From 2013 to 2019, the entire FMCG B2B industry has reached its sixth year. From a few entrepreneurs briefly testing the waters, to internet giants entering one after another, to more and more brand owners starting to build their own B2B, the industry's development has been unpredictable. Returning to the essence of the FMCG industry, all technological developments and advancements should still help brand owners achieve cost reduction and efficiency enhancement, accelerating the circulation of goods. From an industry development perspective, what value can B2B bring to the industry? In today's increasingly evident channel and consumption stratification, how can B2B help brand owners return to trillion-yuan growth? Recently, at the "FMCG2019·China FMCG Conference" hosted by New Distribution, Zheng Hongyan, Vice President of JD Group and President of JD Retail New Channel Business Unit, delivered a keynote speech titled "Symbiosis, Co-construction, Win-win". During a break, Zheng Hongyan accepted a video interview with New Distribution.
Where exactly is the value of B2B?
When doing anything, the original intention is very important. Having an original intention doesn't guarantee success, but without it, you won't go far. "If B2B is just a substitute or a re-division of power, then it has no value in this field," Zheng Hongyan emphasized. As the leader in FMCG B2B, New Channel has been able to reach where it is today because its core value point has always revolved around whether it can create value for brand owners, channel distributors, and every partner in the channel. If B2B only thinks about replacing old channels or dividing existing ones, at best, for brand owners, it just adds another "option" for channels, another distribution channel. From its inception to now, whether it's early exploration, model iteration, or strategy adjustment, JD New Channel's core judgment boils down to one point: whether it can create value for brand owners. New Channel is not here to pick the peaches; it hopes to become a core partner of brand owners, growing together, building together, and ultimately achieving a win-win situation.
Since it's about creating value, what specific aspects does it reflect? Zheng Hongyan said the core lies in two points: omni-channel supply and omni-channel selling.
Supply business, simply understood, is helping brand owners place products in suitable stores and suitable venues. Selling business revolves around the stores closest to consumers, using various forms and collaborations to bring more traffic into stores, allowing consumers to purchase needed products anytime, anywhere. In this process, JD New Channel plays a role not only as a tool-type connector but also as a coordinator and service provider, fully utilizing its own resources and organizing external resources and capabilities to better serve brand owners' supply and selling businesses.
Helping brand owners fight positional warfare and guerrilla warfare
Regarding the selling business, Zheng Hongyan took channel sinking as an example. Whether it's deeply distributed categories like alcohol and beverages, or non-deeply distributed categories like snacks, daily chemicals, and general merchandise, sinking channels to 3-6 tier cities and below, including county and township markets, is relatively costly. The current consumption capacity in rural and township markets has risen, and they need better products. However, due to consumption frequency issues, although there is demand, distribution costs are too high and marginal effects are too low.
At this point, JD New Channel can unite multiple categories, multiple brands, even cross-category, organize products, and penetrate each other to complete coverage of the sinking market together. Brand owners might think, "I already have good coverage now, so where is New Channel's value for me?" Indeed, some deeply distributed brands have already achieved extreme coverage, but nowadays, the value of coverage is gradually decreasing. Consumers' personalized demands are becoming a new round of challenges for various brand owners.
Personalized consumption demands are reflected in two aspects: First, personalized demands for the product itself; consumers need more "new, novel, and special" good products, and the lifecycle of such products is getting shorter. Second, at this moment, in this place, consumers need a different product that matches their current mood and scenario. Behind personalized demands, brand owners are actually required to have the ability to respond quickly, distribute quickly, and sell quickly. As Zheng Hongyan said, in the past era of big single products, brand owners were required to fight positional warfare; the wider the position, the bigger the market. Today's personalized consumption demands are forcing brand owners to fight guerrilla warfare. Launch "new, novel, and special" good products and quickly find suitable selling scenarios.
JD New Channel likens itself to a highway running across regions, helping brand owners deliver good products to stores everywhere. Of course, as a connector, New Channel doesn't do everything itself; it adopts an open mindset, bringing in all parties from society to do the supply business together. For example, as of now, JD's Zhangguibao has onboarded over 3,000 joint warehouses, combined with JD's own logistics advantages, to help brand owners deliver products quickly to various locations. Another example: in March 2019, JD New Channel launched the "7 Modular Channel Solutions" to implement on-demand customization for different brand owners' distribution chains.
Not only do well in distribution, but also do well in sell-through
Supplying stores only helps brand owners solve the distribution action. Although it can already generate huge incremental value, especially for non-deeply distributed categories, this is not enough. If distribution doesn't lead to sell-through, then New Channel's work is only half done.
Zheng Hongyan stated at the conference, "The key for enterprises is in-store sell-through. We will, just like omni-channel supply, put our capabilities on the platform and integrate high-quality products and services from all parties to help all players in the retail industry sell better." Through a complete open loop of supply and selling, JD New Channel allows consumers to have a better experience in the entire retail ecosystem: products are more authentic, logistics are faster, and services are better.
How to do well in omni-channel selling? The core is two points: make the experience better for consumers who visit the store, and allow consumers who haven't visited the store to also get quality products immediately, increasing store consumption stickiness. Zheng Hongyan mentioned that based on in-store, New Channel has the smart store management system Zhanggui Guanjia; based on home delivery, it provides the WeChat-based mini-program JD Bianli GO. Consumers can shop in-store or at home. This is the B2B2C data chain that New Channel has built, connecting brand owners to consumers.
For example, through omni-channel supply, JD convenience stores can sell rice, flour, oil, beverages, and milk tea. They can even sell large appliances from JD's main platform, such as TVs, air conditioners, and washing machines. Category complementarity fully meets consumers' needs in terms of products. Additionally, JD's "Wujing Jingtian" project allows consumers to place orders on JD's main site, with delivery fulfilled by small stores, giving consumers a better experience. Moreover, New Channel has also listed some JD convenience stores on Meituan Flash Purchase in KA format, gaining more social traffic for small stores across platforms. JD New Channel hopes to deliver massive FMCG products quickly to small stores via this highway, and through empowerment, help small stores connect with multiple online resources, reach consumers, and meet their immediate needs for products. Ultimately, New Channel and brand owners work together to serve consumers, based on the concept of co-construction, growing together, and finally achieving a win-win situation!
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