Click the image to register "Ambushes ahead, pursuers behind, attacked from both sides" is a true portrayal of the current survival state of FMCG distributors. Looking forward, foreign chain and regional chain convenience stores are rising; looking back, the traditional commercial distribution system is being eyed by e-commerce giants. Facing the future, how to proceed has become a topic of collective anxiety for distributors. New Distribution has been committed to helping distributors complete the digital upgrade of channels in the Internet era. We have also reported on many suggestions and methods for distributor transformation. In 2018, New Distribution will go further into the front-line market, visiting distributors who have successfully transformed in China, and use their practical cases to tell distributors how to take the future path. Shandong Tai'an Yunbang Warehousing and Logistics Co., Ltd. is one of the typical representatives of distributors transforming into unified warehousing and distribution. Yunbang was established at the beginning of 2017. Both founders, Cheng Yong and Zhong Weihua, have many years of experience in the FMCG industry. Cheng Yong has been running a trading company for nearly 20 years and is the general agent for Six Walnut in Tai'an, with annual sales of around 30 million yuan. Zhong Weihua is the president of the Tai'an Circulation Chamber of Commerce and a distributor of Mengniu room-temperature milk, with annual sales of around 100 million yuan. These two distributors have active thinking and are relatively influential in Tai'an. 01 The original intention of transformation Cheng Yong told New Distribution, "I have been in the trading business for 20 years, and step by step, I found it increasingly tiring and difficult. In the current economic environment, we distributors must make some changes. But where to change and how to change, I didn't know. So I went out to learn, visiting various places to see how successful people do it. After about two years, I finally found that unified warehousing and distribution is the best way for distributor transformation." Why is unified warehousing and distribution the best way? Cheng Yong said, "In the past, my warehouse was a standalone courtyard of 600 square meters. The Six Walnut products I represent have obvious off-peak and peak seasons, with the peak lasting only two months, during Mid-Autumn Festival and Spring Festival. For Mid-Autumn, orders start in June, and pressure to stock terminals begins in July. For Spring Festival, stocking occurs in December or January. In 12 months of the year, the 600-square-meter warehouse usually only uses 200 square meters, and most of the time, the warehouse is idle and wasted. Additionally, each distributor needs to hire 2-3 people to manage their own warehouse. In fact, if efficiency is fully utilized, 2 people can manage the goods of 2-3 distributors." This is only the cost pressure of warehousing rental and management. Cheng Yong said, "There are also operating costs of delivery vehicles, declining gross profit margins, etc. Considering all these, the first thing distributors should consider in transformation is how to reduce costs and improve efficiency, and unified warehousing and distribution is undoubtedly a good method." 02 Difficulties in transformation "After determining the transformation direction, we began to change roles, from distributors to platform operators, and distributors became our service targets. Although we knew that unified warehousing and distribution could reduce distributors' operating costs, how to persuade them to enter the warehouse was the first problem we faced," Cheng Yong told reporters. "At first, we planned to set warehousing fees based on pieces or weight, at 0.2-0.3 yuan per piece, but during the actual merchant recruitment process, distributors were unclear about what their past warehousing costs were per piece. They don't calculate detailed accounts. If you charge per piece, distributors definitely won't come in." In the end, Yunbang did not set a standard for warehousing fees. Cheng Yong said, "We negotiate based on what is suitable, with the mindset of helping distributors save money, directly showing how much money we can save for customers. For example, if a distributor's warehouse costs 70,000 yuan per year, with 2 warehouse managers (annual expenditure of 50,000 yuan per year), the total cost is 120,000 yuan per year. If Yunbang charges you 110,000, will you come in? If not, then 100,000... until the distributor enters the warehouse. Yunbang transformed old factory buildings and established a three-dimensional standard shelf warehouse of over 31,000 square meters. Currently, nearly 40 distributors have settled in Yunbang, including distributors of first-line brands such as Six Walnut, Mengniu, Wahaha, and Jinluo." Cheng Yong said that even with such fees, Yunbang can achieve profitability from the unified warehousing alone (due to low cost of old factory renovation). In addition to helping distributors "save money" through unified warehousing and distribution, Yunbang will also launch an ordering platform. Through online data transactions, it will connect terminal outlets, obtain terminal sales and inventory information, and thereby help distributors optimize their product structure and resource allocation, improving business efficiency. It is reported that Yunbang's "Elephant Ordering Platform" has completed internal testing and will be launched after the Chinese New Year. Launching an ordering platform means Yunbang will have access to a series of data information such as terminal outlets, orders, and prices. In this regard, many distributors may worry that if they give this data to the platform, the platform might turn around and cut off the distributors' path. On this point, Cheng Yong told New Distribution that he resolved distributors' concerns in the following two ways. First, since its establishment, Yunbang has set a principle: Yunbang will never touch goods, only provide third-party services, and not engage in sales. Second, help distributors increase sales. Yunbang will establish a supply chain management company, absorbing distributors with resource advantages as shareholders, integrating distributors' customer resources. Originally, each distributor might have 2,000 or 3,000 outlets, but after integration, it becomes 5,000 outlets, all shared with our platform members, allowing distributors to focus on product promotion and terminal maintenance." 03 Future plans Currently, Yunbang has completed the preparation of unified warehousing, and the next steps, unified distribution and the ordering platform, are both in testing. Regarding the future, Zhong Weihua said, "Unified warehousing and distribution, and launching a B2B platform, are only the basic business of Yunbang. Yunbang will also extend on the basis of the supply chain. In the past, individual agents had difficulty financing and few fixed assets. In the future, through Yunbang's integration, putting goods in the same warehouse, digitizing orders, and cooperating with financial institutions, goods can be turned into usable money." Zhong Weihua said that in the past, individual distributors had limited bargaining power with upstream brand owners, and even signed unreasonable contracts. Through integration, distributors will have greater say and cooperate "fairly" with brand owners. In addition, when Yunbang has thousands of SKUs, the platform can connect with new retail formats, such as chain convenience stores and unmanned vending kiosks. Final thoughts The above is a practical case of distributor transformation in Tai'an. In the past two years, distributors have gradually begun to accept the concept of unified warehousing and distribution, but most are still waiting and thinking about how to take the transformation path. Few truly dare to take the first step. The reform of the commercial circulation system is an inevitable trend. Distributors who transform early will certainly bear risks, but they will also enjoy market dividends. If they still stay in place and rely on past resources, their business will inevitably get worse and worse. What do you think about distributors transforming into unified warehousing and distribution? Welcome to leave a message at the bottom and share your views with us.