---
title: "Who Is New Urban Distribution For?"
description: "At the 2018 China FMCG Urban Distribution Logistics Conference, Chen Siting, founder of Wanchaobang, discussed the foundations and goals of new urban distribution, arguing that it is not suitable for dealers but should be embraced by brand owners, and shared lessons from his company's experience."
author: "陈思廷"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-10-30"
language: "en"
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---

# Who Is New Urban Distribution For?

> At the 2018 China FMCG Urban Distribution Logistics Conference, Chen Siting, founder of Wanchaobang, discussed the foundations and goals of new urban distribution, arguing that it is not suitable for dealers but should be embraced by brand owners, and shared lessons from his company's experience.

**New Distribution Note:** On October 24, 2018, at the "2018 China FMCG Urban Distribution Logistics Conference" hosted by New Distribution, Mr. Chen Siting, founder of Wanchaobang, gave a keynote speech on "**Who Is New Urban Distribution For?**"

**Foundations of New Urban Distribution**
First, let me share my understanding of new urban distribution. **First, standardization of orders or delivery.** 2B delivery is particularly difficult at present, especially for orders coming from upstream. So the first foundation of new urban distribution is order standardization and commercial distribution standardization.

**Second, integration of trunk, branch, and last mile.** Whether trunk, branch, and last mile can run on one network is the key factor for improving efficiency and reducing costs. When can this be achieved? It depends on the joint efforts of all practitioners in the urban distribution industry.

**Third, integration of B-end and C-end.** The integration of C-end and B-end delivery networks is also a foundation of new urban distribution. Only when we truly achieve all-channel delivery, where orders from both B-end and C-end run smoothly on one network, will new urban distribution truly bear fruit.

**Fourth, data online.** When all data, especially service provider data, runs on the internet, efficiency improvement becomes possible.

This is my understanding of new urban distribution. I believe achieving these four aspects will take a long time.

**Goals of New Urban Distribution**
In the past, we always talked about B2B, and urban distribution was not given much attention. Teacher Liu Chunxiong wrote an article a couple of days ago saying that B2B has borne three fruits: data online, warehouse-distribution integration, and community group buying. In my understanding, warehouse-distribution integration is only at the seed stage, not even at the flowering stage.

**What are the goals of new urban distribution?**

**First, full sharing of social inventory.** When most data is in the cloud, delivery is just a transfer of ownership and sharing of benefits. For example, if we buy milk on JD.com and JD delivers it, if these products are standard branded goods with guaranteed quality, why can't it be delivered from downstairs or from the nearest place? When a small shop places an order, the order is fragmented; why can't the nearest second-tier distributor deliver it?

**Second, inventory sharing leads to a decline in overall social inventory levels and costs.**

**Third, new urban distribution like the State Grid, plug-and-play.** Fully share the urban distribution capacity of society and squeeze out waste.

**Fourth, a distributed social logistics structure, like an ant colony.** Kevin Kelly wrote in *Out of Control* that linear structures are factory-like, focusing on processes, a single line, and link control. Parallel networks, like the internet or telephone, allow each individual to have autonomy and follow their own rules.

Today, the "FMCG Urban Distribution Alliance" was established. Personally, I believe the alliance is the prototype or initial stage of this network. Once this network is built, anyone can plug in. If I have forklifts, vehicles, spare capacity, or spare warehouse space, I can plug in anytime and contribute inventory. Why must distributors hold inventory? Social e-commerce has achieved zero-inventory sales, unlike traditional agents who sell to distributors, which is a transfer of inventory. Social e-commerce achieves one-time inventory placement and one-time delivery, but traditional sales still involve multiple transfers and profit-sharing at each step.

**Who Is Urban Distribution For?**
After the vision, let's return to reality: who is urban distribution for? Previously, Wanchaobang did urban distribution when it wasn't hot. At the same time, the industry and capital didn't pay much attention to this track until the end of last year and the beginning of this year, when it suddenly became hot.

**Based on my experience with FMCG urban distribution, if there is any real profit-making, I believe it's less than 1%. I don't know if anyone here is making money from FMCG urban distribution, but Wanchaobang hasn't. However, we have achieved one thing: we've figured out the logic of losing money.**

I want to share the path Wanchaobang has taken over the past two-plus years and my personal advice. Truth is often harsh, but it's also the most useful.

If you agree that making money in FMCG urban distribution is very difficult, that's a rational start. In fact, FMCG urban distribution is really not a good business, at least not currently. If I had a choice and treated it as a business, I would definitely do commercial flow, because with the same effort, you can make much more money than in urban distribution.

**Who is urban distribution really for?**

**First, I don't think FMCG urban distribution is for dealers.** This doesn't mean no dealer can succeed in transforming to urban distribution, but those who succeed will definitely not exceed 1%. It's not that this path is absolutely hopeless, but the hope is too slim. You can't equate individual success with replicability; that's different. Success might be due to unique historical resources and past background. **If we believe something has only a 1% chance of success, I think we shouldn't do it.**

In the past, a dealer's logistics was just a department, and internal coordination was easy. But when you open an internal logistics function to society, the entire organizational model and management mechanism are completely different. The warehouse can't be the current one; if you invest 1 million in a three-dimensional warehouse, when will that investment be recouped? The original drivers were employees, and any allocation was fine. Now drivers are service providers. If you expand, can you rely entirely on your own capacity? That's unrealistic. Will outside vehicles listen to you? Although professional urban distribution and capacity companies can serve you, they are expensive. So I think FMCG urban distribution really shouldn't be for dealers.

**Second, who are the important players in urban distribution? Professional logistics companies. Traditional logistics companies transforming—I think that's possible, but they need partners, commercial flow, and someone to bring them customers.** If I'm a logistics company, I can cooperate with brand owners, but if I'm only in one region, the chance of getting brand business or quality business is relatively small. No brand owner will go to every place to negotiate with many logistics companies. Brand owners prefer to trust a branded urban distribution company. Therefore, the value of a single point in urban distribution is small. Traditional logistics companies have vehicles, people, and management mechanisms; it's feasible to connect my single-point system to a network.

**Third, participants with technical backgrounds, whether tech companies or new entrants like Wanchaobang.**

**Who Should Embrace New Urban Distribution?**
Who should embrace new urban distribution? **My view is that B2B without brand owner participation is nonsense; similarly, new urban distribution without heavy brand owner participation to change the logistics model is still difficult.**

Brand owners should embrace new urban distribution, and they must embrace it, because only new urban distribution can help solve their problems: **First, the issue of distribution data. If you still use traditional dealers, you'll never get data because dealers themselves are not digitized.**

**Second, only new urban distribution can achieve standardized delivery.**

**Third, only new urban distribution can help solve the balance between inventory and market sales for long-tail products.** Only with new urban distribution's full-network and all-channel delivery, with a provincial warehouse, can every county and every store sell, and it handles delivery. This can solve brand problems. Only by changing the logistics model can tens of thousands of salespeople be freed up, with delivery completely separated and fully digitized. Nowadays, chains are developing rapidly, new retail is integrating online and offline, and making big advances. If brand owners don't make bold changes, many will fall behind. Many brand owners want painless reform, but that's a false proposition. Which surgery doesn't bleed? Which revolution doesn't hurt someone? It's impossible.

**The Value of Wanchaobang's Experiment**
First, Wanchaobang uses its two years and ten months of experience to tell everyone how difficult the urban distribution path is. For friends who are ready to enter this field, if you are prepared to shed three to five layers of skin, welcome. So far, Wanchaobang has truly achieved multi-scenario, multi-terminal, and multi-status order delivery in the FMCG urban distribution field. What makes FMCG complex? Its terminals vary in size, including chains, hypermarkets, high-speed rail, convenience stores, gas stations, and prisons. Each delivery is different, with very fine granularity. Wanchaobang has spent over two years on these diverse scenarios and accumulated a relatively standardized delivery system.

The second value is the TMS. Our TMS can only be used in FMCG; other industries can't use it. It processes 3,000 orders daily, of which only 2,500 can be delivered normally, 200 require appointments, 100 require specified arrival times, and 50 have vehicle restrictions. Although the plan is good and economical, it can't be executed. TMS is definitely not just route planning. Wanchaobang has used machines and systems to solve 90% of the complex delivery scenarios over the past two years.

What will Wanchaobang do next? Currently, we only operate in Chengdu and two direct-sales markets. Next, we will cooperate with service providers in various regions. Because Wanchaobang has an FMCG delivery system, delivery SOPs, and project management capabilities, we welcome partners with real delivery capabilities and standardized management to work together.

Click **Read Original** to see more highlights from the 2018 China FMCG Urban Distribution Logistics Conference...
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