Click 'Read Original' for details. In recent years, the digital upgrade of FMCG industry channels has gradually become a basic consensus among brand owners. Traditional distribution models suffer from multiple layers, high costs, low efficiency, imprecise channels, and lack of control, leading most brand owners to believe it's time for a change. Since B2B emerged on a large scale in 2013, its online ordering, one-stop procurement, intensive logistics, and flexible promotional methods have been well received by small shop owners, with penetration reaching an astonishing 31%. This has led many brand owners to consider whether to abandon their own supply chain systems and move transactions to B2B platforms. However, the centralized traffic model of B2B has also caused headaches for brand owners. Brand owners' concerns mainly include the following:

  1. Can platforms like JD New Channel and Alibaba Retail Link each absorb millions of mom-and-pop stores?

  2. Once B2B platforms grow, will they charge brand owners? If so, how should brand owners respond?

  3. If channel conflict or price undercutting occurs when cooperating with B2B, how should brand owners handle it? There are many other issues during cooperation, which I won't list one by one. Some friends ask: "Since cooperating with B2B has so many problems, is it feasible for us to build our own platform?" New Distribution believes it is feasible, but most brand owners lack deep thinking about the underlying logic and industry understanding when building their own B2B, leading to many low-level mistakes:

  • Brand owners create their own online APP selling only their products, making user costs too high;
  • Treating B2B as a tool without deeply understanding the game between supply chain links;
  • Competitors won't sell on your platform. How can brand owners complete the digital upgrade of their channels? Recently, I've been thinking about two relatively stable business models suitable for brand owners who heavily rely on deep distribution and emphasize channel execution. The first: a partner model based on same-city logistics. This model is based on the concept of social division of labor, outsourcing non-core business and letting professionals do professional work. Let's simulate a scenario: A brand owner, due to high labor costs in recent years, considers cutting some market sales personnel. However, laying off these people requires a large severance package, so instead of direct layoffs, they reduce headcount through natural attrition. But these salespeople are valuable assets to the company—they've received professional training, know the products, understand the market, and have good relationships with outlets. If laid off directly, it would waste talent. In this situation, the brand owner took the following measures:
  1. Cancel the regional distribution rights of outdated distributors that don't align with long-term development strategy, and instead support new distributors with strong commercial capabilities, or transfer willing salespeople in the area to become partners (distributors) within the region. The market remains unchanged, but the distributor structure is upgraded to include new distributors with promotional capabilities and partners (distributors) transformed from salespeople.
  2. Seek cooperation with third-party same-city warehousing and logistics companies like Wanchaobang, signing strategic agreements to hand over all goods in the region to this third-party logistics company for unified same-city delivery.
  3. Change the income model for salespeople from basic salary plus commission to a partner model based on product price differences; shift distributors' profits from mainly logistics income to high-value commercial flow income, improving channel profitability.
  4. Partners only need to focus on marketing, without worrying about warehousing, logistics, loading/unloading, or product freshness (inventory sharing).
  5. If partners lack sufficient funds, the brand owner provides partial startup funds, reducing financial risk through warehouse receipt pledge to solve startup capital issues.
  6. Through the logistics platform's one-stop ordering system, partners and new distributors can use it themselves or let small shop owners use it. After ordering, the backend receives orders in real time, delivers promptly, and collects payments in real time. Through this model, the brand owner perfectly solved the problem of personnel placement and market service. The benefits of this model:

  1. Centralized warehousing and joint distribution reduce warehousing and logistics costs;

  2. Online transactions with accurate real-time orders help brand owners achieve precise visual data analysis;

  3. Stripping non-core functions allows salespeople to focus more on marketing services;

  4. Real-time inventory data sharing ensures product freshness;

  5. Own business ensures execution at own terminals and market competitiveness. The second: an integrated online transaction model based on the WeChat ecosystem. Simply put, all online transactions for the brand owner are done through WeChat, requiring full use of WeChat's ecosystem capabilities: WeChat → communication, Mini Programs → transactions, coupons → incentive systems, Enterprise WeChat → ERP, Official Accounts → advertising, Moments → promotional notifications. Small shop owners can learn about new products, promotions, and other activities in real time through WeChat, Official Accounts, and Moments, and can receive promotional coupons and place orders online via Mini Programs. Sales personnel can use Enterprise WeChat's management tools for scheduled visits and market operations, and can complete internal SOP processes such as expense approvals, business process reviews, and receiving market rewards. The biggest feature of this model is that small shop owners have high WeChat open rates, no need to install separate apps, and all online functions are familiar to them, with no learning or migration costs. Currently, all functions in this model are ready-made; brand owners only need to have someone package WeChat's various capabilities into a system. I think this isn't complicated; the core is the operational system built by the enterprise using WeChat. Benefits of the WeChat ecosystem operation model:

  1. Does not disrupt the original supply chain system.

  2. No migration costs for small shop owners.

  3. Small shop owners can learn about promotional activities in real time online.

  4. All transactions are online in real time, precise and controllable.

  5. Fully utilizes WeChat's ecosystem capabilities to maximize efficiency. Both models share a common feature: they do not share their channel networks, do not leak transaction data, do not rely on breaking price systems to obtain orders, do not disrupt existing business models, and do not affect the interests of existing channel partners. Instead, they achieve digital channel upgrades through gradual changes based on the original business. Of course, brand owners can also implement both systems simultaneously without conflict; enterprises can design their digital supply chain according to their own situations. From August 22-24, the "2018 China FMCG Digital Innovation Conference (2018FDIC)" with the theme "Finding New Growth Engines" will be held in Shanghai, hosted by the China FMCG Industry Association and organized by New Distribution. The three-day conference will focus on two main themes: marketing and supply chain, with six parallel forums on brands, channels, communication, B2B, same-city logistics, and innovative retail. We will invite industry experts, CEOs, and brand executives to deeply interpret the trends and drivers of digital transformation in the FMCG industry. We will invite over 500 FMCG enterprise executives, 200+ B2B industry CEOs, and 1000+ major FMCG distributors to gather and discuss how the FMCG industry can use digital tools to achieve rapid growth again in the digital era. This conference will build a bridge for brand owners, distributors, retail enterprises, and marketing agencies, helping FMCG manufacturers obtain the latest information, understand best practices, and master more transformation skills. Proposed Invited Companies Conference Time August 22-24, 2018 Conference Venue Shanghai Baohua Marriott Hotel Conference Content 8.22 All-day registration Afternoon 14:00-17:30 Distributor Same-City Logistics Parallel Forum Evening 18:30-21:00 New Distribution Night Gala Dinner 8.23 Theme: Marketing Digital Innovation Morning 9:00-12:00 Marketing Digital Innovation Main Forum Afternoon 14:00-17:30 Brand, Channel, Communication Parallel Forums 8.24 Theme: FMCG Supply Chain Digital Upgrade All day: FMCG Supply Chain Conference Registration Method Registration is now open. Long press the QR code below or click 'Read Original' to register. Limited-time group purchase discounts are available! Registration Consultation Ticket Inquiries: Media Cooperation Inquiries: Highlights of Previous New Distribution Conferences Click the links below to review the highlights of the 1st, 2nd, 3rd, and 4th FMCG + Internet Conferences: -END-