The 3rd 'FMCG + Internet Conference' hosted by New Distribution was grandly held at Chongqing Yuelai International Conference Center on November 8-9, 2017, attracting over a thousand distributors, manufacturers, and internet companies from across the country, with a full house and unprecedented scale. The following is the speech delivered by Mr. Zhao Bo, founder and chief editor of New Distribution, at the conference, which has been compiled for our readers. Respected guests, leaders, and friends, good morning! The topic I'm sharing today is based on a survey conducted by the New Distribution team over the past three months, visiting 22 cities nationwide. These 22 cities are representative among the top 40 Chinese cities by GDP, covering Northeast, North China, South China, East China, Northwest, and Southwest China. We visited over 8,000 small shops for in-depth research. Next, I'll share a brief overview with you. Among these 22 cities, there are a total of 124 platforms, with 29 operating across multiple cities and 95 in single cities. In the surveyed cities, almost all third-tier and above cities have no blank market for B2B platforms, meaning that in China's mainstream consumer goods market, the backbone B2B has fully covered these areas. In most cities, B2B has covered over 70% of the market, with 49.3% of small shops ordering from platforms weekly and 15.5% ordering daily. Our sampling is very precise. A key figure is that 10.2% have never ordered. In these cities, 90% of small shops have cooperated with B2B platforms, indicating that in China's mainstream cities, small shop owners have generally accepted B2B online ordering, which is a result of the tremendous efforts made by these platforms. When we asked small shop owners where it's convenient and cheap to stock up, they generally replied that ordering from B2B is very convenient—no need to get up early to go to wholesale markets, prices are transparent, promotions are public, and there are no issues with information opacity due to internal staff problems. Most small shop owners accept and recognize B2B. The daily sales of China's mom-and-pop shops range from 3,000 to 5,000 yuan, and their operational and professional sales capabilities are lacking, urgently needing significant improvement. There is great potential for sales growth, as we know a branded convenience store typically has daily sales between 8,000 and 20,000 yuan, leaving much room for growth. In terms of age, 70.3% of small shop owners are under 40, indicating that the industry's workforce is generally younger. As we know, the earliest post-80s generation is now 36-37 years old, meaning most small shop owners are born after 1975. Their acceptance of the internet is much higher than those born in the 1950s and 1960s, so acceptance is quite good. When asked what they care most about when ordering, price comes first, followed by fast delivery. 66.5% of small shop owners said they have ordered from B2B platforms. In economically developed cities, B2B has become an important way for most small shops to stock up. The highest coverage and penetration rate is in Nanjing, where competition is also fierce. Looking at the overall data, salesperson delivery accounts for 36%, wholesale markets 13%, second-tier wholesalers 23%, and B2B platforms 28%. In terms of product categories, water and beverages, snacks, beer, wine, and liquor are the main high-frequency categories, with grain and oil being the lowest, followed by dairy products and condiments. In terms of order volume, when we looked at data in spring, it was around 10%. In just half a year, 77% of small shops now have platform orders accounting for over 20% of their total order value. This is a staggering figure, showing not just coverage but penetration. Of course, industry practitioners understand that this half-year has seen tremendous changes in our industry. 50.1% of shop owners believe that using B2B platforms for ordering is more convenient—no need to go out, no phone calls, and there are many promotional activities. B2B can basically meet 24-hour delivery, with about 70% of small shop owners saying delivery can be completed within 24 hours. Satisfaction with delivery efficiency: distributors 32%, second-tier wholesalers 38.7%, B2B 29.1%. B2B's delivery capability is slightly behind distributors and second-tier wholesalers, with second-tier wholesalers far ahead in logistics delivery capability. Although the industry is developing rapidly and small shops have formed the habit of ordering, B2B is still a supplementary ordering method for small shop owners at this stage, who still mainly rely on distributors. However, the data shows that B2B's advantages in some aspects have been widely recognized and accepted by small shops. In our survey of 22 cities, the average number of platforms per city in third-tier and above markets is 14, indicating fierce competition. Last spring, I conducted a survey in Xiamen when there were only 13 platforms; now it has increased to 18. JD's Zhanggui Bao covers the most, with 21 cities. Among the 124 platforms, 29 are in large cities, and 95 are in single cities. These single-city platforms are locally born convenience stores that haven't expanded across regions; they are regional platforms and have become a force that cannot be ignored nationwide. We see that most markets may not have cross-regional platforms, but they are seamlessly covered by these local native B2B platforms. Platform competitiveness is evaluated based on coverage, penetration, product richness, service reputation, delivery speed, and other factors. The most competitive overall is indeed Alibaba's Lingshoutong, followed by Zhongshang Huimin. Alibaba invests heavily in various cities, and we see that small shop owners are quite superstitious about big internet brands, with a brand siphon effect. The top platform in each city by comprehensive influence: Hangzhou is Alibaba's Lingshoutong, Chengdu is Zhongshang Huimin, Dalian is Lianpin, and Chongqing is Yishenghuo. Zhongshang Huimin seems to be the biggest winner, as it has been operating the longest with the longest salesperson visit times, so small shop owners' first reaction is that Zhongshang Huimin is the best. Of course, there are also many local B2B platforms doing well, such as Dalian's Lianpin and Suzhou's Dianda. The market structure has a typical characteristic: a hundred schools of thought contend with giants, regional platforms, and vertical personalized platforms coexisting. Why does this happen? Last night, we discussed that it's the combination of a huge market and a long tail that creates this flourishing situation. So, practitioners, don't worry about any giant overturning you. As long as you provide good service and specialize in categories, the market is large enough. Now let's look at the survival status of distributors. We surveyed nearly 300 distributors nationwide. 40% said their sales revenue increased year-on-year, but 70% said they spent more money this year than last year, with wages rising and expenses increasing, and sales growth not proportional to cost input. 77% of distributors said they want to transform, with lower willingness in grain, oil, and alcohol industries and higher willingness in personal and household care, as these two industries have high B2B penetration. Online has become a channel that brand owners cannot ignore, making offline channel distributors extremely painful. About 56% of distributors supply goods to B2B platforms. Does B2B affect distributors' business? Yes, 64% of distributors expressed willingness to transform to B2B, 47% clearly recognize they lack the capability and prefer to join, and only 6% said they have no interest at all. Due to the deteriorating business environment, distributors' awareness and willingness to transform to B2B have changed significantly, and B2B has become an increasingly recognized main channel for channel transformation. However, we should also note that whether B2B can replace distributors remains a point of reservation, with many saying it's uncertain and hard to say. New Distribution's view: B2B's coverage of small shops has reached a considerable number, but penetration still needs improvement. The coexistence of giants, regional, and vertical e-commerce platforms in a large market with a long tail is the current state. Brand owners still face many difficulties in cooperating with B2B due to existing stock. B2B's comprehensive supply chain capabilities need improvement. The upgrade of 6.5 million small shops and the franchise model have become mainstream. FMCG B2B has become a unique, ecological new force in China's fast-moving consumer goods channel! For those who need to download the report, please follow the official account and reply with 'Competitiveness Report' to obtain it. Click Read the original text to view the highlights of the 3rd FMCG + Internet Conference -END-