Click 'Read Original' for details. Warehousing and distribution are to FMCG distribution what e-commerce is to express delivery. Without express delivery, e-commerce would not have developed as rapidly as it has today. Therefore, for the digital transformation of FMCG distribution, the importance of transforming warehousing and distribution functions is self-evident. Looking back at the rise of express delivery, we can see it was a process from 0 to 1; before e-commerce, there was no such thing as 'express delivery.' Warehousing and distribution, however, have been present since the market economy, when commodity circulation shifted from supply and marketing cooperatives to individual dealerships. There are nearly 800,000 distributors nationwide, corresponding to nearly 800,000 FMCG warehouses, each equipped with varying numbers of vehicles. Whether it is distributors transforming to unified warehousing and distribution, or third-party professional urban distribution companies entering the market, restructuring the FMCG warehousing and distribution system is like a process from 1 to 0 and then to 1. It requires first breaking the traditional warehousing and distribution before rebuilding new systems. This process is often fraught with difficulties, akin to demolition in urban renewal, with many 'nail households' (holdouts) along the way. Because it is difficult and complex, and given the varying 'timing, location, and harmony' conditions in different regions, the specific forms and paths of implementing unified warehousing and distribution often differ. Recently, New Distribution conducted a special investigation of Hebei (Chengde) Wulian Cloud Warehouse, hoping that by describing the model of Chengde Wulian's unified warehousing and distribution, we can bring some new thoughts and inspiration to our readers. 01 How to Solve the Problem of Distributors Entering the Warehouse? The predecessor of Wulian Cloud Warehouse was Jingwei Smart Logistics. Starting in mid-2016, after nearly a year of warehouse renovation (28,000 m²) and independent system development, Jingwei attempted to recruit 3 local distributors in April 2017 to provide warehousing and distribution services. After half a year of testing,磨合, optimization, and launching the sorting line, in November 2017, Jingwei Logistics officially opened for external investment. In January 2018, by chance, Jingwei Logistics came into contact with Hangzhou Wulian Technology, and the two parties reached a strategic cooperation to establish Hebei Wulian Cloud Warehouse. As of now, Wulian Cloud Warehouse covers more than 6,000 traditional retail stores locally, with 25 vehicles, nearly 70 frontline service personnel, 31 distributors in the warehouse, and daily warehouse turnover of over 800,000 yuan. The second phase of the warehouse, over 30,000 m², is being prepared. In less than a year, Wulian achieved the entry of more than 30 distributors. How did they do it? The person in charge of Wulian Cloud Warehouse told New Distribution, 'We have never regarded warehousing and distribution as a business, nor do we expect to make money from it. It would be good enough to cover the rent. For us, warehousing and distribution is not a business but a carrier for achieving regional platformization, so we have a cost advantage. Additionally, we help distributors increase their sales. In fact, in the local market, many distributors cannot fully cover 6,000 small stores. Most distributors often rely on multiple secondary distributors to achieve the corresponding store coverage rate. In this process, nearly 80% of the gross profit is taken by secondary distributors. What Wulian wants to do is help distributors bypass secondary distributors and directly supply to terminals, allowing distributors to gain more profit, while supporting them to grow bigger and stronger and expand market share.' In New Distribution's view, Wulian Cloud Warehouse has three key elements in its investment attraction process: 1. Cost reduction. 'No matter what, we must be cheaper than them (distributors).' Warehousing and distribution services are not a business or a trade but a carrier for Wulian Cloud Warehouse to achieve regional platformization. The ultimate goal is the platform, not warehousing and distribution, so it can reduce distributors' warehousing and distribution costs. According to the person in charge, for general-scale distributors, Wulian can help reduce costs by 40-60%; for slightly larger distributors, it can reduce costs by about 20%. 2. Increase sales. In addition to opening up outlets, Wulian Cloud Warehouse also helps distributors in the warehouse organize ordering meetings. Through various forms (for example, standardizing the internal organization and management of distributors), it dispels the possibility of 'hijacking business.' The increase in distributor sales naturally brings word-of-mouth publicity. (Details on how to increase sales are described below.) 3. Stabilize confidence. Wulian Cloud Warehouse always focuses on serving distributors. The person in charge told New Distribution that service is not just a slogan but must be implemented in practical matters. For example, during the Spring Festival peak season in 2017, a series of problems occurred such as overstocked goods and untimely delivery. Afterward, Wulian Cloud Warehouse held a special meeting to 'apologize' to distributors. 02 How Does Wulian Make a Profit? For Wulian, warehousing and distribution is just a means to focus resources. The person in charge told New Distribution, In the future, Wulian Cloud Warehouse's core business will be divided into two parts: providing financial services and sales services to distributors in the commodity distribution process; and extending the consumer-side e-commerce platform business around the rebranded small stores. It is understood that currently, Wulian Cloud Warehouse has rebranded 106 small stores in Chengde, uniformly transforming them into 'Wulian Convenience Stores' (including storefronts, POS systems, etc.). This alone cost Wulian nearly 1 million yuan. The person in charge told New Distribution that the transformation of traditional small stores is based on four considerations: First, focus resources. To strengthen the connection with 'Wulian Convenience Stores,' the platform will also give small stores purchase discounts; second, upgrade store operations, providing guidance on product display, shelf placement, and management. Currently, a 'Franchise Store Management Department' has been established with 6 people; third, use model stores for publicity and momentum, 'forcing' distributors to enter the warehouse; fourth, help small stores build a consumer-side membership system, and on this basis, extend the B2C e-commerce segment. At this point, some may question: Wulian Cloud Warehouse pays to rebrand small stores. Can simple rebranding achieve 'control of goods'? If you spend money for small stores, can goods come from your warehouse? Regarding this, Wulian Cloud Warehouse does the following: The platform, together with 13 local distributors, established a marketing service company, organizing nearly 70 'shared salespeople' to provide in-depth services to stores, with visits to rebranded 'star-rated' stores every 2-3 days for deep merchandising services. The person in charge of Wulian Cloud Warehouse told New Distribution that the established marketing service company will provide commodity sales services to some distributors in the warehouse. While focusing on 'Wulian Convenience Stores,' it also serves other small stores, helping cooperative distributors improve the store's product placement rate and sell-through rate. It is understood that the commodity sales services provided by the marketing service company will be a profit segment for Wulian Cloud Warehouse, based on sales commissions. Cooperative distributors cancel their investment in business personnel for circulation stores, handing this over to the marketing service company, allowing distributors to focus on sales promotion in other channels and product selection. In New Distribution's view, Wulian Cloud Warehouse's shared salespeople are not strictly salespeople but rather merchandising service personnel based in stores. Product sales promotion is only part of their work; the other part is helping stores with product display, shelf restocking, and other services, establishing 'strong connections' with stores. 03 Insights from Wulian Cloud Warehouse's Unified Warehousing and Distribution Model After reading the above model, you may have doubts: Is this called unified warehousing and distribution? It seems not, because Wulian not only provides warehousing and distribution services but also rebrands small stores and provides sales services. Is Wulian Cloud Warehouse a B2B platform? No, because it does not touch goods. What is the underlying logic?

  1. For Wulian Cloud Warehouse, warehousing and distribution has never been the core profit direction but rather the infrastructure to realize the 'regional platform dream.' Only through warehousing and distribution can it gather distributors and then collect goods. The platform's goal is to extend business using warehousing and distribution as a carrier.
  2. In terms of distribution categories, Wulian Cloud Warehouse almost does not touch beverages. Because the brand concentration is high, the value of goods is low, and warehousing and distribution costs are high. Especially first-tier brands already have a stable deep distribution system, and distributors are less willing to enter the warehouse. Wulian Cloud Warehouse's distribution categories mainly focus on snacks, condiments, personal care, household care, and daily necessities. These categories have relatively less concentrated brands and rarely have deep distribution capabilities. Therefore, establishing a marketing service company with a shared concept for commodity services becomes possible. At the same time, it can truly help distributors in the warehouse increase sales.
  3. In the past, unified warehousing and distribution models generally focused on warehousing and distribution as the core business, hoping more distributors would enter the warehouse, with distributors focusing on sales and promotion functions. However, in actual operation, it was found that the profit obtained by providing warehousing and distribution to distributors is very limited. The previous channel levels had already divided the intermediate profits, and profits are declining year by year. Now, inserting another 'warehousing and distribution company' makes it difficult to have a considerable profit margin. Wulian Cloud Warehouse's future direction is to use warehousing and distribution as a carrier, support some cooperative distributors, 'eat up' the market share of some non-cooperative distributors, achieve the restructuring and aggregation of local commodity distribution platforms, serve small stores, and build B2C e-commerce. (Note: This restructuring and aggregation does not necessarily mean 100% restructuring; even if it is only 30%, its share and capacity should not be underestimated.) Wulian Cloud Warehouse's unified warehousing and distribution is a model that 'does not follow the usual path,' but looking at the coordination of all links, its model has rationality. This forces us to reflect: The model is correct but not profitable; the model has deviations but can survive. What is the logic behind this? Without discussing how far Wulian Cloud Warehouse can go or whether the platform dream can truly be realized, from the platform model, we can draw the following two insights:
  4. In the current period of FMCG channel transformation, most transformations and explorations cannot discuss models without considering categories, especially paying attention to beverage categories and brands with first-tier deep distribution. Taking Wulian Cloud Warehouse as an example, if during investment attraction, the platform pursued base traffic, outlet density, and delivery density, focusing on high-frequency, rigid-demand beverages and first-tier brands like Master Kong and Uni-President, it is likely that the so-called 'shared salespeople' would not exist. At the same time, the platform could not obtain considerable sales service commissions from the marketing service company. Conversely, brands with deep distribution would not 'tolerate' distributors taking such measures. 2. The big trend is a national chess game; the small process varies greatly by region. The digitalization of channels, the separation of commercial flow and logistics, and the onlineization of commodity distribution... these are definitely national trends and directions, but when implemented locally, because the resources, backgrounds, environments, and patterns of the leaders differ, the specific forms of transformation vary greatly. Timing, location, and harmony: as long as the direction and trend are clear, and without violating basic business logic, any form of transformation has the possibility of success.