---
title: "The Underlying Logic of Distributors' Internet Transformation"
description: "In recent years, sales of mainstream products in most FMCG categories have stagnated or declined, prompting many distributors to pursue horizontal expansion through category diversification. However, distributors recognize that horizontal expansion alone is insufficient; they must deeply study transformation. This article explores the underlying logic of distributor transformation, emphasizing the need to understand consumer changes, redefine distributor value through vertical supply chain services, adopt content marketing, achieve digital transformation, and drive change through organizational reform."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-05-11"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/the-underlying-logic-of-distributors-internet-transformation-9ff4591e/"
markdown: "https://xinjignxiao.com/en/articles/the-underlying-logic-of-distributors-internet-transformation-9ff4591e.md"
original_source: "https://mp.weixin.qq.com/s/hIcZZwc1czKqwFSiOjjVSw"
translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86%E4%BA%92%E8%81%94%E7%BD%91%E8%BD%AC%E5%9E%8B%E7%9A%84%E5%BA%95%E5%B1%82%E9%80%BB%E8%BE%91-9ff4591e.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-underlying-logic-of-distributors-internet-transformation-9ff4591e/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# The Underlying Logic of Distributors' Internet Transformation

> In recent years, sales of mainstream products in most FMCG categories have stagnated or declined, prompting many distributors to pursue horizontal expansion through category diversification. However, distributors recognize that horizontal expansion alone is insufficient; they must deeply study transformation. This article explores the underlying logic of distributor transformation, emphasizing the need to understand consumer changes, redefine distributor value through vertical supply chain services, adopt content marketing, achieve digital transformation, and drive change through organizational reform.

In recent years, sales of mainstream products in most FMCG categories have stagnated or declined. Most distributors have adopted a horizontal expansion model, achieving sales growth by adding new categories.
However, distributors are well aware that if they only expand horizontally without changing their business model, it won't work in the long run. First, horizontal expansion has its limits; second, most brands and products have aged, and decline is the norm for most categories. To achieve further growth, they must deeply study the topic of transformation.
Why discuss the underlying logic? During recent visits, I discovered many unfinished internet transformation projects among urban distributors. For example, after building city warehouses, goods couldn't enter; after joining platforms, operations failed; self-developed technology had poor user experience. These issues reflect that many distributors are blind in their transformation efforts, entering hastily without clarifying the underlying logic, making problems inevitable.
Today, I'd like to discuss some underlying logic of distributor transformation.
Since it's transformation, it requires an accurate understanding of the current market environment and a directional prediction of future industry development. Only with accurate understanding and directional prediction can distributors avoid blind transformation.
1. For future strategic predictions, first study consumer changes.
When discussing market changes, everyone talks about consumption upgrading and internet impact, but how exactly is it upgrading? What is the impact? Few distributor friends can systematically explain. In fact, all changes stem from consumer changes. If a company makes future strategic predictions, it must first study consumers.
Previously, distributors didn't need to study consumers because products were in market expansion, and as long as the product was good, the brand was strong, and the channel was powerful, they could sell nationwide.
However, the internet has completely changed consumer cognition and behavior, yet most distributors and companies haven't deeply perceived this change. This has caused the traditional supply chain's iteration speed from product development to retail to lag far behind consumer changes. In short, consumers have changed, but you haven't, so poor sales are inevitable.
Consumers have indeed changed.
The internet's impact on consumers is permanent and irreversible. As consumer cognition improves and self-awareness awakens, they seek diversity and personalization. Mass-produced industrial goods can no longer meet their varied needs. B2C e-commerce has brought a vast array of products, greatly enriching and satisfying consumer needs. The internet has truly put choice in consumers' hands.
On the other hand, heightened self-awareness has changed purchase motivations, shifting from functional needs to self-satisfaction and self-identification. People buy products not because they're useful, but as self-reward, telling themselves they deserve better, or even creating illusions about becoming a certain kind of person.
At this point, you find that no matter how loud your advertising, consumers don't buy it. When asked why, they say your product is too outdated, and online products are better and cheaper.
But are consumers just seeking bargains? Look at data: In 2016, the Engel coefficient for urban residents in China dropped significantly from 35% in 2013 to 29.3%. Additionally, the proportion of spending on services like healthcare, education, entertainment, tourism, and transportation rose from 35.7% to 41%, up 5.3 percentage points, while spending on food and clothing fell from 43.2% to 36.8%, down 4.4 percentage points. What does this Engel coefficient indicate? It shows people are getting richer!
Ye Maozhong once described consumer changes vividly: "When the stomach is full, the mind becomes active, naturally. When basic necessities are satisfied or even surplus, consumers naturally seek higher consumption. Having money but nowhere to spend? That's a crime, comrades!"
The internet is not just a tool.
In understanding the internet, know that e-commerce is not a channel, and the internet is not a tool; for consumers, it's a lifestyle.
The internet breaks time and space limits, allowing consumers to be online anytime. If your products are only online for 12 hours (store hours), users won't wait for you to open; someone else will fill the other 12 hours.
Your competitors are no longer just shelf rivals but Tmall, JD.com, Meituan Waimai, even Didi and Mobike.
As a distributor, to be irreplaceable in the supply chain, you must do consumer insight, study consumer behavior, and build your product structure and business model around that behavior.
2. The future value of distributors lies in vertical supply chain services.
For brand owners, the basic value is meeting consumer needs. When consumer concepts and behaviors fundamentally change, brand owners must also change, but that's not today's topic.
In the internet era, under the backdrop of social division of labor, changes in brand owners and consumers will inevitably alter the business models and forms of intermediaries like distributors and retailers. Visualized commercial flow, routinized logistics, financialized capital, and data-driven information are basic requirements from supply chain leaders to service providers, changing the cooperative relationships among intermediaries.
I call this change: from a chain form to a steel wire rope form.
**What are the chain form and steel wire rope form?**
**Chain form:** Each link in the supply chain is interdependent yet independent. Relationships are transfer and game relationships, with no information sharing. Each link loses meaning if separated from the chain, and cannot independently carry out functions.
**Steel wire rope form:** Each member in the supply chain can directly connect upstream and downstream. Each individual can independently handle business at both ends, and members can cooperate to handle larger business needs.
Simply put, this shift is from horizontal full-function to vertical specialized services.
In practical terms, what one distributor used to do alone is now done by specialized local delivery companies, B2B trading platforms, and professional customer acquisition or ground promotion teams. Each company's business module can independently cooperate with brand owners, and also form local alliances to complete local marketing work for brand owners.
The core of these business models is data, finance, and information flow.
3. Content marketing is already a basic capability for distributors.
Undoubtedly, if distributors' warehousing and logistics functions are differentiated, the most important remaining function is local marketing.
Previously, marketing only required good distribution, attractive displays, and in-store promotions to drive sales. But now, simply placing products in channels doesn't effectively generate sales. Distributors doing marketing must also have the ability to sell directly to consumers.
Therefore, distributors must have the ability to communicate directly with consumers. Fortunately, they can leverage local media resources and use the internet for innovation.
Internet communication tools like WeChat official accounts, Weibo, or Tencent's Guangdiantong are channels to reach consumers. But distributors must understand that having a public account isn't internet marketing, followers aren't fans, adding WeChat friends isn't CRM, and creating a WeChat group isn't a community. Advertising-style indoctrination has failed. Attracting consumers with quality content and sincere communication is the internal skill distributors need to cultivate.
Products are like looks, content is like acting skills. No matter how good-looking, fans will tire of them. Distributors lacking content marketing must quickly learn this lesson.
4. The prerequisite for internet transformation is digital transformation.
Distributors' internet transformation has a prerequisite: the enterprise must achieve digital transformation internally and externally. Simply put, all operations should be informatized and real-time online, whether internal management, external transactions, or marketing, all unified through information systems, allowing you to see the company's operational status anytime.
Many distributors can't even achieve their own digital transformation, making internet transformation difficult.
When your company has a high level of informatization, using internet tools to empower your business is an upgrade, not a revolution.
5. All transformation is driven by organizational transformation.
After discussing so much logic—whether thinking, models, marketing, or technology—all are driven by people. No matter how great the technology, it needs good operations; no matter how powerful the business model, it needs people to implement. Traditional trade organizational models are certainly not suitable for the new supply chain system in the internet era. If you truly want to transform, the first step is to effectively reform organizational driving, respect individual value, truly stimulate individual potential, and drive the implementation and execution of the business model at the organizational level, rather than simply copying or franchising others' models.
The above five points are general. If you want to discuss distributor internet transformation in depth, you're welcome to join our B-end e-commerce study tour from the 15th to the 19th. This year, we're organizing a small group instead of a large one. I'll have in-depth discussions with participating distributors about problems and solutions during transformation.
For the sixth B-end e-commerce study tour, we'll visit Beijing, Jinan, and Yantai, inspecting four representative B2B platforms: Shuhai Supply Chain, Zhongke Shangruan, Yunmei Shares, and Yishang Logistics. Interested friends can scan the QR code below to register. The fee is 200 yuan per person, as usual.
**Long press this QR code or click "Read Original" to register**
**Long press the QR code to add WeChat for registration**
> > Company introductions:
>
>> **Shuhai Supply Chain:**
>>
>> Shuhai (Beijing) Supply Chain Management Co., Ltd. is controlled by Sichuan Haidilao Catering Co., Ltd.
>>
>> Shuhai Supply Chain has modern logistics centers, food processing centers, base material factories, vegetable planting bases, lamb processing factories, and marketing centers nationwide. Leveraging strong R&D, procurement, production, quality assurance, warehousing, and transportation capabilities, it is a catering supply chain service enterprise integrating sales, R&D, procurement, production, QA, warehousing, transportation, and finance.
>>
>> In 2007, Shuhai began independent operations, providing overall supply chain custody and operation services for Haidilao.
>>
>> Since its establishment, in addition to serving Haidilao's own business, it also serves one of the world's largest retail groups, "7-11," and airline catering company Beijing Air Catering; hotpot brands: Haidilao, Rela No.1, Wei Laoxiang; Chinese cuisine: Youth Restaurant, Jiumaojiu, Xinbailu, Fengzhuan, Xibei, Huda, Qunsheng Shijia; barbecue: Long Long Ago, MIT, Jiangbian Chengwai; Korean cuisine: Hanshi BBQ.
>>
>> **For detailed model introduction, see original articles on this public account:**
>>
>> **Zhongke Shangruan:**
>>
>> Beijing Zhongke Shangruan Software Co., Ltd. (Zhongke Shangruan) has been dedicated to FMCG industry informatization since 2005, is a top domestic B2B2C platform provider and service provider, and an important force in promoting and leading China's FMCG + internet transformation.
>>
>> Zhongke Shangruan's mission is "helping users succeed." Through salesperson systems, store ordering systems, store management systems, warehousing systems, and O2O systems, it helps chain enterprises and distributors quickly achieve regional FMCG market integration.
>>
>> **Below is Zhongke Shangruan's industry viewpoint:**
>>
>> **Yunmei Shares:**
>>
>> Shandong Yunmei Software Co., Ltd. is the first intelligent commercial enterprise in China to enter the capital market, listed on the New Third Board in February 2015, stock code 832148. Founded in 2009, after years of dedicated technical research, it has become a pioneer and leader in China's intelligent commercial era. Through technology upgrades and labor industry upgrades, it has led industry development, optimized commercial resources, and improved commercial transaction efficiency.
>>
>> In the mobile internet era, Yunmei Shares helps numerous small and micro merchants achieve comprehensive synergy of business flow, information flow, capital flow, user flow, and logistics flow, forming a massive data traffic entry point and becoming the largest intelligent commercial data service provider in China.
>>
>> **Yunmei Shares' viewpoint at the Spring Sugar FMCG + Internet Conference:**
>>
>> **Yishang Logistics:**
>>
>> Yantai Yishang Logistics Co., Ltd. was established in 2002, mainly engaged in warehousing, loading/unloading, and distribution services for food, beverages, alcohol, and daily necessities. It now has 40,000 square meters of standard three-dimensional shelved warehouses and a 3,000-ton low-temperature cold storage. Distribution services cover over 5,000 outlets including supermarkets, chain stores, convenience stores, and internet cafes in Yantai's five districts, with 82 logistics vehicles and 26 Linde forklifts. As of now, Yishang Warehousing serves over 230 trading companies, with products covering more than 10,000 items including food, alcohol, beverages, daily necessities, home appliances, grain and oil, and dried goods. By the end of October 2015, Yishang Warehousing achieved annual goods throughput of 2 billion yuan and sales revenue of 18 million yuan.
>>
>> Yishang has established strategic cooperation with logistics companies in Xiamen, Tianjin, Shenzhen, Wuhan, Jinan, and other places. In the first half of 2014, Inspur Group established a partnership with Yishang, jointly investing to form a joint-stock company, committed to building and promoting a new e-commerce warehousing model. The Yishang model has become a replicable business model of "warehousing + loading/unloading + distribution + sales + e-commerce + financing," providing a direct communication link between upstream distributors and downstream consumers, thoroughly opening the entire supply chain system.
>>
>> **Teacher Liu Chunxiong's interpretation of the Yishang model:**
>>
Activity schedule:
> May 15-19, Beijing · Jinan · Yantai
>
> 15th: Check in at designated hotel in Beijing;
>
> 16th: Morning: participate in industry exchange meeting organized by Zhongke Shangruan; Afternoon: visit Shuhai Supply Chain central kitchen; Evening: high-speed rail from Beijing to Jinan;
>
> 17th: Visit Yunmei Shares; In the evening, all participants take high-speed rail from Jinan to Yantai;
>
> 18th: Morning: participate in the "First Seminar on Warehouse Distribution Intelligence and B2B Transformation and Upgrading"; Afternoon: visit Yishang warehouse;
>
> 19th: Return or free time to explore Yantai;
**Distributor friends interested in transformation are welcome to join us for understanding and on-site inspection** :
**Organization format**
************1. Company visit
2. Actual market case visit
3. On-site explanation
4. One-on-one communication************
Participating distributors only need to pay a registration fee of 200 yuan
Other expenses are self-covered
**Photos from previous study tours:**
**5th B-end e-commerce study tour group photo, from top to bottom: Huiwangxing, Beiquan, Tongying Tianxia, Quanshi Hui, Zhongke Shangruan.**
**4th B-end e-commerce study tour group photo, from top to bottom: Alibaba Retail Link, Qianmi Network.**
**3rd B-end e-commerce study tour group photo, from top to bottom: Yunbao Shangmeng, Weijie City Distribution, Wanshang Yizhan.**
**2nd B-end e-commerce study tour group photo, from top to bottom: Jinhuobao, Caiba, Yishang.**
**1st B-end e-commerce study tour group photo, from top to bottom: Piduoduo, Beiquan, Yishang.**
**Click "Read Original" to register**
-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