--- title: "Liu Chunxiong | 10 Conjectures on B-end E-commerce" description: "At the 'New Food Era · New Distribution 2016 FMCG + Internet Summit' held on October 16, Liu Chunxiong, CEO of Yanling Maker, delivered a keynote speech on B-end e-commerce. He proposed 10 conjectures representing current divergences in the industry, covering topics such as whether B-end e-commerce is truly e-commerce, the role of manufacturers, centralized vs. distributed models, and the feasibility of burning cash to build barriers." author: "刘春雄" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2016-10-18" categories: "E-commerce & Instant Retail" language: "en" canonical: "https://xinjignxiao.com/en/articles/liu-chunxiong-10-conjectures-on-b-end-e-commerce-59e0f0bc/" markdown: "https://xinjignxiao.com/en/articles/liu-chunxiong-10-conjectures-on-b-end-e-commerce-59e0f0bc.md" original_source: "https://mp.weixin.qq.com/s/1PMA8C6XUkNJl21mw5Lkiw" translation: "https://xinjignxiao.com/zh/articles/%E5%88%98%E6%98%A5%E9%9B%84-b%E7%AB%AF%E7%94%B5%E5%95%86%E7%9A%8410%E4%B8%AA%E7%8C%9C%E6%83%B3-59e0f0bc.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/liu-chunxiong-10-conjectures-on-b-end-e-commerce-59e0f0bc/" citation: "刘春雄. “Liu Chunxiong | 10 Conjectures on B-end E-commerce.” New Distribution, 2016-10-18. https://xinjignxiao.com/en/articles/liu-chunxiong-10-conjectures-on-b-end-e-commerce-59e0f0bc/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Liu Chunxiong | 10 Conjectures on B-end E-commerce > At the 'New Food Era · New Distribution 2016 FMCG + Internet Summit' held on October 16, Liu Chunxiong, CEO of Yanling Maker, delivered a keynote speech on B-end e-commerce. He proposed 10 conjectures representing current divergences in the industry, covering topics such as whether B-end e-commerce is truly e-commerce, the role of manufacturers, centralized vs. distributed models, and the feasibility of burning cash to build barriers. The following is the core content of the speech delivered by Mr. Liu Chunxiong, CEO of Yanling Maker, at the "New Food Era · New Distribution 2016 FMCG + Internet Summit" held on October 16. New Distribution has organized the key points as follows: The second half of last year should have been a period of great enlightenment for B-end e-commerce, while the first half of this year I think was a trough, because everyone was thinking, hesitating, and waiting. By the second half of this year, my feeling is that it suddenly became red-hot. On the 13th, I met a distributor who had been in the business for over twenty years. Before the Spring Festival, he transferred all the products he represented to his former subordinates, and he himself moved into branding, doing quite well, with a warehouse of about ten to twenty thousand square meters. But I have seen so many B-end platforms, and almost none are exactly the same. I can only say that current B-end e-commerce is basically in an exploratory period. It is hard to say which one represents the direction, because the race is not over. Therefore, I propose 10 conjectures. **These 10 conjectures actually represent 10 divergences, divergences arising from different logics.** The first conjecture is: **Is B-end e-commerce really e-commerce?** I think in the first half of the year, no one doubted this. In other words, does the traffic of B-end e-commerce have commercial value? There is a concept that we are all doing now: it seems that the more traffic we have, the happier we are, and the more we attract capital investment. But I have found that B-end e-commerce has a characteristic: most platforms lack the ability to redistribute traffic. Traffic itself may not generate value; it only has transaction capability. For traffic to generate profit for your platform, it must have secondary distribution value. Whoever gives me money, I allocate traffic to them. I think this is the secondary distribution capability. Current B-end platforms may have some secondary distribution capability, but I think it is very little. At this point, we must begin to question whether B-end e-commerce is really e-commerce, or if it is just a commercial electronic tool. You can think about it: if B-end does not have commercial value, does not have secondary distribution capability, for example, if it depends on B-end payment for existence, then you must think about where your ability to distribute traffic lies. **Perhaps your traffic is large, but without secondary distribution capability, you do not have commercial value.** The second conjecture is: **Currently, few upstream manufacturers participate in B-end e-commerce. If manufacturers do not participate, they have enormous control over distribution.** Moreover, no distribution link is irreplaceable, because over the years, we have constantly changed distributors. Without manufacturer participation, your business has no starting point. If your starting point does not exist, and you are purely a platform dealing in second-hand goods, what is your survival value? Of course, some are doing this now, such as JD New Channel, Alibaba's Retail Link, and Wandi Yigou, which I met yesterday. They are combining with manufacturers. But the logic of many platforms is that if I grow big enough, I will force manufacturers to cooperate with me. Does this logic hold? The third conjecture is: **In the entire distribution chain, there are four major parties: manufacturers, distributors, secondary wholesalers, and retail stores. These four relationships extend into various models.** Currently, all kinds of models exist. Will they coexist, or will one model become dominant and others disappear? I think there must be a crowding-out effect among these models. If one grows big, others will be squeezed. **So whether it is coexistence or one model dominating, this is a major divergence.** The fourth conjecture: **Is the main body of B-end e-commerce centralized or distributed?** We see that C-end e-commerce is basically centralized, and it has formed a monopoly. So many people in B-end e-commerce are also doing this, and the bigger they get, the more they choose centralization. But due to the natural regional nature of Chinese commerce, the fragmented pattern so far gives centralized commerce a big advantage: it can force upstream manufacturers. Which of these two will be the mainstream in the future? Currently, vertical players are mostly scale-oriented, so they choose **centralization**. But service-oriented players mostly choose **distribution**, because the differences among regional distributors are too great. They must serve regional distributors with various characteristics through a distributed approach; otherwise, they cannot survive. Which one will be more competitive in the future? I think this is also a major divergence. The fifth conjecture: B-end is currently attracting a lot of investment, and many are burning cash. At the beginning of this year, I proposed a concept: **Can B-end burn cash to build barriers?** Wrong logic will never burn out scale. Once I hear who has money, who invests, I do not believe it at all. If the logic is wrong, you just burn more ashes; you will never burn out scale. Can correct logic burn out industry barriers? In the first half of this year, I also proposed a "four no" principle that many did not agree with: no burning cash, no price chaos, no subsidies, no hijacking. Many disagreed. Why do I say this? **Because I lean towards B-end efficiency. If it can improve efficiency over existing distributors, it can reduce costs, and ultimately benefit retail and consumers. That is its value.** Of course, the "four no" principle: no burning cash does not mean no spending, no price chaos does not mean no price adjustments, no subsidies does not mean no policies. So when looking at a company, first look at whether it has correct logic, not whether it burns cash, and second, look at its secondary distribution capability. The sixth conjecture is: **How high is the concentration in B-end?** Because C-end has a characteristic, basically a 7-2-1 structure: the leader holds 70% share, the second 20%, and others 10%. This concentration is very high. Such high concentration makes many in B-end imitate C-end logic, saying I must be the leader, or I will die. But is that really true? Perhaps the leader may die before you do. So is B-end logic centralized, or will there be multiple platforms to choose from in the future? If your platform service is poor, I will switch to a second platform; if your platform efficiency drops, I will go to another. Which is it? I dare not conclude, because today's 10 divergences are to lay out various paths for everyone to think about. The seventh conjecture: **What is our role in B-end? Do we want to eliminate distributors and become distributors ourselves, or do we help distributors?** If you help distributors, you must cooperate with them. If you eliminate distributors, why would they cooperate with you? If you eliminate distributors, in the short term you cannot take over the manufacturer's channels, and manufacturers may not continue to cooperate with you. Some platforms have the hidden logic of helping distributors in form but eliminating them in substance. Many can see through this. At this point, we must recognize our true role. Do not on one hand say cooperate with you and ask for money, and on the other hand say we will eliminate you. So there are also the hijacking theory and the tool theory. The hijacking theory is to eliminate you and become a new distributor. If you become a new distributor, do you have the efficiency and low cost of traditional distributors? Traditional distributors are inefficient but low-cost. You may not achieve low cost or high efficiency. The eighth conjecture: **Can B-end control retail?** Because many B-end services target retail, even fragmented retail, trying to string them together in some way. Of course, B-end itself does not have this capability. So it is necessary to do C-end. Now many B-end players are working on C-end, which I call community e-commerce. Community e-commerce may be the hardest e-commerce I think, even harder than C-end like Taobao. This logic may hold, but can you bear the difficulty? Recently, we have heard of many B-end platforms opening retail stores after financing. Is it possible to assume that because C-end is hard to control, I might as well open my own stores? But Chinese retail stores are a very low-cost business model, small shops. If you open retail stores without scale, even if you have your own traffic, what significance does it have for the platform? The ninth conjecture: **Is B-end mainly vertical or platform-based?** Our self-operated businesses are basically vertical. Vertical means you become a new distributor competing with existing distributors. Similarly, if you are platform-based, cost advantages may not be present. So it is a balance between the two. The tenth is strictly not a conjecture, because whether for manufacturers or merchants, when we promote B-end, we face a problem: our sales are declining, and our costs are rising. In a situation of declining sales and rising costs, you ask me to do something unfamiliar. That is to say, so far **B-end is not a comprehensive solution for distributor transformation**. Since it is not a comprehensive solution, who can provide one? Does B-end have one? Can you cure the manufacturer's disease with just one dose? Strictly speaking, distributors and manufacturers have a syndrome. If you provide a folk remedy, will they accept it? Finally, let me share my views in a few sentences. B-end e-commerce is a confusing thing because its connotation is unclear. I divide it into three parts for easy understanding. **First, it is an ordering system, management system, or SaaS system, an internet-based, efficient, low-cost deep distribution logic. Second, it is a platform-based unified warehousing and distribution system, which may save more than half of our logistics costs. Third, when merchants face financing difficulties, internet data credit and traffic-supported credit make it a tool to connect with financial markets.** One is a tool for deep distribution, one is a logistics tool to improve efficiency and save costs, and one is a financial tool. If these three tools are combined, can they solve the problems of our current distributors? **I believe the prerequisites for judging B-end success are: first, the logic is rigorous. But all B-end I have seen so far have failed. Second, the path is reasonable. The premise is that it has been verified in a certain region. If these two logics are not met, no matter how much financing you get, I think it is meaningless.** -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and applicable 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 the corresponding content Reply with number 1 to view the complete knowledge base | **001** Excellent article selection | **002** Distributor market operation | **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 eighteen skills | **013** KA operation methods and strategies | **014** First lesson for new sales | **015** Internet, brand | **016** Distributor B2B transformation | [Long press QR code to follow] --- ## Citation metadata - Publisher: New Distribution - Author: 刘春雄 - Published: 2016-10-18 - Canonical: https://xinjignxiao.com/en/articles/liu-chunxiong-10-conjectures-on-b-end-e-commerce-59e0f0bc/ - Original source: https://mp.weixin.qq.com/s/1PMA8C6XUkNJl21mw5Lkiw ## Copyright and AI use This article is sourced from New Distribution. 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