On August 28, Alibaba Group's B2B business unit, Retail Link, held a global strategy conference in Hangzhou with the theme 'Trees make a forest, rivers flow to the sea.' Retail Link aims to cover 1 million small stores in the next year Lin Xiaohai, Vice President of Alibaba Group and General Manager of Retail Link, announced at the conference that Retail Link has surpassed 500,000 small stores covered, making it one of the platforms with the most store coverage in the FMCG B2B field. Alibaba stated it will cover 1 million retail small stores in the next year, helping China's over 6 million small stores fully embrace the DT (big data) era. Caption: Lin Xiaohai, Vice President of Alibaba Group and General Manager of Retail Link, announces Retail Link covers 500,000 retail small stores Lin Xiaohai revealed that there are currently over 6 million small stores in China, mostly mom-and-pop stores, with over 70% in tier 3-6 cities, and the number has been stable over the past 10 years. 80% of store owners are over 45 years old and are usually not familiar with smartphones and the internet. Store owners open their stores for an average of over 12 hours a day, even 15 hours in South China, but earn meager incomes. Due to being at the end of the supply chain, after layers of price increases, the purchase price of goods for small stores is relatively high, resulting in retail prices usually 10 percentage points higher than hypermarkets. Retail Link will provide these small stores with simple and high-quality smart devices to help store owners with category planning, in-store display, and better understanding of their operations, achieving informatization of products, customers, and transactions. At the same time, Retail Link will connect with Taobao and Tmall to establish online and offline connections between small stores, consumers, and brand owners, better serving consumers. It is reported that some street-side small stores in Hangzhou have seen business increase by nearly 70% under Retail Link's smart services. In the past few years, B2B platforms have developed rapidly. To date, 23% of small stores accept orders from B2B platforms. Stores that order do so every 10 days, with each order around 800 yuan. Orders from these stores account for 15% of total product sales. Why do small stores choose B2B platforms? There are four reasons: rich product variety, reliable quality, timely delivery, and competitive prices. These are the core reasons for choosing B2B platforms. By 2020, Retail Link expects 45% of small stores to accept B2B platforms, with the total market capacity reaching 300 billion yuan. Currently, Retail Link covers 500,000 stores, making it one of the platforms with the most store coverage among B2B platforms. Retail Link's store purchase frequency, SKU count, and purchase amount are far ahead of the industry average. In the past few months, Retail Link has grown over 50% month-over-month. In July, it grew 28 times year-over-year. In the next year, Retail Link aims to cover 1 million stores, double the average SKU count and GMV per store, and account for one-third of the B2B market by 2020. Lin Xiaohai stated that compared to convenience store franchising or competitor listing models, Retail Link's brand authorization advantage lies in its backing by Alibaba's resources, especially Tmall and Taobao. Retail Link will help small stores open store accounts on Taobao, connect them with nearby consumers online, and help them establish direct connections with brand owners on Tmall. Building an intelligent distribution network together with brand owners and distributors At the conference, Lin Xiaohai stated: For brand owners, Retail Link's positioning is compatibility. Compatibility means supporting brands with different distribution depths on one hand, and integrating into the brand owner's existing distributor system on the other. Retail Link hopes to bring value to brand owners through: efficient distribution coverage, precise channel marketing, omni-channel services, and comprehensive digital support. He also stated that they will deeply cooperate with FMCG industry distributors, working with brand owners and distributors to build an intelligent distribution network, sharing the low-cost, high-efficiency warehousing, distribution, and personnel of the distributor system with the entire FMCG industry, allowing brand owners to cover stores more efficiently and precisely. Next, New Distribution will analyze the opportunities and challenges brought to distributors by the six major strategies heavily released at Retail Link's global conference. Retail Link's Six Major Strategies At the conference, Lin Xiaohai announced Retail Link's six future strategies for covering these 1 million stores: First, provide small stores with rich and competitive quality products. The first is product selection. Retail Link hopes to use profiles of small stores, store owners, and nearby consumers to select and recommend the most needed and favorite products for each store, maximizing the richness of the limited store space. Second is sourcing. Retail Link's FMCG product sources will mainly come from channels of brand owners' first-level authorized distributors. In addition, Retail Link is committed to bringing Tmall's online brands offline, Tmall Global's products from abroad to China, and Rural Taobao's products from rural areas to cities. It hopes to provide small stores with more differentiated choices to help them embrace consumption upgrades. Third, Retail Link hopes to rapidly expand store coverage to increase scale, integrate into brand owners' existing marketing systems, bring the entire process to small stores, and reduce intermediate links. Second, establish a compatible and efficient three-tier warehousing and distribution system. To be compatible with brand owners of different distribution depths, Retail Link plans to set up a three-tier warehousing and distribution system. The three-tier system includes regional warehouses, city warehouses, and front warehouses. First, regional warehouses typically cover three to four provinces and store low-frequency, differentiated products. Retail Link has already deployed five regional warehouses nationwide, completing the national layout. Second, city warehouses each cover two to three prefecture-level cities, storing moderately distributed FMCG products. Currently, Retail Link has deployed 15 city warehouses, will expand by 20 more in the next six months, and plans to deploy 200 city warehouses nationwide in the future. Third, front warehouses each cover one district or county, storing high-frequency dairy and beverage products. On August 18, Retail Link opened its first front warehouse in Yiwu, marking the official establishment of Retail Link's three-tier warehousing and distribution business model. Partners for regional and city warehouses will in principle be selected from Cainiao's current partners, Cainiao CPs, and current logistics providers. It is hoped that Retail Link's business scenario can create several more 'Four-Tong and One-Da' logistics companies. For the vast number of front warehouses, Retail Link will deploy 2,000 city warehouses nationwide in the future, with one front warehouse per district or county. The partners selected by Retail Link will be distributors of deeply distributed brands. In this industry, the most efficient and lowest-cost are the warehousing and distribution systems of deeply distributed brand distributors. Retail Link will next deeply cooperate with distributors in industries like dairy and beverages, helping standardize, informatize, and intelligently upgrade distributors' warehousing and distribution systems, gradually transforming these distributors into logistics providers. Retail Link currently delivers goods to small stores in two parts. First, each order from a small store will have a batch of goods delivered from the front warehouse, such as high-frequency products requiring deep distribution like dairy. Regional warehouses deliver differentiated mid-frequency products, and city warehouses deliver low-frequency products. Three batches are much simpler than the dozens of batches from wholesale markets in the past. Lin Xiaohai emphasized: 'After completing the warehousing and distribution layout in the future, all goods from regional and city warehouses will be sent to front warehouses and combined with dairy and beverage orders, and the final batch of goods will be delivered to small stores. This is our future vision,' Lin Xiaohai said. Third, rely on Retail Link's professional socialized retail iron army, along with city partners in various regions, to serve small stores offline. Since retail is a B2B business, even the smallest store is a business. At minimum, there are mom-and-pop or two-person operations. Small store purchasing is deterministic, rational, and planned. The services small stores need are more complex and professional than C-end services. Therefore, retail business definitely requires a professional retail iron army, today and in the future. The leading partners of the retail iron army will be city partners, including individual partners from self-employed individuals and enterprise partners from distributors. Individual partners are typically deployed in tier 1-3 cities, while enterprise partners are deployed in tier 3-6 cities, Lin Xiaohai explained to reporters. Partners not only sell products on the Retail Link platform but also have responsibilities including: First, find new small stores; second, educate small stores to use the Retail Link platform and cultivate usage habits; third, promote Retail Link's selected products and brand owner tasks; fourth, provide customer service, value-added services, and after-sales service to small stores; fifth, provide professional consulting to gold small stores in the future. Partners will evolve from sales-driven to service-oriented to consultant-type. Regardless of type, their responsibilities are these five, just with different focuses. Retail Link hopes to build a professional retail iron army with competitive commission incentives, data-driven efficient tools, and scale, one that is well-planned, strongly managed, combat-effective, and executive. 'In my plan, our goal is for one partner in Retail Link to earn the income of two traditional salespeople but make a social contribution exceeding three salespeople,' Lin Xiaohai said. Fourth, expand comprehensively across regions, channels, and industries. Retail Link's expansion plan is a comprehensive expansion across regions, channels, and industries. After a year of accumulation, Retail Link has the capability to accelerate expansion. In the next year, Retail Link will expand from over 800 districts and counties today to 1,500 districts and counties. These 1,500 come from existing provinces extending vertically, including expansion into North China and Northwest China. On August 22, Retail Link officially expanded its Tianjin regional warehouse, marking expansion into North China. 'In the second half of the year, as our product richness increases and differentiated products grow, we will use differentiated products to start covering large stores and chain stores. We are currently working with Tmall to establish Retail Link's maternal and infant industry. With the establishment of the maternal and infant industry, we will start covering maternal and infant stores. We plan to cover 40,000 maternal and infant stores in the next year. Through comprehensive expansion across regions, channels, and industries, as mentioned, this year Retail Link's goal is to cover 1 million stores,' Lin Xiaohai said. Fifth, comprehensively upgrade service capabilities for small stores. A comprehensive upgrade of services for small stores. Retail Link is committed to providing the best basic services to stores, promising T+1 after-sales timeliness in all areas covered by city warehouses, and at least T+2 delivery in cities outside city warehouse coverage. Today, Retail Link's completion rate is only 90%, with the next goal to increase to 98%. Additionally, starting this month, the updated Retail Link APP allows viewing the shelf life of each product, especially for food, so you know the shelf life when you buy. You can also see logistics delivery status and estimated arrival time. After-sales service is promised to be resolved within 48 hours. On top of basic services, Retail Link has launched value-added services including credit sales service. Retail Link should currently be the only B2B platform offering credit sales service. Sixth, join hands with quality small stores to embrace new retail. For quality small stores with monthly purchases over 10,000 yuan on Retail Link, good store locations, high foot traffic, guaranteed product quality, and good service attitude, Retail Link will provide Tmall brand authorization, transforming them into rich, professional, intelligent, and warm 'Tmall Small Stores.' 'Our brand authorization aims to be different from previous convenience store channels and other competitors' listing models. We hope to provide personalized services and renovations to stores, offer rich products, provide professional value-added services, and intelligent store management systems. We also hope to help small stores connect online and offline, making their business easier and more profitable,' Lin Xiaohai said. 'Retail Link's investment principle is that local merchants supply local customers. Unlike other e-commerce platforms, Retail Link's business creates local GDP, retains local tax revenue, and increases local employment,' Lin Xiaohai said. New Distribution Zhao Bo's Interpretation: The author also attended the conference on site. Overall, Retail Link's services to small stores at this conference come from three aspects of support: brand authorization, technology, and supply chain capabilities, to achieve upgrades and support for small stores. China's supply chain has never been a single link or a single dimension. It is a complex operating system involving multiple industries and links, from planning, production, distribution, marketing, warehousing, logistics, to retail. In this system, the value of B2B lies in achieving high planning, efficiency improvement, and cost reduction across the entire chain through technology-driven, brand empowerment, and supply chain integration. Although Retail Link's context emphasizes the importance of small stores, the conference also took into account the interests of brand owners and distributors, providing them with corresponding data and technical support to help them achieve upgrades and transformation. In terms of supply chain services, it can be said that JD's New Path and Alibaba's Retail Link have taken completely different paths. Alibaba's Retail Link focuses on empowerment, using technology, brands, and supply chain systems to empower the supply chain. However, from the results, Retail Link's support for the supply chain actually modularizes industry members and reconstructs the industry. JD, although doing direct sales, uses its own supply chain system to provide brand services. Regardless of the service, facing increasingly open brand owners, this is good news. But regarding supply chain service capabilities, in the author's view, Retail Link may still need to solve several problems: 1. Can front warehouses solve the online listing of local products? In the three-tier warehousing and distribution system, the purpose of front warehouses is to list local high-frequency products online. For example, water and beverages, long-radius distribution is very uneconomical. Moreover, at the distribution level, most brand owners adopt deep distribution strategies, and distributors' local inventory is relatively large. Facing uneconomical and large inventory, the online listing of local products has always been a headache for all B2B platforms. Retail Link wants to use local same-city shared warehousing and logistics to allow local distributors to enter warehouses and go online. However, since Retail Link does not control goods (purchasing) or control retail stores (monopolizing purchase rights), local front warehouses will lead to conflicts with distributors' existing warehousing and logistics inventory. This means either Retail Link eliminates distributors' warehouses or integrates distributors' goods. Getting existing distributors to abandon their original business models and enter Retail Link's warehouses is quite challenging for both distributors and Retail Link. Lin Xiaohai told New Distribution: Retail Link has always emphasized compatibility. Retail Link will use various means to be compatible with distributors, helping local distributors achieve professional transformation as soon as possible, becoming logistics providers under the Retail Link system, or enterprise partners and other professional service providers. Undoubtedly, from an efficiency perspective, the three-tier warehousing and logistics strategy is correct and very efficient. If it truly goes as Lin Xiaohai wishes, then front warehouses with short-radius distribution will enable Retail Link to achieve rapid product delivery and high-density store coverage. If local products cannot enter warehouses, then Retail Link's three-tier warehousing strategy loses a very important pillar. Therefore, for Retail Link, this must succeed; if not, they will have to fill the warehouses with transshipped goods. 2. Can the goal of covering 1 million small stores be achieved? Alibaba's Retail Link can be said to be confronting JD's New Path. When Liu Qiangdong announced JD's million small store franchise plan in April, it drew strong skepticism from industry practitioners. Under such public opinion, the two industry giants successively announced their goals of winning over 1 million small stores. Regardless of whether this can succeed, at least the goals of the two giants are highly consistent. Both have presented feasible execution plans externally. The next question is how to achieve them. In the case of loose franchising without controlling goods, Retail Link's market strategy is somewhat different from New Path's. Similar to JD's Huiyan + central warehouse + mobile APP POS system, Alibaba's million small store brand authorization may go further, unifying store images and imposing certain requirements on store purchases. Lin Xiaohai told New Distribution: Not touching goods, not controlling stores, Retail Link only provides services. This is the principle Retail Link adheres to. However, in China's current retail business environment, front warehouses not controlling goods and small stores not controlling purchase rights still pose significant challenges to store operations and management. Moreover, it contains a large number of moral and legal risks. Whether loose franchising is just a transitional strategy or a long-term strategic goal for Retail Link remains to be seen. Of course, we can understand Retail Link's considerations. Nothing is absolute. Since Retail Link can use 7-11's backend NEC system, why couldn't it adopt the 7-11 model in the future? As Lin Xiaohai said, professional retail industries like Lawson have high barriers. Among China's 6 million small stores, only a very few can adopt this upgrade method in the short term. The upgrade of most stores may be more gradual and penetrating. At this stage, it's still about grabbing market share. First, capture the stores, then gradually upgrade. This may be the first issue the two giants need to address. The author has been thinking about a question recently: B2B platforms have always emphasized efficiency and cost, but in fact, customers go to convenience stores not for cheapness. Customers need convenience and a comfortable shopping experience. When B2B platforms invest all their energy and resources in efficiency and cost, is there a problem? As supply chain integrators, shouldn't B2B platforms stand from the customer's perspective, help small stores optimize product structure, optimize shopping experience, optimize operations management, and obtain their own returns through value-added services to customers? 3. About partners and competitors Currently, there are not many B2B platforms with national supply chain layout capabilities. Purely calculating GMV, Retail Link is definitely not in the first tier. In terms of coverage, Retail Link confidently announced it is already the platform with the largest coverage in China. For any B2B platform seeking a national strategic layout, Retail Link is a competitor that must be considered. For Retail Link's grand strategy, it's not just JD that feels pressure, but also a large number of self-operated platforms. The most uncomfortable may be Eternal Asia. Eternal Asia's 380+ Star Chain strategy is similar to Retail Link's, with the core being to build a highly flattened supply chain to achieve rapid distribution of brand owners' products and services to small stores. As a listed company, Eternal Asia will definitely be questioned by investors and brand owners about how to resolve conflicts between the 380 strategy and Retail Link. Facing the channel reconstruction by JD and Alibaba, honestly, it's not easy to explain. As for who are our enemies and who are our friends, Retail Link's view is very clear: unite all forces that can be united to jointly reconstruct this industry. For brand owners, Retail Link's three-tier warehousing strategy clearly expresses its intention to serve the entire industry and all categories. For distributors, Retail Link repeatedly emphasizes compatibility, meaning welcome to join us and become our partners. 4. About the future 'Trees make a forest, rivers flow to the sea' - these eight characters perfectly reflect Alibaba Retail Link's business philosophy of cooperation, openness, and win-win, which also echoes the name of Lin Xiaohai, Vice President of Alibaba Group and General Manager of Retail Link. As Dai Shan, Alibaba Group Partner and President of the B2B business unit, said, she hopes Retail Link will take covering 500,000 small stores as a starting point to realize its strategy, fulfill its commitments, and live up to customers' trust. 'The so-called new retail is to reconstruct people, goods, and places through big data. This path is difficult and unknown. To do the unknown, you must explore. Behind exploration, we will also see difficulties, but we have no choice because we hope to use Alibaba's data and technology capabilities to serve the 6 million small stores. Let more and more Tmall Small Stores and future Tmall convenience stores appear in everyone's life.'