Recently, New Distribution held the '4th FMCG + Internet' conference in Chengdu, where brand owners, distributors, and B2B players gathered, both young and old, with a sense of reviewing the past and preparing for the future. After years of day-and-night marching, FMCG B2B peers gathered around the fire during the Spring Sugar Fair, drinking and boasting, and as the mid-game approached, everyone felt it was time to take stock. Indeed, FMCG B2B has existed as an industry for four years. In these four years, companies that have survived have climbed over countless pitfalls, passed through many trends, and crossed hills to see too many left with nothing. Looking back, there were indeed many pitfalls. One major pitfall was the 'trend'. Over the years, several seemingly related trends emerged, such as O2O, 'storefront renovation' convenience stores, and unmanned shelves, each accompanied by hot money that swept along investors and entrepreneurs lacking firm understanding of the industry's essence, leaving behind a mess. In fact, there aren't that many 'trends'. Too many trends are fog for entrepreneurs, making them lose their way, and meteorological disasters for the investment community, blowing money around like tumbleweed, causing severe capital waste. Only by seeing the main line clearly and refining your business day by day can you pass through the illusion of trends and reach the promised land of abundant water and grass. Besides trends, the biggest pitfall is the urge to go national from the start, prioritizing scale. This mainly stems from the beginning of this industry four years ago, when the ride-hailing war led by Didi was in full swing, creating miracle after miracle of 'burning money - financing - more burning - more financing', giving onlookers a strong impression that any internet-related project should focus on scale, winner takes all, the bigger the better. At that time, the venture capital world was filled with impatience, and burning money to inflate GMV became the standard play. However, this is a huge cognitive bias. People saw that internet giants like Alibaba and Tencent became more dominant as they grew, making it harder for newcomers to catch up. But 'bigness' is just a phenomenon; the giants' dominance does not come from size but from 'network effects', meaning the more users you have, the more people want to use you, and the more people are forced to use you, creating a self-reinforcing cycle, Matthew effect, leaving others in the dust. Network effects are an ancient divine weapon that even Buffett dreams of. An investor who can invest in a company with this weapon in their lifetime would stand at the pinnacle of the investment world. This is hundreds of times rarer than a unicorn. Unicorns are just auspicious signs in the venture capital industry, used to celebrate good times, but network effects are the true king of beasts. Microsoft, Amazon, and Facebook all dominate their industries through network effects, and their market caps are worth hundreds of unicorns. However, in the FMCG e-commerce field, the biggest difference between 2B and 2C is that in 2C, bigness often means network effects (though not always, as seen with shared bikes), but in 2B, this is often not the case. In 2C, there are factors like consumer mindshare, brand preference, increasing customer acquisition costs due to diminishing traffic dividends, and zero marginal cost for expanding categories, but none of these factors that build network effects hold in 2B. In 2B, the supply chain is primarily localized; scale in terms of area is just an inorganic accumulation of single-point scale, and warehousing and distribution must be solved locally. 2B users are small shops; their spending is almost 100% rational, without the emotional component of consumers. Therefore, the stickiness of upstream and downstream cannot be bought with money. In a market of trillions, a 2B company burning billions might just be like throwing a coin into a deep pool, making no sound. From an evolutionary perspective, it's not hard to understand that mere size can sometimes be a burden. After all, the rulers of the earth today are not dinosaurs but humans, and even not humans but microorganisms. Dinosaurs were huge and fierce, but their neural circuits were slow, their senses numb, and they lacked efficiency. If their tail was bitten, they wouldn't feel the pain until minutes later, making it hard for them to thrive. Their reaction was too slow relative to the ever-changing world. Imagine if dinosaurs had reacted quickly? Then the outcome might have been different. If elephants could dance, other species would have no chance. From this perspective, FMCG B2B must find its competitive advantage, which is not size but speed and efficiency. The secret of the FMCG B2B industry is written in its name: fast, efficient. Reality confirms this. This year, when summarizing the development of the FMCG B2B industry in previous years, a conclusion is emerging: 'regional kingship'. That is, in the past few years, companies that have survived relatively well and have advantages are those focusing on specific regions (such as the Yangtze River Delta or South China). This is actually a result similar to natural selection. With limited resources, companies focusing on a region concentrate resources of the same scale on the density of small shop coverage, the depth of supply chain operations, and the systematic improvement of operational efficiency. As a result, they naturally have higher gross margins and lower fulfillment costs, thus better financial balance, stronger sustainable development vitality, more obvious competitive advantages in the region, and barriers that are harder for competitors to break. In fact, 'regional kingship' is an overstatement; the industry still has a long way to go, and no one is qualified to claim kingship. But it somewhat reflects that in the process of building competitive advantages for FMCG B2B enterprises (continuous operation is essentially a process of building and consolidating competitive advantages), between scale and efficiency, prioritizing efficiency while considering scale may have a better chance of surviving well in the second half. The combination of 'moderate scale, extreme speed' might be the most viable. Scale without efficiency is a dinosaur, and dinosaurs are hard to survive the second half. So, is scale never important? Of course not. Mr. Ma Yun likes to say, 'At first, mountains are mountains; then mountains are not mountains; finally, mountains are still mountains.' Standing at the mid-game summary, we feel something similar. Initially, everyone chased scale, then gradually felt efficiency is more important than scale, but from the endgame perspective, scale is still the most important. On a vast land, no ambitious company wants to be confined to a corner. It should be said that 'regional kingship' is just the starting point; the end is still the whole country, and scale is part of it. But only by doing well in one region, penetrating a market thoroughly, achieving high efficiency, and implementing a standard efficiency-centric operating model can a company have the conditions to go national. Looking back at history, the Romans did exactly this, and they left a famous saying: 'Rome was not built in a day.' From a small city-state on the Palatine Hill by the Tiber River in the 8th century BC, to a world power spanning Europe, Asia, and Africa around the 1st century AD, Rome took hundreds of years to achieve the longest-lasting systematic governance in human history. The Romans' greatest characteristic was their enthusiasm for building roads. Wherever they went, they first laid out road networks, then promoted Romanization, establishing Roman administrative, judicial, tax, military, and educational systems, turning conquered areas into 'effective markets' capable of efficient governance like themselves. Rome's expansion was carried out piece by piece along the Roman roads, 'Romanizing' and consolidating one 'effective market' after another. It can be said that Rome formatted the entire Mediterranean world, installing 'Rome OS' (Roman Operating System), so that every territory could achieve Rome's governance efficiency and standards, realizing the victory of order. The benefit was that within the Romans' 'effective markets', competitors found it hard to enter. Even when Carthage, the Mediterranean overlord, produced a military genius like Hannibal, Rome could withstand the impact of the three Punic Wars and ultimately defeated Carthage completely, becoming a millennium-long great power. In stark contrast to the Romans were the Mongols. With their iron horses and superior bows, they swept across almost the entire Eurasian continent, plundering everything in their path, leaving nothing behind. The Mongols conquered the largest territory in history, but not a single piece of land achieved effective governance, leaving only a few decades of 'rise swiftly, fall swiftly' in history. This level of conquest is vastly different from that of Rome. A thousand years have passed, and now we start anew. The FMCG B2B industry has an exciting boundless frontier. Using data, networks, and an integrated online-offline efficient operating system to upgrade traditional distribution methods, reaching millions of small shops and covering hundreds of millions of C-end consumers, the energy and possibilities contained here are far from fully tapped. Here, we don't need to argue who is Rome and who is Mongolia. Just remember the lessons history has taught us: build your own effective markets day by day, piece by piece. About the author: Xi Liang, co-founder of Dianda, graduated from Renmin University of China and the University of Paris (Law School), with years of experience as an M&A lawyer and TMT industry investment, and previously served as the head of M&A at a well-known listed company. -END-