Transform 6 million mom-and-pop stores? Why did Ali JD.COM collectively "step on the air"

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Author | Fan Xiangdong

Source | Gao Jie Gaoshen (ID:gjgc 168)

The head picture comes from the poster of JD.COM New Access published by Tiger Sniff Editor.

The era of rapid development of domestic large-scale retail formats has ended.

Recently, the list and report released by China Chain Store & Franchise Association show that in 20 18 years, the efficiency of large supermarkets, the main retail formats of FMCG, decreased by 8.0% on average, the total wages of employees increased by 13.0%, and the rents increased by 10.6%, which generally led to the predicament of weak growth.

The growth rate of convenience store industry is obviously better than that of supermarkets and department stores. In 20 18, the sales scale of the top 100 convenience store enterprises increased by 2 1. 1%, and the number of stores increased by 18.0%. This also corresponds to the efficiency-oriented lifestyle of young people, and the retail and catering formats with the community as the service radius will become the growth point of retail in the future.

However, this list mainly focuses on modern chain convenience stores, and does not mention the main convenience store format-husband and wife stores. There are more than 6 million mom-and-pop shops in China. These shops are small in size, and the operators are mostly middle-aged. And 40% of fast-moving consumer goods in China come to consumers through them, which has an important impact on the consumption of China people.

Compared with chain convenience stores, the pain points of traditional husband and wife stores are obvious: multi-level distribution of brands and terminal stores, slow circulation of goods and high cost; Small shop operators are relatively weak and lack the funds and methods to improve their sales and service capabilities. Small stores want to change, not only in the operators themselves, but also in the fast-moving consumer goods distribution system behind them.

Business opportunities are among them. This is the billion-dollar market that Ali and JD.COM dream of. Tmall and JD.COM convenience stores seem to seize the terminal, but the ultimate goal is to quickly reconstruct B2B channels and integrate terminal data. Therefore, the fast-moving B2B once became a popular track, and entrepreneurs, traditional supermarkets, e-commerce platforms and even logistics companies all came to grab the fat of this "old city reconstruction".

But looking back, the rapidly developing B2B platforms, such as Ali Retail Link and JD.COM New Channel, have "stepped on the air" and fallen into the "trap" of traditional wholesale industry.

The princes danced wildly, and their lives were uncertain.

"I have more than 5 million tobacco proof materials from the husband and wife shop." Wang Qiang turned on the computer and found the information of a small shop in his hometown. This naturally surprised me, but Wang Qiang was not happy. He can't use these data because his fast mobile B2B platform closed down last year.

"Even if you haven't figured out how to make money, you can't stick to it." Wang Qiang is talking about himself, which is also a common problem in this industry. Compared with 20 17, the total financing of FMCG industry decreased by 75% last year, and many players who rely on capital transfusion for a living can no longer support it. Last year, there were about 170 FMCG platforms in China, about 40 of which closed down, and some of them began to transform.

Together with Wang Qiang, there are many industry leaders, such as Zhenge and Jingwei Investment. The failure of financing led to the break of the capital chain, and the palm world with HNA background also stopped operating at the end of May last year. Even if the giant is blessed, it will not be spared. Huidan received two rounds of investment from Tencent and Ping An Overseas last year. As a result, the operation failed at the beginning of this year, and the cruelty of the industry is evident.

Of course, in the business law of survival of the fittest, there will still be some industry stars who are not bad at money. An investor told the author that he was optimistic about Yijiuban (formerly known as Yijiuban), which also appeared in the article of Tiger Sniffing Gao Jie Gaoshen, focusing on alcohol and cooperating with the B2B business of Meituan. Yijiuban 20 16 won the strategic investment of Meituan. Last year, Meituan and Tencent led the investment of 200 million US dollars in the D round. In March of this year, Yijiu Class was merged into the D+ round of 1 billion dollars.

It is estimated that you have also noticed that Tencent has invested in returning orders and wine batches in the summer. The big chain of modern access has stood between Ali and Tencent, and the B2B platform for transforming traditional access has also been clarified.

Tencent invested in remittance slip and Yijiu approval, and JD.COM has a new channel. Last year, it strategically took a stake in the supply and marketing concourse of the parent company of Zhang World Cooperation Company. In addition to Yijiu's approval, Longzhu Capital, an industrial fund of Meituan, also invested in Pocket Fast Retailing.

Look at Ali. In addition to its own retail outlets, Ali invested in Huitong last year, mainly in the rural market. Plus Baishi Store and Fa of RT Mart E Road, it also brings together four head platforms.

The above-mentioned B2B platforms, as well as the state-owned tycoon Yi Yatong and the Chinese businessmen who have not yet stood in line, are basically the head forces of the industry.

When the giants enter the stadium, it will be difficult for the rapidly developing B2B track to gain the favor of capital again, and the industry concentration will be higher and higher. Basically, people in the industry interviewed by Tiger Sniff think that more fast-moving B2B will fall this year, and the fatal factor is "unprofitable". A practitioner told me that there are few M&A cases in B2B field, because most players "have no assets, only liabilities" and have no M&A value at all.

At present, there are only a handful of profitable fast-moving B2B platforms. In addition to the listed company Yi Yatong, only a few platforms, such as Caihua Business, Yijiupan and New Gao Qiao, have news of profit. Even the number one retail outlet in the industry is at a loss.

Some time ago, Retail Link made internal adjustments. According to several media reports, Retail Link requires all individuals to sign a new agreement before April 1. In the past, the income of partners mainly came from product sales commission. The new agreement gave the partners a basic salary, but due to the sharp drop in product commission income, the income of partners generally declined.

The salary composition reflects the changes in the positioning of retail partners. "The partner is no longer a sales system, but a service system." Lin Xiaohai, general manager of the retail business department, told Hu Weiwei: "At present, the salary of partners is in the form of basic salary plus bonus. Wages are mainly affected by the quality of service, and the proportion of product sales commission is very small. "

The salary adjustment of retail partners is synchronized with the platform subsidy of retail links. It is not difficult to see that all retail links want to reduce costs. In addition, Retail Link has covered10.3 million retail stores nationwide, with more than 5,000 brands and distributors. Perhaps "staking a horse" will come to an end and focus on the refined operation of the covered stores.

In short, the basic pattern of this industry has been set, but the profit problem has not been effectively solved.

Fast-selling B2B's Short-lived "Three Doors"

It must be said that the business logic of saving costs by integrating traditional channel data and establishing an efficient distribution platform can make sense. But the actual situation is cruel. Even if a fast-moving B2B platform wins two rounds of financing a year, it still can't survive. What's the problem? Is the business model unworkable, or is the execution not in place?

1. Get the goods, there is no price advantage.

Basically, the B2B platform of FMCG has a "hard injury": it may not be able to get the goods directly from the brand, and even if it does, the price is not cheaper than that of traditional dealers.

On the surface, the platform is devouring the dealer's market, but in the whole distribution system, the brand that determines the price of goods is the most powerful party and the biggest beneficiary of the distribution channel. The most typical example is Wahaha. Zong Houqing once said that Wahaha "products are heavy, the total value is low, and e-commerce is not easy to do", and it is not "cold" for Ma Yun's e-commerce. It is through the benefit distribution mechanism that brands and dealers become the same interest subject, and brands can have a stable cash flow reservoir.

The multi-level distribution system of the brand, the first layer is the regional general agent, and then divided into urban distribution companies and individual wholesale merchants. No matter what kind of system design, if you want to get the agency of the brand, you have to pay a lot of agency fees every year. With the help of the dealer system, brands can spread channels at low cost, which may be inefficient, but they are in their own hands and can take the initiative to make some decisions, such as launching new products.

Therefore, brands are concerned about the fast-moving B2B platform. Lin Xiaohai also said that the brand has always been excluded, but after seeing the growth, the brand is gradually willing to cooperate with retailers, but when the brand gives goods, the price is relatively high, and the price is similar to that of dealers.

You can vaguely feel the attitude of the brand: the dealer wants to maintain it, but the delivery price of the brand to the B2B platform of FMCG is higher and more can be earned. "The brand does not want to destroy the original channels, nor does it refuse incremental distribution." Wang Qiang said that the brand will set up a new channel department or a special team to provide a different product and price system for the B2B platform.

Therefore, whether you get goods from dealers in the early stage or do business with brands directly after accumulating to a certain scale, the prices of goods obtained by the B2B platform of FMCG are relatively high. B2B platform must be subsidized and enter the market with low price strategy. Low prices can attract bonus hunter, a small shopkeeper, but it's hard to stay after the subsidy stops. The B2B platform that takes this road will be in a dilemma and can't get the money, and the result can be imagined.

(The service station of World Cooperation is blocked by the supplier for payment. See the watermark for the source. )

2. The whole category is getting worse and worse.

As far as brands are concerned, dealers and fast-moving consumer goods B2B are both their own businesses, but the two channels face the same consumer groups, which is an irreconcilable competitive relationship.

In the physical circulation, the most basic thing is the warehouse allocation ability, which is also the value of the dealer to the brand. From the mode, the B2B platform of FMCG has more cost advantages. After the infrastructure is built, warehouses and salesmen can be used by all brands, saving industry costs.

However, the gross profit of 2B is very low. As mentioned above, the price of FMCG is relatively transparent in the industry, and the ex-factory price and terminal price are limited by the brand. In commodity circulation, warehousing, personnel salaries, vehicles, etc. are all hard costs, and so are efficient warehouse division and scheduling. Therefore, if you want to cover the cost with limited gross profit margin, you must increase the customer unit price.

Whether it is fast-moving B2B or catering B2B, there is a concept called "bicycle profit". Wang Chaocheng, the founder of Yijiu Batch, once said the importance of bicycle profit, which roughly means that the distribution cost of 2B is fixed. A gold cup is delivered once at the cost of 300 yuan. What is delivered on the car determines whether the car can be profitable. If the car is full of wine and the gross profit is 3%, then the car is profitable. If it is a car full of drinks worth 5000 yuan, at least 6% gross profit is needed to share the distribution cost equally.

Small shop goods can be simply divided into two categories, one is high-frequency, low-profit bulk goods, the most typical of which is the rigid demand for water and drinks in small shops; The other category is low-frequency but high-profit commodities, such as alcohol and snacks. Fast-moving B2B platform needs to subsidize the sales of some goods to ensure the stickiness of small stores, but it should be covered by profitable categories.

"All B2B platforms with problems are basically categories." Wang Qiang said that this road may not be suitable for entrepreneurs. "Convenience stores can be all categories, because there are fresh and matching sales activities. If the gross profit can't even cover the fixed cost, even if the order density is made, the cost will be higher and higher. "

3. High compliance costs

Even if the business of B2B platform is successful, compared with dealers, B2B platform will still have inevitable "compliance costs" in the future.

"Few people say that." Wang Qiang said, "Although it is somewhat exaggerated, FMCG is outside the tax system." Dealers and wholesalers make money, in fact, part of it is tax evasion. Individual wholesalers at the terminal get the goods, and small shopkeepers buy the goods. Whether it is credit or cash, there is basically no invoice, and there is no so-called input ticket deduction. It is difficult for countries to check one by one. They are responsible for their own profits and losses, and the merchants themselves remember that they are close to ten, which may be the reason why individual industrial and commercial households set a fixed tax.

"The challenge of the B2B platform is not only the business model, but also the tax relationship." Wang Qiang said. All orders and transactions of FMCG B2B platform will be recorded, and the future listing will definitely meet the regulations. In the current tax environment, the cost of fast-moving B2B platform is definitely relatively high.

Why do you want to move on with your life?

"These problems have been said and said, but most B2B platforms have not found a way to deal with them." Wang Qiang sighed. After some visits and exchanges, Tiger Sniff summed up several possible breakthrough directions:

1. Maximize the value of fixed costs.

Fast-moving B2B, whether it is trading to earn commodity price difference or platform service fee, is based on the efficiency of commodity circulation, and the requirements for platform capabilities are similar, such as the most basic warehouse allocation ability, which can develop unified warehouse allocation business.

As a self-operated fast-moving B2B platform, you can also dock with dealers, such as JD.COM Xinlu, first self-operated, then POP (platform opening), open logistics distribution, warehousing and capital (supply chain finance) to dealers, and implement cooperation modes such as agency, distribution and consignment, so as to improve cost utilization efficiency through * * *.

In addition, B2B is naturally suitable for supply chain finance and is considered by practitioners as the most feasible way to make profits. Third-party orders, transactions, warehousing and other business activities are all on the platform. After accumulating transaction data, we can build suitable supply chain financial products, sell them to upstream and downstream customers, or help banks make risk control loans.

2. Channels push back brand differentiation customization

Category may be the breakthrough point with the fastest effect. Just like wine, the demand is stable, and the product differentiation of each brand is obvious. The unit price of customers is relatively high, a few dollars more expensive, and consumers are not sensitive enough. However, if there is water, a bottle of two dollars, there is no problem without Nongfu Spring, Wahaha and Ipoh, so we must strive for every profit.

Lin Xiaohai believes that the core competitiveness of B2B platform is still in commodities. Generally, there are about 300 SKUs for high-frequency sales in small stores, accounting for 30% of platform sales. The retail association will provide the most stable supply, price and service.

In addition, the retail link should also integrate market capacity, store consumption scenarios, brand resources and other factors to collect a set of channel-specific products, "such as sanitary napkins, typical store consumption products; There is no umbrella brand that can cover the whole country, the price is opaque and the gross profit space is huge. "

B2B can also do channel customization. For example, JD.COM's new channel launched a selection of JD.COM and Beijing. COM's own brand, and the key word is super high gross profit. However, if FMCG brands have no sense of existence, most of them will not escape the fate of slow sales. It is worth mentioning that the landing of e-commerce brands is a good breakthrough in categories. After the online traffic dividend has passed, online brands are seeking offline outlets.

3. Earn the money invested in the brand market.

The brand reaches the consumers and understands the demand of the end goods. In terms of total volume, the domestic FMCG market is rising steadily, but the changes of commodities are getting faster and faster, and consumer insight is becoming more and more important to brands. The role of dealers is not only the circulation of goods, but also the promotion of goods, brand promotion and promotion activities, and feedback the marketing and market situation of terminal goods to brands.

In this respect, B2B platform can replace dealers. Through technical means, stores, commodities and marketing will be digitized, so that brands can see the returned data and perceive the results of each investment. In fact, more and more FMCG enterprises are also doing their own DMP, and actively cooperate with third-party data platforms, expecting more accurate global marketing, making traffic, conversion and retention visible and helping decision-making.

In the United States, P&G and Unilever have been cutting their marketing budgets, but their investment in MarTech has maintained a steady growth. If B2B platform can help brand management channels in a digital way, reduce the loss of brand launch, or rob the money directly invested by the brand to buy terminal shelves for dealers and earn money from the brand, this should be a feasible path.

4. Help the mom-and-pop store to carry out the brand transformation of convenience stores.

Some fast-moving B2B industry reports show that more than 70% of small shops use B2B platform to purchase goods, but usually when a small shop is still being renovated, local distributors and wholesalers will come to talk about business. Small shopkeepers can compare prices from dozens of wholesalers, but how many platforms do they need? And the permeability also depends on the color. The most important thing in offline retail is location. The falling orders have also covered millions, and it is not reliable to simply look at the quantity.

Almost every platform is a flop, and brand joining is a feasible way to increase the purchase of small shops on the platform. In fact, when we look at convenience stores, some non-first-line chain convenience stores/supermarket brands are already very large. Hibiscus 12000, Meiyijia 16000. The stores they export are rough, but the threshold for joining is low. After joining the brand, small shopkeepers will naturally connect with the supply chain.

Ali and JD.COM are also exporting brands, and they offer a lower threshold. Lin Xiaohai believes that convenience stores for couples are the trend. "We often joke that retail stores need to use 10% to achieve 70% service capacity of convenience stores. If a small store wants a convenience store, should it join the convenience store brand or choose platform empowerment? The latter may be more practical. "

From the brand, or from the supply chain, it is possible to achieve the same goal in the end. However, the importance of convenience store brand is also reflected in the terminal operators. Many young people who start a business in a small shop, or the "second generation of shops" who take over the shop, do not have the hardships of the older generation, but also hope to hang a signboard that can drain and make their shop more decent.

B2B platform in the eyes of small shopkeepers

How do small shopkeepers view B2B platform? Tiger sniffs around several small shops. When asked about the B2B platform, most of them said that it was convenient to use and purchase goods, but it was also quite malicious. A small shop showed the tiger three broken umbrellas, indicating that the quality of umbrellas on a platform was not good. Another shopkeeper said that the refrigerated fresh milk on the retail channel was distributed by a third-party dealer, and the delivery was not on time after the order was placed.

From the point of view of small shop operators, B2B platform one-stop procurement has advantages, but compared with dealers with more personalized services, it has been treated differently. In order to present objectively, Tiger Sniff Gao Jie Gao Shen paid a return visit to a Tmall store he interviewed a year ago.

In the purchase of goods. The owner said that in addition to the retail link, easy wine batches and cloud ants are mainly used in daily life. "As before, 30% of the goods are purchased at retail, mainly casual snacks. In addition, drinks and drinks are approved by Yi Jiu, and daily groceries are approved by Yun Ant. " He also said that Best Shop Plus has pushed here and there, but there are too few products, and there is also a platform called Cheap Fight. It takes time to play games and give up directly.

In addition, there are more than 20 dealers in the store, mainly in-depth distribution of brands and cold chain goods. The owner said that Wahaha, Nongfu Spring, Coca-Cola and other brands are directly managed by dealers. In fact, these dealers should have a higher priority than the B2B platform. "If there is no direct docking of dealers, they will purchase goods from the platform." The implication is that the dealer's price and service may be more advantageous.

And the store is not willing to give up the income from the display. The best shelf should be "tobacco, alcohol and betel nut" to display goods with high gross profit and high turnover. Compared with a year ago, there are two more small shelves by the door, one of which displays a brand of health drinks, and the dealer naturally spends money.

For the mineral water with lower unit price, the store doesn't want to show too much. Tiger sniffing Gao Jie Gaoshen happened to meet a dealer of a certain brand and came to the shopkeeper to complain, "The cost is quite high, why is the display of its own mineral water not prominent enough?" He wanted the store to show more, but the owner refused. From the words, we can feel the shrewdness of small shopkeepers, and also reveal that the management of terminal goods by dealers is not perfect enough.

In terms of digitalization, can B2B platform help small stores operate more efficiently? I didn't expect the cashier POS system to be spit out by the owner.

"A brush face payment machine is installed, but the payment machine is not connected to the POS machine, which is equivalent to being invalid. Still need to re-operate on the POS machine. You can't scan the goods and then scan the code for self-checkout like 7-1/machine, which doesn't save manpower. I also bought an inventory machine, but I didn't get through to the POS machine. When the goods arrive, I still have to record them in the POS machine one by one. There are not many takeout. I didn't get through to the POS machine inventory, which was more troublesome to operate. "

The situation of this shop has not changed much compared with that after the first renovation. In fact, the changes in the mom-and-pop shop are hard to push by themselves. The author has been to a small shop in a remote community and has been in business for 25 years. Except for drinks, most of the goods have to be bought by the shopkeeper himself in the wholesale market, and each purchase takes one morning. Another small shop with a good location, Tiger Sniffing Gao Jie Gaoshen, stayed in the store for more than half an hour and met six dealers who came to take stock and maintain the display. The service is very thoughtful. Although cruel, the development value of small shops with bad locations is indeed limited.

In addition, another factor that is easily overlooked is the small shopkeepers themselves. For those small shops with good operating conditions and looks, the quality and management awareness of the owners are usually better. Traditionally, the biggest business opportunities should come from the rejuvenation of small shop operators or the innovation of business awareness.

In short, the cake of traditional retail channels is very big, and the B2B platform of FMCG is also moving in a good direction, but it is difficult to escape the "trap" of traditional channels. The formation of this "trap" is because brands, distributors and small shop groups play games for their own interests, which makes the fast-moving consumer goods B2B collectively "empty".

Note: Wang Qiang, one of the interviewees in this article, is a pseudonym.

* This article was published by Gao Jie Gaoshen (ID:gjgc 168) authorized by iDark Horse. Author: Fan Xiangdong, edited and published by Hu Wei. I am a dark horse, so that entrepreneurs are no longer lonely.

I am a dark horse, so that entrepreneurs are no longer lonely.

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