Click the image for details. Moutai Group announced on September 9 that its e-commerce platform "Moutai Cloud Merchant" (Moutai Yunshang) has been fully launched, and stated that it will fully open the platform to guide Moutai's 2,800 distributors and exclusive stores nationwide to join. According to information, Moutai Cloud Merchant is an IoT-based cloud commerce trading platform launched by Moutai E-commerce Company, integrating upstream resources from Moutai Group subsidiaries, midstream logistics companies, offline exclusive stores (distributors), and downstream consumer-facing services. The "Moutai Cloud Merchant" app began trial operations in December 2015 and officially launched in June 2016. According to official data, Moutai Cloud Merchant has attracted over 2,800 distributors, has 250,000 members, and cumulative sales exceed 4 billion yuan. Testing revealed that after registering on Moutai Cloud Merchant, users must add a shipping address to view product prices. Additionally, the platform recommends corresponding offline service outlets for supply and nearby delivery based on the address. It is understood that Moutai issued the "Notice on Fully Activating the Moutai Cloud Merchant Platform" on August 14. Before December 31, cloud merchant outlets with transaction volumes exceeding 30% of their unexecuted Moutai liquor contract volume will be rewarded by Moutai Company based on actual circumstances; those not exceeding 30% will have their 2018 Moutai liquor contract plans proportionally reduced. Distribution units that have not activated cloud merchant outlets by September 30 will have business processing suspended and 2018 contract signing postponed. Commentary by Zhao Bo, Editor-in-Chief of New Distribution: When I saw this news, I checked the market price of Moutai. The 52° Feitian Moutai was priced at 1,350-1,355 yuan per bottle, having peaked at 1,580 yuan recently. I downloaded the Moutai Cloud Merchant app and saw the price at 1,299 yuan per bottle, with a limit of two bottles per person within 24 hours, and it was out of stock. I tried to buy other Moutai products, but they required self-pickup, with the farthest location over 150 kilometers away and the nearest over 80 kilometers. I then had an in-depth discussion with a friend who has worked in the liquor e-commerce industry for many years. He shared some views: Given Moutai's status as the national liquor and production capacity constraints, Moutai cannot increase supply to meet market demand. It naturally carries scarcity, which is something no other domestic FMCG product possesses. Currently, hoarding and reluctance to sell are very serious. Moreover, with the Mid-Autumn Festival approaching, consumers are buying blindly, so even at 1,350-1,354 yuan, sales are not affected. A Moutai exclusive store can easily net 5 million yuan a year. Moutai has been under pressure to control prices, requiring exclusive stores to sell at 1,299 yuan and put 30% of their quota on the cloud merchant online sales. The article above mentions that from January to June, online sales exceeded 4 billion yuan, which, based on the price of Feitian Moutai, is roughly 3 million bottles. According to purchase limits, about 8,000 people purchase 16,000 bottles online daily. This transaction volume is not low. I checked the Tmall store; the exclusive price is 1,299 yuan, also limited, with monthly sales of over 23,000 bottles for one or two bottles. As a loyal consumer, I have two questions: How many consumers would install an app where you can never buy the product at 1,299 yuan? If you can buy the product at 1,299 yuan anytime on Tmall, why would you install the Moutai Cloud Merchant app? Additionally, I have a second question: when distributors can sell at 1,350-1,355 yuan without worry, why does Moutai insist on 1,299 yuan and require at least 30% of sales online? Will distributors resist? During resistance, will there be fake transactions or fraud? Moutai's transformation mindset is understandable. According to Wang Chonglin, Chairman of Moutai Liquor Sales Company:
"Although the transformation of Moutai's consumer structure has basically succeeded, achieving a shift from official consumption to mass consumption, the marketing model has not yet undergone effective upgrades. It still relies on traditional marketing methods, methods, and thinking. The application of new concepts and technologies is not widespread, research on consumer behavior is not deep, the portrayal of consumer profiles is not clear, analysis of consumer purchasing psychology is not precise, and the formulation and implementation of marketing policies lag behind and are passive. Market management and marketing services urgently need transformation and upgrading."
Nie Yong, Chairman of Guizhou Moutai Group E-commerce Co., Ltd., said in an exclusive interview with the media: "Moutai relying solely on exclusive stores can no longer meet future consumer demand. If we don't prepare in advance, it will be too late when exclusive stores close and affect Moutai's sales channels. As travel costs and time costs become increasingly expensive, exclusive stores opened by distributors are becoming less attractive to consumers. A safer and more convenient way to buy Moutai will be more welcomed by consumers."
Additionally, Nie Yong stated that Moutai Cloud Merchant is not primarily about sales; its first positioning is to act as a matchmaker, solving the information asymmetry between liquor-selling distributors and consumers. Only then does it focus on shipment transactions, providing quality assurance and endorsement for sold Moutai liquor. From the views of the two executives, Moutai's marketing dilemma is evident: over-reliance on core single products, living off the national liquor legacy, and the entire marketing system and brand image have not been upgraded with the advent of the internet era. However, Moutai is not sitting idly. It hopes to achieve transformation and upgrading of market management and marketing services through Moutai Cloud Merchant. Moutai's original intention in e-commerce is, first, to facilitate consumers, and second, to build a bridge between distributors and consumers, breaking information asymmetry. The essence of Cloud Merchant is that Moutai provides technology and operations, enabling distributors to transform into B2C. In summary, Moutai does not take transaction commissions, does not rob, does not earn price differences, and does not bypass distributors to reach consumers directly. It merely digitally empowers existing channels, enabling online-offline integrated marketing transformation for existing channel partners. However, it should be noted that Moutai Cloud Merchant's marketing upgrade is not about building new channels or restructuring original channels. Considering the existing offline inventory, it does not undertake drastic reforms but merely uses its strong management capabilities to attempt an upgrade of existing channels. Undoubtedly, Moutai's single product structure, high value, low frequency consumption, and similarity to 3C categories. Many 3C companies like Xiaomi and Huawei have indeed built their own online malls, but Xiaomi's mall sells cost-effectiveness and has no offline inventory. Online, they can freely implement diversified online operation strategies and methods. But Moutai's main products are too singular; without online operations, how many fans can it attract? Moreover, Moutai has a very rich offline distribution system, and ordering from online platforms like JD.com, Tmall, and 1919 is already very convenient. If Moutai's own platform does not have sufficient price advantages or exclusive supply, how much traffic can it bring? I still have doubts. Although Moutai has very strong control over distributors, whether administrative measures that violate human nature and market economic laws can constrain main distributors to fully implement them remains questionable. Additionally, the relationship between distributors and brand owners is inherently a game. Which distributor would be willing to hand over their core customer resources to the manufacturer online? Isn't that cutting off their own future? Clearly, Moutai is using its strength to force distributors online. Whether distributors are willing is something to ask Moutai's distributors. Regarding the upgrade of Moutai's market management and marketing services, I think Moutai, as the industry leader with market dominance, can use strength as a strategy. But the core of transformation is efficiency improvement and digital marketing upgrade. Essentially, it is a systematic restructuring of the entire marketing and distribution system, not just an improvement of existing inventory. Of course, Moutai's difficulties are understandable; a market system with nearly 40 billion yuan in sales cannot change overnight. Where to start is indeed a challenging topic. My views:
- Moutai's distributors are too comfortable; they have no motivation for change. Don't expect distributors earning 4-5 million yuan a year to have the courage to disrupt their own business.
- Internet entrepreneurship is almost a matter of life and death, especially when combined with traditional industries. If not approached with an entrepreneurial mindset and deep expertise in internet and brand marketing, the probability of success is very low.
- There are no successful typical cases of internet reform of existing large organizational systems at home or abroad. Most fall into the "Innovator's Dilemma" trap. For Moutai, with its huge existing inventory, it is crucial to deeply understand the impact of the innovator's dilemma on large enterprises. It requires forward-looking strategic thinking and the courage and determination for self-reform. Otherwise, transformation remains just a slogan on paper.
- Suggestion: Instead of building its own platform, Moutai could act as a VC, investing in several excellent domestic B2B2C platforms or localized distributor self-entrepreneurship platforms like Niu E-commerce. With annual profits of over 20 billion yuan, strategically investing in a few promising and innovative platforms might be better than doing it itself. Click the image for details. The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in October 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting 1,000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to jointly explore a new chapter of cross-border integration! Core topics of this conference:
How can the FMCG industry leverage B2B to achieve new growth opportunities?
How should the new supply chain behind new retail be built?
How can intra-city logistics help B2B achieve leapfrog development?
Highlights of this conference:
The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"
Case sharing of excellent transforming distributors
Conference + exhibition upgrade: Hall 6 Internet Technology Exhibition strengthens matchmaking
Alibaba Retail Link, ProLogis Finance, Eternity Supply Chain, Best Store Plus, YiJiuPi, Unilever, Haiding Technology, Yunmei Media—leaders from various fields will deliver speeches and share pioneering views.
November 8-9, 2017 Chongqing International Expo Center Registration is now open. Long-press the QR code below or click "Read Original" to register. Early bird tickets before September 15 enjoy a 30% discount! Add friend with note "Conference Registration" Click the links below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 "FMCG + Internet" Summit Forum 2017 (2nd) China FMCG + Internet Conference Click the links below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 "FMCG + Internet" Summit Forum -END-