"If there is an industry that 'earns a meager profit but worries like selling drugs,' then same-city warehouse and distribution logistics must be one of them. If you, as a distributor, feel the same way, it's likely that you are also doing warehouse and distribution work, and the price difference between purchase and sale is the storage and logistics fee given to you by the manufacturer." In recent years, the difficulty of doing business for FMCG distributors has become a consensus in the FMCG distribution field. Some distributors with a sense of crisis have considered transformation, among which "unified warehouse and distribution" is a relatively easy direction for distributors to transform into. Three or five distributors jointly establish a logistics company, persuade other distributors to store goods in their warehouse, and provide warehouse and distribution services in a way that saves money for distributors. However, after one or two years of actual operation, they find that this business may be even more arduous than being a distributor. With a 10,000 square meter warehouse, dozens of vehicles, and transaction flow exceeding hundreds of millions, the revenue and net profit expectations are far from met. Mr. Wang Bo, founder of a warehouse and distribution platform transformed from a distributor in Jingzhou, Hubei, told New Distribution that distributors transforming into a unified warehouse and distribution platform are essentially providing services, similar to shoe shining services. If a pair of shoes costs 2 yuan, the customer (distributor) may bargain with you, and finally you have to share dividends with shareholders (three or five distributors, sometimes up to dozens). Such a business is meaningless. Where is the way out for distributors transforming into unified warehouse and distribution platforms? Recently, New Distribution interviewed Wang Bo, chairman of a logistics company in Jingzhou, Hubei. As a veteran FMCG person with nearly 20 years of distribution business, he began transforming into a same-city logistics company in 2017. Currently, he provides localized warehouse and distribution services for FMCG distributors, maternal and child chain stores, Suning.com, and Qingju Bicycle. Regarding distributors transforming into unified warehouse and distribution, what are his thoughts? 01 Increasing store fees prompt thinking about transformation In 1996, Wang Bo resigned from his teaching job due to personal interest and took over the family trading business. At that time, the trading business was among the top in the region, representing brands such as Wahaha, Jianlibao, and Yili. After nearly 20 years of distribution, in 2013 and 2014, Wang Bo clearly felt that business was not easy. With annual sales of nearly 200 million yuan, at the end of the year, he found that he was not making much money. Wang Bo recalled that at that time, store fees were increasing day by day. Although there were sales, operating costs were rising, and profits were declining sharply. Downstream accounts receivable were too large, and the pressure of upstream manufacturers' advance payments was suffocating. Just as Wang Bo was thinking about transformation, Eternal Asia took the initiative to contact them frequently. Considering the difficulties faced by the trading company and Eternal Asia's background as a national platform, in January 2015, Wang Bo formally cooperated with Eternal Asia to establish Jingzhou Xindi Supply Chain Management Co., Ltd., with Eternal Asia as the controlling shareholder. After the cooperation, for Xindi, the entire trading company underwent a "big change." The configuration of software and hardware, standardized management, and process orientation overnight made the traditional trading company look like a "regular army." But beauty is always short-lived. By July 2017, this marriage had failed. Wang Bo told New Distribution, "In the past, the trading company was small but flexible, without too many management levels. Now everything requires processes and standards. For example, to pay the manufacturer for goods, this single item requires signatures from the local trading company, the provincial company, and the Shenzhen headquarters. There are three processes, and it's not just 3 people but 8 or 9 people signing. It takes a week to get one signature, which seriously affects market sales. We originally hoped for 1+1>2, but after cooperation, it didn't work out as expected, and we finally had to part ways." 02 Failure of cooperation with Eternal Asia leads to transformation into warehouse and distribution platform After leaving Eternal Asia, Wang Bo began to seriously think about the next step. If he continued the traditional distribution business, he would still face the difficulties before 2014: the impact of e-commerce, declining traditional supermarket business, and advance payments for fees and funds. He couldn't go back; he had to move forward. Wang Bo told New Distribution that it was precisely the cooperation with Eternal Asia that upgraded the software and hardware of Xindi's warehouse and distribution, such as standardized in-warehouse operations, leading among peer distributors. With such a foundation, it was just right to provide warehouse and distribution services for peer distributors. At that time, distributors transforming into unified warehouse and distribution platforms were also at a peak. In the second half of 2017, Wang Bo gave up the distribution agency for brands such as Haoliyou, Perfetti, Yili, and JDB, retaining only the agency for Wyeth and Friso milk powder, while also operating two imported food companies and a wine estate. Wang Bo told New Distribution that in August 2017, they went out with local distributors to investigate distributors transforming into warehouse and distribution platforms, considering jointly investing in a same-city logistics company. Although everyone thought the model was good, it was difficult to reach a consensus on implementation, so in the end, he had to do it alone. He established Hubei Yijiaren Logistics Co., Ltd., upgrading the original 4,000 square meter warehouse to an 8,000 square meter three-dimensional high-bay warehouse and introducing the Medlin warehouse and distribution system. In the early stage of attracting merchants, because of the milk powder agency business, the first to enter the warehouse was a local maternal and child chain enterprise, providing warehouse and distribution services for 35 local stores. After ending cooperation with Eternal Asia, the brand agency business was basically abandoned, so Yijiaren Logistics did not have too many "burdens." Distributors of various snacks, including Xizhilang and Nongfu Spring distributors, also entered the warehouse one after another. As of now, Yijiaren Logistics has covered more than 1,000 outlets and has more than 20 delivery vehicles. 03 Focus on warehouse and distribution functions, extend service targets Many unified warehouse and distribution platforms, when persuading distributors to enter the warehouse, often help distributors "calculate small accounts." But in Wang Bo's view, the correct approach should be: Calculate big accounts, not small accounts. Wang Bo told New Distribution that the platform itself provides warehouse and distribution services. We cannot calculate business item by item for distributors based on the past trading commodity price difference thinking. In the process of attracting merchants, we usually persuade distributors to enter the warehouse in the form of "packages." At the same time, we also need to "preach" to distributors: the benefits of stripping off warehouse and distribution, freeing distributors from the tedious warehouse and distribution work in the past, reducing vehicle risks, reducing labor costs, and releasing personal energy and time, etc. In addition to inviting distributors to enter the warehouse, Yijiaren Logistics is also actively contacting brands such as Master Kong and Uni-President. Yijiaren Logistics will also consider providing warehouse and distribution services for these first-line brands. At the same time, Yijiaren Logistics also goes beyond the FMCG industry, based on local resources, to provide diversified and personalized warehouse and distribution services. Currently, Yijiaren Logistics' business segments, in addition to FMCG, include three parts: First, providing regional distribution services for Suning.com (e-commerce last-mile distribution), and is currently negotiating cooperation with JD.com; second, providing same-city distribution for chain operations in different industries (such as vegetables, raw materials, etc.); third, local shared bicycle placement and distribution services. Yijiaren Logistics is providing placement and distribution services for nearly 8,000 Qingju bicycles. Final Thoughts The above is a case of a distributor in Jingzhou, Hubei, transforming into a unified warehouse and distribution platform. In the view of New Distribution, unified warehouse and distribution platforms in the past pursued bottom-line traffic and profit goals, and the target objects of service were often distributors. They persuaded distributors to enter the warehouse through various forms (partnership, cost reduction, supporting the growth of distribution business, etc.), but often it was not as smooth as expected. In the future, as upstream manufacturers become more aware, especially brand owners represented by deep distribution, providing local warehouse and distribution services for them will also be an important direction. In this process, due to the compression of levels between manufacturers and small stores, the roles of participants change, and ultimately the profit distribution mechanism in the middle will be reconstructed, and the profit goals of unified warehouse and distribution platforms can also be improved. As shown in the figure below: Of course, if after transforming into a unified warehouse and distribution platform, distributors simply position themselves as local city logistics service providers, they should jump out of FMCG, base themselves locally, fully utilize local social resources, and extend in multiple directions, such as the business segments involved in the above Hubei Yijiaren Logistics: distribution for chain stores, localized distribution for e-commerce giants, and other last-mile distribution businesses for standard products that do not require too much complex delivery.