Revisiting the Impact of FMCG B2B: Where Should Distributors Turn for Transformation?

The traditional distribution business is being reshaped and reconstructed by the internet, and this is an inevitable trend. In this field, countless smart people are using VC funds and the most advanced technology to transform the industry. There are industry giants like Alibaba and JD.com, rising stars like Huimin Wang, Zhanghe Tianxia, and Yijiupi, and countless other B2B platforms such as Xingaoqiao, 51 Ordering, Yunbao Shangmeng, Jinhuobao, and 91 Ordering that have entered the market. Currently, from T1 to T6 markets in China, different types of B2B platforms have covered the market. From last year to this year, through continuous trial and error, they have basically completed the initial education of the market. The habit of small shops ordering online has begun to be cultivated, and shop owners are gradually adapting to this new ordering method.

From another perspective, whether B2B is segmented or vertical, matching or self-operated, there is no small business. In dealing with the traditional stock, platforms will reconstruct the existing distributor stock, reallocate resources, and re-divide functions. Some may see this as a revolution, but from another angle, it is more like a window of opportunity.

So, how can distributors transform and seize the opportunity during this window period?

Five transformation directions for distributors under the impact of internet B2B on traditional agency businesses.

First, transformation is based on the premise that future B2B platforms will reconstruct traditional businesses. Under this reconstruction, the original interest pattern in the local market will be broken, and the original business model of distributors will be transformed and given new roles. If distributors stick to the old ways, they will definitely be revolutionized by more efficient division of labor.

Functions that may be divided

First type: Platform operators, city service stations

Some distributors spontaneously unite, jointly contribute capital and resources to establish a B2B online platform, and restructure their business structure around the trading platform. By transforming order forms, building unified warehousing and distribution logistics, and using the data from the trading platform, they provide supply chain finance to partners. This is the most difficult and most valuable of all transformations. Currently, some regional distributors in China have begun to spontaneously organize such platforms.

For example: Hubei Qianjiang Nianjia Company

Join a platform as a local service station, responsible for the platform's local operations.

For example: Zhanghe Tianxia service stations

Second type: Logistics providers, unified warehousing and distribution

Logistics is the infrastructure of B2B and the core supporting the offline flow of goods for all B2B platforms. This is also one of the easiest transformation directions for distributors. Several distributors cooperate to build large warehouses and distribution centers, providing end-of-line logistics distribution services for local distributors and national B-end e-commerce companies. They obtain orders through price advantages and gain revenue through value-added services.

For example: Yishang Logistics, Weijie City Distribution

Third type: Professional brand service providers

Some distributors have limited financial strength but possess strong team management capabilities. These distributors can give up the agency rights for the brand in the regional market and rely on their strong team management capabilities to help B2B platforms or small and medium-sized brand owners with ground services in a certain region or nationwide. They earn commissions through ground value-added services.

For example: Xiaobao Zhaoshang

Keep the original agency model unchanged, but hand over warehousing and distribution to professional city distribution logistics providers. Distributors focus on promoting products, obtaining orders, and serving stores.

Fourth type: OEM, private label, leveraging the rapid spread of the internet

B2B networks have nationwide coverage. Distributors with strength can consider extending upstream to do OEM private label, leaving distribution to professional ground promotion teams in various places, while focusing on online operations and consumer pull.

Fifth type: Chain retailers, transforming downstream

Convenience stores are currently flourishing in China. Retail is evolving towards service standardization, internetization, and chain operation, which has become a trend. Retail stores in township markets are developing towards supermarkets and KA, while cities are evolving towards small convenience stores. These are all business opportunities. If you have professional experience in this field, consider transitioning to the retail industry; it is a good opportunity.

This year, business for distributors has not been easy. Many people think the industry has peaked and reached its limit, but the author believes that the consumer goods market is never saturated, only redistributed. If distributors only focus on their current business, they will surely have their rice bowl taken away. Whether to change or not depends on how distributors judge the situation.

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