Introduction: Don't deny which path is best; the most important thing is to get involved personally.

A couple of days ago, at a brand's distributor annual meeting dinner, I sat next to a distributor with annual sales exceeding 100 million yuan. When discussing the current offline daily chemical business, he shook his head, saying business is getting harder and harder... As we chatted, he thought there was no other way but to try online e-commerce, even though he had no experience. It wasn't because online e-commerce could make money, but because he truly didn't know where the growth for his trading company would come from; he felt lost. With no other options, and to meet the manufacturer's targets, he planned to sell on e-commerce platforms to alleviate the pressure. Regarding whether distributors should engage in online e-commerce, I have expressed my views multiple times in past articles: If you're just thinking about e-commerce now, the dividend is basically gone. In many public settings, I've also told distributors, 'Don't touch online e-commerce!' But many distributors think: Even without dividends, at least with effort online you can still get some sales; offline, no matter how hard you try, the volume isn't there. It's all equally competitive, so might as well go where you can create some increment; let's compete there! Since many daily chemical distributors still have high hopes for online e-commerce, this article will look at a case of a second-generation traditional distributor doing e-commerce, hoping to provide some inspiration and thoughts for distributors who are entering or considering e-commerce.

Mr. Wang Banglai, a second-generation distributor, entered online e-commerce in 2020 because the COVID-19 pandemic halted offline store business. In just over two years, he achieved nearly 50 million yuan in sales. How did he do it? What dividends did he seize? What pitfalls did he encounter? Let's hear his story.

Seizing the Community Group Buying Dividend

Hefei Jinlida Trading was established in 1999, mainly dealing in well-known first-line brands such as Unilever, Colgate, Nice, Yunnan Baiyao, Shanghai Jahwa, SC Johnson, and Darlie. With annual sales of hundreds of millions of yuan, it is a well-known regional distributor in the local daily chemical distribution circle. Wang Banglai, who studied architecture, left the design institute in June 2019 and began to take over his father's business, starting at the wholesale department. At that time, offline business was shrinking due to the impact of e-commerce. Wang Banglai's initial idea was to seek new offline growth points for Jinlida through government and enterprise group purchases. After nearly a year of trying, the input-output ratio was not satisfactory. By May 2020, the pandemic fully broke out, and offline business was further hit. Wang Banglai believed that they must have a breakthrough mindset and not be constrained by the pandemic. At that time, there were two paths to break through:

First, online e-commerce. In fact, Jinlida had an e-commerce department since 2012, but annual sales were only about 100,000 yuan. It was previously done casually without much management; now it needed to be revived.

Second, community group buying. On one hand, due to the pandemic, and on the other hand, seeing other regional distributors trying it, they used mini-program malls with employees as group leaders covering surrounding communities, directly doing local C-end business.

How should they choose between the two paths? Whether e-commerce or community group buying, both were new to Wang Banglai and required exploration from zero to one. Without denying which path was better, the most important thing was to get involved personally. Around July 2020, Wang Banglai set up an internal community group buying mini-program and started operations. But by September, with capital and giants backing, Duoduo Maicai and Meituan Youxuan entered the community group buying market with great fanfare. Their own local community group buying couldn't compete with capital-backed groups. Since they couldn't beat them, they fully embraced them. Jinlida had many daily chemical products and short-term operational experience, which was a huge advantage. Subsequently, Jinlida's e-commerce department seized the first wave of community group buying dividends. While other distributors didn't even know what community group buying was, Jinlida had already started deep cooperation. By 2020, in less than half a year, the community group buying business achieved 6 million yuan in revenue with good gross margins.

By 2021, Wang Banglai noticed that community group buying was attracting government regulation, and increasing sales also brought pressure from manufacturers to raise targets. They continued cooperation with community group buying, adjusted product structure, appropriately reduced pure volume products, and increased gross margin requirements. In 2021, the community group buying business achieved over 20 million yuan in revenue, but the focus was gradually shifting to traditional e-commerce.

Traditional E-commerce: Operations Are a Hurdle

Although community group buying brought revenue growth, Wang Banglai did not abandon the exploration of traditional e-commerce because of the temptation of community group buying. In July 2020, Wang Banglai personally started a Taobao store, and soon sales increased from only 20-30 orders a day to 200 orders a day, with monthly sales of over 100,000 yuan. But that wasn't enough. In 2021, he enrolled in an e-commerce training class to deepen professional operational capabilities. As of now, Jinlida has laid out 9 stores in traditional e-commerce, including JD.com, Douyin, Pinduoduo, and Taobao. In 2022, overall e-commerce business was 47 million yuan, of which 70% came from traditional e-commerce.

Regarding how to do traditional e-commerce well, Wang Banglai has very deep insights: Operations are a hurdle! Wang Banglai shared that previously, e-commerce operations positions were recruited by the HR department, but the people hired were not suitable, and they suffered losses because of it. After investigating, they found that HR didn't understand e-commerce, so they recruited e-commerce operations using the logic for salespeople, drivers, and warehouse keepers, and even chose the wrong recruitment websites. Because he personally did e-commerce, he gradually became familiar with e-commerce operations methods. By 2022, Wang Banglai personally interviewed for e-commerce operations positions. In addition to operations, he also had to go through customer service, packing, and other e-commerce-specific positions himself, not to do the work, but only by going through the process could he know what kind of people to hire. Wang Banglai joked that if he didn't understand operations or other e-commerce positions, it would be easy for hired people to "manipulate" him! Now Wang Banglai can relatively easily judge which operations personnel are professional and quickly find suitable operations staff. As of now, Jinlida's traditional e-commerce business has 8 operations staff, 7 customer service staff, and 15 packing staff. When talking about the next focus of e-commerce business, he frankly said the focus will be on Douyin e-commerce. Other platforms have lost their dividends; for example, Pinduoduo's 100 billion subsidy has passed its peak, and three-person group bidding is severely competitive. Douyin e-commerce, especially the local life channel, still has some space for regional distributors.

Doing E-commerce Well Requires Timing

Looking at the development of Jinlida's e-commerce business from a time perspective: From 2020 to 2021, Jinlida seized the dividend of the crazy expansion of community group buying, thereby completing initial operational experience accumulation and revenue start. In 2021, as community group buying declined, they turned to focus on traditional e-commerce, mainly Pinduoduo, and through hands-on exploration and practice, gradually built their own operational methodology. Wang Banglai told New Distribution that after accumulating certain e-commerce operational methodologies in 2021, they began to expand in 2022, using war to support war: opening one store, achieving slight profitability, then quickly opening a second store. In his view, from a timing perspective, starting e-commerce in 2021 was actually late; many brand authorizations were already hard to obtain. At that time, only by continuously expanding without stopping could they occupy a place.

Currently, Wang Banglai is focusing on Douyin e-commerce. He analyzed that based on the consumption characteristics of daily chemical products, it is actually difficult for distributors to break through in self-broadcasting. On the talent broadcasting level, it is increasingly found that brand owners are personally entering the field, and in the future, platforms will gradually tilt towards brand owners. For distributors, the best strategy is to use Douyin's local life channel, focusing on storytelling and interesting content, to attract local life traffic and thereby achieve revenue growth.

Summary

After reading the above case, I think there are two key points that will inspire or help you.

First, it is important to see the timing clearly. Before 2018, JD.com and Taobao had dividends, and obtaining brand authorization was relatively easier; by 2020, Pinduoduo had dividends, especially the 100 billion subsidy; by 2022, Douyin e-commerce had dividends, but with brand owners' demand for business growth, it is a certain trend for brands to enter Douyin. The current opportunity is more about local life channel traffic. If you can't see the trend clearly, don't know where the opportunity is, and blindly do e-commerce, you may have some volume but no profit.

Second, it is important to get involved personally. Many distributors open Taobao stores and hire a clerk to do it. But if you want to treat it as a sustainable business, not just a small-scale effort to dump goods and share offline target pressure, the boss must personally get involved. Otherwise, it is difficult even to recruit a suitable operations person because you don't understand the operational logic behind it.

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