I have a feeling that under the banner of the Internet, people dare to do anything, and under the banner of disruption. I think that for something to succeed, it must first be logical. Of course, logical things may not succeed, but illogical things definitely won't. Recently, I've looked at many industry B2B platforms and found huge opportunities hidden there. A successful B2B e-commerce must be valuable, so I'll analyze it from the value perspective. What is B2B? Everything except C2C is B2B. Now calling all B2B 'B2B' is problematic. A complete channel chain has about four links: Manufacturer (F) → Distributor (B) → Retailer (R) → Consumer (C). So-called C2C means all targets point to consumers (C). So-called B2B is actually a combination of F, B, and C. There are not many combination models. Today, I want to discuss: what value do various B2B e-commerce models have?
Is B2B that bypasses distributors (B) valuable? B2B that bypasses distributors is actually F2R. In the pharmaceutical industry, I've seen this type of B2B.
The traditional pharmaceutical channel is: manufacturer → wholesaler → retailer → patient. There are pharmaceutical wholesalers at provincial, city, and county levels; pharmaceutical retailers are clinics, hospitals, and pharmacies. This is the traditional offline channel.
Pharmaceutical F2R means the platform bypasses all levels of pharmaceutical wholesalers and goes directly to retailers. Retailers place orders on the APP, and delivery is made within half a day. Since there are well-known distribution centers for pharmaceuticals in China, F2R platforms quickly organize supply with high efficiency.
I've also seen F2R in the pesticide industry, a typical example being Nongyi.com. But it's only suitable for conventional pesticides.
There are also F2R models in the FMCG industry, such as JD New Channel and Alibaba 1688.
Does the F2R B2B model have value? I think it does. But bypassing the distributor link also loses promotional capabilities, especially for new products. Distributors as promoters cannot handle too many SKUs, and the retail link itself does not have promotional capabilities.
In the F2R model, if products do not rely on the platform for promotion, I think the logic is valid and valuable. Of course, if all require platform promotion, that's a different story. Is B2B that bypasses retail (R) valuable? Some may ask: is bypassing retail still B2B? Because the backend of retail is consumers. In theory, that's correct. But in China, there are exactly such strange things.
Take the agricultural materials and agricultural animal husbandry industries as examples. Agricultural materials are agricultural production materials. We know that in textbooks, production materials have no retail. But now, China's agricultural materials and agricultural animal husbandry are actually marketed in a consumer goods model, so there is a retail link. This is also why multinational companies in these two agricultural-related industries, despite their strong technology, still cannot adapt to the Chinese market.
China's agricultural-related industries have undergone major changes recently: land concentration, more large-scale farmers, restoring the production materials nature of agricultural materials and animal husbandry. But currently, it's still in a transitional stage.
At this time, a type of B2B e-commerce has emerged that bypasses the retail link of agricultural materials and animal husbandry, going directly to farmers or breeders. This type of e-commerce can still be considered B2B e-commerce; its characteristics and logic are B2B logic.
Perhaps in the future, the retail link in China's agricultural-related industries will disappear, but currently, B2B that bypasses retail is still valuable, and it may be that B2B has eliminated the retail link. Is B2B that doesn't bypass any channel link valuable? In some people's eyes, e-commerce should save a link, otherwise it doesn't show its value and can't save gross margin space. I know a company that does e-commerce, and it actually added an extra link compared to traditional. Initially, I actively participated, using O2O to increase sales. Later, I found this model problematic: how can e-commerce add a channel link?
The B2R model in the FMCG industry doesn't save any link. So, is this type of B2B valuable? I think it is.
The first value of the B2R platform is visit-sales, which improves efficiency; that's the first value. Visit-sales procedurally bypasses second-tier distributors, but this value is relatively low. B2R platforms must be shared by many distributors; without unified warehousing and distribution, its value is greatly reduced. If unified warehousing and distribution are implemented, it's significant.
The value of the B2R model is not creating gross margin space, but improving efficiency and saving costs. Is B2B that eliminates second-tier distributors valuable? Honestly, I never thought there would be B2B with the basic starting point of eliminating second-tier distributors, because eliminating second-tier distributors is just a 'by the way' thing for B2B; there's no need to deliberately do it.
Since someone did it, let me talk about second-tier distributors.
Before deep distribution, second-tier distributors were indeed a distribution link, not easy to bypass, and there were really people who made a living from second-tier distribution.
The goal of deep distribution was to break through second-tier distributors and directly supply terminals. After deep distribution became a trend, those who made a living from second-tier distribution disappeared entirely.
Now, why have second-tier distributors reappeared? On one hand, labor costs are high now, so deep distribution is basically not done; on the other hand, most current second-tier distributors are mainly retailers who also do second-tier distribution.
Another reason second-tier distributors have received attention recently is that due to industry ceiling and sales decline, manufacturers and distributors have increased tiered policy intensity, giving second-tier distributors opportunities to absorb large amounts of inventory pressure. Some retail stores find it cheaper to get goods from second-tier distributors than from distributors.
When the existence of second-tier distributors is no longer a profession but a side business of wholesale and retail, and when the gross margin space of second-tier distributors is just the result of tiered policies, I think B2B e-commerce targeting the elimination of second-tier distributors has very low value. Is B2B that diverts goods valuable? I didn't expect that diverting goods was once the mainstream of B2B. I didn't expect that some would shamelessly call themselves diverting goods B2B. But since diverting goods B2B exists, let me talk about it.
I think there are two reasons for the emergence of diverting goods B2B:
First, current manufacturer tiered policies are too large and extremely unreasonable. Current tiered policies not only cause the return of second-tier distributors but are also an important reason for the proliferation of diverting goods B2B. But I don't think this process will last long.
Second, B2B can't find a breakthrough, so they only use low-priced diverted goods to attract customers and make GMV.
GMV is a logic from C2C. In the early stage of B2B, venture capital also looked at GMV. But now the trend has changed; venture capital basically no longer looks at B2B GMV, because compared to C2C, B2B is wholesale, too easy to obtain and too easy to fake.
B2B no longer looks at GMV, and tiered policy-induced diverting goods don't support low prices long-term. So to have stable traffic, subsidies are inevitable and certainly not sustainable.
Diverting goods has no value to the channel, and diverting goods B2B is hard to sustain. I didn't even list it as an observation target, but as a phenomenon, I still want to talk about it. -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and actionable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent Article Selection | 002 Distributor Market Operations | 003 Terminal Visit Management | 004 Sales Supervisor Skills | 005 Sales Improvement Techniques | 006 Channel Expansion | 007 Managing Distributors | 008 Distributor Development | 009 Distributor Internal Operations Management | 010 Team Management | 011 Efficient Distribution Techniques | 012 Sales Manager's 18 Skills | 013 KA Operation Methods and Strategies | 014 First Lesson for New Salespeople | 015 Internet, Brand | 016 Distributor B2B Transformation | [Long press QR code to follow]