Preface After last year's market groundwork and trials, B2B e-commerce companies have sprung up in 2016. There are countless B2B e-commerce platforms of all sizes across the country, with industry insiders estimating at least 2,000! And the number is still growing... B2B e-commerce types vary, each with its own characteristics: some focus on logistics, some on industry, some on channels, some are pure platform models, some are unified procurement and distribution, some are asset-light, some are asset-heavy... Today, let's analyze in detail several popular FMCG B2B models:

Heavy Logistics Model: Centered on warehousing and logistics, using internet technology as an information transmission tool, providing timely and effective distribution for the circulation of goods. Advantages: Control over product quality and delivery timeliness, effectively ensuring terminal experience. Disadvantages: Large investment, slow returns, relatively high operating costs.

Light Logistics Model: Centered on goods and warehousing, using internet technology as a traditional information tool, with self-owned logistics + crowdsourced logistics or fully crowdsourced logistics to complete timely and effective delivery. Advantages: Controllable investment, ability to control product quality and delivery timeliness, effectively ensuring terminal experience; no need to invest in delivery hardware and management costs, reducing overall expenses. Disadvantages: The initial磨合 (running-in) period with crowdsourced logistics takes time.

Pure Platform Model: Also known as the zero-logistics model, it is an internet platform where numerous distributors settle in, and the settled distributors complete delivery themselves. Advantages: Asset-light; franchisees (operators) only need an office and a few computers to start operations. Distributors (suppliers) who settle on the platform complete delivery for sales generated, while franchisees (operators) only need to supervise each link and can take a commission from transactions. Disadvantages: Franchisees (operators) cannot control goods or guarantee product quality, nor can they control logistics, making it difficult to manage customer experience; also, taking a commission from transaction flow may cause dissatisfaction among distributors (suppliers), who might bypass the platform and supply terminals directly.

Analysis from an Operational Model Perspective: Operational models fall into two categories:

1. Distribution Model: The so-called distribution model corresponds to asset-light assets, i.e., the pure platform model, where goods on the platform come from settled distributors (suppliers). In some regions, the platform is directly operated by headquarters, but most regions are operated by city partners. Advantages: Low investment, quick platform launch. Disadvantages: Cannot control core goods and logistics, cannot control terminal experience.

2. Self-operated Model: The self-operated model distinguishes between headquarters self-operation (unified investment and operation by headquarters across the country) and city partner self-operation. Headquarters self-operation is easy to understand; let's focus on city partner self-operation: city partners invest in warehousing, logistics, personnel, procurement, and operations. Both are forms of self-operation. Advantages: Control over core competitive goods, logistics, and terminal experience. Disadvantages: Early-stage investment in warehouses, logistics, procurement, and other fixed assets.

Analysis from Entry Point: 1. Entering the Distribution Channel: Currently, most traditional distributors focus on distribution channels (B/C-class stores, convenience stores, shops). Whether using manual store visits, phone orders, or the currently popular vehicle sales (market coverage, distribution), they are all doing one thing: delivering goods directly from distributors to terminals! This is the circulation model of the distribution channel. Almost every brand's distributor has thousands or even tens of thousands of such B/C-class small stores, which are the source of all profits and the only source of profit for distributors! So far, many B2B e-commerce companies have entered the distribution channel in two ways: First, self-operated B2B companies purchase goods from local distributors and deliver to terminals via the internet and self-owned logistics systems. Because the terminals they target overlap with existing traditional distributors (i.e., the existing stock of distributors), distributors are dissatisfied and refuse to supply goods! For B2B companies to develop, they must have goods. What if local distributors don't supply? They resort to cross-region sourcing! Buying high and selling low! In the early stages, this is the only viable path! Regardless of where the goods come from or through what channels, the terminals they flow to are the traditional distributors' existing market! This is an unsolvable deadlock! Recently, media reported a B2B e-commerce company being blocked at its door, and another B2B e-commerce delivery vehicle being smashed... Second, distribution-model B2B companies attract distributors (suppliers) to settle on the platform in the early stages, with distributors (suppliers) handling delivery themselves. Initially, distributors join out of novelty or curiosity, but after a while, they realize the situation and gradually distance themselves from the platform. I once interviewed several distributors (suppliers) who had settled on a B2B platform, and their feedback was roughly: joining the platform didn't bring sales growth, it was just my existing stock! Initially, it was free to join, but later they would take a 1% commission on transactions, and taking a cut from existing stock is definitely not acceptable to distributors. Moreover, another disadvantage of the distribution model is the scattered delivery model: if a certain area orders just one item, the distributor (supplier) won't deliver promptly due to cost considerations, making it hard to guarantee customer experience. Thus, whether self-operated or distribution, B2B in the traditional distribution channel still has a long way to go. Self-operated models ultimately aim to bypass distributors and purchase directly from factories, eventually achieving over 70% of goods sourced directly from factories. But to achieve direct sourcing, they need traffic and scale. How to achieve scale now? How to handle relationships with distributors? This remains a difficult path for B-end e-commerce. Traditional distributors, where should they go? Cooperate with B-end e-commerce? That's suicide! Not cooperate? That's waiting to die! After all, what B-end e-commerce does today—cross-region sourcing, buying high and selling low—doesn't violate national laws, and they have capital backing to persist for a long time. Traditional distributors, on the other hand, are exhausted by price cuts and subsidies from B-end e-commerce... How long can they hold on? Another piece of bad news for traditional distributors: starting in 2016, B-end e-commerce networks have begun to sink from first- and second-tier cities to third- and fourth-tier cities...

2. Entering the Catering Channel: Having discussed the various issues with entering the distribution channel, let's now talk about the catering channel. The structure of goods circulation in the catering channel is completely different from the distribution channel. Due to the industry structure, in the catering channel, whether it's seasoning distributors, disposable tableware distributors, or grain and oil distributors, they don't directly deliver their代理 (agency) goods to catering terminals. Almost all deliver goods to wholesale markets, where they are collected and redistributed, and restaurant owners, head chefs, or purchasing staff go to wholesale markets to buy. The characteristic of the catering channel is that distributors don't directly supply terminals; instead, wholesale markets collect and redistribute. This means catering terminals are not effectively controlled by distributors, or rather, distributors don't know how many terminals ultimately purchase a specific product they代理 (represent). This data is held by secondary wholesalers. Speaking of secondary wholesalers, many distributor friends will think of the phrase "weathervane" (墙头草). Why? Because distributors often say: secondary wholesalers are weathervanes, bending whichever way the wind blows! Clearly, the relationship between distributors and secondary wholesalers is not loyal cooperation but purely interest-based. "No permanent friends, only permanent interests" aptly describes the relationship between distributors and secondary wholesalers. I've discussed this with multiple distributors and secondary wholesalers. Distributors say: secondary wholesalers only care about money, they only make money without contributing, never help promote new products, and don't even actively promote old products. When customers come, they give whatever is asked, purely a transit station. If the price to secondary wholesalers is low, they don't praise you; if the price is high, they source from other regions! However, secondary wholesalers respond: catering terminals have credit periods, and they are unwilling to give the lowest prices; the longer the credit period, the higher the price. Different restaurants get different prices depending on the credit period. If the distributor's price is high, their profits shrink, and restaurants owe money, plus they have loan interest. With so many product varieties and concentrated purchasing times at restaurants, they are either idle or extremely busy, with no time to promote new products! So both distributors and secondary wholesalers have their own grievances. The ship of friendship is rocking. Currently, catering channel B2B e-commerce also falls into two categories: The first is the distribution model, similar to the distribution model in the distribution channel, where distributors (suppliers) or secondary wholesalers from wholesale markets settle on the platform and deliver to terminals themselves. The platform franchisee (operator) takes a commission from the transaction flow of settled distributors (suppliers) or secondary wholesalers. The advantages and disadvantages are the same as those in the distribution channel, so I won't repeat them here. Let's focus on the second category, the self-operated model. The self-operated model in the catering channel also distinguishes between headquarters-invested self-operation and city partner-invested operation. Whether headquarters-invested or city partner-invested, there is no essential difference in the experience for distributors (suppliers) and terminals. We treat both as self-operated. In self-operation, goods are purchased from local distributors into self-operated warehouses and then delivered to catering terminals. Since distributors in the catering channel don't directly serve terminals, and B-end e-commerce only serves terminals, combining with distributors should be a perfect match, helping distributors bypass secondary wholesalers to complete the last mile of delivery. For distributors, B-end e-commerce helps them (suppliers) increase volume, because B-end self-operated e-commerce is also a secondary wholesaler to them, but a larger one and a new e-commerce company that plays by the rules, making it easier to manage than the many secondary wholesalers in wholesale markets. So from the distributor's perspective, B-end self-operated e-commerce doesn't affect my business, and it even helps promote new products, expand regions, increase terminals, and I don't need to deliver—why not? Some distributors even deeply integrate with B-end self-operated e-commerce, such as taking equity stakes, and some distributors (suppliers) offer credit terms to reputable B-end e-commerce companies. The same self-operated B-end e-commerce can clash with distributors in the distribution channel but cooperate happily in the catering channel! Friends choosing to do e-commerce should note: the entry point of the e-commerce platform is very important!!! Having said so much, regardless of the model or channel entry, one thing is certain: B-end e-commerce will eventually cooperate directly with factories, ultimately bypassing distributors to supply terminals directly! It's just a matter of time. JD's New通路 (New Path) division and Alibaba's 1688 have already started...

Liang's Observation: With so many platforms now, many traditional distributors ask me, which one should I cooperate with? Some platforms have mutual shareholding or cross-shareholding models, some have large franchise fees, some require various things... Today, let me state my view: choose self-operated over distribution, choose catering channel over distribution channel, choose no franchise fee if possible. Shares are futures; no one can guarantee the future, unless given for free. The best defense is offense! Traditional distributors might as well proactively join the e-commerce ranks—this could be a good choice! Rather than waiting to be revolutionized, it's better to start a revolution early! -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]