****At JD.com's annual meeting, Liu Qiangdong revealed that in 2016 JD.com would launch a 'New Channel Division' to become a partner for community stores and supply them with goods. This means bypassing distributors and wholesalers, with JD.com sales representatives directly visiting stores, which then order via JD's supply platform app, with JD delivery bringing goods to their doors, shortening the distance between terminals and upstream. Not long ago, Alibaba's B2B division announced a 'City Partner' plan to provide retail outlets with a series of services including sourcing, delivery, and finance, also aiming to seize distributors' market. At the same time, supermarket B2B platforms like Zhanghetian, Huiminwang, 500mi, Yubianli, Aibianli, and Youwuxian have all secured funding, and the internet's impact on the distribution market is forming. In traditional retail, those who control the channels win; traditional retail channels are in the hands of a vast network of distributors and wholesalers. The internet has already caused intense or disruptive impact in industries like ride-hailing, retail, film, hotels, and real estate. The traditional distribution system is proven by practice to be the most efficient, naturally evolved offline distribution method, while the internet is a bottom-level ecosystem that will affect the supply chain level by level. It has already changed consumers and retailers. Whether it can reshape the distribution system, the only standard for judging the outcome is whether the new method can achieve lower costs, higher efficiency, better experience, and expand new profit points compared to the traditional distribution system. There are mainly two types of supermarket B2B: One is the platform model, similar to Taobao's C2C model, where they cooperate with traditional distributors who join the B2B platform, and supermarket owners order online; the distributors who receive orders deliver separately or uniformly. The second is the unified distribution model, similar to JD.com's B2C model, where they build their own warehouses, stock goods, and create an online platform; supermarket owners order online, and all goods are delivered to stores uniformly. The author participated in the 500mi project in 2012. At that time, we set up a point at Hangzhou Sandun Wholesale Market to develop wholesalers and distributors to join the 500mi platform. After supermarket owners placed orders, we either delivered uniformly or distributors delivered themselves. The biggest problem we encountered then was that convenience was not as good as traditional distribution methods. Now most manufacturers are pushing 'channel sinking' strategies, with sales reps from manufacturers or distributors visiting supermarket stores to help owners organize goods, place orders, and communicate. The role of distributors is not just delivery; they also expand and maintain terminal relationships, promote new products, tidy shelves, and provide feedback. Compared to cold online ordering, this is more attractive to supermarket owners both emotionally and in terms of convenience. Since supermarket B2B cannot attract owners through convenience, it must break through on price. But with the platform model, it's impossible to control the prices of participating merchants, so the supermarket B2B platform model has taken two paths: First, some products are self-operated, using low-priced self-operated goods to attract owners to order. Second, provide a platform for distributors, making them regional agents, willing to give up profits to attract owners. The logic is to first use self-operated discounts to attract owners, then use the store base to attract more distributors to join, forming a large platform, and then implement unified warehousing and distribution, putting some distributors' goods in a unified warehouse. Which goods are suitable for unified distribution and which for decentralized distribution is determined by the market. The founder of Youwuxian is himself a distributor in Hangzhou. His idea is to use unified warehousing and distribution with low-priced supply (online ordering) to integrate small stores, tap into their value, and expand more business. But in practice, if prices are too low, manufacturers warn them about disrupting the market; once there's no price advantage, small stores stop ordering. Youwuxian faces two problems: first, as a distributor, how to avoid manufacturer control when lowering prices; second, after attracting small stores, how to tap their value. The internet has always favored traffic thinking: first attract traffic with free or low prices, then monetize it. Taobao, Tencent, and 360 all follow this pattern. But after using low-priced supply to integrate small stores, how to monetize the traffic is not clear. For example, 19e platform, which is the largest digital product recharge channel for small stores in China, has integrated 300,000 small stores nationwide with annual turnover exceeding 30 billion yuan, but how to tap more and greater value from small stores has been explored without breakthrough. Another problem with unified warehousing and distribution is the system. Although individual supermarkets use POS systems, owners generally don't use the system to manage inventory; they only record prices. Because once inventory management is required, every purchase, sale, loss, and split must be documented and reviewed, which is too troublesome. Since it's their own goods and they usually watch over them, there's no need for complex inventory management functions. If the system doesn't manage inventory, then when ordering, they must count goods to know which are out of stock and how much, which hinders the promotion of unified warehousing and distribution. Unified warehousing and distribution ideally require inventory management to automatically generate orders based on sales and turnover, but currently such conditions don't exist. In short, individual small stores are a loosely managed business, so the traditional distribution system uses a flexible way to connect with them, usually cash on delivery, but for good relationships, payment can be deferred to the next delivery. The position and display area of products on shelves are related to the sales rep's investment in the terminal. It's not easy for supermarket B2B to use a standardized approach to seize distributors' market, and manufacturers don't want downstream to be controlled by giants. The author once researched supermarket B2B for a large e-commerce platform, which faced three problems: First is the shelf-life issue. The wholesale logic is fast in, fast out, high turnover, so shelf life is relatively fresh. E-commerce platforms use FIFO for retail customers, with turnover typically 30-60 days, making it hard for JD.com's product shelf life to meet supermarket B2B supply needs; (full unified warehousing and distribution also struggles with shelf life because there are too many products) Second is the price issue. Manufacturers divide channels into KA channels and circulation channels. Although KA channels like JD.com have payment terms and rebates, the purchase price including taxes is generally higher than the circulation market without taxes, making supply prices uncompetitive. Third is channel conflict. KA channels sometimes get promotional prices (limited supply) that are lower than the circulation market, but manufacturers strictly control channels. If a few are bought by scalpers, it's okay, but if actively supplied to the circulation market, it becomes cross-channel selling, which is a major taboo for manufacturers. For large e-commerce platforms like JD.com, using the existing supply chain is insufficient to support supermarket B2B business (maybe supplying communications and electronics is feasible), but large e-commerce platforms have more compelling reasons to integrate small stores, and it's worth building an appropriate supply chain for this. Because large e-commerce platforms can develop small stores into promotion points, delivery points, and after-sales points, and use this to enter the community O2O market. For ideas, refer to my previous article 'Retail O2O Using Store Traffic Can Be Played Like This'. The traditional distribution system is not perfect. For example, too many sales reps making repeated visits wastes human resources and raises costs. For example, some slow-moving products have few sales reps visiting, making it cumbersome for owners to restock and prone to stockouts. For example, products are too similar and have poor image, making it hard for quality single items to enter stores. If there were a mature and powerful regional supermarket B2B platform using unified warehousing and distribution, and small stores also used systems to manage inventory and connect with the platform, then compared to traditional distribution, it would have the following advantages: 1. Online ordering reduces the need for so many sales reps; use chain store display standards and standardized operations. 2. Unified warehousing and distribution, automatic ordering, data management reduces inventory backlog, improves turnover, simplifies ordering, lowers distribution costs, and reduces stockout rates. 3. Using store flash sales on the platform to handle near-expiry or surplus goods is faster, more efficient, and lower cost. 4. New product distribution is simpler; give stores the choice, use data management and systematization to achieve consignment distribution cooperation, which is good for new product promotion. 5. If most small stores use supermarket B2B ordering, they become closer to O2O convenience stores, making it easier to combine with online retail platforms and community O2O platforms, laying the foundation for tapping the last-mile value of stores. A mature supermarket B2B platform does have value, but building such a platform is not easy. There may be two paths to create a supermarket B2B platform: One is to attract capital investment for subsidies, using subsidies to attract enough outlets to use the platform. After all, FMCG prices are extremely sensitive; even a 5% discount on A-class products can attract owners to order. First use a money-burning approach to build a B2B platform in a region, wait for the platform to mature, then reduce costs, tap platform value, and create integration effects. The second is to create pseudo-franchise chain stores, using chain convenience store management and display to upgrade individual supermarkets. Consumer demands will get higher, and the image of individual supermarkets will struggle to satisfy increasingly picky consumers. Turn scattered individual supermarkets into franchise chain stores, integrate the supply chain, supply fresh food products, weaken traditional A-class products, supply diversified upgraded image products, and endorse products. Change the circulation market through supply chain integration and store upgrades. This article focuses on the supermarket B2B model, discussing its confusion and difficulties. Currently, people in the FMCG industry generally believe that supermarket B2B platforms are a farce, unable to replace distributors' role and of little value. Many internet practitioners believe that online ordering for small stores is the future trend, as small stores are numerous and have high traffic, crucial for tapping the last-mile potential. Who is right needs time to verify. Finally, I also shared my conjectures on how supermarket B2B might break through. -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and applicable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | [Long press QR code to follow] To join QQ/WeChat groups, click: Read original text