Introduction: Do 'one meter wide and ten thousand meters deep' things, choose a field to do deeply and thoroughly, and manage your own small plot well.

Author | Yuan Lai Review | Wang Qiang Layout | He Wen

Hello friends. Seeing this letter is like seeing me. I am Yuan Lai. Today, I want to talk to you about a distributor who, in just six years of entrepreneurship, achieved annual sales of 1 billion yuan. This is almost rare in China's FMCG distribution and circulation field. Founded in March 2017, it broke through one million in the first month. In December 2017, monthly sales exceeded one million. In December 2018, monthly sales exceeded 20 million, and annual sales exceeded 100 million. In August 2019, monthly sales exceeded 30 million. Despite the pandemic, this trading company continued to grow rapidly and simply couldn't stop. By 2023, monthly sales exceeded 90 million, with projected annual sales of 1 billion. Seeing these sets of data, I guess you will be surprised at the speed of this company's business development. It's hard to imagine that for most mainstream distributors, achieving 30% annual growth is already very excellent. This makes us wonder: What model and methods have they used to achieve doubling growth every year? Do they have support from JD.com or Alibaba? How much did they burn through subsidies? ... With surprise and doubt, let me formally introduce this trading company to you: Located in Xi'an, Shaanxi, 'Jiayun Yunshi' currently covers more than 15,000 mom-and-pop stores in Xi'an, with 6,000+ SKUs covering all categories including beverages, snacks, grain and oil, and daily necessities, with a market coverage rate exceeding 50%. Recently, I visited Mr. Fan Qi, the founder of Jiayun Yunshi. Less than a year after my first visit in September 2022, Jiayun Yunshi has been completely renewed, moving into a new 18,000 square meter standard three-dimensional warehouse and a brand-new office. After an in-depth exchange with Mr. Fan Qi for more than two hours, he revealed the development history of Jiayun Yunshi and his thoughts and understanding of distribution and circulation operations.

What exactly is the model of Jiayun Yunshi? If you are familiar with Jiayun Yunshi, many people would define it as an FMCG B2B platform. Whether it's called B2B or not, I think it cannot be separated from the essence of distribution and commodity circulation. To help you understand the business model of Jiayun Yunshi, I drew a diagram as follows: What is the difference between Jiayun Yunshi and traditional distributors? Fan Qi gave a very accurate description: "Our positioning is as a supply chain service provider for small shops. Traditional trade first serves the brand, selling whatever is available, but B2b (platform distributor) first serves the store, selling whatever the store needs." Indeed, 90% of current distributors are based on their own brands or categories, covering various channels such as supermarkets and small and medium stores. The starting point of their business is that they have been appointed to distribute a certain brand or have done a certain category. But Jiayun Yunshi's logic is based on store demand, purchasing goods on a large scale, and placing orders with manufacturers or distributors based on inventory, seasonal nodes, and market competition. According to Fan Qi, as of now, 60% of Jiayun Yunshi's products are under distribution agreements, and 40% are supplemented through cooperation with local distributors or wholesale market purchases. With 6,000 SKUs, it covers 7 major categories including snacks, grain and oil, daily chemicals, beverages, and low-temperature dairy products, with 46 mid-level categories and 228 sub-categories. Based on the product structure, Jiayun Yunshi has set sales strategies for three types of products: "A products for bestsellers, B products for sell-through, and C products for entry."

A products: Make them bestsellers; first-line brand bestsellers should generate sales volume. B products: Make them move; second- and third-line brand products must have sell-through and turnover. C products: Make them enter; unknown products must be stocked by stores, otherwise they will be eliminated.

What are the operating principles of Jiayun Yunshi? With 6,000 SKUs, one-stop meeting the FMCG needs of small shops, Jiayun Yunshi has also set itself a "Three No Principles": Not expensive, Not out of stock, Not late. "Not expensive" means that the products supplied by Jiayun Yunshi should have a price advantage, especially for first-line brand products. Perhaps many distributors will ask, what exactly does "not expensive" mean? Is it cheaper than all local distributors or platforms? Fan Qi emphasized, "Since it is one-stop supply, price competition is inevitable. But it is also impossible to make all products of Jiayun Yunshi cheaper than distributors or other platforms. To avoid getting caught in a price war from all sides, we have formulated a strategy: within a certain period, we only target a specific competitor and achieve relatively low prices." We cannot make all products "not expensive," but we can achieve relative "not expensive." "Not out of stock" means that as long as a store orders products on the Jiayun Yunshi platform, they will definitely be delivered. To ensure "not out of stock," Jiayun Yunshi conducts monthly dynamic inventory checks and maintains a 100% order fulfillment rate. "Not late" means that according to Jiayun Yunshi's delivery schedule, orders placed in the morning can be delivered the same day at the earliest, and orders placed in the evening will be delivered the next day. Regarding ordering, store owners have had two pain points in the past: First, they don't know when the ordered goods will arrive; second, if they order on the platform, the goods may not be delivered, either short or missing. Fan Qi emphasized that the ordering behavior of small and medium store owners is a continuous, certain, and stable action. Since that's the case, the supply we provide to stores must also be certain and stable, letting them know that as long as they order on Jiayun Yunshi, they can be guaranteed timely delivery without shortage or missing items.

Supply chain is a good business In recent years, various new retail formats have emerged, such as wholesale supermarkets, discount supermarkets, warehouse supermarkets, snack chain stores, O2O front warehouses, community group buying, etc., which have had a significant impact on traditional offline supermarkets. Some formats directly compete for sales with mainstream supermarkets. This has also caused certain impacts and pressure on offline mainstream distributors. Facing declining channel sales, distributors are becoming increasingly anxious. Coupled with rising operating costs and pressure from brand owners' tasks, many distributors even believe that the supply chain business has "no future," and can only be a business to make money, not a long-term stable career. In this regard, Fan Qi believes that the local supply chain business is a very worthwhile business. These mom-and-pop stores do not owe money, there are many of them, and providing one-stop supply to small shops on a large scale and with high efficiency can definitely bring economic value. Fan Qi gave us a calculation: the supply chain business capacity of mom-and-pop stores in an ordinary third-tier city: based on 3,000 small shops, with an average daily sales of 2,000 yuan per store, excluding tobacco and alcohol (40%), daily sales are 1,200 yuan (all FMCG categories). With 80% coverage and 80% penetration, 3,000 stores * 1,200 yuan daily sales * 365 days * 80% coverage * 80% penetration = 840 million yuan. Covering 3,000 local mom-and-pop stores, there is a market capacity of 840 million yuan. Looking back at ourselves, our business with mom-and-pop stores ranges from a few million to tens of millions, with very few reaching the billion scale. It's not that the market is not good, but that your business model and methods are outdated and haven't kept up with changes. In fact, the distribution and circulation business has great potential. In the past, upstream brand owners dominated the local trade landscape, and distributors were too small and not professional. But in the future, excellent local distributors will dominate, dividing territories and competing for existing market share. Who will win depends on the changes in the coming years. Fan Qi said that the philosophy upheld by Jiayun Yunshi is to do "one meter wide and ten thousand meters deep" things, choose a field, build strong fortresses and fight steady battles, do deeply and thoroughly in local markets, and manage your own small plot well.

Summary Due to space limitations, it is impossible to elaborate on all the business methodologies of Jiayun Yunshi. Therefore, "New Distribution" will organize an in-depth study tour on July 21-22, visiting Xi'an Jiayun Yunshi, and having in-depth discussions with founder Mr. Fan Qi and co-founder Mr. Zhang Jun on the changes in local distribution and circulation business, discussing Jiayun Yunshi's business model, development path, and the latest business strategies. The two founders will share everything, providing a model and practical cases for distributors in the full-category supply to small and medium stores, how to achieve 6,000 SKU full-category operations, covering 15,000 stores, with 60% distribution and 40% supplier supply, 0 credit period, and cash on delivery. Interested friends, scan the QR code to add my WeChat for details.