---
title: "The Decline of the Distribution Industry: Old Soldiers Never Die, They Just Fade Away!"
description: "The 2018 China FMCG City Distribution Logistics Conference, hosted by New Distribution, will be held in Changsha on October 23-24. Industry experts have sent their blessings via video. The article discusses the rise and challenges of FMCG B2B, arguing that the revolution is just beginning and that distributors must transform or face extinction."
author: "杜建芳"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-10-15"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/the-decline-of-the-distribution-industry-old-soldiers-never-die-they-jus-14ea3a41/"
markdown: "https://xinjignxiao.com/en/articles/the-decline-of-the-distribution-industry-old-soldiers-never-die-they-jus-14ea3a41.md"
original_source: "https://mp.weixin.qq.com/s/M4826tqamZykKkSWNt7kyg"
translation: "https://xinjignxiao.com/zh/articles/%E8%AE%BA%E7%BB%8F%E9%94%80%E8%A1%8C%E4%B8%9A%E6%B2%A1%E8%90%BD-%E8%80%81%E5%85%B5%E4%B8%8D%E6%AD%BB-%E5%8F%AA%E6%98%AF%E9%80%90%E6%B8%90%E8%B0%83%E9%9B%B6-14ea3a41.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-decline-of-the-distribution-industry-old-soldiers-never-die-they-jus-14ea3a41/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# The Decline of the Distribution Industry: Old Soldiers Never Die, They Just Fade Away!

> The 2018 China FMCG City Distribution Logistics Conference, hosted by New Distribution, will be held in Changsha on October 23-24. Industry experts have sent their blessings via video. The article discusses the rise and challenges of FMCG B2B, arguing that the revolution is just beginning and that distributors must transform or face extinction.

**October 23-24, the 2018 China FMCG City Distribution Logistics Conference hosted by New Distribution will be held in Changsha. Industry experts have sent their blessings; click the video to watch; more details at the end of the article.**

FMCG B2B emerged in 2014, and by 2018, many FMCG B2B companies have become martyrs. As a result, many industry insiders have begun to be pessimistic about FMCG B2B, believing it to be a false business logic, or even claiming it will be as short-lived as "group buying" and "O2O" were a few years ago.

Is that really the case? In my view, for FMCG, the changes brought by B2B are just beginning. This is a T2B2C revolution driven by technology. As more participants join, every node in the FMCG supply chain will be connected, given more specific and clear missions and values, and together build an ecosystem, becoming a community that co-builds a digital ecosystem.

Why do I say this? What is the goal of FMCG B2B under the push of technology? And for distributors, the most important players in FMCG distribution, where is their path of transformation?

**1. What is the ultimate goal of FMCG B2B?**

**1.1 The shift in overall business: an industrial revolution driven by digital technology**

Business models that used to evolve over decades or years have now shortened to every year or even months, and more than one or two have emerged related to FMCG. This change is partly due to technological advancement and partly because internet giants have completed early data accumulation, giving them better industry insight and lower trial-and-error costs. In contrast, the massive FMCG distribution system largely remains at the stage of sitting merchants or traveling merchants.

Regardless of the evolution of business forms, supply chain and logistics support each other and develop together. For example, B2C models like "mall + express delivery" and "food delivery + instant delivery," while B2B models will certainly develop in coordination with logistics based on intra-city delivery.

**1.2 Internet development: gradually upgrading from consumer internet to industrial internet**

With the reduction of C-end dividends, more and more internet giants are beginning to penetrate the 2B industry, innovating and disrupting. For example, Alibaba's Retail Link and JD's New Channel in FMCG B2B are strongly increasing their efforts, accelerating technology output to the industry.

Therefore, **T2B2C is an inevitable outcome of industrial evolution. Only by transforming the B-end with technology and information technology can we truly serve the C-end well.** In the future, creating a new C-end user experience will depend on integrated technological innovations such as big data, blockchain, artificial intelligence, and industrial internet.

**1.3 The business landscape of FMCG: leveraging a smart supply chain community to serve consumers comprehensively**

The goal of FMCG B2B is to form a smart supply chain from as large as the whole country or the world to as small as every county, city, and town, **using a smart supply chain to place the right products in the right scenarios at the right time to meet consumer needs.**

What is a smart supply chain? A smart supply chain can sense and predict user needs and interests, thereby guiding product selection, customization, pricing, and inventory at the upstream; distribution, warehousing, and delivery at the midstream; and retail, promotion, and delivery at the downstream.

How to achieve a smart supply chain? "**Connection, digital (visual) operation, and decision-making**" are its key capabilities. These capabilities not only connect all participants in the supply chain (brand owners, suppliers, warehousing and distribution, stores, field staff, delivery personnel, consumers) but also connect equipment (sorting equipment, handling equipment, vehicles), enabling automated operations. All information in every link can be transmitted in real time, shared, and monitored by every participant in real time.

Digital (visual) operation can quantify reasonable cargo volume, reasonable prices, the number of warehousing nodes, warehousing locations, and even user preferences. These automated operations will ultimately guide business management.

Specifically, it is reflected in the following five aspects:
- Reasonable product structure
- Efficient marketing
- Efficient inventory
- Timeliness requirements
- Lower supply chain costs: warehousing and distribution

Based on the logic of a smart supply chain, participants in the chain will further divide labor: **integration of warehousing and distribution.**

Warehousing and distribution are the foundational support system for the overall smart supply chain. No matter how business models change, warehousing and distribution are the core key to supporting a smart supply chain. Therefore, **the separation of warehousing and distribution functions is an inevitable trend. It is not a question of whether it will happen, but a certainty; it is only a matter of time.** Without an agile warehousing and distribution system, it is impossible to create a new user experience, and thus there will be no so-called "smart supply chain."

**2. Unified warehousing and distribution is not large-scale warehousing and distribution**

In the past few years, many local distributors have attempted to transform into warehousing and distribution platforms, providing warehousing and distribution services. In practice, they have encountered many problems and face many uncertainties about the future, becoming even more confused. From an essential analysis, during the transformation to warehousing and distribution, the platform has not generated new capabilities, and order picking, warehousing, and distribution capabilities have not significantly improved compared to traditional warehousing and distribution (distributor's warehousing and distribution). Coupled with heavy upfront investment, the same efficiency has actually increased costs.

From the perspective of warehousing and distribution alone, many transforming distributors have not reached the balance point between "traffic and cost." As shown in the figure below:

**The above explains why current warehousing and distribution platforms are in an awkward position.**

In addition, in my view, transforming into warehousing and distribution services should not be simply understood as becoming a logistics provider. If you understand it as a logistics provider or logistics platform, that is not transformation and upgrading; at best, it is cross-industry, doing another business, with business logic not much different from traditional logistics. **I would rather call the transformation to a unified warehousing and distribution platform a city-localized service enterprise or a regional platform.** Warehousing and distribution, as the infrastructure of business, will develop in coordination with the supply chain and deeply integrate. This is reflected in two aspects:

**1) Efficient marketing system**
**2) Refined operation system**

Not only do retail terminals need categorized and refined operations, but special channels also need this. To a large extent, special channels can be said to be the best scenario for offline social marketing.

Therefore, **if regional distributors only use traditional thinking to do the work of "unified warehousing and distribution," it will be difficult to achieve victory.**

I have experienced the transformation of FMCG commercial enterprises in multiple regions, and I especially want to emphasize a misunderstanding. Many regional enterprises, during the transformation process, overemphasize physical barriers while ignoring the importance of technology. They rent a warehouse and think they need WMS, so they buy a WMS; when they cover more outlets, they find they need to buy TMS to support it; when they find personnel hard to manage, they buy field service software; to attract traffic, they have to deploy an OMS ordering system.

They call it: "Don't let software become a constraint on the enterprise." This is using traditional methods to do "unified warehousing and distribution." Not to mention connecting enterprises, **it creates multiple information silos within the enterprise itself**, which is actually the biggest constraint on the enterprise.

**3. Can distributors avoid transformation?**

Whether it is consumption upgrading or consumption downgrading, enterprises must have strong operational capabilities in the future because consumer demand is diversifying and the market is constantly being segmented. This means that the original business scenarios of distributors will be continuously segmented. In other words, **for a single product item, the density and quantity of orders will continue to decrease, so if distributors continue to use the original business methods, it will become increasingly difficult.**

In fact, for traditional distributors, there are not many paths to choose from in the future.

1. Separate the warehousing and distribution function, focus on product sales and promotion, and earn product profits;
2. Transform into services, using warehousing and distribution as a carrier, providing warehousing, distribution, marketing, and other services to brand owners or regional suppliers, and earn service profits.

So, can traditional distributors avoid transformation?

Borrowing from General Douglas MacArthur's words, "**Old soldiers never die; they just fade away.**" In the future, the speed of FMCG updates can be described as light-speed. If you cannot reach retail terminals across urban and rural areas through low-cost, high-efficiency distribution, you naturally cannot approach customers at low cost. If you do not understand your customers, you naturally cannot do sales and promotion well. **The distribution rights you have are granted by brand owners, and this will soon become a thing of the past. What about the future? If you do not transform or transform blindly, the only difference is whether you die slowly or quickly.**

With the digitalization of the supply chain, the warehousing and distribution system supported by technology (intra-city logistics + instant delivery) has increasingly higher efficiency, lower operating and marginal costs, and deeper scenario penetration. Business is still the same business, just on a different stage. But whether you will be on the future stage depends on your current choices.

**October 23-24, during the Autumn Sugar and Wine Fair, the "2018 FMCG City Distribution Logistics Conference" hosted by New Distribution will be held.** We will invite industry experts, FMCG warehousing and distribution specialists, and distributors who have transformed into unified warehousing and distribution platforms to discuss and answer questions about the future development trends of FMCG city distribution logistics and practical cases of distributor transformation to unified warehousing and distribution, under the theme "New Distribution, New City Distribution." We hope to bring you different inspiration and thinking! The specific meeting topics are as follows:

**List of Participating Companies**
(In no particular order)

Hunan Zonglan Diandan Network Technology Co., Ltd.
Jingbang (Wuhan) International Freight Forwarding Co., Ltd.
Mengniu Dairy
Qinghai Hanxiang E-commerce Co., Ltd.
Unilever Services (Hefei) Co., Ltd. Shanghai Branch
Huicong
Hunan Xuan'ang Food Co., Ltd.
Guangzhou Tongdaoren Information Technology Co., Ltd.
Qingdao 888 Trading Co., Ltd.
Uni-President Enterprises (China) Investment Co., Ltd.
Hunan Province Zhongxiang Gongpei Logistics Co., Ltd.
Shenglong Ingredients
COSCO Shipping Logistics Warehousing and Distribution Co., Ltd.
Guangxi Yongpai Wine Industry Co., Ltd.
Shangqiu Kangrong Trading Co., Ltd.
Jinan Dingzhong Economic and Trade Co., Ltd.
Liaoning Bimai Agricultural Technology Co., Ltd.
Kunming Xiongjia Trading Co., Ltd.
Shaanxi Houheng Trading Co., Ltd.
Guangzhou Dingwo Enterprise Information Consulting Co., Ltd.
Shaodong Jiajiale Commercial Firm
Boda Trading
Industrial Bank Changsha Branch
Wuhan Muchen Convenience Store Chain Co., Ltd.
Fujian Fuxing Yuncang Logistics Co., Ltd.
Guizhou Yilimi E-commerce Co., Ltd.
Jiangxi Xiao Laoer E-commerce Co., Ltd.
Jinshankoufu
Shanxi Taihang Yuanjing Supply Chain Management Co., Ltd.
Shanxi Dezhun Supply Chain Management Co., Ltd.
Shaoyang Tongdeli Trading (Xiangbang Logistics)
Huanfu
Tongda Express City Distribution
Beijing Xinjingxiang Food Co., Ltd.
Wuhan Huizhong Tianhong Wine Industry Co., Ltd.
Changsha Paide Biotechnology Co., Ltd.
Chao'an Tuqiang
Guizhou Yihe Bopin Supply Chain Management Co., Ltd.
Jiangxi Kang'en Industrial Development Co., Ltd.
Xiangtan County Yisuhe Town Yuhua Paper Store
Luoyang Yuanlang Trading Co., Ltd.
Tongchuan Yaozhou District Huayuan Supermarket Co., Ltd.
Hunan Yongfu Jiujiu Trading Co., Ltd.
Zhejiang Chengchengtong Logistics Co., Ltd.
Chongqing Kaiguo Materials Trading Co., Ltd.
Beijing Xianmaixianmai Data Technology Co., Ltd.
Hanchuan Qixing Trading Co., Ltd.
Tongxin Jiuzhiru Trading Co., Ltd.
Guizhou Meiguo Guoguo Network Technology Co., Ltd.
Hubei Anjie Logistics Co., Ltd.
Hubei Kuaixiao Hulian Technology Development Co., Ltd.
......

**Representatives of Distributor Transformation (Proposed)**
(In no particular order)

Rong Jun, Chairman of Jiangsu Huashang City Distribution Network Co., Ltd.
Wang Bo, Chairman of Hubei Yijiaren Logistics Co., Ltd.
Jiang Shuming, General Manager of Sichuan Chengdu Xingrenxing Trading Co., Ltd.
Liu Jichen, Chairman of Shandong Yunbang Warehousing and Logistics Co., Ltd.
Tu Mingyu, Chairman of Chongqing Lingyu Consumer Goods Supply Chain Management Co., Ltd.
Yang Su, Chairman of Guangzhou Zhongshan Wanrong Marketing Co., Ltd.
Yuan Xia, Chairman of Sichuan Bajie Supply Chain Management Co., Ltd.
Li Qiangyun, Co-founder of Hubei Pengdun Meiyitian Supply Chain Management Co., Ltd.
Zhang Jianyong, Chairman of Henan Xuchang Jiulegou E-commerce Co., Ltd.
Ma Haichao, Founder of Hebei Changyi Logistics Co., Ltd.
Meng Yucun, General Manager of Hebei (Chengde) Wulian Yuncang Co., Ltd.
Zhang Xun, Chairman of Xinjiang Urumqi Su'an Jinchi Logistics Co., Ltd.
Zhang Hailing, Chairman of Jilin Sanxian Lianggou
Qiang Huitao, Founder of Hebei Dunjie Supply Chain Management Co., Ltd.
Liao Lei, General Manager of Hunan Damei Supply Chain Management Co., Ltd.
......

-END-


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671