected, Capital Tight, Logistics Fragmented: How Can B2B Break Through FMCG Channel Pain Points?"
description: "FMCG B2B and distributor transformation have become hot topics, with many trying various models. However, after nearly three years of research and practice, we believe that without addressing the entire supply chain, these efforts may be a false proposition. The key is to start with B2B platforms in the wholesale segment and provide full supply chain services."
author: "赤霄剑"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-07-01"
language: "en"
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---

# Information Disconnected, Capital Tight, Logistics Fragmented: How Can B2B Break Through FMCG Channel Pain Points?

> FMCG B2B and distributor transformation have become hot topics, with many trying various models. However, after nearly three years of research and practice, we believe that without addressing the entire supply chain, these efforts may be a false proposition. The key is to start with B2B platforms in the wholesale segment and provide full supply chain services.

FMCG B2B and distributor transformation have recently become hot topics, with many trying their hand, from self-operated to matchmaking models, asset-light to asset-heavy, and a variety of business models. However, after nearly three years of research, piloting, and promotion, until monthly transaction volumes exceeded 100 million, we increasingly feel that no matter the model, if it remains limited to the distributor-to-retailer link rather than viewing the industry's true pain points from a full supply chain perspective, FMCG B2B and distributor transformation may well be a false proposition.
This is like a river with silt deposits and slow currents. If we only focus on one section of the riverbank for treatment, even if we make it lush and paved with bricks, it won't solve the big problem, and may even create new barrier lakes upstream and downstream. Even if it helps overall flow, it's like seeing only the trees without the forest, solving only local small pain points while ignoring the major pain points in the chain. Below, we explain our views on the FMCG supply chain.
After years of operation, most FMCG distribution markets have achieved flattening, where manufacturers directly face regional distributors (district/county level), distributors are responsible for the regional retail network, and ultimately retailers sell goods to consumers (as shown in the figure). This structure has clear levels, each link gets what it needs, and has operated for years. However, with rapid economic changes, especially intensified market competition, reduced profit margins, and increased inventory, the problems of this structure are becoming more apparent. In a word, when times are hard, problems emerge.
First, in terms of information flow, the word is "disconnected." That is, information between levels is fragmented. For example, some distributors falsely report the number of retail outlets to claim full coverage in the region and obtain related policies; more distributors underreport terminal information to prevent manufacturers from accessing it and affecting their interests; and for some small and scattered terminals, distributors lack marketing enthusiasm and basically leave them to second-tier distributors, so the completeness and credibility of this terminal information is questionable.
Second, in terms of capital flow, the word is "tight." To meet sales targets, there is mutual gaming and pressure to stock up at each level, causing capital strain. For example, large supermarkets collectively slump, causing manufacturer inventory to increase, so they push goods to the distribution market, making distributors miserable; market information fragmentation leads to unreasonable ordering and production arrangements, causing slow-moving goods and increased inventory capital; and to push goods to terminals, they blindly promise return and exchange conditions, which temporarily brings back capital, but when returns occur, the losses and capital pressure are passed back to distributors.
Third, in logistics, the word is "fragmented." In urban markets, this problem is not prominent, but in rural markets, single-store order volumes are small, regional distribution is scattered, and distributors operate independently, resulting in low delivery efficiency—at most about 20 stores per day per vehicle; delivery costs are high, with one vehicle and two people, various expenses accounting for 7%-8% of sales.
**Brand and Channel Problems Abound**
First, brand: mainly manifested in single form, poor information flow, and ineffective placement. The form is still very traditional, nothing more than TV, print, and wall painting; information flow is not smooth, coverage, reach, and feedback rates cannot be accurately measured, lacking continuous tracking; the feedback path is long and prone to distortion, leading to inaccurate evaluation of effectiveness. It is under such extensive conditions that many black or gray areas arise, becoming difficult to reverse.
Second, channel: mainly manifested in lack of coordination, missing terminals, and insufficient stickiness. Each link pretends to be ignorant, guarding against each other, let alone coordinated action, so the entire channel is like seeing flowers in a fog. Some terminals are not directly covered due to high service costs such as delivery, preventing the "channel sinking" that many manufacturers have promoted for years. Terminal feedback is not smooth, leading to inadequate terminal services, unreasonable terminal policies, and even policies being eaten by intermediate links, so terminals follow the market, order based on price, and cross-region sales and counterfeit goods arise.
**Pain Points in Each Supply Chain Link**
**Brand Manufacturer Pain Points**
(1) Accurate, effective, and continuously measurable brand promotion;
(2) Direct-to-terminal, clear channel management;
(3) Real-time, precise, multi-level and multi-dimensional information control;
(4) Targeted, sustainable sales enhancement methods.
**Distributor Pain Points**
(1) Reduce operating costs; (2) Expand channel coverage; (3) Reduce capital occupation.
**Retailer Pain Points**
(1) Favorable supply prices; (2) Complete product selection; (3) Comprehensive marketing services; (4) Standardized store management.
Consumer demands are simple: first, convenience, related to retail network coverage and SKU count; second, safety, preventing counterfeit goods from entering the market; third, value, with reasonable prices and rich promotions.
**Solutions**
To solve the above pain points, we believe that starting with a B2B platform in the FMCG wholesale segment and achieving full supply chain services should be the solution. Among these, FMCG B2B must abandon the pure online operation concept and instead combine online and offline to solve practical problems such as field marketing, warehousing and distribution, and financial services. Future successful B2B platforms will win with their basic service capabilities. As for self-operated or matchmaking, we believe both will have a share, and no single model will dominate.
Step one: Use FMCG B2B as the entry point, focusing on solving the pain points in the wholesale segment. There are three starting points: first, a grid-based field marketing team; second, a unified warehousing and joint distribution system, where for rural markets, consider setting up town-level warehouses for reasonable stocking and regular replenishment to reduce delivery costs; third, comprehensive financial services, focusing on payment and financing services, and providing working capital wealth management and other investment services as appropriate. Through unified warehousing and joint distribution, reduce distributor costs; through grid-based field marketing, expand distributor channel coverage; through financial services, reduce distributor capital occupation.
Step two: Extend to both brand manufacturers and consumers. Specifically, start with information services to achieve information sharing within the supply chain, then through field marketing teams and warehousing and distribution systems, cooperate with distributors to provide manufacturers with brand promotion, channel sinking, and sales enhancement services. At the same time, consider cooperating with retailers to extend to the consumer end. Ultimately form a complete supply chain service.
The above is just a simple idea; specific plans can be shared with like-minded individuals.
Source: Lanli Sword Team
**At the request of many distributor friends, the third B-end e-commerce inspection class of this public platform will visit three platforms from July 9-12: Wanshang Yizhan, Yunbao Shangmeng, and Weijie Chengpei. Distributor friends interested in transformation can join us for on-site inspection:**
**Organization Form**
1. Company visit
2. Actual market case visit
3. On-site explanation
4. One-on-one communication
Participating distributor friends only need to pay a 200 yuan registration fee. Time: July 9-12, 2016. Location: Changsha, Xiamen.
Interested distributor friends can register by long-pressing the QR code below.
When adding friends, please reply "Third Registration".
**Past Inspection Enterprise Cases:**
**Yishang Logistics Model Inspection**
(Second B-end E-commerce Inspection Group Yishang Logistics)
**Caiba Model Inspection**
**Jinhuobao Model Inspection**
**Beiquan Model On-site Inspection**
**Piduoduo Model On-site Inspection**
-END-
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