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With the deepening of professional division of labor across various social sectors, many brand owners have long disbanded their own logistics fleets and turned to third-party logistics companies. What about distributors? Most distributors still handle both sales and logistics. In the current era, do distributors also need to hand over logistics to third parties? Can distributors themselves become third-party logistics enterprises? With these questions in mind, let's look at Best Supply Chain's judgment—the trend of urban-level logistics delivery under multiple consumption scenarios.

Intense competition and slowing growth are the realities facing the FMCG industry today. The FMCG industry has shifted from an incremental market to a stock market. Under urban-level multi-consumption scenarios—B2B, B2C, O2O, community group buying, hypermarkets, chain convenience stores, new retail, and other consumption scenarios are continuously segmenting—brand owners and distributors face greater challenges. The distributor systems that major brands have cultivated for decades have not only failed to contribute to or enjoy the online incremental market but have also been continuously impacted, putting them in a difficult position. So, what can the distributor systems that brand owners painstakingly built still do for them?

Brand owners and distributors urgently need transformation and upgrading

From the brand owner's perspective, whether it's online e-commerce platforms or new retail with richer scenarios, each different sales channel requires a set of supply chain delivery systems. Moreover, different retail scenarios face different delivery methods, which无形中 increases the brand owner's supply chain delivery pressure. To cope with these scenarios, brand owners often establish different teams and warehousing and distribution systems. This inevitably leads to redundancy in organizational structure and inventory, significantly increasing overall operational costs.

From the distributor's perspective, the development of e-commerce platforms has had a huge impact on offline distributors, mainly because online and offline information is fragmented. Offline, the traditional distribution channels centered on distributors have incomplete informatization and data black holes. Brand owners deliver products to distributor warehouses, and thereafter, product distribution relies entirely on the distributor's distribution, making it impossible to fully monitor product flow. Even though many distributors have begun digital transformation in recent years, they still haven't effectively connected with the brand owner's business systems, so the offline data chain still has black holes. Distributors served by B2B RDC and offline stores often play the role of inventory transfer.

In addition, with intensified competition and channel saturation, the relationship between distributors and brand owners is more about game-playing than collaboration. Due to the natural characteristics of distributors, they have not reaped the benefits of the information age. Furthermore, with the extension of offline channels, distributors' costs in warehousing and logistics are also increasing.

How can brand owners and distributors reduce costs and increase efficiency by opening up the distribution chain?

As social division of labor becomes clearer, the requirements for distributor specialization are also increasing. Among the vast distributor community, some are suitable for sales, while others are not good at sales. With intensified industry competition, some distributors have begun to transform into digital B2B platforms, and others have started to engage in joint warehousing and distribution, gaining profit increments through optimization of warehousing and distribution. They treat logistics as a separate business and have gradually become irreplaceable.

Similarly, for brand owners, there are too many retail scenarios, so they need to optimize and integrate, using informatization logic to manage the entire backend warehousing and distribution logistics. This forces brand owners to achieve one-warehouse delivery across all online and offline retail and consumption scenarios.

Currently, more and more brand owners are choosing to use digital supply chain platforms to separate sales and logistics, classify different consumption scenarios according to different channels, and open up inventory collaboration across different distribution levels, thereby achieving flexible and efficient one-warehouse delivery.

For brand owners, the best way to achieve one-warehouse delivery is to turn distributors into their front warehouses and logistics supply chains. But the natural attribute of distributors is to sell goods. If brand owners simply store goods in distributor warehouses, that's just inventory transfer, which puts great pressure on distributors. Therefore, brand owners need to transform distributors, helping them become the brand owner's logistics supply chain.

Brand owners screen and train distributors, selecting those with warehousing and logistics advantages, and empower them with digital software to enable information-based logistics delivery capabilities, turning them into a logistics delivery platform for all retail scenarios in the city. At the same time, brand owners can also use third-party logistics for goods delivery platforms, but the prerequisite is to establish the brand owner's own information flow.

For example, Chinese sportswear brand Li-Ning, after experiencing inventory backlog and a cliff-like decline in sales, began to rebuild its distribution and logistics system. After its return, Li-Ning mainly focused on eliminating intermediate distributor inventory, making stores directly operated, and achieving one-warehouse delivery for store inventory. The result was a decrease in distributor inventory in Li-Ning's service areas, and third-party contract logistics companies would assist Li-Ning in shipping directly from NDC or RDC to stores.

Another example is global daily chemical giant P&G. P&G's e-commerce warehouses are generally in first- and second-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen. But what if a consumer in a county town doesn't have a P&G e-commerce warehouse? If the information infrastructure is connected, a consumer in a county in Xuzhou who buys the brand's products doesn't need to have the goods shipped by express from a Shanghai warehouse to Jiangsu and then to the county; instead, the goods can be shipped from the distributor's warehouse in Xuzhou county. The brand can not only see the distributor's real-time inventory, but once the information foundation is established, the offline information chain will be opened, allowing the brand to comprehensively aggregate online and offline information and get consumer feedback in the first place. This is crucial for major brands' market insight.

From these two cases, we can see that after brand owners collaborate with distributors to create a city-level one-warehouse delivery, the distributor's overall logistics costs, from transportation to warehousing, will decrease. In Best Supply Chain's successful experience, a digital supply chain system can increase inventory accuracy from 90% to over 99.95%; in addition, after achieving one-warehouse delivery, it can improve the delivery efficiency of distributor logistics vehicles, reduce vehicle investment, and the vehicle full-load rate is expected to increase from 70% to over 95%.

Currently, some forward-thinking distributors have already started urban warehousing and distribution businesses. Distributors can free up one-third of their warehouses and vehicles, and have the energy to take on warehousing and distribution business for other brands in their city, turning their logistics departments into logistics enterprises. For distributors, cost reduction and efficiency improvement in logistics distribution can save capital occupation, and at the same time, the independent logistics distribution can help distributors open a new profit channel.

How Best Supply Chain helps brand owners build a city-level one-warehouse delivery

Currently, Best Supply Chain is using its own warehousing and distribution capabilities, as well as its IT system output capabilities for distributors, to help brand owners build a one-warehouse delivery logistics system in every city.

Founded in 2007, Best Group has developed for twelve years. As of the end of June 2019, Best Supply Chain has more than 370 cloud warehouses nationwide. Starting this year, Best Supply Chain has officially opened its software services—Baizhihui Digital Supply Chain Management System, announcing the full launch of urban 2B joint warehousing and distribution business.

In the new retail era, the contradiction between delivery scenarios and total inventory has become particularly prominent. Therefore, brand owners must establish an autonomous and controllable supply chain operation platform, using Best Group's IT and warehousing capabilities to build the brand owner's supply chain operation platform. Through a unified, easily deployable, and easily iterable supply chain information system, it can ultimately connect distributors and logistics service enterprises, enabling multi-party collaboration to achieve brand one-warehouse delivery.

The distributor logistics department using Best's system + Best's cloud warehouses in various cities can help brand owners achieve full-scenario supply chain delivery, serving both B-end and C-end. This improves distributor logistics efficiency and accelerates the transformation of logistics business, thereby achieving coordinated development between brand owners and distributors.

And Baizhihui will provide distributors with a full business process ERP solution. Through the Baizhihui distribution and inventory system, it helps distributors achieve true digital management in order, sales, warehousing, transportation, purchase-sales-inventory, business accounts, and reports, improving operational efficiency. Through cloud deployment, it can connect with brand owner systems, enhance collaboration efficiency, and improve service quality for end consumers.

After several years of development, Best has established comprehensive strategic cooperation with many brand owners and distributors.

In this way, brand owners, through Best's IT system empowerment of distributors, establish a full-scenario delivery system for urban logistics, allowing distributors, with the help of standardized logistics delivery systems, to focus more on sales expansion.

In this way, distributors can also use IT systems to refine logistics delivery operations, not only reducing costs and increasing efficiency for their own logistics delivery but also providing urban warehousing and distribution services for other cargo owners in their city, making the joint warehousing and distribution business prosperous.

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