01 After JD and Alibaba educated the market, the vacated market space has led to rapid growth for many regional B2B platforms this year. Recently visiting Pinpianyi, Xu Yi told New Distribution that they expect to reach about 23 billion yuan in 2022; Yijiupi's scale is still around 10 billion, and it is said that Lingshoutong has fallen below 10 billion; several larger B2B platforms in East China such as Caihua Commerce, Zhongshang Huimin, Kuailai Zhanggui, and Wanquan Supei are currently at 2-3 billion; regional players like Jiabin Yunshi and Weiran Jinhe have exceeded 1 billion; single-city, single-warehouse operations like Rongcheng Yigou, Wuhan Huxiaosheng, and Luoyang Hecai are mostly in the 100-300 million range. This is only a part; many local B2B platforms have seen significant growth in both speed and single-warehouse scale. Although JD and Alibaba are no longer the leading players and forces in this market, their exit has in a sense freed up the ecological niche, making the entire industry more prosperous. And the next decade will be even better.
02 Small shops ordering from B2B has become standard, typically choosing two to three platforms as their fixed ordering platforms. The author also visited some small shops and chatted with shop owners. Ordering from B2B platforms has basically become standard. In terms of ordering habits, shop owners tend to prefer one to three platforms as their main ordering targets, but they do not rule out checking other platforms. For some brand platforms, it is usually when salespeople come to take orders that they inform shop owners of promotions, and then shop owners order from such brand platforms. However, the advantage is that since the platform's fee investment is more direct compared to platform-based B2B, and some fee verification and investment are done through platforms like ColaGo, shop owners are not averse to ordering on such platforms.
03 The survival situation of small shops is not ideal, and profitability is worrying. In the past two years, the trend of convenience store chains has been very obvious. In terms of product richness, decoration, and brand, traditional mom-and-pop stores cannot compete with such chains in hardware. We see that well-performing convenience stores usually carry fresh produce and also provide deep community services like delivering large water bottles. However, some shop owners reported that group buying has made business difficult in the past two years. Currently, only tobacco and alcohol are profitable. Categories with high online penetration, such as personal care, household cleaning, grain and oil, and condiments, have very poor offline sales. Shop owners are also trying to adjust their category structure, gradually moving towards fresh produce, tobacco, alcohol, and beverages, but fresh produce is not very profitable either, and overall survival is difficult. One shop owner said that they can hardly even earn their salary. Through our visits, we found that this is not just one or two cases; it is a very common phenomenon in cities above the prefecture level. In addition, in some regions like Hunan, not only group buying but also a large number of discount stores like Haotesell and specialty stores for leisure snacks like Snacks are very busy, giving consumers more and more choices.
04 B2B is fully profitable, with Zhongshang Huimin and Wanquan Supei close to break-even. With deeper operations, lower backend development costs, and reduced difficulty in consumer promotion, B2B has become profitable on a large scale. Even some self-operated B2B platforms with heavy operations have reached break-even or are close to it. This means that once B2B becomes profitable, the subsequent scale advantages will immediately become prominent, also proving the basic success of this business model.
05 A large number of distributors are starting to move their existing business online to do B2B. In the past two years, we have seen that distributors' business in regional markets is not doing well, with no growth for many years. Some large distributors are seeking transformation, and the first choice is to do B2B. On the one hand, enterprises have their own growth needs; on the other hand, the business similarity is high, especially for leisure food distributors, who will automatically enter the B2B model during digital upgrading. Third, the cost of educating small shops has decreased. Finally, because a large number of B2B platforms have become viable, the trial-and-error cost of the business model has become very low.
06 Brand-owned digital systems have made B2B a standard, as a key way to invest fees. Coca-Cola's ColaGo has been relatively successful in promotion in the past two years. The logic behind it is that when brands vigorously promote digitalization, moving small shop transactions online is a very important scenario, because only after transactions are moved online can a series of digital marketing possibilities follow. Currently, mainstream brand manufacturers in China have basically launched their own B2B platforms for transactions with small shops, and even if they have not launched, they are planning and building them. Moving transactions online still involves some complex issues, such as brands that rely on distributors for deep distribution will encounter problems with distributors' B2B operational capabilities and willingness to do B2B, but from a broad logic, there is still an opportunity.
07 B2B is far from the endgame; in fact, it is just beginning. As the supply chain integrator for small shops, it will significantly replace the role of wholesalers in the market. There are three reasons for this view: China's urbanization process is still ongoing, and the improvement of various infrastructure will further catalyze the advancement of B2B; second, labor costs have risen significantly in the past two years, and using software to complete automated transactions is a rigid need for enterprises to reduce costs; third, distributors and wholesalers will also continuously iterate themselves, and in the process, some strong regional supply chain platform providers will emerge, further squeezing channels and forcing wholesalers out of the market. Kuailai Zhanggui in Shanghai is the largest distributor for many first-tier brands such as Coca-Cola, Red Bull, Budweiser, and Master Kong. Why is this? Analysis shows that the efficiency advantage of B2B supply chains will become more and more obvious with operational maturity and scale expansion, while the traditional distribution system, with multiple transaction chains and redundant and cumbersome management systems, will gradually cede resources to B2B.
08 For B2B, efficiency is the ultimate weapon, and scale is an overwhelming advantage. Those that can be profitable are basically very efficient. In regional markets, due to limited market capacity, sales volume is approaching the limit of market growth, and involution is inevitable. At this time, whoever has an efficiency advantage will form an overwhelming competitive advantage in the regional market, and distribution B2B will grow rapidly because of this advantage.
09 Wholesalers are resilient and are also trying to iterate themselves. It is understood that the number of B2B mini-programs currently counted is about a thousand. Some platforms say the number is more than that; a large number of wholesalers have started using mini-programs to create simple shelves for online ordering. New Distribution estimates that the number of wholesalers using mini-programs exceeds 10,000, but most are mainly for electronic shelf display, with communication and transactions still offline.
10 A new era of Warring States in B2B may be about to appear. Unlike the previous wave of external entrepreneurs entering the FMCG industry to do B2B, the current B2B landscape is more like the self-iteration of the industry chain: brand B2B, distributor B2B, platform B2B, and wholesaler B2B. These B2B platforms will compete for traffic in small shops on both horizontal and vertical levels. However, this round of competition is no longer about gaining advantage through capital burning, but through refined operations, scale, and efficiency improvements to form competitive advantages. Under such circumstances, which type of B2B will become mainstream is still uncertain. But the platforms that have already emerged do have obvious competitive advantages. Boldly predicting, in the next three to five years, a new era of Warring States in B2B may be about to appear, and the second half of B2B is about to begin.