B2B has barriers, very high barriers. Unlike B2C, where anyone can say something. An ordinary person, if they don't understand B, don't they understand C? But B2B is different; as soon as you start speaking, someone might ask: "Are you new here?" In the previous commentary on New High Bridge, someone commented that they read it three or four times and still felt confused. Some B2B problems can be figured out with your feet. For example, using strong brands to drive traffic. Who in B2B hasn't thought of that? But remember, there's a "fallacy of composition" in economics: what everyone can think of is also what is ineffective. Some B2B problems require brainpower. For example, order density and average order value in delivery. Once someone raises it, everyone agrees. But that's the goal; how to achieve it? There seems to be no answer yet. There are also problems that only time can answer. For example, the core term of this article, "category integration," must be explored over a long time to find the answer. When you tell others the answer you've found, they might be distracted, perhaps because they haven't made enough mistakes. On April 16, I visited Hunan's B2B company New High Bridge for learning, and incidentally shared some thoughts, which they uploaded to their official account, formally raising the issue of category integration. The Answer Given by Time I first felt this issue last year when I visited Hunan's B2B platform "Wanshang Yizhan" for learning. General Wang (Wang Shaomin) introduced the situation, and I realized that Wanshang Yizhan is a supply chain service provider focused on category integration. At that time, I thought it was just a case, because what was popular in B2B then was not this. At the 2016 Autumn Sugar Fair, Zhao Bo gathered many B2B bigwigs for a night chat, and I noticed a type of low-key B2B. They weren't as flashy as those with huge financing, but developed rapidly in a low-key manner. These low-key B2Bs had a commonality: they were once channel distributors for a category, transformed into B2B, and started horizontal development. Although low-key, they grew fast. More importantly, they didn't burn money; they had traditional supply chains. At that point, my impression of category integration deepened. This visit to New High Bridge, because I followed the delivery to visit stores, deepened my feelings. Especially since New High Bridge started store integration in 2008, inadvertently achieving supply chain category integration. So I formally proposed this concept. When I talked about supply chain category integration with people who have traditional channel experience, most were excited. Those without channel experience seemed indifferent. Some answers only come after experiencing storms to see the rainbow. Supply chain category integration seems to be like that. Why Is It the Soul of B2B? I want to use a word to express the position of category integration in B2B. I definitely won't use "essence" because I don't easily talk about essence; it's too distant. I thought about the word "soul" for a while. I think "soul" is very appropriate. Category integration, if the B2B platform is clear, everything becomes clear. Isn't that the soul? Xu Zong (Xu Jiabao) of B2B "Qiaonong Food Materials" expressed it like this: the storefront is the image, the system is the nerves, the category is the heart, and delivery is the blood. 1. Category integration is the handle for "controlling goods upward and controlling stores downward." Controlling goods upward and stores downward was first proposed by Zhao Bo. First, talk about controlling stores downward. How? Current methods are one, changing the signboard, and two, self-operation. Changing signboards is questioned by everyone, waiting for successful cases to prove it. Self-operated stores are irrelevant to B2B. Using categories to control stores is soft control. Without intending to control stores, they are actually controlled. Group member Liu Ping, who works in retail, explained: From category integration, plan profits, use profits to manage terminals, then you understand New High Bridge. Then talk about controlling goods upward. B2B wants to control strong brands; no way. Alibaba and JD can't do it either. They might get the goods, but they definitely can't achieve the goal of controlling goods. Most categories in category integration are not strong categories; they are the "long tail" of categories. Some categories have low concentration and don't need control at all. They just need integration based on store needs. 2. Category integration is the common profit source for stores and platforms. The platform's profit structure is actually the same as the store's. Platforms use big brands to drive traffic; don't stores do the same? Since strong brands drive traffic, where does platform profit come from? Some say platforms don't make money and have financial means. That's distant water; it doesn't quench immediate thirst. It's like saying "XXism" is about to be realized. Category integration first creates profits for stores. Only last does it create profits for the platform. 3. Category integration is the means to achieve order density and average order value. Strong brands don't create stickiness; whoever offers special prices gets the orders. Order density and average order value presuppose customer stickiness. If store performance is poor, category integration definitely has problems. I've recently observed this. Comparing Changsha and Zhengzhou, in Changsha, small categories and store category integration are much better. Wei Zhe said B2B doesn't generate increment. But B2B can change the distribution of traffic among stores. Two adjacent stores, if one has good category integration, traffic will concentrate there—that's stickiness. Once stickiness is strong, order density and average order value will rise quickly. New High Bridge's order density and average order value are much better than those platforms that use low prices to drive traffic. I told General Tang and General Ren of New High Bridge, "You might make others envious." Using category integration to connect multiple fields, once clear, everything is clear. Isn't that the soul of B2B? Who Is Doing Category Integration? Manufacturers and distributors do brand promotion, not category integration. So who did category integration in the past? First, wholesale markets. When stores go to wholesale markets to purchase, they naturally do category integration. General Guo (Guo Huixiong) of Jiangxi's "Palm Hongcheng" might have come from a wholesale market background and reacted quickly. "Wholesale markets won't die, probably because of long-tail category aggregation." His platform is wholesale market matching, but can matching truly form category integration? Small shop owners integrating by themselves at wholesale markets definitely has problems. Second, second-tier distributors. "First-tier do brands, second-tier do categories." I proposed this concept around 2000. The integration by second-tier distributors is similar to current platforms: big brands at low prices drive traffic, small brands make money. But their integration orientation has problems. The current category status in small stores is the result of second-tier integration. Now it's B2B platforms' turn to do category integration. Platforms naturally have a broader vision than second-tier distributors, especially since many call themselves "super second-tier." What Is the Result of Category Integration? The result of category integration is customer stickiness. More specifically, it's concentrating orders and excluding other platforms or suppliers. In platform competition, no one has an advantage in big brands. Even if platforms keep burning money, there will be a day when they stop. Competition beyond strong brands is competition in category integration. In the past, salespeople from manufacturers and distributors often did deep cultivation, distributing goods, arranging goods, and occupying shelves. This still happens now. This competition is harmful to stores, especially when it interferes with each other and the stores. For example, when arranging goods, they occupy large display areas, and competitors do the same. Stores are already annoyed. During my research in Changsha, I found that a store downloads no more than three supply chain apps, usually one or two at most. If you're not in the top three, you're in danger. How to Do Category Integration? China's business environment lacks awareness of category integration. So even if you want to do it now, it's hard to find suitable people. Category integration is mostly in industries with low concentration, which were previously not highly noticed. Or even in high-concentration industries, they are the "long tail" of the industry. Set up category managers on the platform. First have the position, then have the expertise. There's no other way. What products does category integration involve? It's "long tail" products. There are many "long tail" products with poor quality stability and poor market coverage. In short, because they are usually not noticed and have many problems, integration is so valuable. Some industries are naturally fragmented and need more category integration, such as leisure food, seasonings, ingredients, fresh produce, stationery, frozen products, baby products, building materials, hardware, etc. Of course, platform data helps with product screening, but data is the result of the past; maybe the past was problematic. Category integration is not just about screening products; it also includes category display methods, display order, price system, etc. Source: Teacher Liu's Forum (ID: liuchunxiong1964) -END-