Click to read the original text for details. Any business model transformation cannot escape the two validation standards of 'cost and efficiency.' Testing whether each distributor can survive longer, sustain, and remain competitive comes down to cost and efficiency. Today, we mainly discuss the differences between traditional warehousing and distribution and digital warehousing and distribution for distributors. On the surface, traditional warehousing and distribution versus digital warehousing and distribution is a technological upgrade, but in reality, it is not. Traditional warehousing and distribution mainly met the needs of commodity preservation and circulation in the industrial era. In today's internet era, digital warehousing and distribution meets consumers' needs for freshness and efficiency. Distributors present here, if we want to continue doing business sustainably, we must pay attention to warehousing and distribution. Characteristics of Digital Warehousing and Distribution vs. Traditional Warehousing and Distribution Traditional warehousing and distribution has three major characteristics: low cost, low efficiency, and rough management. Most people agree with the last six words, but some distributors have different opinions on 'low cost.' They think that after more than a decade of warehousing and distribution, costs have not decreased but have been rising. This is because distributors look at costs from their own perspective, comparing last year and the year before, and costs are indeed increasing. But from the perspective of the national warehousing and distribution industry as a whole, why is it said that distributors' costs are low? Because distributors' warehouse rents do not need to be high-end; they can rent in more remote locations, can rent simpler facilities, as long as the goods can be stored and protected from wind and rain. Digital warehousing and distribution has three major characteristics: low cost, high efficiency, and fine management. The initial investment cost of digital warehousing and distribution is relatively high, including systems, warehouse hardware, etc. But calculated from another dimension, when the nodes are connected and efficiency improves, it can handle more volume, and the comprehensive cost will be reduced. Which is higher, the cost of traditional warehousing and distribution or digital warehousing and distribution? So far, it is difficult to reach a conclusion. The underlying costs are similar between the two. Since costs are similar, digital warehousing and distribution is far more efficient than traditional. For the leading distributors in each city, today's transformation is not for survival today. Today, doing traditional business with the current management model is sufficient. Upgrading warehousing and distribution to digital is more about seizing tomorrow's opportunities. Traditional warehousing and distribution is not unable to survive; it can still support existing trading businesses, but it is difficult to seize new opportunities. The transformation of the times is always a transformation of cost and efficiency. When distributors transform, no matter how they change, they cannot escape efficiency. Only with high efficiency and low cost will the world not abandon you; your existence is valuable. If efficiency is slow and costs are high, you are a social appendage. Success today does not guarantee sustainability tomorrow. Digital warehousing and distribution is not only a technological change but also a transformation of the warehousing and distribution industry. When distributors build warehousing and distribution with high efficiency and without significant cost increases, they can achieve multiple transformations, such as 'digital warehousing and distribution + one-stop ordering' model, 'digital warehousing and distribution + two deliveries a day' model, 'digital warehousing and distribution + unified warehousing and shared distribution' model, etc. Distributors undergoing transformation and upgrading, especially leading distributors, should do warehousing and distribution business in a new way, not relying on the old human-wave tactics. For example, doing 30 million in business with 10 people, and 60 million with 18 to 20 people, is the old way, relying on human-wave tactics. What is transformation? 10 people doing 50 million in business, or 10 people doing 200 million, using higher efficiency for warehousing and distribution. In terms of transformation and upgrading methods, distributors can 'fight from the bottom up': Improve warehouse picking efficiency and logistics delivery efficiency, let peer distributors come to see how to do it, how to manage, what the costs are, and then gradually take over their warehousing and distribution. After a certain level, spin off the warehousing and distribution. This is a very stable method, no losses, no risk, and a solid warehousing and distribution foundation is a great benefit to existing business. When distributors' warehousing and distribution efficiency is high, they can cooperate with national B2B platforms. B2B platforms need to land and go deep. If they build warehouses locally, cost and expansion speed are issues. The platform's warehousing and distribution costs are higher than distributors'. So platforms do the model, and distributors are rooted locally, fully able to connect with B2B platforms. Distributors digitizing warehousing and distribution can also graft new retail. The essence of new retail is the transformation of traditional retail entities, and its logistics characteristics are 'faster delivery speed, without adding too much cost.' In the past five years, the external environment has been changing. For example, O2O, B2B, community group buying, but they all cannot escape the core: warehousing and distribution, which is the foundation. Traditional distributors changing 'from the inside (warehousing and distribution) to the outside (trading)' is, I think, the most solid. Amazon founder Bezos once said, 'The world is changing, and our strategy must be built on something that doesn't change.' Distributors should calm down and think clearly about what exactly is unchanging? I think it is warehousing and distribution. The short-term goal of digital warehousing and distribution is to reduce costs and increase efficiency, and the long-term goal is to strengthen the 'moat.' Currently, distributors still have two opportunities: one is the old business opportunity, deepening the old business to improve efficiency, letting peers fall first. When one falls, the existing market share is released and naturally redistributed; the second is grafting new species, and the third is actively transforming into new species. But the prerequisite for the latter two is: whether your 'moat' is valuable. How to Implement Digital Warehousing and Distribution? At the macro level, reconstruct the 'people, place, goods' in the warehouse. First, people. In traditional warehouses, personnel are 'people looking for tasks,' like taxis: the driver drives to find passengers. The driver equals warehouse personnel, and the passenger equals the task. What is the concept of 'tasks looking for people'? Like Didi Chuxing, the passenger is directly pushed to the driver, meaning the task is directly pushed and immediately handled. Why are there so many people in traditional warehouses? Have we considered that besides non-standard processes, each person's workload is not saturated? They work when busy and rest when idle. Is the workload unsaturated? Can we use digital transformation to fully utilize the fragmented time of warehouse personnel? Also, 'place' refers to warehouse hardware. Is it possible to go from flat storage to high-bay storage? Flat to high-bay does not mean installing high racks, but having a high-bay mindset. Another is 'goods.' Goods are placed in certain areas by brand, but efficient operation is based on frequency and re-optimization. This is the core of people, place, and goods. In the middle are three 'reconstructions': process reconstruction, system reconstruction, and management reconstruction. Any business model transformation cannot escape the two validation standards of 'cost and efficiency.' Testing whether each distributor can survive longer, sustain, and remain competitive comes down to cost and efficiency. Distributors must 'first become strong, then become big,' especially leading distributors. They must first be strong. What is a strong-strong alliance? Only when you are strong will others 'ally' with you. If you are weak and they are strong, will they come to ally with you?