After years of development, FMCG B2B has also entered the deep-water zone of industry development, accompanied by changes in practitioners' self-awareness and positioning. From initially reducing intermediate links in FMCG circulation and replacing traditional distributors, to some B2B platforms quietly exiting due to various problems, and then to serving the entire circulation chain and empowering the supply chain, the constant changes in roles and positioning have led us to think about where exactly B2B should be positioned in the entire FMCG distribution chain? As a new species brought by informatization, where exactly are the capability boundaries of B2B? 1 The Boundaries of B2B Everything has boundaries; the so-called boundary is to clarify what can be done and what cannot be done, and this is especially true for B2B. Role Boundaries What exists is reasonable. After decades of development, the FMCG distribution chain from brand owners to distributors to wholesalers to stores still exists, indicating its value and significance. As a new species, B2B has inserted itself into this supply and marketing chain and must clearly understand its role and positioning, and more importantly, define what the platform can and cannot do. Brand owners primarily focus on new product development and brand marketing; factories handle production and storage; distributors undertake functions like payment collection and market services; wholesalers, being close enough to stores, help distributors achieve inventory prepositioning and rapid order delivery, essentially providing shared warehousing services to stores. Distributors serve brand owners, so they can only represent a few brands within certain categories; wholesalers truly serve retail stores by purchasing a large number of branded products from distributors with cash, then selling them to stores to earn margins, while also helping stores reduce the number and frequency of direct communications with distributors, providing one-stop product procurement. However, they do not bear the function of advancing payments for upstream distributors, nor do they provide store services downstream. In this chain, B2B, as a newcomer, actually plays the role of a wholesaler, because most current B2B platforms can neither hold funds for upstream brand owners nor fully provide market services for a single brand. The emergence of B2B provides stores with a more informatized and efficient procurement method. In this process, brand owners and distributors will still exist, so B2B platforms must clearly define their role and capability positioning to find the optimal path for their own development. Many B2B platforms blindly pursue profit margins on goods, spending heavily to secure distribution rights for brands in certain regions. This means the platform will bear the burden of advancing funds for those brands. The more brands and categories they represent, the heavier the financial pressure, which also prevents the platform from carrying more SKUs, ultimately limiting its expansion and growth. Capability Boundaries For the current FMCG distribution channels, what needs to be solved from factory to end is superficially warehousing and logistics efficiency, but essentially it is capital efficiency, whether for traditional distributors or internet B2B platforms. In this process, B2B platforms undertake two functions: partial fund advancement and logistics delivery. Most B2B platforms can secure cooperation opportunities and good relationships with most brand owners if they handle these two things well. The value of B2B lies in improving the overall efficiency of FMCG circulation through informatization, and efficiency gains come from transparency of online product information, digitalization of operations, and integration of offline warehousing and delivery. After users pay online, B2B can quickly respond to orders, achieve one-stop delivery, and complete the closed loop of the procurement process. The capability boundary of B2B is to serve a certain number of customers within limited service capabilities, but this does not mean B2B must serve all customer groups. For example, some users cannot complete online payment due to age or other factors. Serving such users would require additional personnel and offline cashier systems, increasing order fulfillment costs and lowering overall operational efficiency. Moreover, different consumption scenarios have different requirements for B2B supply chains and warehousing and delivery. For instance, summer beverages require rapid delivery, fresh produce and dairy need cold chain throughout, and snacks and paper products need relatively dry storage. These all impose different warehousing and delivery requirements on B2B platforms. Therefore, B2B platforms must recognize their capability boundaries and clarify which types of customers they serve and which consumption scenarios they meet. Some B2B platforms continuously expand their SKUs to meet all user needs, but the result is lower inventory turnover and higher warehousing and delivery costs. Some customers need good service, while others, non-target customers, do not need service because they drag down the efficiency of the entire supply chain, including warehousing and logistics. Making trade-offs is also one of the core capabilities of B2B platforms. 2 What B2B Should Not Do: Terminal Services 6.8 million retail small stores constitute the most terminal point where trillions of FMCG products flow to consumers, and services to stores have become an issue that brand owners and distributors at all levels cannot ignore. As mentioned above, B2B undertakes the functions of fund advancement and logistics delivery in the entire circulation chain, so who should provide services to millions of stores? New Distribution believes the most ideal should be brand owners. In the future, more brand owners may incubate their own terminal service systems to build a complete market service system for stores. This process requires a large number of market personnel, but the cost of these personnel may not necessarily be borne by brand owners. For example, a well-known domestic FMCG company has piloted a model in some markets based on warehousing and logistics logic, converting salespeople into agents. By providing loans to former market staff to solve their capital pressure, while outsourcing basic services like warehousing and delivery to third parties, this approach on one hand makes upstream distributors highly granular and solves the cost problem of a large number of grassroots market employees; on the other hand, it improves the enthusiasm of grassroots market staff for terminal services without disrupting the existing market sales system. At the same time, since funds circulate between brand owners and third-party warehousing service providers, this also ensures fund security to a certain extent, allowing market staff to focus on service. In this process, what role do third-party warehousing companies play? On the surface, they play the role of warehousing and delivery, but in essence, they are B2B platforms. 3 What B2B Can Do: Supply Chain Services for Different Consumption Scenarios The deepening development of the industry has turned competition among participants into competition across the entire industrial chain. Therefore, we see more and more B2B companies moving upstream to do OEM, downstream to do retail chains, and more retail companies entering the B2B industry, such as RT-Mart and Every Day. The boundaries between links are becoming blurred. New Distribution believes that this phenomenon superficially reflects the competition of supply chain capabilities among different enterprises, but in essence, it is a competition for consumption scenarios based on stores. Take Shenzhen and Shanghai, the most developed retail markets in China, as examples. Although there are some market differences, they also share commonalities: vast markets, sufficient population density, and strong consumption power. In such markets, convenience stores are easily born. However, in Shenzhen, there are only over 20,000 convenience stores, and only over 5,000 chain convenience stores. The entire retail market is still dominated by traditional mom-and-pop stores. Meiyijia, known as the king of domestic convenience stores, has developed in the Guangdong market for many years but has not achieved full market penetration; the retail market still relies mainly on traditional mom-and-pop stores. Although Shanghai has the highest level of chain convenience store development in China, it still faces low penetration rates, with traditional small retail stores dominating. Under current market conditions, traditional small retail stores still have value and room for development, but the rise of online e-commerce and various new retail formats has forced them to undergo transformation and upgrading. This so-called "upgrading and transformation" is definitely not just about ordering online and buying cheap goods; it also includes store renewal from the inside out, improved operational levels, and refined management. Therefore, choosing to join a convenience store brand has become a major demand for many store operators, especially the younger generation of small store owners. The regional nature of retail stores serving consumers determines that within the same area, it is unlikely for a single retail chain brand (non-direct-operated, strongly controlled retail brand) to achieve high coverage. For example, if a traditional small store on a street joins a convenience store brand, the possibility of another small store on the same street joining the same brand becomes extremely low, which provides living space for other retail convenience store brands. From a retail perspective, the closer the sales scenario is to consumers, the more obvious the personalized needs. Consumer shopping behavior is single-frequency, and this is reflected in differences in consumption scenarios and sales channels, such as communities, hospitals, schools, etc. The differentiation of scenarios determines that store operators' business philosophies, category structures, and product selections vary greatly, making it difficult for one brand to meet all differentiated needs in different consumption scenarios. Therefore, we see that domestic convenience store brand Xingaoqiao has three chain brands: Xingaoqiao, Kuailehui, and Kaola Convenience. Japanese convenience store brands 7-11, Lawson, and FamilyMart also target different user groups with different focuses. B2B can be divided into self-operated B2B platforms and matching B2B platforms based on ownership of goods. This classification also applies to the chain retail field, except that in the channel, B2B self-operates or matches products, while in the retail field, it self-operates or matches brands. That is, B2B can not only incubate multiple chain retail brands through its supply chain advantages but also transform its supply chain capabilities into services for chain retail brands, with supply chain self-operated and brands matched. A typical representative is Caihua Trading. Caihua Trading serves dozens of convenience store brands, but none of the convenience stores belong to Caihua Trading. Caihua encourages employees to start businesses internally and open different brands of convenience stores to meet as many different consumption scenarios as possible, while Caihua only provides a backend supply chain platform. This allows the platform to cover enough stores, improve order fulfillment efficiency, and enhance its bargaining power with upstream suppliers. The vast market space has nurtured diverse business models, and the high backwardness of infrastructure means that industry evolution must inevitably go through a painful process. After years of development, FMCG B2B platforms have shown significant differences. But no matter how business models evolve, the indisputable fact is that competition among industry participants has shifted from single-dimensional competition to competition across the entire industrial chain, and the entire FMCG distribution chain will eventually transform and develop towards greater efficiency and transparency. -END-