---
title: "Real Experience | Three Painful Lessons in Centralized Warehousing and Distribution!"
description: "The following is a sharing by Chen Siting, founder of Wanchaobang, on the lessons learned in centralized warehousing and distribution at the New Distribution Open Class, edited by New Distribution for readers. Wanchaobang is a platform for centralized warehousing and distribution, founded in 2016, and its development can be roughly divided into three stages: from early 2016 to October, project initiation and system development; from October 2016 to April 2017, market validation or trial and error; and from June 2017 onwards, market expansion from Chengdu, Zhengzhou to Beijing..."
author: "陈思廷"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-03-03"
language: "en"
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---

# Real Experience | Three Painful Lessons in Centralized Warehousing and Distribution!

> The following is a sharing by Chen Siting, founder of Wanchaobang, on the lessons learned in centralized warehousing and distribution at the New Distribution Open Class, edited by New Distribution for readers. Wanchaobang is a platform for centralized warehousing and distribution, founded in 2016, and its development can be roughly divided into three stages: from early 2016 to October, project initiation and system development; from October 2016 to April 2017, market validation or trial and error; and from June 2017 onwards, market expansion from Chengdu, Zhengzhou to Beijing...

The following is a sharing by Chen Siting, founder of Wanchaobang, on the lessons learned in centralized warehousing and distribution, at the New Distribution Open Class, edited by New Distribution for readers.
Wanchaobang is a platform for centralized warehousing and distribution, founded in 2016. Its development over the past two years can be roughly divided into three stages: from early 2016 to October, project initiation and system development; from October 2016 to April 2017, market validation or trial and error; and from June 2017 onwards, market expansion from Chengdu, Zhengzhou to Beijing. This sharing will not summarize too much; it mainly reproduces what we have experienced, to provide some experience for distributor friends who are about to do or are doing centralized warehousing and distribution.
1**First Lesson: Six Months of Software System Development**
In March 2016, our project funds were in place, and we officially started system development, after project initiation and feasibility study. The system needed to integrate multiple modules such as WMS/TMS/OMS, and also involve PC and mobile product development. We approached three software companies for outsourcing, but all failed in the end.
Later, I reflected that the main reason might be that if requirements are very clear and functional points are very specific, software outsourcing is suitable; but if requirements are not detailed enough and functional points are not clear, problems will arise in system design, development, and implementation. During rapid iteration, outsourcing companies cannot respond quickly. So we took many detours in the system, and finally we made up our minds to build our own development team, but the capital investment was enormous.
After six or seven months, by the fourth version, in October 2016, the system was successfully launched. During this process, our developers were stationed in the distributor's warehouse, delivering with the drivers, discovering needs and discussing them, and finally formed a requirements document of about 300 pages, which was confirmed after multiple discussions. Our developers delivered nearly 100,000 items. My feeling is that nothing can be achieved easily without suffering, sweating, and shedding layers of skin.
Here, there are two orientations in the system: one is technology-oriented, the other is business-oriented. Technology orientation often emphasizes powerful and comprehensive functions, giving you everything useful or not, and software buyers like that; business orientation is based on the business model, with the starting point being how to facilitate business use and development. Frontline business needs simplicity, usability, flexibility, and compatibility, while the system emphasizes consistency and security; sometimes there is a conflict between the two.
Take delivery and payment as an example: we are completely different from express delivery. The goal of delivery is to settle goods and payment, but B-end delivery is more complex. More than 50% is cash on delivery, which includes unpaid orders, partial payment, and batch settlement; receiving goods includes full acceptance, full rejection, partial rejection, and returns upon receipt. These offline actions and data may not have needed to be transmitted to the system in real time, but now they need to enter the system in real time, involving subsequent order processing, product return to warehouse, reconciliation, etc., which is relatively complex and increases development difficulty.
Another example is the ordering function. Distributor salespeople originally wrote orders manually, but now they use WeChat to report orders. When reporting, they don't know the inventory, so they can only estimate. Sometimes there is a shortage, and then they have to explain to customers and cancel orders, which is a poor experience. So we need to have real-time online inventory, lock inventory in time, and also involve the function and process of pre-orders.
In addition, while accurately implementing these functions, we must also consider user experience, and not increase the burden on salespeople because of using mobile functions. We can now basically place an accurate order in an average of 8 seconds, so salespeople can use it more easily. Therefore, a business-oriented development approach makes us constantly think about how to meet business needs and user experience while ensuring the system's management purpose.
Finally, we set the development direction as specifically for FMCG categories, business-oriented, so as to achieve a lean system with strong pertinence. The system includes order management, product management, promotion management, warehouse management, distribution management, route planning, reconciliation, and other functional subsystems. Wanchaobang finally formed an information system system with 11 software copyrights.
2**Second Lesson: A 100,000 Yuan Bet to Get the First Customer**
The first stage of market implementation was painful, no exaggeration. Every day was either sweat or tears, and you even hoped for more sweat. If you have friends doing centralized warehousing and distribution, you should feel the same. First, it was hard to find our first customer. Why is it relatively easy for distributors to start? Because they have their own commercial flow, and they can transform their own business first, but we didn't have that. We needed one or several customers to test with us.
When choosing what kind of test customer, there was a big debate internally. Colleagues thought we should test with customers we were familiar with, but my opinion was to find unfamiliar customers. Although such customers are more demanding and have more problems, don't we hope to expose as many problems as possible in the early stage? If we have to pay tuition, I hope to pay it all at once. Let me share a sentence I saw recently: "Sometimes, the best way to solve a problem may be to let the problem happen first."
Later, through cold visits, I met a customer who also wanted to transform but had no confidence in us at all. He asked me a question: "Mr. Chen, I have been in business for 30 years and delivered goods for 30 years. You have hardly delivered anything. Now you say you can manage goods better than me and deliver better than me. If you were me, what reason would you use to convince yourself?"
I couldn't answer. I could only say that I cannot prove something that hasn't happened yet, but since both of us want to do this, we can only bet. Bet 100,000 yuan: if I fail, I'll pay you 100,000; if I succeed, I don't have to pay. In this way, we bet to get our first test customer. So, despite many things that happened later, I am always grateful to this customer in my heart.
Our first market was at the county level, originally all vehicle sales. To do centralized warehousing and distribution, we first had to change to visit sales. In the first month, the terminal rejection rate was 30%, and the customer's sales declined severely. The team was also hit hard and under great pressure. I could only use RMB as an analogy to cheer up the brothers. I said, "Only RMB is loved by everyone. Centralized warehousing and distribution is a new model. People see a 30% rejection rate, but let's look at it the other way: 70% of terminals accepted it immediately. Isn't that the best data?" In this way, with encouragement and a bit of "hype," we made the brothers hold on. The most difficult big store took five deliveries to accept the order. Finally, the rejection rate was reduced to less than 1%.
3**Third Lesson: Ignoring Human Nature, Abandoned by Customers**
In addition, we once paid a price for ignoring human nature, and the price was not small. During the Spring Festival peak season in 2016, the power of centralized warehousing and distribution was unleashed, helping the customer increase market share by 30%. We were excited and planned to move to a larger and better park after the Spring Festival, and the customer agreed. But when we planned the new park, the customer didn't move, and even occupied our old warehouse and equipment without returning them.
This is the price we paid for ignoring human nature! The customer's consideration was: I have brand business, I have people and vehicles, I can also attract merchants. Isn't it just a software system? I can buy one. I am a local, and merchants will trust me more. In this way, he pulled another customer of ours, and the two cooperated to do centralized warehousing and distribution. Of course, he also paid the price for ignoring human nature. A year passed, and no merchant entered. Apart from taking advantage of us, he didn't save any cost.
Our summary is that in an immature market, innovative models do not necessarily yield results just because they are effective; human factors must be considered! Any model that ignores human nature will eventually be punished by the market. After reflection, we set a new development approach: only do direct operations in central cities, and only do franchising in county-level markets, only outputting systems and management guidance, not the brand. Only by relying on local opinion leaders, letting them operate independently, enjoy independent benefits, and bear independent consequences, can this thing run.
Wanchaobang has stepped on too many big and small pits in the past two years. Sharing time is limited, so I can only talk about whatever comes to mind. Although Wanchaobang is still small in scale, we care about the future and firmly believe that centralized warehousing and distribution is a trend. For this trend to arrive faster, it requires the joint participation of brand owners, investors, brand agents, service providers, and infrastructure providers in the industry chain! It requires a more open attitude, more proactive actions, and more cooperation!
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