---
title: "Why I'm Skeptical of Wu Xiangdong's 'Dida' E-commerce Platform?"
description: "A recent hot topic in the liquor industry is the 'Liquor Industry Heroes Alliance' led by Wu Xiangdong, chairman of Huaze Group and founder of Jindong Capital. The alliance's offline seminars have been held 17 times with over 6,000 participants, and its business is carried on an e-commerce platform called 'Dida'. The model is decentralized B2B and O2O, uniting distributors to transform traditional industries with internet, with the slogan 'No competition, only alliance!' and profit through big data, supply chain finance, and logistics."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-06-27"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/why-i-m-skeptical-of-wu-xiangdong-s-dida-e-commerce-platform-11a096cf.md"
original_source: "https://mp.weixin.qq.com/s/jF6idJg01gToSsg6M3UhSg"
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---

# Why I'm Skeptical of Wu Xiangdong's 'Dida' E-commerce Platform?

> A recent hot topic in the liquor industry is the 'Liquor Industry Heroes Alliance' led by Wu Xiangdong, chairman of Huaze Group and founder of Jindong Capital. The alliance's offline seminars have been held 17 times with over 6,000 participants, and its business is carried on an e-commerce platform called 'Dida'. The model is decentralized B2B and O2O, uniting distributors to transform traditional industries with internet, with the slogan 'No competition, only alliance!' and profit through big data, supply chain finance, and logistics.

A recent hot topic in the liquor industry is the 'Liquor Industry Heroes Alliance' led by Wu Xiangdong, chairman of Huaze Group and founder of Jindong Capital. The alliance's 'Internet+' seminars have been held 17 times across the country, with over 6,000 participants. The platform carrying the alliance's business is an e-commerce platform called 'Dida'.
**Its model is decentralized B2B and O2O, uniting distributors to undertake these two traditional industry + internet businesses. Its slogan is 'No competition, only alliance! Only ally with upstream and downstream!' and it profits through big data, supply chain finance, and supply chain logistics.**
**Wu Xiangdong's trillion-yuan 'blueprint' for Dida e-commerce and the 'five-year, three-step' strategy are:**
Starting from the liquor B2B sector, the alliance will use the 'Dida' B2B platform to help members move most of their business online, completing the internet transformation for alliance members. When B2B business reaches a certain level, the alliance will leverage the channel network system mastered by allies to smoothly connect retail terminal outlets, help them complete internet transformation and provide ultimate service, then integrate major FMCG distributors into Dida's B2B and O2O platform, further expanding the boundaries of Dida's business and the scale of platform transactions.
Wu Xiangdong pointed out that the essence of the B2B model is to win by scale, not by product price differences. Therefore, if the platform's business volume does not reach trillions, it is worthless; platform scale is just the foundation.
The core of 'Dida's' profitability: first, based on the liquor B2B business as a breakthrough, extending downward to O2O, and through derivative financial services, providing allies with efficient financial services such as lending and wealth management; second, through unified warehousing and distribution, saving costs and increasing efficiency, and opening to the FMCG field to further enhance warehousing service value. Finally, achieve revenue through 'big data'.
Wu Xiangdong stated: The only way the platform can gain significant benefits is not from selling liquor itself, but from the big data generated by allies' online transactions; plus the big data generated between retail terminals and hundreds of millions of consumers. These two big data sets are the core value.
**Summarizing the above strategy, the 'Dida' under the China Liquor Alliance aims to move traditional liquor distributors' business online, help distributors complete internet transformation, then help the small shops under distributors complete internet transformation, and use the unified warehousing and distribution logistics system to extend business into the FMCG field. The Dida platform strategically clearly states that it does not rely on price differences to make money, but will profit through big data, supply chain finance, and supply chain logistics services.**
I have been following B2B in the consumer goods sector for some time and have deeply studied dozens of B2B platform models. Frankly, I am very pessimistic about the 'Dida' e-commerce platform built by the China Liquor Alliance.
Before explaining why I am not optimistic, let me tell a story:
In a barn lived a loyal old cat and a group of mice that loved grain. In the cat-mouse confrontation, the mice were clearly at a disadvantage. Constantly, some mice could not resist the temptation of grain, took risks, left the mouse hole, and ended up in the cat's belly, never to return.
The mice, after painful reflection, gathered to discuss countermeasures. While everyone was thinking hard, not knowing what to do with the old cat, a clever mouse suddenly thought of a brilliant idea. It said to everyone, 'Why not hang a bell on the cat's neck? Before the cat pounces, we can hear the bell and flee?' The mice cheered and clapped their paws, thinking the thousand-year cat-mouse conflict was solved. After a while, another mouse, not knowing when to stop, asked, 'Who will hang this historically significant bell on the cat?' All the mice looked at each other, speechless, and finally dispersed in discord.
As a business model, having only a great strategic vision is not enough. The core is having a tactical path to implement it and the execution ability to achieve goals along that path. But for allied merchants with loose relationships and their own interests, it is too difficult to make this happen!
The 'Dida' B2B of the Liquor Alliance is like the story above: the idea is good, but where is the path for implementation? On the surface, the strategy is very clear, but the implementation path is very difficult. In general, there are four difficulties that current liquor platforms cannot solve:
**1. Existing liquor distributors' stock cannot be moved online**
The main business of Chinese liquor distributors is currently done offline, ranging from tens of millions to hundreds of millions. To achieve these transaction volumes, distributors have invested a lot of personnel, vehicles, warehousing, and other resources. How can this stock be moved at will? A large amount of sales, service, and public relations work cannot be carried by online platforms; it still needs to be handled by distributors themselves. **If only transactions are moved online, it is meaningless, and what about their own business? Should they resign or stay?**
**If they hand over existing sales to the platform? Traffic is in the platform's hands; which distributor would be at ease?**
Unified warehousing and distribution can indeed reduce costs, but this is not the pain point for distributors. The pain point is that liquor is not selling! Lack of sell-through is a problem for the entire liquor industry, not a matter of distributor efficiency.
**Moving distributors online is like demolishing an old city. Moving liquor distributors online is like the urban villages in core business districts of big cities. How much capital is needed to demolish an old city with an annual output value of over 550 billion yuan?**
Moreover, the internet transformation of the liquor industry requires not only the 'Dida' platform but also: **distributors' own ideological change, a large number of internet marketing professionals who understand liquor, teams with rich operational experience, and the cultivation of local online purchasing habits**. These four conditions must match. How many markets and liquor distributors across the country have these resources?
**Conclusion: Without the pain points and rigid demand for moving online, existing liquor distributors cannot successfully reform themselves.**
**2. The platform cannot create incremental sales for new products**
The brand concentration in the Chinese liquor industry is very low, and regional fragmentation is very serious. This is caused by specific history and different regional cultural backgrounds. Except for a few famous liquors, there are few national mass consumer brands. This determines that consumer cognition overly relies on local people and cultural factors.
**Liquor is not food or beverages. Especially for liquor priced above 100 yuan, price and cost have decoupled. What is sold is relationships and culture, which are carried by people. Liquor distributors rely on local connections and resources, through the influence of opinion leaders and brand penetration, to cultivate consumer habits and drive sell-through. These marketing methods cannot be achieved by platform companies through brand power or advertising, let alone having resources and energy to operate new products.**
Moreover, where is the core value of B2B in this?
**3. Product sell-through relies on promotions, and traffic acquisition costs are huge**
**In this industry, prices are opaque, with high profits, even excessive profits. This is the source of motivation for liquor distributors. Once moved online, if the platform does not squeeze product profits to run promotions, there will be no traffic. Once squeezed, product profits will quickly be drained by the platform, which distributors cannot accept. The opposition is inherent in their genes; how can they form an alliance?**
The recent incident where Yijiupai's Taizhou warehouse was blocked by Niulanshan distributors has proven this point well. Platforms and distributors are substitutes; they cannot merge into one.
**4. Small shops have no rigid demand for online ordering**
Let's talk about small shops. They open for business to make money. **They won't take goods if the price is not low, if the product's consumer awareness is not high, if service is not good, or if there is no credit sales. These all need to be handled by distributors' sales personnel through persuasion, public relations, and service. Does the platform need ground promotion? What pain points can online ordering solve for small shops that offline cannot solve?**
If the platform does not build its own chain stores and standardize procurement, it fundamentally cannot solve the problem of store ordering.
**And building its own stores is a problem of another industry. Even harder!**
**The core value of B2B lies in compressing levels, reducing channel costs, unified warehousing and distribution, improving channel efficiency, transforming stores, increasing sales per square foot, and through integrated supply chain transformation, making the entire supply chain operate efficiently. These premises are all based on the natural opposition between distributors and platforms, and distributors' own lack of ability to change.**
As for big data and supply chain finance later, the premise is to first build up platform traffic, then consider it.
I see that for liquor industry B2B, existing liquor brands and products have no significance for online transactions. Success is a long and arduous road.
On the contrary, B2B platforms in other industries, such as Meicai, Caiba, Tongying Tianxia in the catering supply chain, and 51 Ordering and Huimin.com with their own warehousing and distribution logistics, after deeply transforming their own industries, will incidentally take orders from liquor small shops. Of course, they will definitely take locally popular liquor brands.
**Warehousing and logistics, finance, sales, public relations, and service are the five essential elements that distributors carry from factory to small shop in FMCG. These functions were originally handled by one role, the distributor. However, social division of labor is inevitable. So, even without the internet or B2B, these five functions will evolve from being handled by one distributor to being shared by two or three roles, or even four or five. That is, the functions borne by a single role will become fewer and fewer, and the overall trend of division is toward high efficiency and low cost. This is evolution.**
If a B2B platform wants to enter the business form under the A-B relationship and build a platform between distributors and small shops, it must either help distributors take over the core functions through value-added division of labor, or replace Party A and cooperate directly with factories, like JD and Huimin.
If you only do one thing to the extreme, you become infrastructure, like Yishang and Weijie City Distribution.
If a B2B model does not possess the above five elements, nor does it add value to them, such a platform, no matter how bustling and lively, is just a passing cloud.
The above summarizes four major reasons why 'Dida' will find it difficult to succeed. Of course, 'Dida' will face more than just these four issues. Not only 'Dida', but all B2B platforms that do not build their own terminal stores will find it hard to succeed.
**In early July, this platform will organize the third B-end e-commerce inspection tour to inspect B-end e-commerce platforms that are useful for distributor transformation. Interested friends can long-press the QR code below to register.**
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**Interested distributor friends can long-press the QR code below to register.**
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