---
title: "Restructuring the FMCG Supply and Distribution Landscape is the Mission of B2B, and Alliance is the Best Form!"
description: "Discussions on FMCG B2B platform business models have waned, with a consensus emerging that platforms fall into matchmaking, self-operated, or hybrid types, often leaning towards either improving agency efficiency or disrupting the industry, rarely aiming to restructure regional supply and distribution. The article argues that pure matchmaking under existing dealer relationships is logically untenable, while self-operated platforms face heavy asset burdens and inefficiencies. It advocates for restructuring the supply chain through division of labor, symbiosis, and cross-industry alliances, where B2B platforms integrate resources rather than replace or eliminate traditional dealers, ultimately creating a closed-loop ecosystem."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-08-01"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/_0v3otquSiUe0mgrTfpPgw"
translation: "https://xinjignxiao.com/zh/articles/%E9%87%8D%E6%9E%84%E5%BF%AB%E6%B6%88%E5%93%81%E4%BE%9B%E9%94%80%E6%A0%BC%E5%B1%80%E6%98%AFb2b%E7%9A%84%E4%BD%BF%E5%91%BD-%E8%80%8C%E8%81%94%E7%9B%9F%E5%88%99%E6%98%AF%E6%9C%80%E5%A5%BD%E5%BD%A2%E5%BC%8F-39a90a4f.md"
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# Restructuring the FMCG Supply and Distribution Landscape is the Mission of B2B, and Alliance is the Best Form!

> Discussions on FMCG B2B platform business models have waned, with a consensus emerging that platforms fall into matchmaking, self-operated, or hybrid types, often leaning towards either improving agency efficiency or disrupting the industry, rarely aiming to restructure regional supply and distribution. The article argues that pure matchmaking under existing dealer relationships is logically untenable, while self-operated platforms face heavy asset burdens and inefficiencies. It advocates for restructuring the supply chain through division of labor, symbiosis, and cross-industry alliances, where B2B platforms integrate resources rather than replace or eliminate traditional dealers, ultimately creating a closed-loop ecosystem.

Recently, there have been few discussions or mentions within the industry about the business models of FMCG B2B platforms. It seems a consensus has been reached: **B2B platforms can basically be divided into matchmaking, self-operated, or hybrid (matchmaking + self-operated) platforms.** Platform business models tend to lean towards two extremes: either improving agency efficiency or disrupting the supply and distribution industry. Few B2B models aim to restructure the regional FMCG supply and distribution landscape.

Let me first explain the key terms:

**Improvement:** Some matchmaking platforms do not participate in operations or control inventory; they simply move dealers' business from offline to online, acting solely as information intermediaries. The original business model of dealers remains unchanged. **In such platform models, because the original buyer-seller transaction relationship persists, online information matchmaking holds no value or significance. Even with unified warehousing, the original transaction method remains unchanged.**

In the FMCG sector, pure matchmaking under the existing buyer-seller relationship is logically untenable. However, it may have some value in industries that distribute through secondary wholesale markets (e.g., the catering industry).

**Disruption:** Platforms replace dealer functions, eliminate a batch of small dealers, and become the largest local dealer themselves. Regardless of how such platforms control the supply chain upstream and downstream, they cannot completely change the industry's model and ecosystem. They merely leverage scale advantages to improve operational efficiency and reduce costs, but they still encounter the same bottlenecks of dealer-factory and dealer-store negotiations, market constraints, and cost pressures. Additionally, due to multi-category brand operations, the complexity of management and operations, and various costs under legal compliance, achieving break-even in a low-margin industry like FMCG is extremely difficult.

**Summary: Why are both improvement and disruption undesirable?**
1. The existing market volume in regional markets is too large, akin to demolishing an old city in a bustling area. External forces attempting to penetrate the buyer-seller relationship require enormous capital—possibly hundreds of billions or even trillions of yuan.
2. From a social value perspective, improvement and disruption do not fundamentally change the supply chain's supply relationships; some platform models actually increase transaction costs.
3. Existing commercial entities are not worthless; they possess significant energy and value. Platforms should leverage this force.

Throughout Chinese history, few founding emperors failed to utilize the surrendered forces from the previous regime. They not only represented the interests of a class but also embodied the most advanced management thinking of the time. Their extensive professional experience and networks, once harnessed by the new regime, could avoid much unnecessary waste and loss.

Similarly, the traditional supply chain cannot merely be optimized for efficiency, nor should it be eliminated. Instead, it should be restructured. Only through restructuring can the internet truly empower the entire supply chain, making it more valuable.

**What is restructuring?**

**Restructuring** refers to re-examining the business logic of the supply chain from front to back, **breaking and reintegrating existing resources and interest chains**, clarifying the roles of each participant, and **reassigning functions** based on their characteristics and strengths. Each original member becomes a **new role** with fundamentally changed functions. By **injecting new internet business modules**, the entire supply chain is **empowered**, generating new economic value.

For example, should platforms adopt unified warehousing and distribution? Absolutely! However, warehousing and distribution cannot solely serve the platform or FMCG; they must operate independently and be self-financing. Through unified warehousing and distribution, a public transit-like logistics system within the region can be established, making logistics costs far lower than self-built logistics by B2B platforms or dealer self-distribution. Moreover, warehousing and distribution entities should avoid redundant construction of warehouses and vehicles unless necessary. Instead, they should integrate existing warehouses, people, vehicles, and goods of local dealers, using their own WMS technology to restructure the local logistics system.

In summary: Let those with resources participate, break the existing dealer logistics system, and reorganize warehousing and distribution resources to achieve a truly efficient and low-consumption warehousing and distribution system.

City distribution logistics companies like Yantai Yishang and Weijie City Distribution are examples of this.

**Logistics restructuring is just one small part of the supply chain. To achieve large-scale industry restructuring, several key concepts must be discussed:**

**Division of Labor, Symbiosis, Alliance, Ecosystem**

**Division of Labor:**

Image: Ford assembly line. When automobiles were first invented, workers took 12 hours to produce one car. But Ford improved the production process by inventing the assembly line, simplifying the 3,000 assembly parts into 84 steps. This new production process revolutionized mass production, reducing the time to 90 minutes. The subsequent benefit was reducing the price of the Ford Model T from $850 to under $300. With continuous process improvements, Ford factories could produce a Model T every 24 seconds.

In the original supply chain, the core connector between factories and small stores was only the dealer, and the relationships among chain participants were competitive and cooperative.

Each dealer bore all functions from product to small store: **warehousing and distribution, sales, service, public relations, and capital.** For goods to reach small stores smoothly, every dealer had to undertake these five functions, none of which could be omitted.

After restructuring, supply chain participants transform their functions, **dividing the five functions of warehousing and distribution, sales, service, public relations, and capital**, with each function independently carried by a **professional role**. This is like workers on an assembly line, where each person completes only a small part of the process, but together they form a huge combined force.

Let's boldly hypothesize a division of labor for the FMCG industry:

**Warehousing and distribution: Third-party logistics companies;**
**Sales: B2B platforms or dealers;**
**Service: Factory business or dealers;**
**Public relations: Factories or dealers;**
**Capital: Banks or dealers.**

In the original chain, only the dealer fulfilled this position. Now, more roles participate in the product distribution process, each completing only the part they excel at. Through **B2B platform connectivity**, **capital flow, goods flow, and data flow are all integrated using data**, maximizing efficiency.

The premise of division of labor is that the market is large enough for each function to become an independent profitable business entity, while also being interdependent and mutually beneficial. A typical example is the relationship between e-commerce and express delivery: the growth of the e-commerce industry and the express delivery industry are intertwined and co-growing. Without e-commerce, there would be no today's S.F. Express, ZTO, YTO, STO, and Yunda; similarly, without these express companies, there would be no Taobao and Tmall. This is a classic example of symbiosis.

**Symbiosis (commensalism)**, also known as mutualism, is a type of interspecific relationship where two organisms live together for mutual benefit, and neither can survive without the other. It is a highly developed form of biological interaction. Symbiotic organisms divide labor physiologically, exchange products of life activities, and form new structures at the organizational level.

Most symbiotic organisms do not know they are helping another organism; they simply choose the most advantageous survival strategy for themselves, which is an instinctive behavior of natural selection.

This is a widespread phenomenon, existing both in nature and in social life, such as the relationship between sea anemones and clownfish, or between enterprises with complementary production processes. They all share a common feature: any member of the symbiotic system gains more benefits from the system than from living alone, resulting in a "1+1>2" symbiotic effect.

However, to restructure the supply chain into a symbiotic state, relying solely on natural evolution would be very slow. This requires human intervention and change. **Cross-industry alliance is a topic that must be mentioned.**

**Within a regional economic zone, B2B platforms, dealers, retailers, logistics companies, and banks form a cross-industry alliance, using internet technology and injecting capital to jointly promote the internet-based transformation of the local supply chain, thereby achieving the goal of restructuring the local supply chain.**

**When regional market dealers, through division of labor and cross-industry alliances, form a symbiotic supply chain model, and continuously improve the business model, ultimately forming a closed-loop end-consumer supply chain ecosystem, this is the truly unbreakable FMCG Internet+.**

In fact, self-operated platforms can also connect the supply chain, but they are closed. Every link is designed around transactions. Since they cannot be self-financing like symbiotic entities, every link is a cost, and their social efficiency is inevitably low. Moreover, self-operated platforms are information islands externally. Self-operation aims to monopolize the business, which I find very difficult in China.

Why do I say this? Self-operation inevitably leads to a heavy asset model, which cannot efficiently utilize capital, inevitably conflicts with the existing business ecosystem, and requires one entity to transform the entire industry alone.

Building warehouses will be dragged down by warehouses; building stores will be dragged down by stores. Although self-operation is stable, it is difficult to achieve economies of scale. It merely eliminates a batch of small dealers, turning itself into a large dealer, and then dominates both upstream and downstream. Doing everything ultimately results in doing nothing well.

**Summary: Platforms cannot do everything themselves; whatever they do, they will be dragged down by it.**

Finally, returning to the beginning of this article: **For FMCG B2B to succeed, it must be a resource integrator. So-called resource integration means using information, technology, and model advantages to break apart, sort out, and rebuild the supply chain members, creating a new business ecosystem model. It is not about pure matchmaking or self-operation.**

Therefore, the value of FMCG B2B lies in restructuring the FMCG supply chain and empowering the regional market's business forms! Whether matchmaking or self-operated, it is difficult to effectively integrate all industry resources alone. **The "alliance" form may be the best form!**

-END-

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