Editor's Note: In the current B2B boom, entrepreneurs are rushing into this market full of opportunities and uncertainties. The author writes this article based on a very optimistic outlook on future B2B trends, hoping to provoke some thoughts among practitioners in the industry.

Different Entry Models of FMCG B2B Platforms:

1. Zhanghe Tianxia: Keywords: Full supply chain, data, small store upgrade; Zhanghe Tianxia is one of the earliest B2B platforms in China to enter the supply chain from FMCG. They typically find three to five local distributors to form joint ventures, operate service stations, and jointly rent warehouses. Zhanghe provides the online platform, and service stations help distributors list products online, assist with transshipment and sorting, and provide fast delivery to small stores. They select small stores with franchise intentions from the market, help them undergo system upgrades, and turn them into standard Zhanghe convenience stores. Additionally, they integrate upstream enterprise resources, quickly help small stores select quality cloud factory products, integrate small stores, and help them improve operational capabilities. Problems: Due to the varying levels of local franchisees and their different abilities to integrate local resources, the development of various markets is uneven. Some city partners lack the ability to integrate local resources, leading to losses in many local stations. Moreover, as one of the earliest platforms to enter the market, they invested significant effort and cost in market cultivation and took many detours in the process.

2. Huimin Wang Keywords: Self-operated, asset-heavy Huimin Wang is also one of the earliest B2B companies in China to enter the small store supply chain from FMCG. It adopts a self-operated model: building its own online platform, warehousing and logistics, and asset-heavy operations. To cultivate small stores to order online, they have been heavily subsidizing small B. Currently, the number of cities launched is limited, but they are steady and successful in each city, and they have more conflicts with local suppliers. Problems: Due to the asset-heavy self-operated model, their expansion speed is slower compared to asset-light platforms like Zhanghe. Additionally, they are constrained by sourcing and often conflict with local suppliers.

3. JD New通路 Keywords: JD, business unit, ground service staff JD New通路 exists as a business unit within JD, indicating its high status within the company. It directly cooperates with brand owners, bypassing distributors and secondary wholesalers, and uses its own logistics to quickly supply products to small and medium stores. Due to direct national brand agency and self-built channels, the ground team of service staff is particularly distinctive. Their role is to help small stores install the APP, manage product shelving, and provide terminal maintenance. Problems: Since they directly cooperate with enterprises and bypass distributors and secondary wholesalers, most products are non-well-known brands, and terminal order activity is not high. However, their upstream procurement and logistics advantages are relatively obvious, depending on the company's attitude.

4. Alibaba Retail通 Keywords: Cainiao Logistics, city partners, 11000, multiple integration failures Alibaba recruits local suppliers to list products online, allowing small stores to order online, with delivery by Cainiao Logistics or self-delivery. They use city partners to serve local market stores. It is said that the Retail通 project has been established under the 1688 department for a long time, with multiple reforms and failures, and no significant breakthrough. Staff turnover is severe. Recently, they launched city partners, requiring a 11000 cash deposit to stabilize team turnover, but there has been no major brand integration, and brand owners are not very interested in their model. Problems: The project is not a key project within Alibaba, lacks internal resource support, has failed multiple integrations, and has changed policies multiple times. Recently, it was reported that they failed to honor commitments to early partners. Despite the Alibaba gold-lettered signboard, there seem to be no other highlights.

5. Yishang Model Yantai Yishang Logistics is the largest logistics distributor in Yantai, providing integrated warehousing and distribution services for the local supply and marketing system. Through its self-developed ERP system and self-owned warehousing and logistics, it reduces logistics costs for local distributors and improves distribution efficiency. It is said that annual turnover has reached 6 billion, warehouse SKU is 15,000, and daily delivery within a 35km radius reaches more than twice. However, it is only a logistics platform, and the Wanshanggou B2B platform built on it has not seen breakthroughs. Problems: Due to high entry barriers, it operates successfully only in Yantai, and expansion to other regions is slow. Currently, it is exporting the project to Weifang and Jinan.

6. Other Models In 2016, numerous platforms were launched, such as Piduoduo, Beiquan, Wanshang Yizhan, Xingaoqiao, Duocai Shichang, etc., each with its own characteristics and unique skills. I will not elaborate on them here. In the coming days, I will gradually introduce the better-performing B-end platforms in China.

Entrepreneurial Team Backgrounds: From the perspective of entrepreneurial teams, platform team backgrounds can be roughly divided into three types: First: Distributors with local existing resources, who unite to build platforms and jointly integrate the local market; Second: IT industry practitioners who see huge opportunities and enter; Third: Consulting firms with deep professional theoretical foundations and clear model logic;

Common Problems Currently Faced by Platforms: Currently, few FMCG B2B companies are profitable; most are either living on past achievements or burning cash. Successful markets are few, business expansion is difficult, and successful models generally have typical personalized characteristics, with few replicable success models.

Difficulties Faced by FMCG B2B Platforms:

1. Huge Existing Stock, Old City Renovation Impossible Large distributors in the FMCG industry are generally indifferent to the internet, fear change, and distrust platforms. FMCG has a characteristic of high brand concentration, especially in food and beverages. High-quality brand resources are usually concentrated in the hands of large local distributors. These traditional distributors have a complete business chain and logic with huge offline stock (warehousing, vehicles, personnel, goods, sales). Moving them online in a short time is impossible. This is like demolishing an old city: first, you must change the thinking of the demolished (distributors), and also meet their interests (break-even plus extra profit). However, for service stations, they cannot fundamentally solve the after-sales service issues after products enter stores; these still need to be handled by distributors themselves. Platforms can only reduce logistics costs through unified warehousing and distribution. Whether this cost reduction matches distributors' psychological expectations is key. Distributors lack the courage and ability to reform their own operational models (from vehicle sales to visit order taking). As a B-end platform, facing factories, distributors, and small stores, there is a very stable production-supply-sales triangle. Either you become one of them, armed with internet thinking to rewrite or improve the overall efficiency of the industry, or you use an efficient logistics system to play the game of cross-regional sales, completely breaking the local supply chain system. The harder you break it, the greater your opportunity. If you can't do either, the possibility of moving existing stock is basically zero.

2. Enterprises Lack Patience for New Products, Building New Cities Takes Time Platforms like JD directly bypass intermediate links to launch new products. This is not a problem in itself. The problem is that in FMCG, especially food and beverages, consumer brand awareness and concentration are high. New products face high entry barriers. Short-shelf-life, low-temperature, personalized products that conform to consumption trends are not suitable for unified warehousing and distribution. Moreover, in a saturated market, continuous investment in new products is not what manufacturers expect from JD, nor can they have such patience. For example, Uni-President's Tang Daren took 8 years from launch to profitability. Danone also lost money for 7 years when promoting Mizone. How many enterprises can bear this? How many can give JD such patience? This is not to say that JD's platform cannot produce big FMCG products, nor that JD lacks traffic, but the success of big FMCG products is full of contingency. Even giants like JD face many difficulties.

3. For Small Stores, Product Logistics Is Not the Pain Point; the Pain Point Is Consumers Buying Logistics is a pain point for large B, not for small stores. B2B logistics can only solve the problem of large B products being on the platform, but it cannot solve the problem of small store owners ordering on the platform. This is not a rigid need for small store owners. As long as a small store can open, it will have a stable supply of goods. So small stores do not lack channels for purchasing; the problem is not purchasing but selling—they cannot sell goods quickly and effectively. Therefore, the problem encountered by Wanshanggou on the Yantai Yishang platform is also the problem that all platforms that successfully integrate local suppliers and achieve unified warehousing and distribution will face in the future. For small stores: due to fixed sales points and limited retail radius, the number of users is the upper limit of sales. To increase revenue, small stores either increase average transaction value or squeeze supply chain profits. Unlike C-end subsidies that change consumer habits, small stores aim for profit, so platform subsidies to small stores are a bottomless pit. The significance of B2B for small stores is to help them increase foot traffic, visit frequency, purchase SKUs, and average transaction value. If the B-end platform's business logic does not include helping small stores increase sales and reduce operating costs, it is difficult to increase stickiness. Either you open your own stores, or you learn from the Ai Xian Feng model.

4. Multiple Attributes, Multiple SKUs, Multiple Brands, Multiple Categories, and Extremely Difficult Warehousing, Sorting, and Distribution Additionally, FMCG is characterized by super many SKUs. In resource integration, due to the numerous and varied suppliers, their different interests, operational models, and product characteristics (short shelf life, low temperature, single brand with multiple SKUs), platforms face various issues during integration, placing extremely high demands on the integration capabilities of local service stations. So, if you plan to meet the overall needs of small stores, it poses a huge challenge to logistics distribution efficiency and sorting capabilities. Many people think the success of the Yishang model lies in its ERP software, so some smart people found the software development company and bought the software directly. But facing numerous problems, distributors who are used to taking shortcuts suddenly find they cannot handle it, because it is not a software problem at all. Therefore, to be a platform, you must be both a teacher, changing mindsets and teaching operations, and an expert, capable of handling various thorny issues in warehousing, sorting, and distribution.

5. Low Informatization of Small Stores, High Transformation Costs Since they are mom-and-pop stores, platforms will inevitably face several issues: a. The boss, boss's wife, boss's mother, and boss's wife's mother's proficiency with computers and mobile phones b. Inventory and sales are a mess; how much comes in and goes out is mainly determined by what's left at year-end. c. They are wary of "well-intentioned" people coming to reform them d. They value profit over sentiment and trust acquaintances f. They are uneasy about putting money on the internet. g. They are uneasy without seeing the goods in person. h. Payment issues, credit periods, sudden changes, competitor interception... Each of these issues requires capable people to solve, but across the national market, where can we find so many capable people to help platforms expand? Investment in educating small stores requires a large investment in human resources, which internet platforms are unwilling to accept. Instead, it might be better for platforms to open their own stores, but that is too slow...

Given these many problems in the FMCG market, I conclude that more than 90% of B2B platforms entering from FMCG will fail. It is not that the FMCG industry cannot be integrated, but B2B platforms entering from FMCG are currently the hardest nut to crack, yet also the market with the greatest opportunity.

Regarding the above issues, I will soon organize discussions and exchanges among B2B platform leaders in a community. Interested distributor friends can add my WeChat to register for participation. When adding, please reply with the keyword: FMCG

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