The 3rd "FMCG + Internet Conference" hosted by New Distribution was grandly held at the Yuelai International Conference Center in Chongqing from November 8 to 9, 2017! It attracted over a thousand distributors, manufacturers, and internet companies from across the country, with a full house and unprecedented scale. The following is the transcript of the roundtable forum on the afternoon of November 8, where Xue Shilin (CEO of Kuaixiao Hulian), Zhang Hailing (Chairman of Sanxing Liangou), Yan Lu (Founder of Tao Daqing), and Li Qiangyun (CEO of Meiyitian) discussed "Facing the Onslaught of Internet Giants, Do Distributors Still Have a Chance to Build Their Own Platforms in Regional Markets?" New Distribution has organized the content for our readers.
Xue Shilin: I'm honored to attend this event and serve as a guest host. We are a special group of people; there are many big names here today, and many of us share similar experiences. Mr. Li may have less experience as a distributor, but the four of us have all been distributors for quite a few years. I was also involved in the early B2B deep waters and am now making some adjustments. It's a great opportunity to exchange ideas. Many distributors want to transform and upgrade but have many concerns, and indeed there are many pitfalls. Today, we will explore how FMCG distributors can transform and upgrade, or whether regional distributors have more opportunities. We hope our exploration can provide some thoughts and reference for our next steps. Today's panelists are representative: one is Mr. Zhang from Changchun. Please introduce yourself.
Zhang Hailing: Hello everyone, I'm from Jilin. We've been distributors for over a decade. Our new company aims to combine traditional industry with the internet, hoping to make our company last longer. Thank you.
Yan Lu: Hello, I'm from Daqing. I've been a traditional distributor for over 20 years and entered the internet industry in 2015. I believe distributors must upgrade and change. As a pioneer, I think our platform in Daqing is doing well, with 7,961 terminal customers. So, fellow distributors, let's discuss how to better upgrade and develop.
Li Qiangyun: I'm honored to share with you. I'm Li Qiangyun, founder of the local B2B platform in Jingmen, Hubei, called Meiyitian. Our company was founded in 2015 by several large traditional agents in Jingmen. Considering the development in recent years, we had transformation ideas early on. I wasn't originally in the traditional FMCG industry; I was in internet operations. Our current shareholder structure created the new company. We've been operating for nearly three years. Through meticulous local operations, we've integrated about 20 large distributors locally, but we're not just cooperating; they are also shareholders in the project. For terminal convenience stores, we separately established a subsidiary to integrate owners of many regional key stores and make breakthroughs in chain convenience. In three years, our sales volume and store resources in Jingmen are quite good for the region. Our ultimate business model is to build a regional B2B2C trading platform with unified warehousing and distribution, plus a value-added service platform for chain terminals. One of today's sponsors is GLP Finance. We will have deep cooperation in supply chain finance next, building a supply chain financial service platform. Thank you.
Jiang Shuming: Good afternoon, I'm Jiang Shuming from Chengdu. We do traditional trade, with a few thousand square meters of warehouse and several thousand SKUs. We're still in the traditional industry, which is hard work. Thank you, Teacher Zhao Bo, for giving me this opportunity to share. Thank you.
Xue Shilin: Everyone is talking about whether distributors will disappear, or what is the original intention of distributor transformation? Mr. Zhang, please share with us.
Zhang Hailing: Yes, this is an era of change. As distributors, if we don't change, with the many big names speaking this morning, how much longer can we last? In this era of change, distributors must also change to adapt to the current situation. So, from traditional distributor to +Internet, we are not Internet+. Today we talk about B2B. When I started, I didn't know what B2B was. I think we distributors were originally B2B; we just added internet tools to make ordering and delivery more intelligent and efficient. We started transforming in September 2015. These two years have been tough. We face strong competitors in Changchun, like Huimin and Baishi Dianjia, which are very powerful. The pressure is high. We learn by doing, constantly changing and learning from good practices, hoping our company can go further or cooperate with others later. As Professor Liu said, we will choose one of four roles in the future. For now, we should do our own work well and keep moving forward. If we don't act, we'll be scared now and have no chance. If we act, we might have a chance. I hope distributors unite and work together to continue this business. Thank you!
Xue Shilin: Everyone is talking about transformation, and there are many models. But which model is truly suitable for distributors with low risk? Teacher Zhao Bo's research shows that starting from 2B and distribution has many early difficulties. Also, as traditional enterprises, we differ greatly from internet companies in technology, talent, and capital. I'd like to ask Mr. Li from Jingmen: Which B2B entry point is more suitable? And how does your company solve the talent, technology, and capital issues?
Li Qiangyun: For the first question, which area is most suitable for distributor transformation? Personally, the most suitable is what fits you. Each distributor has different local resources, company situations, and other factors. So, when entering, you must combine your actual local situation. Of course, in the past two years, many early transformers might have started from warehousing and logistics. We currently have a 40,000-square-meter warehouse in Jingmen, but we found that while we're good at FMCG and trade, when we turn to logistics, we have significant shortcomings in professionalism and operational management. Through these two years of operation, we've stepped on some pitfalls, but with team training and learning, there's much room for improvement. For future distributors considering transformation via unified warehousing and distribution, you should bring in more professional logistics talent.
Second, for 3-6 tier cities, we face big problems. Talent-wise, many capable people are in first- and second-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen. In Jingmen, a prefecture-level city, there's a severe shortage of internet-savvy and operationally strong talent. Even when city leaders organized meetings, the local government introduced policies for talent introduction, but there's been little improvement short-term. Talent-wise, all distributors here with over ten years of experience are professional in FMCG, but for +Internet transformation, we need professional talent to assist in operations. Many distributor bosses may have room for improvement in management and internet project awareness.
We invested less than 20 million yuan initially, all self-funded. We found a local modern agriculture company, but as a regional platform, attracting venture capital short-term is still a long way off because our scale is still lacking. Through our three years of operation, if we improve efficiency, reduce costs, and control operations well with local distributors, we don't need to spend too much money. Of course, we won't burn cash like big platforms; we can't and won't. If you become the number one in your region, you can connect with financial institutions for capital support based on your goods and transaction data. From an operational perspective, we won't lose much money.
On technology, for regional local distributor transformation, building your own platform and information system with your own money is something you must never do. I saw three companies today that provide support in this area. The company we cooperate with now provides excellent technical support for distributors in third- and fourth-tier cities. The cooperation model focuses more on future development. So, for technical support, local distributors should leverage specialized companies with strong development capabilities and good service platforms.
Xue Shilin: Mr. Jiang, please share your view: What are the opportunities for regional distributors to build regional platforms?
Jiang Shuming: As Sister Zhang said, traditional distributors are already doing B2B; it's just that tools have evolved. When we do B2B, can our backend support it? While we develop and promote, do we have technical support? The two sisters built their own platforms. We traditional distributors are very professional in our regions. We've done distribution for eight years, studying customer needs. Building a B2B platform is feasible, and regional B2B platforms can be promoted, but they need professional teams for operations and technical support.
Xue Shilin: Whether self-operated or aggregated, we need to cooperate with other suppliers. There are many challenges. Mr. Yan has done well. Please share how you make partners feel confident cooperating with you.
Yan Lu: We follow the principle of altruism. With terminal supermarkets and suppliers, we aim for their benefit. When you benefit others, you benefit yourself, and that makes us successful. Many distributors here may have built platforms and faced issues like other distributors not supplying. We use the law of attraction. A platform can't just boast; it must let consumers, users, and word-of-mouth speak. That's our core secret. It's the same with employees: let those who work speak, and let those who speak work. Only when they genuinely want to do it can we succeed. When our platform started, we faced many problems. Big brands didn't want to cooperate, fearing price wars—that's why big brands avoid platforms. We have activities every Sunday, creating a buying habit where customers order on the platform every Sunday. Other distributors might rest on Sundays, but our platform sales on Sundays are around 180,000-190,000 yuan, solving the problem of rest days and costs. When other distributors rest, they can't sell, so customers ask why their goods aren't on Tao Daqing's platform. That's word-of-mouth, and they come to us. Recently, for the Mid-Autumn Festival, we approached Tsingtao Beer, but they refused, saying they had their own network. But when our Mid-Autumn activity launched, all distributors contacted us, saying our activity was great and they wanted to cooperate because we have many terminal customers in Daqing. I said cooperation now has conditions. For this event, Master Kong provided us with 1,000 boxes of water. When the platform becomes attractive, all suppliers naturally cooperate. Even Tsingtao Beer proactively approached us with 50 boxes. So, building a platform is imperative for distributors. Love spreads and love comes back; altruism is self-interest, and this will succeed.
Xue Shilin: We've been visiting many customers recently, including our own team. Seeing their efforts sometimes feels bittersweet. Our company has been around a long time; many employees have reached retirement age, but many return to work. We're exploring how to truly transform and upgrade, hoping our team's efforts aren't in vain. Let me briefly introduce myself: I'm Xue Shilin, founder of Kuaixiao Hulian. We've been in FMCG for 20 years, logistics for 16, e-commerce for over a decade, and exploring FMCG transformation for nearly ten years. I've stepped on many pitfalls. With so many models, even big names can't say which is right, so we just move forward. I entered B2B early, and our company is transforming. I think many distributors want to do it but dare not, feeling it's too deep. For this reason, we continue B2B. If I had to choose again, I wouldn't develop software with my own team. At the time, I confidently set up a development team, but now it's turned a bad thing into good. Recently, we did customer delivery, and people think we understand the industry well and can serve them better, giving us a sense of achievement. I believe distributors have great advantages. Adding internet tools to our own strengths is fine. So, we focus on +Internet tools because the investment is low; the key is how to do it. Bosses must take it seriously and have professionals handle it. We've always done B2B, just moving it online. That's a tool. Tools aren't just tools; they have multiple functions: they're a platform, and they offer management. According to FMCG industry characteristics, how to integrate is valuable for us.
Returning to today's theme, most distributors believe regional e-commerce has opportunities. No matter what Alibaba or JD does, there should be room for us. We discussed that distributors' logistics costs are much lower than e-commerce, especially for big brands, with high efficiency. Yesterday, we heard from Meiyijia that automation is 6 points, traditional is 4 points, so we must combine our actual situation. When I did logistics, I made money, but profits were very low. Distributors' costs were too low; when we calculated, their methods differed—they didn't count management costs. But a professional logistics company must count management costs. Whether we transform or share with others, we should include management and other costs to be on the same starting line.
Let's have each guest share opportunities for regional distributors and good suggestions, starting with Mr. Jiang.
Jiang Shuming: I'll share some of my gains and insights. We transformed into logistics distribution. Previously, I was a single distributor in the wholesale market for many years, which was painful. In 2008, I transformed into distribution and hit bottlenecks. After transforming, I focused on milk powder, but adding many SKUs was difficult, and the product structure was unreasonable. During transformation, we faced talent, capital, customer service, and brand acceptance issues. It's been tough. For talent, every new hire must go through every link: warehouse, delivery, sales. If they don't accept the company culture, they can't keep up. We also study how to motivate the post-80s and 90s, care for them, and retain them. In fact, we need to make customers happy, upstream happy, and our team happy; only then can our company survive. That's what I think is most important now. When these three are happy, we as bosses can be happy.
Li Qiangyun: Briefly, many big names talked about Alibaba and JD. A few months ago, at Alibaba's Retail Link launch, I watched and thought regional e-commerce was doomed—money, capital, technology—you can't compete. But today, our last guest, Mr. Wang, spoke many truths. I agree with that view. Big companies have advantages, but they also have shortcomings at this stage. For us local traditional distributors, how to maximize our existing advantages during transformation is crucial. In the future, boundaries may blur. We might run our own platform locally, but for warehousing and distribution services, if users find it satisfying, and when Alibaba or JD comes, if our services and costs are competitive, we can embrace cooperation. So, we need an embracing mindset. But finally, many distributor friends attend many studies and meetings, but if you haven't thought it through, don't rush. If you have, then don't overthink; just charge forward.
Yan Lu: Every regional distributor has an association. Our association is a big whole. United, we're not afraid of JD or Alibaba. We only aim to be king in our region; we don't have such big ambitions. We just want to be the boss in our territory. How can distributors come together? We need platform sharing. Originally, we had unified warehousing and distribution; now we can have sub-warehouses and direct distribution. Distributors all want to join such a platform, fully open, with each providing a platform entry and handling their own orders and delivery. We form a regional brand locally. All suppliers are together, prices won't be chaotic, each sets their own prices, and we can do promotions together. For example, Double 11, Mid-Autumn, New Year. Because distributors must leverage our strengths to build our local brands better. I've experienced this: on October 5, we introduced a new product. The salesperson didn't know yet, but the backend data operator put it on the platform, and customers ordered it themselves. The platform is really important. Distributors have thousands of SKUs; a salesperson can introduce at most 50, maybe just eight or ten. But now terminal customers can see all products and order themselves. So, distributors uniting to build a regional king platform is imperative. Thank you.
Zhang Hailing: Through these two or three years, we've developed +Internet thinking. Using internet programs, our work is standardized, and management is good. After going online, I feel order processing is fast. Unlike before, when we visited weekly and delivered once a week per customer, now we can deliver the next day for orders placed before 3 PM, increasing customer ordering frequency. Without the system, we couldn't do this because we'd save costs by weekly visits. With the system, it's very convenient, and hiring warehouse managers is easier. The platform is about unity, building a regional platform together. That's the best. We're all in this together; direct-operated terminals have profits, and unity makes us better.
Xue Shilin: Internet+ and +Internet—actually, +Internet suits us better. Internet+ is a process for us. I want to first add internet tools, combine our capabilities, and develop together. I believe our regional efforts can also achieve some Internet+ things. To borrow a phrase: This is the worst of times, but also the best of times. Leverage your strengths, change early, and the future will be better. Thank you!
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