Click image for details Click image for details Source: People's Daily Distribution connects production on one end and consumption on the other. In the new normal of the economy, as the final link in matching supply and demand, distribution plays a dual role in supply-side structural reform, serving as a key force in the orderly transition from low-end to high-end supply-demand balance. The problems and shortcomings in the distribution sector are precisely the huge opportunities and space to be explored in China's economic transformation and upgrading. In the domestic distribution sector, high costs and low efficiency are major chronic problems. Although with the upgrading of the logistics industry and the rapid growth of e-commerce, the quality and efficiency of distribution in China have gradually improved in recent years, overall, poor distribution remains a key factor pushing up final product prices and hindering residents' expansion of consumption. So, how high are domestic distribution costs? What is the proportion of costs at each stage from factory to consumer? Where exactly are the bottlenecks? How much room is there for "cost reduction and efficiency enhancement" in distribution? Can e-commerce alone solve the problem? Where should efforts be focused to break the "intestinal obstruction" in distribution? Recently, with these questions, our reporters visited Beijing, Nanjing, Hangzhou, Zhengzhou, Changsha, Qingdao, and other places, conducting exclusive surveys of 37 production and distribution enterprises, and also interviewed some consumers. — Editor How high are domestic distribution costs? From the logistics process perspective, China's logistics storage costs are twice those of developed countries, and management costs are 3 to 4 times higher; from the distribution organization perspective, multi-level wholesale and retail are common, with each additional link adding an average of 5% to 10% to prices. Fresh milk is one of the most demanded foods for urban residents. In a supermarket in Chaoyang District, Beijing, Yili Jindian pure milk is priced at 69 yuan per box of 12 packs, each 250 ml, equivalent to 23 yuan per liter; Dutch Globemilk whole milk is sold at only 22.8 yuan per liter, cheaper than Yili Jindian pure milk. A citizen named Zhang Jian, who was buying milk at this supermarket, told reporters: "Domestic milk travels from the place of production to the supermarket, only within the country, while imported milk requires cross-border transportation, involving more links, so distribution costs should be higher and prices should be more expensive. But why are domestic milk prices sometimes higher?" "The trick is that although domestic milk only travels within the country, distribution costs are still too high," said Pei Liang, Secretary-General of the China Chain Store & Franchise Association. The so-called "distribution costs" refer to the costs incurred from the time consumer goods leave the factory or field until they reach the consumer, including not only transportation costs but also warehousing and distribution costs. Taking domestic dairy products as an example, they not only go through primary wholesale and secondary/tertiary distribution links, but also often have to pay a considerable entry fee and promotional fee to compete for good shelf positions in supermarkets. According to estimates by some enterprises, domestic dairy distribution costs account for more than 50% of total costs, while imported milk generally goes directly from the first-level agent to the store, and some products are sourced directly from the place of origin by supermarkets, without excessive intermediate links. In the domestic consumer market, it is common for retail prices to differ significantly from ex-factory prices, mostly due to excessive distribution costs. In Luohe, Henan, the farm-gate purchase price of Chinese cabbage is about 1 yuan per kilogram; but at a vegetable market in Yangpu District, Shanghai, the price is close to 2 yuan per kilogram. Statistics show that distribution costs for vegetable agricultural products account for 50%-60% of the selling price, or even higher. In Jinan, Shandong, a supermarket in the high-tech zone sells a 5-kilogram bag of Northeast rice for 49 yuan, about 5 yuan per kilogram. In the Northeast rice production areas, the price per kilogram is generally less than 3 yuan. A responsible person from the State Administration of Grain stated that China's grain distribution costs are relatively high, more than double the average level of developed countries. In Changsha, Hunan, the owner of a building materials store in Yuhua District introduced that the distribution links in the building materials and home furnishing industry add serious markups, with some products priced at more than 5 times the ex-factory price in building materials markets. The logistics costs of domestic home furnishing and building materials account for nearly 20% of sales revenue, while similar products in Europe, the United States, and Japan have logistics costs accounting for less than 10%. In Wenzhou, Zhejiang, a clothing manufacturer told reporters that a piece of clothing with a production cost of 50 yuan is sold at least for one to two hundred yuan in large shopping malls, and in high-end shopping centers, the price can increase 10 times or more. The domestic clothing industry has numerous distribution links, with distribution costs accounting for more than 50% in most cases. He Dengcai, Vice President of the China Federation of Logistics & Purchasing, said that from the logistics process perspective, among the three logistics links of transportation, storage, and management, China's distribution costs are high in storage and management. Last year, the total national logistics cost was 11.1 trillion yuan, accounting for about 15% of GDP, significantly higher than the average of 8%-9% in developed countries, of which storage costs accounted for 33.1% and management costs 13%. Compared with developed countries, China's logistics storage costs are twice theirs, and management costs are 3 to 4 times higher. The proportion of logistics costs in product costs is about 30%-40% in China, while other developing countries are about 15%-25%, and developed countries generally 10%-15%. From the distribution organization perspective, the small scale, scattered forms, multiple links, and poor efficiency of distribution entities are chronic problems in the domestic distribution industry. Ma Jihong, Deputy Director of the Economic Development Department of the All-China Federation of Supply and Marketing Cooperatives, said that China's distribution entities have diverse forms and multiple natures, and multi-level wholesale and retail are very common in commodity circulation. Rough calculations show that each additional link in the distribution process adds an average of 5% to 10% to prices, and these costs are ultimately passed on to retail prices. How many bottlenecks are there in distribution? Single-line costs are not high, but comprehensive costs are high, mainly due to unnecessary handling and transfer fees. Some logistics companies have truck empty load rates near 40%, 4 times higher than developed countries or more, with "trucks waiting for goods" on one side and "goods waiting for trucks" on the other. "Are distribution costs high? Where are they high? This issue needs to be viewed dialectically," said Fu Bing, Vice President of JD Group. A product flows from the place of production to the place of sale through a series of single-line flows, and the sum of all single-line costs forms the comprehensive cost. Fu Bing believes that if we look at single-line distribution costs, China is not high, and even lower than some developed countries. This is not difficult to understand: whether a product goes from city to city or from city to countryside, China has obvious advantages in labor and other aspects. For example, in express delivery fees, the charge for a single express item under 1 kilogram in China is 10 to 13 yuan, while in the United States, this fee is generally more than 10 US dollars. The high cost of domestic commodity distribution is mainly due to comprehensive costs. Because the distribution sector lags behind, with too many distribution links, many products that could directly go from the place of production to the place of sale undergo several unnecessary "tosses," causing comprehensive costs to jump significantly. — Inconsistent standards, resulting in a large amount of unnecessary handling and transfer. "In the transportation of some products, sea, rail, and road transport each have their own standards and operate independently," said Lü Shipeng, Manager of the Sea-Rail Intermodal Center at Qingdao Port. Taking the transportation of edible oil as an example, the railway department requires the use of designated oil tanks and liquid bags, and the road department also has its own regulations. When transferring from sea to rail or from rail to road, it is necessary to re-handle and repackage, doubling time and costs. Survey data from the China Federation of Logistics & Purchasing shows that in China's commodity circulation, unnecessary handling and transfer account for about 25% of total distribution costs, mainly manifested in the low proportion of sea-rail-road intermodal transport and the slow progress of drop-and-hook transport. In mature international ports in European countries, sea-rail-road intermodal transport accounts for about 30% of total cargo transportation, while in China this proportion is less than 5%. — Opaque information, with "trucks looking for goods" and "goods looking for trucks" coexisting. "On one side, trucks are looking for goods, and on the other, goods are looking for trucks. The two ends cannot connect, so we can only worry," said Li Hengliang, General Manager of Qingdao Bangda Logistics. After the company's delivery vehicles deliver goods to the destination, the ideal state is to transport goods on the return trip, thereby reducing distribution costs. But in reality, return vehicles often cannot find suitable cargo, falling into the dilemma of "wait or not wait": returning empty is indeed wasteful, but if you wait for cargo, the cost is also not low—for each extra day of waiting, labor and insurance costs increase by about 5%. Logistics demand is not absent, but due to information asymmetry, it is impossible to find suitable vehicles in the first place. All logistics companies interviewed mentioned a problem: the slow progress of domestic public service platform construction for distribution has led to a lack of connectivity between logistics supply and demand information, preventing efficient matching of supply and demand, with "trucks waiting for goods" and "goods waiting for trucks" coexisting. In some logistics companies, the empty load rate for freight is close to 40%, and even in areas with sufficient cargo like Shanghai, the empty driving rate for road transport is 4 times higher than in developed countries. — Unreasonable planning, causing waste from detours and idle costs. Although local governments are increasingly paying attention to distribution infrastructure construction, actual capital investment is still insufficient, far lower than investment in agriculture and industry, with enterprises building their own facilities accounting for a large proportion and lacking unified planning. Frequent transfers between logistics hubs add many unnecessary costs. Liu Kaijun, Chairman of the Supervisory Board of Nanjing Port Group, said that with the trend of larger ships, port operations should be intensive and large-scale, but in some port areas, enterprise-built docks coexist with public docks. WISCO's ore cannot be loaded and unloaded at Masteel's dock, and steel mills' docks are not used by cement plants, so materials have to be transported back and forth. Coupled with scattered layouts and idle facilities and equipment, it is too wasteful. — Inconsistent policies, with some local management measures leaving logistics companies at a loss. "In the transportation link, tolls and bridge fees account for more than 20% of transportation costs, and there is room for reduction," said Jin Haitao, General Manager of Henan Daxiang Logistics Co., Ltd. The state has opened green channels for the transportation of fresh agricultural products, but in implementation, various places are quite strict, even unreasonable: fresh fish and shrimp can be free, but slightly frozen ones cannot; pig carcasses can be free, but after segmentation, they cannot; overloading is not allowed, but underloading is also not allowed. If delivering to multiple destinations, often halfway through, due to insufficient vehicle load rate, even if no other goods are loaded, the remaining journey cannot be free. The inconsistent transportation management across regions adds unnecessary costs to logistics enterprises. For example, a truckload of goods may not be considered overloaded in Province A, but is considered overloaded in Province B; it can enter the main urban area in City A, but must detour in City B. Arbitrary charges and fines are also common. "The institutional costs caused by inconsistent and uncoordinated policies are the most in need of elimination," said Shu Yaling, Manager of the Trade Department of Zhejiang Bafang Logistics. How significant is the impact of high distribution costs? Not only do they increase the burden on consumers, but they also become a major obstacle for enterprises to expand markets. The farther the consumer market, the higher the distribution costs, and products that travel far have no competitiveness at all. As an intermediate link connecting production and consumption, distribution should not be underestimated. Whether a product is smooth, unimpeded, and fast from origin to destination directly affects the final consumption experience and willingness to consume. Excessive distribution costs not only increase the burden on consumers but also are not conducive to enhancing the market competitiveness of enterprises. Taking the agricultural product market as an example, the "difficulty in selling and high prices for buying" caused by poor distribution has long plagued both producers and sellers. Residents of Taiyuan, Shanxi, reported to reporters that every winter, vegetable prices are particularly high for a few days. Once, when Chinese cabbage was selling for 2 yuan per jin in the vegetable market, news reports said that in some places, Chinese cabbage was unsalable, with no one wanting it even at a few cents per jin. Residents said: "It's still our poor distribution; otherwise, how could it not be sold?" Similar problems exist in the food market. Data shows that in the past 5 years, China's imported food consumption has grown rapidly, with an average annual growth rate of 15%. As the market continues to open, imported food will enter more Chinese households, significantly impacting the domestic market, putting pressure on production enterprises. Yang Dong, Finance Director of Nanjing Dairy Group, believes that excessive distribution costs have become a major obstacle for enterprises to expand markets. As the first dairy enterprise in modern China, "Weigang" brand milk has a history of nearly a hundred years, but now "Weigang" milk is concentrated in Nanjing and surrounding cities because the farther the consumer market, the higher the distribution costs. "If we go far, compared with local products, we have no competitiveness at all." The effect of improving distribution quality and efficiency on promoting consumption is considerable. According to estimates, a 1 percentage point decrease in the proportion of total social logistics costs to GDP can save 750 billion yuan. If the saved costs are passed on to consumers, it will bring a significant pulling effect. For logistics enterprises, the pressure to reduce costs is also imminent. Most logistics enterprises in China are small in scale and face fierce competition. Last year, the business revenue of the top 50 logistics companies accounted for only about 10% of total logistics revenue. There are 8.1 million road transport business operators, of which over 90% are individual households. Practitioners feel survival crises everywhere. He Liming, President of the China Federation of Logistics & Purchasing, believes that in a modern commodity society, people's daily lives are a supply chain system. Many inconveniences, dissatisfactions, and insecurities encountered by consumers are, in the final analysis, due to the lack of integration of various resources, unoptimized processes, too many links, and high costs. Reshaping the industrial chain, supply chain, service chain, and value chain can significantly improve residents' quality of life and happiness index. "In a mature consumer market, supply and demand can be effectively matched. To achieve this goal, we need not only production that better meets new consumption demands but also smoother distribution, building a 'highway' between supply and demand so that products can efficiently meet demand and consumers can get more benefits," said Pei Liang. New Distribution's "7th B2B E-commerce Inspection Class" is now recruiting! Activity Schedule:

June 19-23, Suzhou·Shanghai·Hangzhou 19th: Check in at designated hotel in Suzhou; 20th: Inspect Suzhou Medlian; 21st: Inspect Shanghai Hd; 22nd: Inspect Hangzhou Wangcang; 23rd: Return or free arrangement for sightseeing; Introduction to Inspection Platforms: Medlian Youshang Software, a well-known domestic information system provider, launched the "Medlian" brand in 2015. Based on Youshang Software products, with artificial intelligence technology as the internal force and efficient operation as a breakthrough, Medlian helps distributors build new B2B business models. It has provided software technical services to distributors in more than 50 cities nationwide. Hd Company Shanghai Hd Information Engineering Co., Ltd. (hereinafter referred to as Hd Company) is a first-class domestic management consulting and software development company for commercial circulation, e-commerce, and modern logistics solutions. Since its establishment more than 20 years ago, it has been committed to creating modern commercial management models for customers. The systematic products and solutions with independent intellectual property rights developed by Hd have strong competitiveness in the three business formats of chain retail, commercial real estate, and warehousing logistics. It currently supports more than 500 well-known large and medium-sized commercial enterprises and group users in 30 provinces and cities nationwide. It is the largest retail software provider in China. Wangcang Zhejiang Wangcang Technology Co., Ltd. was established in June 2011. It is the earliest and currently the only large-scale independent fourth-party smart warehousing and distribution service provider in China. Wangcang has been committed to the innovation, implementation, and daily operation of refined and collaborative solutions for e-commerce enterprise warehousing and distribution. Today, Wangcang has the capability to provide solutions from B2C e-commerce warehousing and distribution to B2B+B2C full supply chain integration (warehousing and distribution). Relying on its self-developed adaptive warehousing and distribution comprehensive management system, combined with years of warehouse construction and management experience, as well as self-developed equipment, Wangcang has formed comprehensive competitive advantages. Wangcang's system can seamlessly connect with all sales platforms, enterprise ERP, logistics transportation express resources, and warehouse operation resources (such as equipment, labor, warehouse area application, etc.). Through our services, the efficiency of a single warehouse can be greatly improved, achieving resource interaction and allocation between warehouses. Through big data, we provide value-added services such as supply chain optimization and supply chain finance for cargo owners. At the same time, through open systems and management advantages, we provide franchise business for warehouse owners. Organization Form ************1. Company visit

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  3. One-on-one communication************ Participating distributor friends only need to pay a registration fee of 200 yuan Other expenses are self-paid Long press this QR code or click Read Original to register Long press QR code to add WeChat for registration Group Photos of Previous Inspections: Group photo of the 6th B2B e-commerce inspection, from top to bottom: Zhongke Shangruan, Shuhai Supply Chain, Yunmei Co., Ltd., Yishang Logistics. Group photo of the 5th B2B e-commerce inspection, from top to bottom: Huiwangxing, Beiquan, Tongying Tianxia, Quanshihui, Zhongke Shangruan. Group photo of the 4th B2B e-commerce inspection, from top to bottom: Alibaba Retail Link, Qianmi Network. Click Read Original to register -END-