With the launch of Alibaba's 1688 Retail Connect and JD's New Route, it has stirred up a thousand waves in the retail industry, leaving traditional retail in the psychological shadow of 'the wolf is coming.' However, after in-depth research on business models like Retail Connect and New Route, the author believes that both Alibaba's Retail Connect and JD's New Route will be projects that are 'praised but not popular.' So why does the author not favor the B2B models represented by Alibaba and JD?

Model Issues: Everyone Sets the Stage, They Sing

The essence of a business model is to create new value. Taobao changed the way clothing is purchased, making clothing prices more affordable, and thus became what it is today; JD changed the low-frequency home appliance sales model, reducing the cost of purchasing home appliances, and thus became what it is today. In terms of price and timeliness, frugal Chinese people choose products and services with higher cost-performance, while also solving the problem of diverse choices. Now Alibaba and JD want to simply copy the low-frequency online shopping model of clothing and home appliances to the high-frequency, essential, and time-sensitive FMCG sector, which is clearly not advisable.

The above figure is the project model publicly announced by Alibaba's Retail Connect. From the model itself, it is not difficult to see that Alibaba's essence is to establish a 'manufacturer (imported goods) - Alibaba Retail Connect - terminal - user' offline connection model, which is inherently about removing intermediate links and being exclusive. However, Retail Connect recruits 'city partners' to develop local agents, but in essence, it puts a high-sounding 'city partner' coat on 'salesmen,' doing the work of salesmen while wearing the partner coat.

Therefore, the model represented by Alibaba, which wants to have everyone set the stage while they sing, is theoretically valid but clearly violates the production relations of modern society.

Product Issues: Pseudo-High-Frequency Cannot Resist Real Demand

Channel expansion to lower-tier cities is a major trend, with the essence being to improve product turnover efficiency and reduce transaction links. Therefore, both manufacturers and e-commerce platforms want to get a piece of the pie. However, we have also seen that the product sales of these e-commerce platforms have not achieved ideal results. The essence is that Alibaba leverages its advantages in non-high-frequency products, such as cross-border goods and Taobao products. Although the living standards of the entire community have improved, it still cannot change the current demand for daily non-planned goods like 'salt, soy sauce, vinegar, and tea' that are high-frequency and essential. Alibaba's 'supermarket' product structure copied to small and beautiful convenience stores clearly violates the 'convenience' attribute of convenience stores, and users' timely needs are not met. If one insists that Alibaba's products can create value, it is only adding icing on the cake based on convenience.

On the other hand, many manufacturers have also started to do e-commerce. We can imagine if manufacturers succeed in this, what will our future life be like? Buy soy sauce on Xinhe or Haitian's platform, buy beer on Tsingtao or Snow's platform, buy rice on COFCO's platform... Thinking about this, the author is already collapsing. Such a fragmented life clearly violates users' consumption needs. In the future, users will not need a single product or service but a systematic life solution: 'I want it anytime, you must be there anytime, and come immediately.'

Profit Distribution Issues: The Model's Genes Determine the Future Is a Blank Check

Earlier, I mentioned the value of Alibaba's city partners. All connections have nothing to do with city partners; partners are just 'extraneous branches.' Not to mention whether they are salesmen, Alibaba charges city partners an annual fee of 6,000 yuan, a deposit of 5,000 yuan, and does not pay salaries. How much benefit can partners really bring to our distributors?

Traditional distribution, though with thin profits, can win by volume. However, Alibaba's relatively low-frequency and incomplete product sequence, including imported goods, a small number of manufacturer goods, and Taobao brands, not only gives partners low gross margins (according to existing public data, Alibaba Retail Connect gives city partners a return of only 1-10%), but most importantly, it is difficult to increase volume in existing 'mom-and-pop stores,' making it hard to form economies of scale. This is because Alibaba's distribution mechanism is difficult to change the 'sitting merchant mindset' of traditional mom-and-pop stores.

For small stores, non-time-sensitive products like imported goods can tolerate the waiting time for express delivery, and there is no need to buy from a 'mom-and-pop store' that has no guarantee and a poor image, which contradicts the image of imported goods. This is the first point. Second, slow-turning imported goods not only occupy limited and expensive in-store space but also tie up the store's capital, squeezing the sales opportunities of other hot-selling products.

Therefore, in an era of sticking together for warmth, the model represented by Alibaba unilaterally plunders stakeholders. Once these problems are exposed, it is destined to face resistance from city partners and disdain from small stores!

Seeing this, some distributors may say, 'Then we don't need to worry about the fear brought by the internet.' Is that really so?

Looking at the evolution of history, all changes are because production relations cannot adapt to the development requirements of new productive forces. The steam engine drove the first industrial revolution, the second brought humanity into the electrical age, the third into the technological age, and the advent of the internet era is now giving rise to the fourth revolution in human production relations! The essence here is that old production relations cannot adapt to the development needs of new productive forces. So whether it is B2B, B2C, C2C, or F2C, if they do not fundamentally adapt to the development needs of new productive forces and do not improve transaction efficiency and effectiveness, they will inevitably be eliminated by the times. So whether you need to transform or will be eliminated, fellow distributors can look at your own production efficiency—whether it is declining or unchanged—and draw your own conclusions.

So who represents advanced production relations? Before answering this question, let me summarize the current predictions in the retail industry that represent trends or new production relations:

  1. Small formats represented by modern convenience stores will become the future development trend. According to the experience of developed countries, when per capita GDP reaches $5,000, the convenience store industry enters a rapid growth period.

  2. Consumption scenarios will become more contextual, and community-based platform unicorns will emerge. In various life scenarios, the office scenario gave birth to Ele.me, the dining scenario gave birth to Meituan-Dianping, and the travel sector gave birth to Didi. So the largest consumption scenario will soon give birth to new unicorns.

  3. The integration of online and offline, 'Internet + Retail,' will become the standard for future retail. According to McKinsey's '2015 China Digital Consumer Survey,' 71% of Chinese digital consumers are already using O2O services, and 97% of them say they will continue to use O2O services or even increase usage frequency in the next six months.

  4. In the future, there will be no regional platforms; only national platforms with localized operations. From the experience of traditional e-commerce, only national internet companies exist, not regional ones. The larger the scale, the lower the marginal cost, and the more obvious the economies of scale. Regional platforms are difficult to compete with national platforms in terms of resource integration and strength.

Based on these predictions, who will represent the future direction of development?

Through previous research on e-commerce platforms across the country, the 'Internet + convenience store' business model represented by Beiquan has effectively solved the problems currently faced by the traditional retail industry.

Partner Rights Protection: City partners establish city companies to build the platform together, fully leveraging the concept of 'local people doing local things,' mobilizing local partners' resources to carry out Internet + convenience store business expansion, directly controlling terminals, ensuring the rights of city partners, and also solving the exit mechanism for city partners later.

National Unified Procurement + Local Collective Procurement: City partners share the supply chain platform resources built by Beiquan, including unified procurement, collective procurement, and cross-border e-commerce, to enjoy more competitive prices for higher-quality and more distinctive products and services globally. At the same time, they are also given the authority for local collective procurement. As long as the city company has advantageous resources, they can expand sales through Beiquan's national platform. Through unified and collective procurement, intermediate transaction links are reduced, intermediate transaction costs are lowered, and true logistics intensification and product integration are achieved.

National Warehousing + City Warehousing: The city warehousing system serves the daily supply needs of Internet + convenience stores in the city, earning supply chain revenue. National warehousing reduces the warehousing costs of city companies, and city warehousing distributes to stores, not only replenishing stores in a timely manner but also reducing capital and inventory occupation in stores, improving overall distribution efficiency.

Everyone Opens Stores, Diversified Operations: The Internet is a people's war. The more people participate and the more people served, the greater its value. What is the premise for launching a 'people's war'? The 'people' need food and money. The Beiquan Internet + convenience store model not only provides entrepreneurs with low-cost entrepreneurial projects but also promotes their enthusiasm through national resource integration, increasing store sales and store motivation.

On the other hand, according to statistics, the average single-store sales of convenience stores in Japan is 42,032 yuan, about 7.3 times that of mainland China; the average sales per square meter is 140,000 yuan per square meter per year, 5.4 times that of the mainland. Therefore, there is great room for improvement in convenience stores. The Beiquan Internet + convenience store model, based on modern convenience stores, integrates various community life services to form a veritable community life service platform, providing not only diverse services for community residents but also more revenue sources for store owners, while also realizing the value transfer of city partners.

Controlling Terminals, Connecting Users: The Internet has broken the traditional pyramid-shaped hierarchy. The arrival of the flat era makes controlling terminals and connecting users particularly important. This is why traditional manufacturers and e-commerce platforms are desperately developing users; only with users is there value. The Beiquan Internet + convenience store model uses city partners as key nodes to directly control terminals, grasping the discourse power of the channel. Standardized supermarket products + packaged standard services + 20-minute flash delivery service move users with service, truly cultivating user stickiness. Users with stickiness bring continuous value!

Through research on the Beiquan model, one point can be summarized: Aiming at production efficiency, continuously adjusting production relations, using internet-thinking profit distribution mechanisms, mobilizing more participants to serve more users, thereby realizing the platform's value!

Finally, the author also gives some advice to distributors: Whether it is 2B or 2C or others, transformations that do not improve efficiency are hooliganism; transformations that increase intermediate transaction links are pure nonsense; models that cannot be replicated are all false and empty.

This platform will soon organize distributor friends who are interested in transforming to B2B platform e-commerce to visit and learn from B2B platforms.

The B2B platforms for this visit include:

  • Yantai Yishang Logistics model, strong in logistics;
  • Beijing Beiquan model, strong in integrating terminal retail;
  • Piduoduo model, strong in integrating distributors.

For specific content, please click the link below to learn more.

Friends who are willing to learn with the editor can add the editor's WeChat. When adding, please reply with the keyword: 考察 (inspection).

- END-

The best FMCG distributor learning platform in China Focused 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 the 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 |

[Long press QR code to follow]