In recent years, due to the macroeconomic environment, changes in the consumer market, and the impact of e-commerce channels, some categories have seen significant changes in terminal market performance, with some categories growing and others experiencing sharp market declines. In response, some brand manufacturers have begun adjusting their channel strategies, choosing between expanding direct supply, developing distributors, or selecting new e-commerce wholesale channels. Moderator: Bao Yuezhong Innovation Consultant at Yeshen, former Vice President of Weifang Department Store Group WeChat: bc111246 The topic for tonight's discussion is very important, and given the current situation, it is also quite urgent. The overall retail environment has undergone major changes, and these changes are beginning to affect our product organization. This is manifested in three specific aspects: 1. Supermarkets and convenience stores are seeing fewer category growths and more category declines, which has affected manufacturers' market strategies. For example, P&G has adjusted its deep distribution strategy that had been in place for many years. Many companies have reduced their market investment due to declining performance. Manufacturers' investment in the market has shrunk. 2. Terminal market sales are sluggish, and distributors face capital issues. The overall distributor community is in dire straits, cautious about taking on new brands, and some distributors have begun to exit the industry. The situation for distributors closely tied to retail terminals remains unchanged. 3. Wholesale e-commerce is booming. E-commerce wholesale companies represented by Zhongshang Huimin, Zhanghe Tianxia, Alibaba Retail Link, JD New Access, Yijiupi, Alibaba 1688, etc., are developing rapidly and have formed advantages in some categories. Some e-commerce companies have openly declared their intention to become suppliers to retail stores, showing a trend of replacing offline agents. Currently, some manufacturers are gradually paying more attention to online wholesale e-commerce channels, showing increasing interest. There are also companies like Eternal Asia doing offline integration. Tonight, we have representatives from manufacturers, distributors, e-commerce, and supermarkets to discuss this topic. Guest 1: Wang Yuxuan Current Marketing Director of Crayon Shin-chan, former Marketing Director of Hongyi Food WeChat: wyx1975n This year, the snack food industry has seen a double decline: both revenue and profit margins are down. Many companies that previously adopted a high-quality, low-price strategy have encountered obstacles this year, and the approach of gaining market share through price competition seems to have lost some effectiveness. To summarize the reasons: consumers have more diverse channel choices for purchasing. In the first half of the year, mobile sales of snack foods grew by 65%. Hypermarket systems are struggling greatly; in second- and third-tier cities in Hunan and Hubei, many large hypermarket systems have closed down. One of our clients in Xiangtan operated three systems, with annual business of 6 million yuan previously. In the first half of the year, two systems closed, leaving only 2 million yuan in market share. Squeezed by e-commerce and burdened by high fees from traditional retail hypermarkets, coupled with sluggish sales, distributors feel at a loss. Traditional distribution channels, which allow for quick cash recovery without credit periods, are seen by distributors as a source of profit. However, with rising labor costs, raw material costs, and energy costs, distributors are finding it increasingly difficult to cover traditional channels. Channels that are still growing this year are what we call special channels: campus channels, snack shops, internet cafes, and factory-area stores. Today's topic: With the entry of large internet platforms into wholesale channels, how should all parties respond? Will manufacturers no longer need distributors in future channel changes? I believe that for a considerable period in the future, manufacturers will still rely on distributors and should maintain close ties with them. If previously manufacturers and distributors met with a handshake, in the next three to five years, I think both sides should embrace each other tightly to jointly face channel changes. Let me explain my reasons. When I was at Hongyi Food, I oversaw the launch of the company's Tmall flagship store and also convened meetings with 16 large online wholesale clients. We operated for nearly two years, and the result was a loss. The reason is simple: after the large online platforms invite you in, the fees they impose are even more severe than those of offline retail giants like Walmart, Carrefour, and RT-Mart. As a manufacturer, if Tmall or JD.com approached me about agency through wholesale, I would definitely refuse. They might offer more discounts and subsidies initially, but after getting involved, the company would face even more serious risks. Consumer communication has also undergone tremendous changes. Previously, our FMCG products mainly used TV media, hard advertising, and other modes to communicate with consumers. Now, hard advertising has little effect; more interactive communication is needed to turn more young people into loyal consumers. In the medium to long term, companies' media promotion may need to change their thinking quickly, especially for snack foods, which need to strengthen communication with young people to effectively keep the consumer base close. The sales methods for snack foods are also changing; now it's more about the "prop-ification" of snack foods. Take jelly and candy as examples: simply placing them on shelves makes them hard to sell, but if placed in special boxes or cartoon props, they often sell very well. Moreover, toy candy sales have been booming in recent years. Adding added value to snack foods for customers is a future trend; they should not only taste good but also be fun. This trend should provide inspiration for our manufacturers and distributors. Guest 2: Ji Shengjie, General Manager of Coca-Cola Shandong Region Regarding the discussion topic, I mainly have the following views: 1. Terminal trends and innovation Hypermarkets will be increasingly affected by e-commerce, especially in first- and second-tier cities, where competition within the same format is already fierce. Combined with e-commerce's impact, customer traffic will be diverted, and the business of hypermarkets and supermarkets will continue to be affected for about three years—a painful period! To survive, there must be innovation and survival of the fittest! Small formats will have better development; convenience stores are the trend, requiring changes in scale and business models! For example, convenience stores should transform from the traditional retail-goods-focused sales model to one that adds service innovations, including catering, financial services, and network services. A better direction is to serve as terminal service points for e-commerce! Large systems can cooperate with e-commerce and brands to gain a place in market competition. 2. Changes in consumer shopping behavior As the pace of life accelerates, time is becoming more precious for consumers. Whether they are bosses or employees, time is increasingly scarce! To meet survival needs within limited time, consumers will choose more convenient and time-saving consumption models! In this context, online shopping has a more positive consumption model background, not only with price advantages but also with convenience and time-saving benefits! 3. Category impact Focus on the beverage market Beverages are a typical FMCG product! The 10 years before 2014 were a period of rapid growth for the beverage market. After entering 2015, market growth weakened and competition intensified, but the overall category is still growing. Catering to consumers' convenient and time-saving consumption shifts, bottled beverages are still in a growth period, especially packaged water, functional drinks, and new products with innovative packaging concepts! The beverage market will continue to develop well! Guest 3: Li Yong Market Director of Jingzhi Liquor, former Purchasing Director of Weibai Group From the manufacturer's perspective: Manufacturers can be divided into national and regional players. During the golden decade of FMCG, different companies focused on different channels: some on KA, some on traditional channels, some even on township channels, and others on hotel and special channels. Now, with changes in mobile and convenience store channels, manufacturers have new focuses. Most manufacturers prefer stability, seeking new breakthroughs while maintaining existing channels. Current manufacturer marketing departments, advertising departments, and distributors are all confused. Because their assessments are annual, it's hard to stick to a 3-5 year marketing strategy, so manufacturers are advancing in pain in their marketing efforts. Large e-commerce platforms have disrupted manufacturers' focus, leading them to consider whether they can cooperate with B2B e-commerce platforms to find incremental growth without affecting existing volume. For example, Haitian and Tsingtao Beer are trying to develop their own APPs, creating shopping scenarios directly targeting consumers and pulling offline traffic online. They are manufacturers at the forefront of change, self-rescuing without affecting existing volume. Some companies, while maintaining their local markets, are tentatively running internet projects and trying to release incremental growth through surrounding special channels. Overall, manufacturers are seeking new growth while adhering to their strengths. From the distributor's perspective: The special nature of the FMCG industry requires it to be labor-intensive, capital-intensive, and time-intensive. It takes a lot of time to complete regional organizational structures, logistics systems, and relationship management. Therefore, the distributor link will not disappear for a considerable time in the future, unless new internet brands also go offline, such as Baicaowei and Three Squirrels. Current distributors are confused: if they do KA channels, costs remain high; if they do distribution channels, labor costs are high. Overall, distributors mainly face inventory and capital pressure. Distributors with annual sales exceeding 20 million yuan, representing influential brands and having a voice in the distributor community, are eager to unite with distributors of the same level to do things like unified warehousing and distribution, and use government policies to do e-commerce, but due to asymmetrical technology and interest demands, it's hard to achieve perfect results. Distributors representing brands with some influence, with annual sales below 20 million yuan, and having regional influence, may have hastily joined many internet companies, also hoping to find incremental growth through the internet. These distributors chose e-commerce platforms without matching their own conditions, casting a wide net with little effect. B2B e-commerce are all cross-border disruptors. If local distributors don't cooperate, they will transfer goods from other places to fight price wars with local distributors, seize the market, and make local distribution channels recognize their e-commerce platform, thereby compressing the market share of local distributors. Some distributors firmly refuse to use internet companies and stick to their old models, advancing step by step. These distributors are confident in their industry views, have good team management, and their downstream has high loyalty to the brands they represent. Overall, distributors have not given up on inventory digestion, outlet control, or salesperson management; they are groping forward. Especially during major holidays, distributors' confidence remains. From the retail store perspective: These stores are mainly mom-and-pop shops and stores opened by young people who crave freedom; they have no desire for expansion. They are scattered in every corner of the city and are the next primary targets of B2B e-commerce platforms. These store owners have different platform APPs installed on their phones and are highly price-sensitive; they buy from whoever offers the lowest price, whether it's a distributor channel or an internet channel. If distributors want to easily establish delivery relationships with them as before, they need to add more value beyond price. Relationship between manufacturers and distributors: Manufacturers and distributors should reach a consensus on products, implement a big single-product strategy and a "cannon fodder" product strategy locally, analyze the main channels for single products in the region, and concentrate efforts on attacking one point. At the terminal level, both sides should also open up to each other, understand each other, and cooperate well. Guest 4: Liu Shihai (Distributor Representative) Chairman of Zhongshanghui Supply Chain Management Co., Ltd. I am an agent for candy and chocolate. In the past two years, due to manufacturers' increasing task requirements and lack of control over cross-regional sales, agents have been operating with declining profits, and market maintenance has lagged. The distribution market is now in disarray. I feel that to build a long-lasting brand, there must be a "century brand" operation, allowing agents to have objective profits to maintain their team's normal operations, and also allowing community stores to have sufficient profits to cover their various expenses. Forcing agents to stock up and pressuring terminal supermarkets to hold inventory ultimately leads to a market full of "old stock," harming both agents and the brand itself. Let's review: many brands have exited certain markets because overstocking killed the market. Now e-commerce prices are chaotic, making it tricky for agents to take on new products. When consumers scan a code and see a low price, but the community store price is high, they accuse the store owner of being too greedy. This makes store owners reluctant to accept new brands. Manufacturers should also pay attention to online and offline pricing. "Good quality and low price" is the foundation for school stores and community stores; stable retail prices and stable supply prices to stores are fundamental. Only then can agents and store owners be consolidated to move forward with manufacturers. Guest 5: Zhang Chenyong (E-commerce Representative) Author of "Retail O2O: Mindset, Tactics, and Practice," WeChat: zcyshow FMCG B2B has been quite hot recently. Alibaba Retail Link, JD New Access, Zhanghe Tianxia, Huimin Wang, 500mi, Yu Bianli, Ai Bianli, You Wuxian, Pi Duoduo, Wanshang Yizhan, Bang Xiaodian, Tiantian Mai, Yi Shenghuo, etc., are using various models to seize the FMCG B2B market. There are also basic warehousing and distribution service providers like Yishang Logistics and Weijie City Distribution. Summarizing the case experiences of these players, pure matching models, distributor agency models, and pure self-operated models are all difficult to succeed. Unified warehousing and distribution, integrating finance, and capital integration are seen as promising directions for FMCG B2B. Currently, FMCG B2B mainly serves individual supermarkets. Chain convenience stores have internal supply chains and systems, and their product structures and cooperation conditions differ greatly from individual supermarkets. Chain convenience stores (supermarkets) are not directly affected by B2B platforms for now. Personally, I believe that wholesale e-commerce and traditional wholesale channels will coexist in the future. At present, wholesale e-commerce has no obvious competitive advantage, and the motivation to change terminal supermarket ordering habits is not strong enough. But with so many players and funds entering, they can change some individual supermarkets' ordering habits, and unified warehousing and distribution and capital integration have some effect. In the long run, there will be two trends. First, individual supermarkets will decrease in number, while chain convenience stores and fresh food stores increase, so FMCG B2B platforms serving individual supermarkets will transform and shrink. Second, distributor functions will be split, with warehousing and logistics undertaken by professional basic service providers, while some distributors retain roles in promotion, maintenance, and capital pools. I once participated in an FMCG B2B project in Hangzhou. The problem we encountered was that it was less convenient than traditional distributors because traditional distributors have salespeople who visit stores, help owners place orders, and tidy shelves. Since FMCG B2B is less convenient than traditional methods, many FMCG B2B platforms start with price, either self-operating low-price wholesale for some products or having distributors act as platform agents. They hope to attract small stores to use the platform with low prices, which in turn attracts more suppliers to join, and then launch unified warehousing and distribution services and supply chain financial services. Building a successful supermarket B2B platform is not easy because traditional distributor methods are already low-cost, and small stores are not well-managed; distributors are used to flexible ways of connecting with small stores. But if a supermarket B2B platform is truly built, it still has the following value:

  1. No need for so many salespeople to visit stores, reducing industry costs.
  2. Unified warehousing and distribution reduce logistics costs and increase vehicle utilization. Generally, chain convenience store warehousing and distribution costs account for 3% of sales, while some distributors' costs exceed 5%.
  3. Using systems to order and manage inventory makes replenishment more timely, reduces out-of-stock rates, improves customer experience, and increases store turnover.
  4. Handling near-expiry and clearance products through the platform is more efficient.
  5. New product distribution is faster, and it lays the foundation for building an O2O platform in the future. Previously, distributors, brand owners, and terminal stores formed a stable triangular relationship. Supermarket B2B is a third party intruding. If our thinking is only to help distributors save costs, then supermarket B2B's value is not great. Besides reducing distribution costs for distributors and manufacturers, supermarket B2B can also consider its value from the following three points:
  6. Introduce supply chain finance and big data to bring added value to small stores;
  7. Help stores increase sales, achieving chain convenience store returns at individual supermarket costs;
  8. Turn store foot traffic into online traffic, increasing store profit sources. In summary, we should not only see the substitution of traditional channels by FMCG B2B platforms but also see the possibility and potential of cross-border integration. Actively observe and think; even if we cannot lead change, we should be able to understand and follow change. Guest 6: Wang Chaohong (Supermarket Representative) General Manager of Ningbo Xinjiangsha Supermarket WeChat: wang731100 As a supermarket at the retail terminal, we now feel increasingly difficult, especially this year, as distributors' support for supermarkets has been decreasing. The reason may be that some distributors believe the investment is too large and the return on investment is not proportional, so some distributors choose to exit supermarkets. In response to this situation, our company has made adjustments. First, the company has adopted an overall upgrade strategy, mainly store renovation and upgrading. Store operating area has been reduced. Considering changes in product categories, we have reduced non-food categories, eliminating all general apparel categories and curating household and daily necessities. We expect to reduce SKU count from 18,000 to about 9,000-10,000 through this round of adjustments. Non-food SKUs will be halved, fresh food operating area will expand to 40% of the entire store, with deep category development, strengthening semi-finished and processed fresh food. Each store will allocate 300-500 square meters to introduce dining and influential brand merchants. We hope that through store upgrades, we can find a breakthrough direction. Distributors' reduced support for supermarkets is because they are losing confidence in this format. So we are doing subtraction, reducing operating area. In competitive areas, we will build comprehensive hypermarkets; in non-competitive areas, we will transform into community stores. Facing changes in distributors' thinking, we physical retailers should also innovate in seeking change. We cannot wait for distributors to change; the golden decade of the past may never return. We need to do what we are good at. Summary: Moderator (Bao Yuezhong) -- Terminal supermarket enterprises should be highly sensitive to channel changes, grasp change trends, and take timely countermeasures; -- Accelerate supply chain integration, cooperate closely with manufacturers and distributors, form integrated operations, reduce collaboration costs between links, and work together to build the market and improve efficiency; -- Terminal supermarket enterprises should promptly grasp category change trends, adjust products in a timely manner, develop new products, and overcome the impact of category changes on operations; -- Timely adapt to the trend of channel diversification, understand and research new e-commerce wholesale channels, and develop new channels and new products in product organization. Organized by: Lianshang.com New Retail Advisory Group Moderated by: Bao Yuezhong -END- The best FMCG distributor learning platform in China Dedicated to providing professional, practical, and applicable tutorials for companies 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 | 016 Distributor B2B Transformation | [Long press QR code to follow]