On the occasion of its third anniversary, today (September 3), Alibaba Retail Link's strategic conference 'Together We Grow' (兼木成林 容川入海) was grandly held at the Yunqi Town International Convention and Exhibition Center. At the conference, Lin Xiaohai, Vice President of Alibaba Group and General Manager of Retail Link, shared content on topics related to Retail Link's development. As the proposer and practitioner of the 'New Retail' concept, Retail Link has always undertaken the important mission of upgrading community small stores, one of Alibaba's eight New Retail forces. Over more than a year since the implementation of New Retail, what achievements has Retail Link made in the FMCG distribution field? From Lin Xiaohai's speech, we can glimpse the changes in the entire FMCG market landscape. 1 Three years after establishment, it has become the industry's No.1 FMCG B2B platform According to Lin Xiaohai, after more than three years of development, Retail Link has established an intelligent supply chain based on a three-level warehousing and distribution system in 17 provinces across the country. It also has a sales field promotion team of over 5,000 people, more than 300 enterprise partners, and has achieved coverage of over 1 million small stores. This means that in the provinces covered by Retail Link, one out of every six stores is a Retail Link user. At the upstream supply chain and infrastructure level, Retail Link, together with Cainiao, has built 50 warehousing systems including regional warehouses, city warehouses, and front warehouses in 17 provinces, successfully attracting over 3,500 brands to join Retail Link, and has signed strategic cooperation agreements with 42 of them. In just two to three years, Retail Link's rapid development is closely related to changes in the market environment. 1. Consumer behavior is digitalized, scenarios are fragmented, and demands are diversified Currently, the scale of mobile payment users in China has reached 550 million. In high-tier market convenience store scenarios, the proportion of mobile payment is as high as 75%, which has also contributed to the digitalization of consumer purchasing behavior. A typical case is the rapid development of the food delivery market. The emergence and development of new business formats and consumption scenarios such as unmanned retail have made consumer behavior increasingly fragmented. At the same time, under the general trend of consumption upgrading, more and more consumers are beginning to accept and actively try new products and new brands. The direct consequence is that 40% of small stores have seen better business after introducing niche and specialty products, which has also become a basis for Retail Link to judge the development trend of consumer behavior habits. 2. The number of retail stores is decreasing, and services urgently need upgrading The increase in costs such as rent, labor, and management has become the last straw for some retail stores. In the past year, the number of traditional retail stores has decreased by 5%, and the survival situation of surviving stores is not optimistic: 30% of small stores have seen sales decline, and 3% of stores face the risk of closure within the next year. In sharp contrast, 40% of stores have seen an increase in revenue, and these stores' sales per square meter are 11% higher than ordinary small stores. Through analysis of such stores, we found the following characteristics:
Store owners are relatively young, 2-5 years younger than the industry average age;
POS usage rate is 30% higher than ordinary stores;
Most stores have begun to access additional services such as low-temperature fresh food, phone bill recharge, and parcel collection. 3. FMCG B2B is developing rapidly, and industry consolidation is accelerating Changes in consumer behavior and the younger age of store operators have driven the rapid development of the FMCG B2B industry. It is expected that by 2020, the FMCG B2B market will reach a capacity of 300 billion yuan. At the same time, in the past year, capital entering FMCG B2B has decreased by three-quarters, which has also caused a large number of industry participants to exit, and industry consolidation has entered an accelerated stage. 4. The pain points of the traditional distribution system are obvious, and digitalization is the only way out The traditional FMCG industry has complex distribution levels and high costs, but efficiency continues to decline. In this situation, digitalization has become the only way to solve the existing channel dilemma. 2 Brand channel digitalization, offline store operation as the main battlefield Changes in the market environment have contributed to the rapid development of Retail Link, and as important participants in the entire FMCG supply chain, the digital upgrade of brand owners has promoted the transformation of the entire distribution channel from top to bottom. Judging from the current working methods and decision-making methods of most brand owners, brand owners lack effective data support for channels, information distortion is serious during transmission at various levels, and market decisions are slow and lagging. At the conference, Lin Xiaohai shared a typical case: Suppose the new product marketing plan from the brand marketing department is a 100-page PPT, it may become 30 pages at the channel level, and only 10 pages when it reaches the frontline sales. Finally, the sales representative gets one page. When the sales representative goes to the store, they say one sentence: 'Buy 10 get 1 free, do you want it?' Whether this brand does well is a matter of three months later, based on sample data provided by survey companies for analysis, and then adjusting the plan. This is the past promotion model of brand owners. Lin Xiaohai believes that the drawbacks of this model are very obvious. Because of the lack of data, decisions are made blindly. This is a top-down broadcast-style promotion, where information decays layer by layer. There is a plan first and then stocking, so the inventory pressure is very high. It is a push supply chain, and channel resources are seriously wasted. What Retail Link wants to do is to help brand owners achieve channel digital transformation: The first key point is to be consumer-centric; the second is to achieve the digitalization of the entire channel management and the entire link. The main implementation methods are as follows: 1. Digitalization of stores In traditional channels, the way to collect store information is for sales representatives to manually record store names, owners, areas, business circles, and other information at the stores. After the information is collected, it is given to the entire team and company for use and analysis, but this manually collected information is incomplete, inaccurate, and not timely. To this end, Retail Link takes the store as the center. In addition to frequently collecting and verifying store information, it also labels consumers around the community, codes consumption, and matches them with small stores. It tags each small store with various labels based on the characteristics of surrounding consumers. The Da Vinci Code launched by Retail Link actually decomposes Retail Link's one million small stores into 96 different labels and gives each store a digital ID card. This small store ID card will be opened to platform partners in the future. This is the first infrastructure of the entire digital channel transformation. 2. Digitalization of the supply chain After store digitalization, supply chain digitalization is needed. In Lin Xiaohai's view, the traditional supply chain approach has two problems: First, the circulation of goods is driven by brand owners' performance needs, combined with predictions based on market judgment, and then this prediction is distributed to distributors and retail stores at all levels in a layer-by-layer stocking model, which is called a push supply chain. Second, each brand independently establishes its own supply chain system to distribute products to small stores. The warehousing and distribution system has high costs and complex management. To this day, only a dozen or so deep distribution brands have the ability to directly reach 1 million small stores, and they are isolated from each other, with very high costs. Retail Link divides brand owners into two categories: One is deep distribution brands; the other is shallow distribution brands, and it has developed two solutions: an open platform and a physical warehouse platform. For deep distribution brands, Retail Link's solution is to digitally transform the existing distributors' warehousing and distribution systems. To date, more than 7,000 distributors of 12 deep distribution brands have used Retail Link's MOS system. For shallow distribution brands, Retail Link has created a physical warehouse solution. The core data-driven aspects of the physical warehouse solution include the selection of goods for warehouses, replenishment of goods, and pricing of goods at stores. 3. Digitalization of marketing Marketing is a very important task for brand owners and distributors. Previously, for traditional small store channels, channel marketing was done two or three times a year, with methods not beyond 'buy 10 get 1 free' or mixed box packaging, and the whole country did the same plan at the same time. In previous distribution activities, half of the resources were wasted, but it was not known where they were wasted. To address this problem, Retail Link has launched two data products. The first is called Rulai, a self-marketing system. Brand owners can see various small stores on the workbench, and they can select different types of distribution stores based on the different labels of the stores. Based on the selected stores, they can formulate product selection plans. In addition, during the execution process in small stores, real-time data feedback is available, allowing brand owners to adjust marketing plans in a timely manner. The second marketing product launched by Retail Link is 'Help You Sell', a marketing product that reaches the C-end through small stores. The gameplay is simple. For example, a certain laundry detergent originally costs 20 yuan. If it sells for 15 yuan in a certain type of store, the store can publish this product. After the goods are delivered, the store places the product in the designated position, attaches the QR code and poster that come with the goods, takes a photo and uploads it, and then the store can receive the display fee paid by the brand owner. When a consumer walks into the store and uses the mobile Taobao app to scan the code to purchase, the consumer only needs to pay 15 yuan to take the product. The small store will also receive the 15 yuan paid by the consumer and the 5 yuan promotional fee paid by the brand owner. 4. Digitalization of salesperson operations Lin Xiaohai revealed that the per capita efficiency of city partners is three times that of traditional FMCG salespeople. In addition to the strength of the entire platform and the personal efforts of city partners, the most important thing is that Retail Link has an armor that can make ordinary people become Iron Man: Lin Xiaobao. Lin Xiaobao will calculate the most effective route for the partner to visit today based on the stores covered by the partner, the historical purchase browsing, inventory, and other data of each store, maximizing the guidance of the partner's visit efficiency. 5. Digitalization of decision-making The so-called 'no data, no business', and data is also an important decision-making tool that Retail Link provides to brand owners. Retail Link has achieved digitalization of stores, supply chain, marketing, and partner operations. Of course, Retail Link can also provide brand owners with real-time data advisors. In addition to seeing the brand owner's own business performance and the performance of the business on each street, the data advisor also allows Retail Link to open different permissions based on different brand owners. Brand owners can even see their own business compared to competitors, their business compared to their industry, and their business compared to the entire retail market. This allows for a comprehensive understanding of their own situation, the enemy's situation, and the market situation, helping brand owners make the most efficient and accurate data decisions. 3 Store upgrade solutions In addition to the digital upgrade of brand owners and the distribution supply chain, Lin Xiaohai also proposed a digital upgrade strategy for stores. Retail Link expects to achieve store upgrades at the lowest cost and with the simplest operations. At the conference site, Retail Link launched the Retail Link Ruyi, a smart store manager cloud POS machine. It will connect to Alibaba's entire ecosystem and the marketing and promotion systems of many brand owners. In addition to daily cashier services, this cloud POS machine will also include: food delivery services, category optimization, display suggestions, mobile recharge, parcel collection, one-click replenishment, marketing activities, financial services, customer group analysis, and more. The pricing for this cloud POS machine is 1,999 yuan per unit. For the first 15,000 stores that purchase it, they will enjoy a half-price limited-time discount of 999 yuan per unit. In addition, Retail Link will also invite some stores to participate in a monthly rebate of purchase red packets, with a maximum rebate of 999 yuan, achieving a zero-price model. New Distribution believes that after decades of development, facing the impact of the internet, new technologies, and new species, China's FMCG distribution channels have indeed reached a critical juncture for transformation and upgrading. Relying on Alibaba's powerful ecosystem and leading technical capabilities, Retail Link may have pointed out a new development direction for 6.6 million mom-and-pop stores. -END-