---
title: "Refusing to 'Surrender': When Will Manufacturers and B2B Platforms 'Cease Fire'?"
description: "Amid China's economic slowdown, fragmented consumer demand, the impact of online e-commerce, and a market entering squeeze-style competition, the traditional channel model in the FMCG industry is under assault, with sales generally hitting bottlenecks. Against this backdrop, New Distribution, in collaboration with Professor Gao Song from the Business School of East China University of Science and Technology, launches the 'Gao Song: Channel Empowerment' column to explore new models, strategies, and methods for manufacturer and distributor channels in the new era. What does the future of FMCG channel evolution truly look like? As the B2B platform revolution cools, this question weighs on brand owners and distributors alike."
author: "高松"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-11-13"
categories: "Supply Chain & B2B"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/dMboexfB_cOgXWDYWPxGpA"
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attribution: "New Distribution — https://xinjignxiao.com/en/articles/refusing-to-surrender-when-will-manufacturers-and-b2b-platforms-cease-fi-4e8df35a/"
citation: "高松. “Refusing to 'Surrender': When Will Manufacturers and B2B Platforms 'Cease Fire'?.” New Distribution, 2019-11-13. https://xinjignxiao.com/en/articles/refusing-to-surrender-when-will-manufacturers-and-b2b-platforms-cease-fi-4e8df35a/"
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---

# Refusing to 'Surrender': When Will Manufacturers and B2B Platforms 'Cease Fire'?

> Amid China's economic slowdown, fragmented consumer demand, the impact of online e-commerce, and a market entering squeeze-style competition, the traditional channel model in the FMCG industry is under assault, with sales generally hitting bottlenecks. Against this backdrop, New Distribution, in collaboration with Professor Gao Song from the Business School of East China University of Science and Technology, launches the 'Gao Song: Channel Empowerment' column to explore new models, strategies, and methods for manufacturer and distributor channels in the new era. What does the future of FMCG channel evolution truly look like? As the B2B platform revolution cools, this question weighs on brand owners and distributors alike.

Amid China's economic slowdown, fragmented consumer demand, the impact of online e-commerce, and a market entering squeeze-style competition, the traditional channel model in the FMCG industry is under assault, with sales generally hitting bottlenecks.
Against this backdrop, **New Distribution, in collaboration with Professor Gao Song from the Business School of East China University of Science and Technology, launches the 'Gao Song: Channel Empowerment' column to explore new models, strategies, and methods for manufacturer and distributor channels in the new era.**
**What does the future of FMCG channel evolution truly look like?
As the B2B platform revolution cools, and brand owners and distributors endure anxiety and uncertainty, this question is undoubtedly a major concern for all.**
**-01-**
**B2B Platforms Remain a Berlin Wall Between Brand Owners and Retail Outlets**
**To assess whether any business model is viable, one should view the present from the future, the part from the whole, and the low dimension from the high dimension.**
That is, one must see whether it enhances the efficiency and benefits of the overall ecosystem, thereby gaining support from most species in the ecosystem and achieving lasting vitality.
Clearly, **B2B platforms have not yet gained majority support.**
When B2B platforms first emerged, they used online ordering, centralized warehousing and distribution, intensive logistics, and data empowerment to serve millions of small stores, brand owners, and distributors. Compared with the traditional long-chain, low-efficiency, fragmented channel model, they indeed improved supply chain efficiency and reduced costs.
**B2B platforms claim to empower the entire ecosystem of brand owners, distributors, and small stores, but in actual operation, they expose deep contradictions in top-level design.**
**Brand owners are most concerned with enhancing customer experience, capturing consumer attention, and countering competitors, with the core being sales momentum, promotional power, and empowerment of the C-end.**
Due to their platform nature, neutral role, and capability limitations, B2B platforms lack the ability to empower terminals to deepen sales momentum, help brand owners promote efficiently, or reach consumers. If brand owners rely entirely on B2B platforms, their marketing capabilities will inevitably be weakened.
**-02-**
**Brand Owners Refuse to 'Surrender'**
Due to the high-frequency, low-price characteristics of FMCG products, brand owners' sales channels are not monopolized by B2C e-commerce and KA stores; most (about 60%-70%) of product sales come from traditional distributor channels with lower sales expense ratios. This channel is the last battlefield brand owners cannot afford to lose. Would they hand it over to an uncontrollable B2B platform and become OEM manufacturers?
**For brand owners, fully cooperating with B2B platforms means surrendering.** Not only is the potential platform usage fee a Sword of Damocles hanging overhead, but more frighteningly, consumption and competitive information would be monopolized by the platform, pricing power lost, product development without direction, market competition strategies unable to be implemented, and sales conflicting with current main channels.
Therefore, **most brand owners, especially leading ones, have only 'politely' signed supply agreements with B2B e-commerce platforms without truly delegating channel policies to them.** B2B e-commerce's share of leading brand owners' sales is negligible.
**-03-**
**The Brutal Competition Between Ants and Elephants**
**The competition between distributors and B2B e-commerce is like a battle between ants and elephants.**
B2B e-commerce has never openly claimed to replace distributors, but compressing the supply chain, sourcing directly from manufacturers, and serving small stores directly all point in that direction.
At the start, with the money-burning model, the elephant held the upper hand, and many second-tier wholesalers fell. The elephant took the meager margins of second-tier wholesalers, becoming their revolutionary.
Distributors, however, began to accumulate experience and grow. They discovered that what truly determines their fate is the brand owner. Thus, the ants began to transform from logistics and financial functions to market, sales momentum, promotion, and service, becoming more resilient with each setback.
In contrast, the elephant, with its formal organization and larger scale, faces increased costs in team, compliance, and operations, while margins are thin (5-7%), especially in vast rural markets below fourth- and fifth-tier cities, where it struggles against distributors with extremely low labor, site, and logistics costs, engaging in a bitter fight over efficiency and cost.
**-04-**
**Small Stores and Consumers Watch from the Sidelines**
**Millions of terminal small stores are the focus of contention.** Small stores are extremely rational, holding several apps, and prioritize price and timely service, with little loyalty—they buy from whoever offers the lowest price and fastest delivery. Before the B2B platform's ideal of big data empowering small stores materializes, relying solely on burning money to acquire customers cannot create the stickiness of B2C business. When investors realize this, growth hits a bottleneck.
**For all players mentioned above, consumers are the ultimate users!** For consumers, they need better, faster, more accurate, cheaper, and more convenient access to satisfy their needs, and B2B platforms clearly have not considered the C-end consumer.
For B2B e-commerce to build a super ecosystem platform, it needs to learn the spirit of water: 'benefit all things without contending, thus approaching the Dao.' It cannot attempt to monopolize big data and build a super empire. That path is not viable!
Alibaba CEO Daniel Zhang once said: **'Ling Shou Tong does not wish to become a Berlin Wall between brand owners and millions of small stores. We do not aim to be a super distributor but a platform for data flow.'**
Compared with this ideal, B2B platforms are clearly still on the way.
**-05-**
**So What Is the Future Picture of FMCG Channels?**
**Two Directions for Supply Chain Information Platform Construction:**
The digitalization of order systems and the socialization of warehousing and distribution systems can improve B2B efficiency and reduce costs, which is an inevitable trend.
However, two issues currently constrain this trend: **First, the main force providing socialized supply chain information platform services—B2B platforms—has not undertaken the function of providing marketing services for brand owners. Second, after the separation of order, warehousing, and distribution systems from marketing systems, a new channel transformation model has not yet taken shape, and neither distributors nor brand owners are prepared.**
**To address these two issues, there are two possible future evolution trends:**
**First, brand owners build their own supply chain information platforms.** The digitalization of the order system can be done in-house, and the logistics warehousing and distribution system can be self-built or through socialized cooperation. The problem with this approach is that the order system has limited categories, and terminal small stores are unwilling to use it.
Only leading brand owners in the industry are suitable for this model, because they have large market shares and a full range of products, enabling them to build a category procurement platform. Coupled with professional category sales momentum support activities, their appeal to terminal small stores will greatly increase.
**Second, the socialization of B2B platforms.** The evolution of B2B platform business models is inevitable. In the future, they should position themselves as basic service platforms, providing marketing service support for brand owners, empowering small stores, and becoming altruistic players in the channel ecosystem. In this way, a large number of small and medium-sized brand owners will join and support this ecosystem, and it will thrive.
**Whether brand owners build their own or join B2B platforms, transforming traditional distributor channels and building industry-driven channel empowerment platforms are key measures.**
**-06-**
**Building an Industry Channel Empowerment Platform Is a Key Focus for Brand Owners**
Supply chain information platform construction only solves the problem of improving efficiency and reducing costs, but it does not solve how to better satisfy consumers, nor does it solve the brand owners' differentiated marketing competition issues. These are the core concerns of brand owners.
Therefore, with the socialization of order systems and warehousing and distribution systems, brand owners and distributors must transform collaboratively, highlighting functions such as sales momentum promotion, terminal empowerment, and C-end management, to build an industry-driven channel empowerment platform.
Its essence is to unblock the two main meridians, **linking the supply side and the consumption side to better, faster, more accurately, and more conveniently meet consumer needs.**
**-07-**
**The Channel Empowerment Front End Mainly Consists of the Following Parts:**
**Building a Joint Business Entity**
The core of transformation is to learn from the U.S. military's SWAT special forces model, creating a batch of fully empowered regional marketing small teams. The core functions of these small teams are marketing promotion, terminal service, information collection, and consumer management, enabling agile and efficient responses to complex regional market competition.
**The joint business entity crosses organizational boundaries, composed of brand owners' city managers and distributor teams.** The city manager plays the role of political commissar, with the primary performance indicator being the improvement of the distributor's business performance, ensuring unified interests and shared goals within the joint business entity. This creates seamless integration and deep collaboration between distributors and brand owners.
**The creation of the joint business entity will greatly improve market response speed and accuracy, integrate and activate brand owner and distributor teams, and enhance marketing efficiency and combat effectiveness.**
**Marketing Organization Transforms into Front and Middle Office**
**Transform the traditional pyramid-style centralized marketing organization and build an agile organization with the front office as the core.** Delegate power and resources downward, move headquarters functional department personnel such as marketing, project, and promotion departments forward, build a support service platform composed of multi-arms forces, serving and supporting the joint business entity, and providing firepower for frontline operations.
The key to successful transformation is not only delegating power but also empowering, trusting, and benefiting. Combine training and practice to enhance the 'special operations' capability of the joint business entity. Upgrade from mere execution to marketing decision-making, market planning, business diagnosis, and organizational promotion capabilities. Establish resource allocation mechanisms to avoid chaos after delegation. Establish benefit-sharing and assessment mechanisms to stimulate organizational vitality.
**Yin-Yang Integration, Endless Product Development in the Back Office**
With the emergence of niche and personalized trends in FMCG, traditional mass marketing faces challenges. The biggest difficulty is **the long cycle and imprecise positioning of new product development and launch.** How to face niche groups and continuously launch marketable products is the key to the innovation and transformation of the entire marketing model.
In the channel empowerment platform, the R&D end and the consumption end are thoroughly connected, and the back office's new product development and planning are based on frontline information feedback. Let Yin and Yang integrate, establish a C2B R&D model driven by the consumption end, to achieve endless product innovation—this is the greatest role of the industrial internet.
**Terminal Empowerment**
What kind of empowerment do terminal small stores truly need? Although B2B e-commerce proposes big data empowerment, online empowerment, and offline unattended convenience vending machines to empower small stores, few have truly landed and produced results. The core needs of terminal small stores remain low-priced products with sales momentum and timely, convenient delivery and replenishment services.
Therefore, the joint business entity built by distributors and leading brand owners should leverage industry experience and professional knowledge to become category marketing experts, helping terminal small stores manage their categories well, including product display, product planning, new product introduction and delisting, sales momentum promotion, and consumer experience and education, with the goal of maximizing the profitability of that category for the small store.
**C-End Management**
**Traditional marketing channels do not reach consumers.** To understand consumers, brand owners can only use traditional market research methods. These methods lack timeliness, distort information, and have too large a granularity, causing brand owners to be blind in marketing decisions.
**Future channel models should engage in C-end consumer management.** The joint business entity needs to directly build local consumer communities through community e-commerce, consumer communities, and other models. Its significance lies not only in consumer education and brand promotion but, more importantly, in interaction, understanding richer consumption scenarios and needs, and obtaining consumer opinions on product development and marketing model innovation.
**-08-**
**Symbiosis Is the Future**
B2B platforms will undoubtedly continue to iterate and evolve, further understanding the industry, serving the industry, and empowering small stores, rather than simply doing B2C matchmaking transactions. They can find specific application scenarios and serve customers.
**Industry-empowered channel platforms will also mature rapidly, using internet technology and thinking to transform traditional marketing channels.**
The relationship between them is not a life-and-death competition but one of integration and symbiosis.
Then, who will have a larger share depends on **whether internet people learn industry knowledge faster or industry people learn internet technology and thinking faster.** Let us wait and see!
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## Citation metadata

- Publisher: New Distribution
- Author: 高松
- Published: 2019-11-13
- Canonical: https://xinjignxiao.com/en/articles/refusing-to-surrender-when-will-manufacturers-and-b2b-platforms-cease-fi-4e8df35a/
- Original source: https://mp.weixin.qq.com/s/dMboexfB_cOgXWDYWPxGpA

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