The Value of B2B What is the definition of B2B? Some say it is about providing terminals with cheap, one-stop goods, improving efficiency and reducing costs. I also see many B2B peers saying that the value of B2B lies in services, supply chain finance, and value-added services for upstream and downstream. Others say the value of B2B is B2B2C, helping small B terminals sell goods. ▲ Wang Chaocheng believes that the core value of B2B at this stage is to provide terminals with one-stop, low-cost, and efficient delivery services and value experiences. I agree with all the above viewpoints. From a broad perspective, Alibaba and Tencent are talking about ecosystems today. Many of our companies are in the process of entrepreneurship, being deep B2B entrepreneurs in a specific industry. Therefore, I think it is best to focus on our core value initially. The big difference with Yijiupi is that we believe the core value that FMCG B2B provides at this stage is to offer terminals one-stop, low-cost, and efficient delivery services. B2B2C is correct, but it is not our focus now. Supply chain finance is correct, but when the transaction volume is less than 20 billion, talking about finance is still early. So, Yijiupi is now focused on one thing: supplying goods to terminals, with the most complete product range and the lowest prices, making terminals unable to resist. So we had to be fast. In less than two years, we achieved nearly 400 million yuan in monthly turnover, expanded to over 60 cities, and did not burn cash. I think this is the value of focus. ▲ At the forum, Wang Chaocheng revealed that Yijiupi's model determines that it does not burn cash. If you start by doing many things that seem valuable in the future, spending money everywhere, but lack competitiveness in your main business, I think that is not the right path. What was Alibaba early on? What was JD.com early on? They were just selling goods. Today they have grown big, so they have the right to talk about ecosystems. For companies that have not reached 20 billion or 50 billion, saying you are building an ecosystem is ridiculous. So, I think B2B should first do subtraction, making one point deep and detailed. So I say, what is the essence of B2B? It is a pipeline. We need to make the pipeline short enough, thick enough, increase flow speed, and improve efficiency. Traditional wholesalers each have warehouses, vehicles, and salespeople. We turn them into one large warehouse and a unified fleet, greatly reducing costs. I think doing this well, not losing money and even making a profit, is rare. This is the current state of Yijiupi. So, this is my first point today. I believe the value of B2B for most entrepreneurs today, compared with JD.com and Alibaba, is: being sufficiently focused and deep in one field, with the largest procurement volume upstream, and the lowest prices, most complete categories, and most timely delivery downstream. If you don't even have this, can you talk about ecosystems better than Alibaba? C-end needs are diverse; a person has various needs, so Alibaba and JD.com can satisfy them with 50,000 products. Thus, BAT dominates the entire 2C internet market in China. But in the 2B field, it is not like that. Each B-end has few needs. For example, a tobacco and alcohol store sells cigarettes and alcohol. Cigarettes are monopolized and cannot be sold by others. For alcohol and beverages, I am very complete. Alibaba's retail end has 50,000 products. Does that matter to the owner of a tobacco and alcohol store? No, he only cares about alcohol and beverages. Compared with Alibaba, in alcohol and beverages, I have a more complete product range and lower prices. Consumer needs are diverse, so the C-end ultimately wins with platforms. Facing the B-end, we can be stronger than Alibaba and JD.com precisely because of our relatively focused, even conservative and demanding attitude. We are not doing B2B2C; we are not preparing to do supply chain finance now; we are even conservative about brand chain franchising. Having all terminals purchase from me is my value. B2B Models There are basically two approaches in B2B now: one is to buy and resell, which is our main model. The other is the platform model, and there is also SaaS, where upstream merchants join and downstream places orders, making it a platform. Each model has pros and cons. Which is right or wrong depends on the category. I only talk about the alcohol industry I am in. It is very difficult to do a platform model in the alcohol industry. Why? There is a big problem: who upstream is willing to come on? Suppose I am a large first-tier distributor with 5,000 sales terminals in this city, and another first-tier distributor has only 300. If I put my sales online, terminals are shared, and my 5,000 are visible to him. Why would I give that to you? Some might say that self-operated lowering prices would be disharmonious. Then I say, are Alibaba and JD.com harmonious? "Double 11" can be said to be the most disharmonious thing in the world, but how did Alibaba and JD.com rise? Didn't they also rely on low prices and disharmonious competition to grab consumers and develop? What if second-tier distributors join? A second-tier distributor originally supplies terminals at 50 yuan per bottle, and now still at 50 yuan. Why would terminals order on your platform? So there is no traffic. If the second-tier distributor lowers prices, would it do that? Even if it does, the first-tier distributor will eliminate it. If you do B2B in the same city and set up a platform without creating any value, where does traffic come from? You burn money on subsidies. The question is, is that valuable? The day you stop subsidizing, traffic disappears immediately. Yijiupi learned from Alibaba's "light" platform concept and also borrowed from JD.com's "heavy" self-operated concept. We use self-operated to give customers the ultimate experience, and use the platform approach to solve financial compliance issues. That is, we have traffic and healthy finances, so we can develop rapidly to this day. This is the second point: the model issue of alcohol B2B. The Path of B2B If China's 2B internet is like 2C internet, ending with a super platform, then 99% of the entrepreneurs here today will die, leaving only 1%, and that 1% might be Alibaba or JD.com. But my personal view is that B2B is vertical from the start. The B2B industry will give birth to a large number of excellent companies with a market value of 100 billion, but each may not be as big as Alibaba or JD.com. Because B-end needs are inherently vertical and segmented. What is the core value for 2B users? It is low prices. The essence of B2B is the supply chain. For example, in Beijing, there are many FMCG B2B companies, but if you go to terminals, even if they have multiple platforms installed, they will definitely buy alcohol on Yijiupi because Yijiupi has more professional supply chain advantages. Vertical B2C has too low frequency. Users install one Tmall or JD.com, with complete goods and fast delivery, satisfying all needs. It doesn't matter if it's a bit more expensive. You can't install hundreds of apps for different industries, right? But B-end purchases every day, and the purchase price must be low. So installing a few apps is fine for price comparison. If terminals take price as the core factor, what does that mean? Your supply chain capability must be the strongest, and you must get the lowest prices. Otherwise, how can you provide cheap goods to terminals? You can't endlessly burn investors' money, right? So B-end business must be a vertical industry. You make one industry deep and thorough, your volume is the largest, and your upstream is the strongest. Being the leader in one category, forming an advantage upstream, and converting it downstream, creates a virtuous cycle. This is the essence of B2B. Now many people use 2C thinking to do 2B. 2C thinking is that the many beat the few, platforms beat verticals. But if you don't get the lowest prices in every industry, a batch of vertical companies will grab your traffic, and eventually, profitable businesses will be taken by others. So, the biggest difference between 2B and 2C is that terminal users' needs are vertical. Even if BAT's online traffic is huge, what use is it? So 2B and 2C are fundamentally different. Of course, in the future, could 2B become platformized? It is possible. Many high-quality 2B companies will merge. For example, Yijiupi is doing great, and another company in another industry is also great. If we integrate the supply chain, and both of us are doing well in our own tracks, we merge. After merging, our logistics will have more and denser terminal points on the streets, with higher efficiency, eventually becoming China's largest B2B company. So in 2B, my path view is to start with some very effective categories, become the leader in that category, and then, by becoming the leader, integrate with other companies. Finally, which category should B2B start with? This is very meaningful. My suggestions are: First, it is best that this category cannot be B2C. If this industry sells well online, it means offline is getting worse one by one. What is the point of doing B2B? The alcohol industry is over one trillion, and JD.com, Tmall, and Alibaba combined only account for 1%. If it is an industry with 50% online penetration, I would give up immediately because small B businesses would be replaced, so why do it? Second, small B should preferably not be chain-operated. If it is a highly chain-operated industry, doing B2B is also miserable. If I have 10,000 stores, like 7-11's headquarters is Japan's largest B2B company, you deliver goods to my warehouse, and I distribute to my stores. So, it is very important that the industry is not chain-operated. Why are there 800,000 tobacco and alcohol stores nationwide but only 800 are chain stores? Because half of the sales of tobacco and alcohol stores are credit sales to units. Relying solely on retail is hard to be profitable, and credit sales have high risk, making it difficult for chain companies to do such business. Third, the industry should preferably be large in scale. If the B2B industry is too small, with a total capacity of only tens of billions, it is meaningless. It is best to have thousands of billions to trillions. The alcohol industry has a trillion space, so we have the opportunity to reach hundreds of billions in scale. Fourth, the industry should have a high long-tail rate, and the gross margin should preferably be high. In the alcohol industry, 400 billion is long-tail sales, with 22,000 SKUs, and the entire industry is oversupplied. If the long-tail rate is not high, you are in trouble. You will always be a logistics and distribution business, unable to make money from transactions. Some say I am doing supply chain finance or big data business. I want to say those might just be 2VC concepts; smart investors won't do that. Source: New Business Watch (ID: NewBusinessWatch) -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and applicable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation | [Long press QR code to follow]