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The upgrade of information internet technology, along with the implementation of national policies promoting consumption upgrades, has led to an explosive development in the FMCG industry in recent years. There has been a wave of growth in FMCG B2B development, which not only integrates upstream supply chains but also adjusts channel systems, directly connecting downstream stores. Therefore, manufacturers, distributors, and retailers should develop into a new type of commercial cooperation platform model that jointly acquires quality product resources, shares operating costs, and shares operational risks.
Most of the regional FMCG platforms are built by chain convenience stores, e-commerce platforms, etc., with distributors occupying a very small proportion. This indirectly shows that in this era where more and more B2B platforms are replacing distributors and connecting manufacturers with stores, distributors, who should be the most capable of implementing B2B platforms, are still hesitating, confusedly responding to this social trend without taking action.
The following summarizes the three major confusion points for distributors, hoping that distributors can, under the B2B revolution, apply the right remedies and successfully transform using internet methods.
Distributor Confusions
- Due to competition with local distributors, when trying to unite industry distributors as peers, they find barriers, low trust, and communication difficulties.
- Distributors' own product range is limited by their resources and strength, making it hard to supply all categories. However, B2B platforms must meet one-stop supply (meaning supplying over 60% of a store's categories), requiring high-density warehousing, which takes a long time to integrate.
- The existing team's professionalism is insufficient, especially in third- and fourth-tier cities where recruiting internet talent is difficult. Additionally, talent attrition severely impacts the existing team.
- Management's insufficient understanding of enterprise informatization leaves the team and business model stuck in traditional vehicle sales and visit sales, while industry transformation is driven by technological updates.
Three Solutions for Distributors
First Dispel cooperation doubts among distributors and unite distributors with complementary categories to build a regional FMCG platform: Distributors are limited by their resources and strength, making it hard to supply all categories, but B2B platforms require one-stop supply, necessitating high-density warehousing, which takes a long time to integrate. The traditional unified warehousing and distribution model brings everyone in but lacks unified product strategy, unified service capability, and conflict resolution, ultimately failing to retain service-oriented distributors or stable channels. Even with unified warehousing, each distributor still has the same traffic. Without incremental growth, there is no motivation. Unlike the traditional third-party warehousing model of unified warehousing and distribution, since a regional platform that controls categories, warehousing, distribution, and service capabilities, directly connecting terminal stores, will inevitably emerge (Alibaba, JD, or local resource transformation), we should take action: find the most suitable owners or suppliers (with clear transformation intentions, able to bring incremental growth, non-conflicting categories, etc.), ultimately forming a regional FMCG platform that controls category structure, product pricing, and service capabilities.
Second Shared Warehouse and Unified Distribution Model Solution: Shared warehouse and unified distribution is a method summarized from existing customer market development. It is currently one of the means for convenience store systems and suppliers doing B2B platforms to break their own bottlenecks. This model involves uniting local distributors or resourceful owners to place their goods in the platform's warehouse for management, with the platform unifying products, operations, after-sales, and delivery to small stores. The platform settles with the owners and distributors, typically within a few days (automatic settlement after the return period ends). Owners and distributors only need to focus on the flow of goods, and once the platform reaches a certain scale, it can also provide financial services to owners and distributors, maximizing the resolution of inventory pressure, ultimately forming a plan where categories within the region do not conflict, markets are shared, and the platform is co-built.
Third Regional Markets Should Be Open to All Owners: In the shared warehouse and unified distribution model, you might be owner A. Do you think the market you cover with your channel development and customer maintenance is yours? Whether you flip the sign at the store or not, the store remains, and there will be n other owners generating orders. So the market belongs to everyone, to all owners in the shared warehouse and unified distribution. Therefore, Zhongke opens the business of salesperson app order placement in the shared warehouse and unified distribution to the salespeople of owners who have entered the warehouse. When owner B's salesperson serves terminals and places orders, they will only see products belonging to B in the app. You will find: the platform's categories do not conflict, markets do not conflict, each other does incremental growth, and a controllable regional FMCG platform gradually forms. With increased terminal channel loyalty, how can you not resist external platforms, and how can you not form a stable store control channel?
Conclusion: 'Distributors will be killed by B2B platforms' is a false proposition, but distributors who do not transform will definitely be eliminated. FMCG is a low-margin industry, with intermediate links consuming product profits. Distributors must reach the terminal and must get on the platform.
Source: Zhongke Commercial Software (zksr_cn)
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The Third (CFIC) China FMCG + Internet Conference will be held in Chongqing in October 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting 1000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to explore new chapters of cross-border integration!
Core Topics of This Conference:
How can the FMCG industry leverage B2B to achieve new growth opportunities?
How should the new supply chain behind new retail be built?
How can intra-city logistics help B2B achieve leapfrog development?
Highlights of This Conference:
The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"
Case sharing of excellent transforming and upgrading distributors
Conference + exhibition upgrade, with Hall 6 Internet Technology Exhibition strengthening connections
Leaders from well-known enterprises such as Alibaba Retail Link, Puhua Financial, Eternal Asia Supply Chain, Best Store Plus, Yijiupi, Unilever, Haiding Technology, and Yunmei Shares will deliver speeches and share pioneering views.
October 17-18, 2017 Chongqing International Expo Center Registration is now open. Long press the QR code below or click "Read Original" to register. Early bird tickets before September 15 enjoy a 30% discount! Add friend and note "Conference Registration"
Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum 2017 (Second) China FMCG + Internet Conference
Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum
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