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E-commerce platforms are developing rapidly, and platforms such as Suning.com, JD.com, and Yixun.com have become shopping platforms for most people. The development of e-commerce platforms is a necessity of the new social era. Facing this trend, should food distributors continue to be confined to traditional business models, or should they join the ranks of e-commerce distributors?
Backend Supplier: Unified Delivery by E-commerce Platforms
Traditional distribution models mainly focus on the operation and sales of products in a specific region, with promotional activities near stores or in densely populated areas. The level of publicity is relatively low, and in the traditional model, new product launches by manufacturers require logistics and other distribution methods to get products onto store shelves, resulting in slower product updates.
In contrast, e-commerce platforms have significant advantages. Consumers can shop online without being limited by time or space; as long as there is internet access, transactions can occur anytime, anywhere. They have access to a broader market, as a single merchant can reach all consumers with purchasing needs through the platform.
E-commerce is also faster: new product launches can be synchronized with manufacturers, promotional activities can be publicized online, and consumers can easily see promotions on various shopping sites through searches, learning about new products. The promotional reach is greater. Therefore, it is an effective strategy for distributors to become backend suppliers, join e-commerce platforms, and let the platforms handle delivery.
Cai Kai, General Manager of Guangdong Shantou Kaixiang Trading Co., Ltd., told reporters: "E-commerce is both an opportunity and a challenge for us distributors. We have communicated with e-commerce platforms such as Dangdang and JD.com, and we manage distribution, inventory, delivery, customer information, and market management through system software. When consumers place orders on the platform, we receive notifications and arrange nearby delivery. During the online transaction process, we update new products in a timely manner and run promotions and buy-one-get-one-free activities. This not only ensures our sales volume but also boosts our company's profitability to some extent."
As Cai Kai said, e-commerce is a double-edged sword. The opportunity lies in integrating e-commerce platforms into the distribution process as a sales tool, updating products promptly, and driving sales growth.
Beijing Tianci Pengfei Trading Co., Ltd. primarily deals in snack foods. General Manager Zhang Huibin, when discussing strengthening cooperation with e-commerce platforms, said: "E-commerce is an emerging platform. We can use it to accelerate product circulation. By joining the integrated e-commerce services promoted by platforms like Yihaodian, we act as suppliers, and the platform handles unified delivery, which effectively improves the conversion rate of customer orders."
After joining Yihaodian as a supplier, Zhang Huibin placed goods directly in the e-commerce warehouse, with all shipping and delivery handled by the platform. This accelerated the circulation of his snack food products, effectively boosting sales. Zhang Huibin told reporters: "For distributors, if they can act as suppliers on e-commerce platforms, it can improve product circulation speed and effectively increase operational efficiency."
Beijing Jingfu Tongqiao Trading Co., Ltd. primarily deals in beverages such as Six Walnuts and Wahaha. However, due to large purchase volumes in Beijing, they occupied significant warehouse space, incurring high costs. Since they mainly operate through distribution channels, General Manager Wang Zongfu, after learning about e-commerce platform policies, communicated with the platform and became a supplier to Yihaodian. He placed some products in the e-commerce warehouse, paying a monthly fee, and orders were fulfilled and delivered by the platform.
However, when facing shortages in his traditional operations, he could promptly retrieve some products from the e-commerce platform, avoiding the cumbersome procedures of ordering directly from manufacturers. Wang Zongfu told reporters: "To develop an online trading platform, one must first do well in traditional distribution, and then use e-commerce as a supplement to fill gaps in the traditional model."
Platform Builder: Leveraging Online Marketing Platforms
With the development of e-commerce platforms, distributors see opportunities. They can use their own resources and e-commerce platforms to open online stores and accelerate product sales. Distributors can connect with e-commerce platforms to achieve unified ordering, establish business cooperation, and create a unified pricing business platform, promoting close connections and resource sharing among distributors in various regions.
Shandong Huimin County Huimin Sifang Trading Company primarily deals in snack foods such as Want Want, Hsu Fu Chi, and Huitouke. However, the development of e-commerce has reduced the attention of terminal retailers and consumers to distributor storefronts. Traditional markets are limited by geographical conditions and transportation, and building a broad market network requires significant costs, leading to unsatisfactory market development and declining profits.
Company General Manager Li Huajun said: "The rise of e-commerce has prompted us to gradually improve our business model and strengthen network construction. We built a marketing platform on Taobao, categorizing snack foods for online sale, allowing customers to easily find products through searches. When customers place orders, we ship via logistics, accelerating product sales. We also run group-buying activities on various group-buying websites and occasionally promote free trials of new products. With the support of manufacturer promotions, we have driven sales growth. At this stage, our online marketing system is gradually becoming more complete, and sales have improved significantly. Competition in the modern market is about time and speed. Product sales mainly depend on timeliness and speed. If product updates are too slow or consumer purchases are not quick enough, it will affect product sales and market development."
Zhang Feng, General Manager of Shandong Zhangfeng Trading Co., Ltd., believes that e-commerce has a significant impact on snack foods. For example, during "Double 11" and "Double 12" shopping festivals, JD.com ran promotions on Hsu Fu Chi candies, slashing prices to the lowest and offering coupons for purchases over 100 yuan, which stimulated consumer spending. Moreover, e-commerce platforms release new products much faster than distributors, directly affecting their sales.
Therefore, Zhang Feng took a series of measures to respond. He hired website staff to build a product website, promptly publishing products online. When customers place orders, he ships directly via courier services like STO and YTO. Although this adds logistics costs, it drives sales growth. Zhang Feng told reporters: "The development of e-commerce is both an opportunity and a challenge for distributors. In response to the impact of e-commerce, distributors can break away from traditional business models, build product websites, and support offline sales, which has a positive effect on boosting sales."
Generally, the development of e-commerce has been driven by modern technological advancements, consumers' increasingly fashionable and fast-paced consumption concepts, and competition in various markets. Distributors can try various ways to participate. They can use e-commerce as a supplement to their sales, ensuring their companies have a place in the increasingly competitive market.
Expert Interpretation: Localized O2O Makes the Internet the Front End for Offline Transactions
Regarding the rise of e-commerce, distributors have many questions. In response, reporters contacted Shi Xianlong, Chairman of Bonarui Cheng Consulting Company. Shi Xianlong believes that there are currently two main ways for distributors to cooperate with e-commerce: first, distributors act as suppliers to e-commerce platforms; second, distributors independently open online stores.
As suppliers to e-commerce, if distributors act as offline suppliers, it can accelerate the circulation of goods in the short term. However, as suppliers, distributors will inevitably pay certain fees, so this is not a long-term solution. He recommends that manufacturers act as suppliers to e-commerce, meaning manufacturers coordinate the supply relationship between e-commerce and themselves, making distributors the delivery points. Manufacturers can run periodic promotions and buy-one-get-one-free activities through e-commerce, which can timely boost sales and accelerate product circulation.
Regarding opening online stores and acting as platform builders, distributors can consider this if costs are low. However, since distributing manufacturer products requires authorization, this model is not recommended for distributors who primarily operate through distribution channels. If a distributor is an agent for a specific product, with manufacturer authorization, they can operate flagship stores on Tmall or Taobao. Because online sales are also a distribution channel, this can promote the operation of distributor online stores.
He suggests that distributors adopt a localized O2O model, combining offline business opportunities with the internet, making the internet the front end for offline transactions. Distributors can adopt a regional e-commerce model, developing customers within their own regions. Distributors can transform their roles, not only as sellers providing goods to consumers but also, under the current e-commerce model, as connectors. By establishing regional customer databases, improving customer groups, facilitating communication, and better serving customers, they can transform their business models.
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