FMCG B2B emerged in 2014, but by 2018, many FMCG B2B ventures had already become martyrs. As a result, many industry insiders began to dismiss FMCG B2B, considering it either a false business logic or even clamoring that it would be as short-lived as the 'group buying' and 'O2O' trends of a few years ago. Is that really the case? In my view, for FMCG, the transformation brought by B2B is just beginning. It is a T2B2C revolution driven by technology. As more participants join, every node in the FMCG supply chain will be connected, assigned more specific and clear missions and values, and together build an ecosystem, becoming a community that co-creates a digital ecosystem. Why do I say this? Driven by technology, what is the goal of FMCG B2B? As the most important distributors in FMCG distribution, where is their path of transformation? What is the ultimate goal of FMCG B2B? 1. The overall business evolution: An industrial revolution driven by digital technology Business models that used to evolve over decades or a dozen years have now shortened to every year or even a few 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 form of business evolution, supply chain and logistics support each other and develop together. For example, B2C models like 'mall + express delivery' and 'food delivery + instant delivery' exist, while B2B models will certainly develop in coordination with logistics based on intra-city delivery. 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 instance, in FMCG B2B, Alibaba's Retail Link and JD's New Channel are aggressively increasing their technological 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 new C-end user experiences will depend on integrated technological innovations such as big data, blockchain, artificial intelligence, and industrial internet. 3. The commercial landscape of FMCG: Leveraging a smart supply chain community to serve consumers comprehensively The goal of FMCG B2B is to form smart supply chains on a scale as large as national or global, and as small as every county, city, district, or town. Through smart supply chains, place the right products in the right scenarios to meet consumer needs at the right time. 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 production end; distribution, warehousing, and delivery at the midstream end; and retail, promotion, and delivery at the downstream end. 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. Information from all links can be transmitted in real time, shared, and monitored by every participant in real time. Digital (visual) operation can quantify reasonable cargo volume, reasonable pricing, the number of warehousing nodes, warehousing locations, and even user preferences. These automated operations will ultimately guide business management. This is specifically 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 smart supply chains, participants in the chain will further divide labor: integration of warehousing and distribution. Warehousing and distribution are the foundational support system of the overall smart supply chain. No matter how business models change, warehousing and distribution are the core key to supporting smart supply chains. Therefore, the separation of warehousing and distribution functions is an inevitable trend. It is not a question of whether it will happen; it will definitely happen. The separation of warehousing and distribution is only a matter of time. Without an agile warehousing and distribution system, it is impossible to create new user experiences, and thus there will be no so-called 'smart supply chain.' Unified warehousing and distribution is not scaled 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, feeling even more lost. From an essential analysis, during the transformation to warehousing and distribution, the platform has not generated new capabilities, and order sorting, 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. Additionally, 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 a 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 commerce, will develop in coordination with the supply chain and deeply integrate. This is specifically reflected in two aspects: 1) Efficient marketing system Deep integration of online marketing and offline customer relations. From the characteristics of the FMCG industry, I believe that offline customer relations, like distributors, will not disappear; they will just do very different things with very different efficiency. Previously, it was about selling and display, with the goal of selling; in the future, it will be about marketing and consulting, with the goal of service. 2) Refined operation system Not only do retail terminals need refined operations by category, 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 do 'unified warehousing and distribution' with traditional thinking, it will be difficult to win. I have experienced the transformation of multiple regional FMCG commercial enterprises, and I want to emphasize a particular misconception. Many regional enterprises, during their transformation, overemphasize physical barriers while neglecting 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 management difficult, they buy field service software to manage it; and to attract traffic, they deploy an OMS ordering system. They euphemistically say: 'We cannot let software become a constraint on the enterprise.' This is doing 'unified warehousing and distribution' in a traditional way. Not to mention connecting enterprises, it creates multiple information silos within the enterprise itself, which is actually the biggest constraint on the enterprise. Can distributors avoid transformation? Whether it is consumption upgrading or 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 decline, so if distributors continue to use their 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? To borrow a phrase from Douglas MacArthur: 'Old soldiers never die; they just fade away.' In the future, the speed of FMCG renewal 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 hold are only granted by brand owners; 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) will have 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 that future stage depends on the choices you make now. Tips will be paid 400-2000 yuan once adopted. China FMCG + Internet Professional New Media Committed to FMCG manufacturer and distributor transformation and channel digital solutions