Just like the development of C-end e-commerce, the evolution of B-end e-commerce also takes time. In this process, Yantai Yishang, a distribution e-commerce platform in Yantai City, Shandong Province, has firmly seized the emerging e-commerce opportunities and provided a good model and platform for a new round of distributor transformation. From logistics to platform, the two complement each other Yantai Yishang Logistics is the largest modern warehousing and logistics platform in Yantai and also the largest B2B e-commerce platform locally. In simple terms, retail stores place orders for goods from various distributors on Yantai Yishang's online platform, and Yantai Yishang can quickly deliver the goods from various distributors to the stores in a unified manner. Where did Yantai Yishang come from? The predecessor of Yishang Logistics was Yantai State-owned Textile Company. In 1992, during the reform of state-owned enterprises, Liu Zhongmin led a few old subordinates to take over this restructuring project. Liu Zhongmin renamed the restructured textile company to Yantai Zongxin Food Company. The restructured enterprise developed rapidly. From 1992 to 2002, in ten years, Yantai Zongxin Food Company's revenue went from zero to an annual turnover of about 500 million yuan. To make logistics more efficient, in 2002, Liu Zhongmin bought 100 mu of land and built the largest modern three-dimensional warehouse in Yantai at that time. With this foundation, Liu Zhongmin adjusted the company's strategy, positioning itself as a professional centralized warehousing and logistics distribution platform, and established Yantai Yishang Logistics Co., Ltd. Distributors only need to hand over their goods to Yishang Logistics, and Yishang can provide a one-stop solution covering order, warehousing, sorting, loading, distribution, and payment collection, greatly reducing distributors' fixed assets and personnel investment. Thanks to its powerful backend information management system, Yishang can now deliver to all supermarkets within a 35-kilometer radius of Yantai more than twice a day! And the logistics cost is only 30% of what distributors originally spent on self-delivery! Through years of accumulation, more than 300 agents in Yantai have settled on the Yishang platform, and almost all retail stores in Yantai place orders on this platform. The warehousing scale has also expanded from one warehouse to four warehouses: one for split-picking, one for whole-case storage, and one under construction. The warehousing area has reached 70,000 square meters (with 5-story three-dimensional shelves), and the platform's annual transaction volume has reached 6 billion yuan! Flat model to seize customer market Currently, about 300 distributors have settled in Yantai Yishang, accounting for 15%-20% of the entire commercial market in Yantai. There are more than 9,000 stores in Yantai. If distributors want to deliver to these 9,000 stores themselves, they would need a huge number of personnel, vehicles, and warehousing. Most distributors rely on second-tier distributors to help cover, but second-tier distribution involves repeated loading, warehousing, and delivery, which makes costs quite high. Through the Yantai Yishang platform, goods are delivered directly to stores through the backend logistics system, saving distributors at least 10% in costs from transfer links. In addition, because Yantai Yishang implements centralized warehousing and distribution, it can save distributors 70% of logistics costs. According to Liu Zhongmin, logistics costs account for about 70% of a distributor's total costs. If centralized warehousing and distribution can save 70% of that, then the distributor's total costs can be reduced by about half. Yantai Yishang's profit model is also simple. Besides charging a 3% platform management fee, under the flat management and intensive distribution model, Yantai Yishang's backend warehousing and distribution fees are also about half cheaper than the market. This year, FMCG B2B is particularly hot, and many distributors are confused about how to transform in the face of the internet. Liu Zhongmin said: "In fact, distributors have been working hard these years, making money is difficult, and investment and financing losses have even ruined their social credibility. So they are cautious and won't easily transform, which is normal." In Liu Zhongmin's view, this also reflects the social division's 80/20 rule—20% of people move forward, 80% are eliminated. For Yantai Yishang, the goal is to be the 1% that leads the 20% forward. No one can do everything. Society will inevitably eliminate a large number of people during development; otherwise, there would be no progress. For distributors, the B2B model is a platform, a management software platform, and the key to this model is logistics. If distributors choose to do B2B, it is not unfamiliar nationwide. In a certain city, there will be a dozen companies doing it, but many platforms are almost on the verge of collapse now. Why? Because this model is only the tip of the iceberg above the surface, and the real foundation under the iceberg is the logistics and distribution system. The sudden rise of B-end e-commerce, especially the interception by JD.com and Taobao, shows that the B-end e-commerce model is very correct and the direction is unquestionable. Those distributors still watching with worry should also reflect and change. Teacher Liu Chunxiong's comments on the Yishang model: Yantai Yishang has the following two major value points: First, the e-commerce platform. Under the powerful ERP enterprise management software, retail stores can place orders via mobile APP or scanning codes, which is convenient and fast; Second, warehousing and logistics. Retail stores purchase goods on Yantai Yishang's online platform, and through Yishang Logistics' strong warehousing and distribution capabilities, they deliver twice a day, once in the morning and once in the afternoon. The savings in logistics costs, I think, greatly support the e-commerce platform, which is the weakness of e-commerce like Taobao. Agents hand over distribution to Yishang, so what do agents do? Agents can focus on promotion. Originally, agents' personnel were mostly logistics staff, with few frontline promotion staff. Additionally, poor management led to high costs. Now agents all do promotion, and even finance is handed over to Yishang. Yishang's finance is even better than what agents did themselves. Data and information are all in Yishang, making financial information very easy to handle. Entering capital operations When orders are placed on Yishang, funds enter Yishang. Yishang can then engage in capital operations. Currently, Yishang cooperates with agents and banks, offering pledge loan business because agents have goods in the warehouse. If they can't repay, the goods can be sold. Initially, Yishang did not occupy agents' funds, but some agents found daily settlement troublesome, so now settlement is not same-day, which creates opportunities for capital operations. Increased taxes? Now, many provincial, municipal, and county leaders visit and are very interested in this model. Taxation is an aspect visitors are interested in. Many merchants are sensitive to this because originally sales were a black box, but now they are transparent. Will they be taxed more? The tax bureau can easily grasp sales figures. In fact, e-commerce currently enjoys tax exemption, which is simpler than before. Of course, taxes will be collected in the future, and when e-commerce is taxed, those non-transparent merchants will be punished more severely; otherwise, it would be unfair. Is it useful for distribution e-commerce to only do platforms? According to President Liu, there are now 4,000 platforms in Yantai. I didn't ask for details. I guess some agents have settled on Yishang Logistics, some are doing it themselves. There must be more than 300 agents in Yantai, and retail sales should be more than a few billion. But is it useful to only do platforms? I know some distribution e-commerce platforms have only platforms without backend. To develop quickly, they can only burn money. **Yishang does not burn money, of course, because it originally did trading and distribution. But if the backend logistics did not bring such large cost savings for settled merchants, it might have to burn money. Now there are some distribution e-commerce platforms that are burning money. Recently, I have also contacted some county-level agents who are eager to try e-commerce. Pioneers like Yishang have a demonstration effect. Agents believe in demonstration effects more than theories. More importantly, local governments have supportive policies, such as building county-level e-commerce parks, which allow land acquisition, e-commerce real estate, and logistics real estate. Some counties subsidize a park with 5 million yuan, which is very attractive to county-level agents. So some agents bring county or city mayors to visit Wanshangou, and provincial leaders also visit Yishang. Shandong SASAC injected capital into Yishang, a small city-level e-commerce platform. I believe there is the shadow of provincial leaders. The era of distributed e-commerce Distribution e-commerce also created China's true distributed e-commerce era. A county can only have one platform. Whoever builds it first owns it. Other merchants either join or build their own platform; there are only these two paths. A provincial capital or city may have one or multiple platforms. Some say it might be a platform alliance. But overall, there won't be too many. Under the B2b model, it is easy to expand to B2C or b2C, forming a closed-loop e-commerce. After the visit, I thought that in the past, Ma Yun said e-commerce is disintermediation. Now middlemen are actively participating, which may change the structure of e-commerce. Centralized e-commerce like Taobao and JD.com, although very popular now, I think has little future. Centralized e-commerce is just moving centralized commerce from offline to online. It can even be said that centralized e-commerce is a commercial portal website. Judging from the current decline of portals, I am not optimistic about centralized e-commerce, despite their contributions to China's e-commerce enlightenment. The future of e-commerce belongs to distributed e-commerce. I have been proposing the concept of distributed e-commerce since the end of 2014 and early 2015, but recently I have mentioned it less, mainly because I haven't seen a good business model for distributed e-commerce. Centralized e-commerce will eventually be dragged down by online differential rent, just like offline stores are dragged down by rent. Whether it's offline commercial centers or centralized e-commerce, they haven't changed the essence of charging "differential rent"; only the method has changed. Offline charges rent, e-commerce charges traffic fees, but the essence is the same. Yishang's model can also be extended, such as doing B2C or grafting b2C, forming a distributed e-commerce pattern. Although distributed e-commerce may also have differential rent issues, it will never be as severe as centralized e-commerce. If one was originally a big merchant, it's easy to do; if one doesn't understand or just burns money, I think there's no hope. The success of Yishang Logistics may trigger imitation and learning. Because county-level markets cannot accommodate too many platforms, now is the time to build platforms. Because China's channels and agents are fragmented, Yishang's integration through e-commerce is very convenient. In summary, we can see that the value of Yishang Logistics model is more valuable than the e-commerce platform. 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