---
title: "What Exactly Is the Relationship Among Manufacturers, Distributors, B2B Platforms, and Small Retail Shops?"
description: "As an emerging industry, B2B is widely discussed, yet there is no unified understanding of the roles and relationships among the various parties. Few people analyze the relationships among brand owners, B2B platforms, distributors, and retail stores from a supply chain perspective, including B2B entrepreneurs themselves. Many entrepreneurs habitually define B2B as a competitor or substitute for distributors when assessing their role in the supply chain. Most brand owners, however, treat B2B as just another channel, similar to CVS or a special channel. Many brand owners attempt to promote new products through B2B, and many B2B platforms hope to prove they have the same functions as distributors by promoting new products. Regardless of the promotional results, there is a cognitive error here."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-06-13"
language: "en"
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---

# What Exactly Is the Relationship Among Manufacturers, Distributors, B2B Platforms, and Small Retail Shops?

> As an emerging industry, B2B is widely discussed, yet there is no unified understanding of the roles and relationships among the various parties. Few people analyze the relationships among brand owners, B2B platforms, distributors, and retail stores from a supply chain perspective, including B2B entrepreneurs themselves. Many entrepreneurs habitually define B2B as a competitor or substitute for distributors when assessing their role in the supply chain. Most brand owners, however, treat B2B as just another channel, similar to CVS or a special channel. Many brand owners attempt to promote new products through B2B, and many B2B platforms hope to prove they have the same functions as distributors by promoting new products. Regardless of the promotional results, there is a cognitive error here.

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As an emerging industry, B2B is a topic with many discussions, but there is no unified understanding of the roles and relationships among the various parties. Few people analyze the relationships among brand owners, B2B platforms, distributors, and retail stores from a supply chain perspective, including B2B entrepreneurs themselves.
Many entrepreneurs, when doing B2B, assess their role in the supply chain and habitually define B2B as a competitive or substitute relationship with distributors.
Most brand owners, however, treat B2B as a channel, similar to CVS or some special channel. Many brand owners attempt to promote new products through B2B, and many B2B platforms hope to prove they have the same functions as distributors by promoting new products. **Regardless of the promotional results, there is a cognitive error here.**
**The essence of B2B is supply chain services, serving retail stores. Distributors, on the other hand, serve manufacturers.**
Manufacturers need sales volume, which requires high-density coverage of outlets within the channel, including hypermarkets, chain supermarkets, small retail shops, hospitals, schools, etc. Distributors must unconditionally satisfy any outlet that can sell the manufacturer's products. Can B2B do these distributor tasks?
The answer is no. Why? According to New Distribution, there are two reasons:
**First, the delivery scenarios are too complex. Second, the value-added services required by manufacturers cannot be fulfilled by B2B.**
1. Delivery Scenarios
Delivery scenarios have two characteristics: **First, the diversity of delivery channels.** Anyone who has worked in FMCG knows that relatively standardized manufacturers issue channel guidelines at the beginning of each year to standardize the classification of target customers. Generally, consumer goods distribution in China can be divided into 68 channels, broadly categorized as follows:
**1. Modern Trade Channels:**
1: Hypermarkets: Hypermarkets / Membership-based hypermarkets;
2: Supermarkets: Chain supermarkets / Large independent supermarkets / Department stores (including in-store supermarkets);
3: Chain convenience stores: Chain convenience stores;
**2. Traditional Trade Channels:**
1: Traditional grocery stores: Traditional grocery stores / Traditional grocery stores near schools / Traditional grocery stores near commercial areas / Window-type / Mini grocery stores / Kiosks / Newsstands;
2: Traditional convenience stores: Independent convenience stores / Small supermarkets;
**3. Other Shopping Services:**
Bakeries / Specialty food stores / Tea shops / Fruit and vegetable stores / Mother and baby stores / Pharmacies / Sales points within medical institutions;
Different channels have different requirements for product placement. For example, foodservice key accounts require credit periods, hypermarkets require entry fees, closed channels require complex interpersonal relationships, standardized channels require VAT invoices, and some have special requirements for product dates and delivery. **Distributors find it difficult to solve all these personalized needs alone, so they typically collaborate with multiple sub-distributors and secondary wholesalers to achieve full-channel coverage within the region.**
**However, B2B can only serve a very narrow segment of the traditional trade, specifically mom-and-pop stores, totaling no more than five types. How can this meet the brand owner's one-stop, full-channel delivery needs?**
**Second, in open, free transactions, there are numerous abnormal orders that require external handling, such as credit periods, returns, and customer complaints.** This requires agents to invest corresponding manpower to handle these exceptions. The key is that the scenarios for exceptions are extremely complex and cannot be solved by machines. Take the return and exchange scenario alone; its complexity far exceeds our imagination:
> **1. Attributes of returns and exchanges:**
>
> 1. Order error returns: Current period, delayed;
>
> 2. Quality returns: Damage, perceived quality, production quality;
>
> 3. Near-expiry returns: Single batch near expiry, multiple batches near expiry;
>
> 4. Delivery error returns/replenishment: Over-delivery, under-delivery, wrong delivery;
>
> **2. Types of returns/exchanges and goods/payments:**
>
> 1. Exchange types: Full order return/exchange, partial return/exchange, partial cumulative return/exchange;
>
> 2. Refund types: Full refund, partial refund, partial cumulative refund;
>
> 3. Time types: On-site return, off-site return;
>
> **3. Background factors of returns and exchanges:**
>
> 1. Responsible party: Supplier responsibility, buyer responsibility;
>
> 2. According to contract terms: Damaged packaging, non-returnable after opening, special offers, special procurement items, etc.;
>
> 3. Product attributes: Low temperature, short shelf life, customized;
>
> 4. Stages in the order processing flow: Before/after ordering, payment status, order processing status (unconfirmed, confirmed, allocated, picked and delivered, etc.);
>
> 5. Costs related to returns: Payment handling fees, product deposits, logistics costs, etc.;
When the above return issues intersect, the resulting problems are countless. Unless in a closed trading environment and system, it is difficult to handle these exceptions through batch processing. Currently, most B2B platforms handle these issues in a rough way: no returns for non-quality issues. This is unacceptable in the business philosophy of mom-and-pop stores, so small shops only purchase best-selling items from the platform, which prevents the platform from promoting new products.
2. Value-Added Services Within the Channel
**Manufacturers require agents to provide a large number of value-added services within the channel**, such as new product promotion, terminal visualization, execution of localized promotional activities, inventory warehousing and channel financing, handling customer complaints and relationships, and reverse logistics (returning bottles, caps, boxes), etc. These are the daily tasks of distributors and the true value of distributors. **In a sense, distributors are the imperial army of the manufacturer; whatever the manufacturer asks, the distributor must do. The question is, can B2B platforms do these tasks? And thinking deeper, is this what B2B should do?**
If B2B wants to improve supply chain efficiency, it must achieve the following four key points:
1. Reduce the time products spend in inventory;
2. Increase capital turnover;
3. Reduce intermediate costs;
4. Improve transaction efficiency;
**However, many of these points conflict with the requirements brand owners place on agents** (inventory for off-peak and peak seasons, prepayment capital, personalized services, and pressure for payment and goods in special channels), making it impossible for platforms to meet brand owners' needs across multiple channels, scenarios, and dimensions.
**In summary, when a platform cannot achieve multi-channel coverage and multi-scenario delivery, the so-called deep management of a manufacturer's single product is a false proposition, and the platform cannot obtain corresponding returns through deep product management.**
Moreover, **if a platform deeply manages a manufacturer's single product or acts as an agent, it will create the paradox of being both referee and player.**
The characteristic of B2B is to achieve overall supply chain efficiency improvement through information and technology upgrades. **The core value of B2B is only two: service and transaction.**
**The service target is small shops:** By helping small shops upgrade their brand, operations, services, and image, and by providing extremely rich, high-quality, low-cost products, small shops can reduce costs and increase revenue.
**The transaction target is suppliers (distributors and manufacturers):** By aggregating the procurement needs of small shops and conducting large-volume, multi-batch centralized procurement, they can lower supply prices and obtain more order revenue.
Let's clarify the relationships among B2B platforms, manufacturers, small shops, and distributors:
B2B platforms and distributors are in a transactional relationship;
B2B platforms and small shops are in a service relationship;
Distributors and manufacturers are in a service relationship;
Distributors and small shops are in a transactional relationship;
Once the relationships are clear, discussing some issues becomes less complicated.
**1. Will B2B eliminate distributors?**
Answer: Definitely not. The two are in a buyer-seller transaction relationship, a supplier-purchaser relationship. Purchasers cannot bypass suppliers to directly obtain agency rights. Even if they do, it would be for exclusive products.
**2. Who is on whose side?**
Answer: Manufacturers and distributors are on the same side; distributors are the manufacturer's imperial army, extending the manufacturer's supply chain services. B2B is on the side of small shops, acting as the small shops' agricultural association, providing one-stop supply chain services for small shops' back-end operations.
**3. Will there be a situation where distributors have no shops to supply in the future?**
Answer: It is indeed possible. Currently, B2B is aggressively recruiting small shops. With the acceleration of urbanization in China, small shops have increasing demands for brand, supply chain, and operational upgrades, and it is only a matter of time before they choose sides.
Of course, given the current stage of industry development, it is inevitable that distributors and B2B platforms will compete for the transaction rights of small shops. **In terms of single-product competitiveness, if platforms do not subsidize, it is difficult to beat all the price advantages of distributors.** Under the industry practice of regional agency protection, **for B2B to transact with small shops, it must deeply bind with them, helping them not only with one-stop product solutions but also with category management, planned ordering, operational improvement, and information system upgrades. Otherwise, a pure ordering platform that only earns price differences has no competitive advantage compared to the diversified and meticulous services of distributors.** Even if they coexist peacefully, they are merely an extension of distributor channel coverage, no different from other secondary wholesalers.
However, the transformation of China's supply and marketing industry is inevitable. B2B will inevitably become an indispensable part of the future supply chain. But B2B is different from B2C; B2C is a fast horse, while B2B is a slow ox. Given the huge existing stock, this transformation may take 5-10 years to show results. As for entrepreneurs who want to disrupt the industry in a short time, they need to seriously rethink their industry logic.
**New Distribution's "Seventh B-end E-commerce Study Tour" is now recruiting!**
**Event Schedule:**
> Suzhou·Shanghai·Hangzhou, 19th: Check in at designated hotel in Suzhou; 20th: Visit Suzhou Medline; 21st: Visit Shanghai Hd; 22nd: Visit Hangzhou Wangcang; 23rd: Return or free time for sightseeing;
**Introduction to the Platforms to Visit:**
**Medline**
Youshang Software, a well-known domestic information system provider, launched the "Medline" brand in 2015. Based on Youshang Software products, with artificial intelligence technology as the core and efficient operations as a breakthrough, Medline helps distributors build new B2B business models. It has provided software technical services to distributors in more than 50 cities nationwide.
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Shanghai Hd Information Engineering Co., Ltd. (hereinafter referred to as Hd Company) is a first-class domestic management consulting and software development company for commercial circulation, e-commerce, and modern logistics solutions.
For over 20 years since its establishment, it has been committed to creating modern commercial management models for clients. The systematic products and solutions with independent intellectual property rights developed by Hd have strong competitiveness in the three business formats of chain retail, commercial real estate, and warehousing logistics. It currently supports more than 500 well-known large and medium-sized commercial enterprises and group users across 30 provinces and cities. It is the largest retail software provider in China.
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Zhejiang Wangcang Technology Co., Ltd. was established in June 2011. It is the earliest and currently the only large-scale independent fourth-party smart warehousing and distribution service provider in China. Wangcang has been committed to the innovation, implementation, and daily operation of refined and collaborative solutions for e-commerce enterprise warehousing and distribution. Today, Wangcang has the capability to provide solutions from B2C e-commerce warehousing and distribution to B2B+B2C full supply chain integration (warehousing and distribution).
Relying on its self-developed adaptive warehousing and distribution integrated management system, combined with years of warehouse construction and management experience, as well as self-developed equipment, Wangcang has formed comprehensive competitive advantages. Wangcang's system can seamlessly connect with all sales platforms, enterprise ERP, logistics and express resources, and warehouse operation resources (such as equipment, labor, warehouse space application, etc.). Through our services, single-warehouse efficiency can be greatly improved, achieving resource interaction and allocation between warehouses. Through big data, we provide value-added services such as supply chain optimization and supply chain finance for cargo owners. At the same time, through open systems and management advantages, we provide franchise business for warehouse owners.
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Participating distributor friends only need to pay a registration fee of 200 yuan.
Other expenses are self-covered.
Long press this QR code or click "Read Original" to register.
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**Group Photos from Previous Tours:**
**Group photo of the 6th B-end E-commerce Study Tour, from top to bottom: Zhongke Shangruan, Shuhai Supply Chain, Yunmei Shares, Yishang Logistics.**
**Group photo of the 5th B-end E-commerce Study Tour, from top to bottom: Huiwangxing, Beiquan, Tongying Tianxia, Quanshihui, Zhongke Shangruan.**
**Group photo of the 4th B-end E-commerce Study Tour, from top to bottom: Alibaba Retail Link, Qianmi Network.**
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-END-


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