---
title: "The FMCG B2B Industry Finally Sees Hope"
description: "After two years of pandemic, JD.com and Alibaba shifted focus to same-city retail, reducing B2B investment. However, data shows that B2B orders via the POP model with wholesalers did not decline significantly, and some regional platforms even saw growth, with some like Caihua Commercial growing over 150%. The industry is now climbing out of the trough and moving toward maturity, as evidenced by improved operational data and the adoption of B2B habits by small store owners."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-02-25"
categories: "Supply Chain & B2B"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/HienEfbhzk3Oo5smkCDEZg"
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citation: "赵波. “The FMCG B2B Industry Finally Sees Hope.” New Distribution, 2022-02-25. https://xinjignxiao.com/en/articles/the-fmcg-b2b-industry-finally-sees-hope-e4e12bfd/"
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---

# The FMCG B2B Industry Finally Sees Hope

> After two years of pandemic, JD.com and Alibaba shifted focus to same-city retail, reducing B2B investment. However, data shows that B2B orders via the POP model with wholesalers did not decline significantly, and some regional platforms even saw growth, with some like Caihua Commercial growing over 150%. The industry is now climbing out of the trough and moving toward maturity, as evidenced by improved operational data and the adoption of B2B habits by small store owners.

Cover image source: Visual China
During the pandemic in the past two years, JD.com and Alibaba invested varying degrees of effort into same-city retail, reducing their B2B investment, mostly maintaining the status quo. However, the author learned from the operational data of these two platforms that, in terms of order volume, the decline in POP model orders with wholesalers was not particularly significant. In fact, in some regions without investment, some markets and categories were still growing.
The strategic adjustments of major platforms are understandable. I communicated with several friends who run regional platforms, and last year's data showed varying degrees of growth. Even some regions previously squeezed by major platforms saw substantial order growth because the giants slowed their investment. Some regional platforms, like Caihua Commercial, even saw growth rates exceeding 150%. At the very least, the worst-performing regional platforms achieved positive cash flow, and most platforms were already profitable, some for a long time.
I also communicated with Mr. Su of Zhongshang Huimin. They have five large warehouses nationwide, and during the pandemic, they experienced warehouse overflow to varying degrees. Even now, warehouses in various regions are operating at full capacity.
For local platforms like Rongcheng Yigou, which I visited last week, the warehouse expanded from 7,000 square meters to 20,000 square meters, with daily orders exceeding 1,500. Its associated prefecture-level city, Luoyang, saw annual turnover increase from around 100 million yuan to 160 million yuan.
**From the operational data, it is fully verified that since the second half of last year, the overall B2B business has shown a significant improvement trend.** Based on the above exchanges with various B2B platforms, I have drawn some conclusions: the B2B industry cycle is gradually climbing out of the trough and moving toward maturity.
There is a famous Gartner curve in the technology field. This curve suggests that almost all new technology development trajectories have five stages: **Technology Trigger, Peak of Inflated Expectations, Trough of Disillusionment, Slope of Enlightenment, and Plateau of Productivity.** If we apply this curve logic to FMCG B2B, there is a striking similarity.
**Technology Trigger: 2013-2015**
China's consumer goods industry saw a watershed in 2013. From that year, growth in categories such as beer and instant noodles stalled, production capacity became excessive, and labor costs began to rise sharply. The FMCG industry entered a growth inflection point, moving into a stock market phase. From a technological perspective, in 2013, 4G mobile licenses were issued, and small store owners began to widely use 4G phones, laying the foundation for the future popularization and explosion of B2B. Many domestic B2B platforms emerged during this period, including Zhongshang Huimin, Yijiupi, JD New Channel, Alibaba Retail Link, Hui Xiadan, Zhanghe Tianxia, and Wanyidian, all of which were launched in this phase.
Alibaba Retail Link, after two years of trial operation, began large-scale investment in the second half of 2015. JD.com also formally proposed its "Locomotive No. 1 Project" - New Channel - at the end of 2015. **During this period, the industry was still in a chaotic stage. According to incomplete statistics, there were over 200 B2B startup platforms, with various models and routes coexisting, marking the Spring and Autumn period of the B2B industry.**
**Peak of Inflated Expectations: 2016-2018**
With the entry of internet giants, the industry's explosive window appeared, and capital began to pour into this track. Many domestic B2B platforms received financing. At that time, Zhongshang Huimin raised 1.3 billion yuan in a single round, the highest financing in the FMCG B2B field at that time.
Zhanghe Tianxia received 700 million yuan from HNA Supply and Marketing Group. JD.com and Alibaba invested billions in their own B2B operations. Some regional B2B platforms also received financing in the hundreds of millions.
This period also saw the most intense subsidies and investment in small stores by domestic platforms. According to a survey and interviews with over 7,000 small stores conducted by New Distribution, each small store installed an average of 3.5 B2B platforms. After receiving financing, all platforms aggressively expanded into cities, building warehouses and stores, with some covering over a hundred cities.
However, behind the industry's prosperity were deep concerns. **According to New Distribution's research at the time, although data showed significant growth and the industry scale was large, the average order value was very low, around 300-500 yuan, with low order frequency. The order value could not cover fulfillment costs. During this period, the industry's bubble had reached its peak.**
**Trough of Disillusionment: 2019-2021**
The subsidy war for small stores did not quickly activate order values or frequency. Moreover, due to the massive investment in B2B, subsidies were like a bottomless pit, and B2B could not replace the services of wholesalers and manufacturers' sales representatives.
Competition remained fierce, and the giants' competition made it difficult for many platforms to see competitive advantages. Capital quickly lost patience with B2B industry platforms and began to suspend investments, leading to a wave of platform closures due to funding shortages.
Platforms such as Kuaixiao Hulian, Hui Xiadan, Zhanghe Tianxia, Dianda, and Best Dianjia closed down. Platforms like Hui Jinhuo and Zhangshang Kuaixiao were acquired. Zhongshang Huimin and Yunmayi began to shrink their city coverage. Furong Xingxing, Xingaoqiao, JD.com, and Alibaba all pivoted to community group buying. In 2019, with the rise of community group buying, the industry's heat almost instantly fell to the bottom. **The industry began to return to rationality and re-focus on the essence of business: goods and services vs. cost and efficiency.**
**Slope of Enlightenment: 2022--**
Strictly speaking, from the second half of 2021, due to the continuous impact of the pandemic on various cities, the giants stopped investing in the market, and community group buying quickly entered its own bubble burst phase. Therefore, the entire small store retail market gradually returned to rationality.
Although the total order volume declined from its peak, both order frequency and small stores' stickiness to B2B have significantly recovered. We see B2B gradually entering the Slope of Enlightenment.
**The reasons for this recovery phase are mainly as follows:**
1. Small store owners have become familiar with self-ordering habits after years of cultivation, and due to their educational background, they have basically developed B2B habits.
2. Through continuous operational refinement, B2B platforms have significantly improved product richness and matching, delivery timeliness, and service quality.
3. With the pandemic, the efficiency and frequency of in-person sales visits are clearly inferior to B2B platforms.
4. Brand owners have begun to accelerate investment in building their own B2B platforms, such as Coca-Cola, Master Kong, Mondelez, Haitian, and other leading domestic brands, continuously iterating and optimizing, educating the market, and accelerating the arrival of the maturity stage.
5. Wholesalers are now constrained by rising costs in labor, warehousing, and operations. In my visits to many wholesalers over the past six months, I found that most are gradually shifting from phone orders to B2B orders. Wholesalers without sales staff are more willing to use B2B models to solve order issues.
6. With the continuous standardization of platform operations, brand owners have gradually accepted the rationality and advantages of B2B operations.
7. Some large distributors are also constantly trying to transition to B2B models to complete the iteration and upgrade of their own businesses.
8. Certain categories, such as snack foods, paper products, and beverages, are naturally suited to B2B channels and distribution models.
**Summary:** B2B has been around for nearly 10 years since its emergence in 2013. Although we use the Gartner curve to illustrate the industry's development, we must still objectively recognize that **B2B still has a long way to go from climbing out of the trough to reaching maturity. It may take another 5-10 years before it truly becomes the main form and tool for ordering by small retail stores in China.**
This includes objective factors such as the significant rise in labor costs, the actual withdrawal of traditional wholesalers from mainstream markets, as well as continuous technological iteration and brand manufacturers' adjustments and optimizations based on market changes.
But regardless, it is an objective fact that FMCG B2B will inevitably become an important distribution force in China's FMCG industry.
The rest is up to time.
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## Citation metadata

- Publisher: New Distribution
- Author: 赵波
- Published: 2022-02-25
- Canonical: https://xinjignxiao.com/en/articles/the-fmcg-b2b-industry-finally-sees-hope-e4e12bfd/
- Original source: https://mp.weixin.qq.com/s/HienEfbhzk3Oo5smkCDEZg

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