Dear readers, I am Yuan Lai from New Distribution. Today, I want to share with you a distributor, Shanghai Kuaile Zhanggui, which is also a regional FMCG B2B platform. Founded in 2016, it has achieved over 1 billion yuan in sales in the single Shanghai market in 8 years. Recently, I had an in-depth exchange with Mr. Yang Qiming, CEO of Kuaile Zhanggui. Although it is an FMCG B2B platform, I hope to discuss how Kuaile Zhanggui does distribution business from the perspective of a distributor. Let me first share some data:
1. Warehouse area: 12,000 m2, with split-picking, and inventory turnover of 6.5 days;
2. Product structure: 4,000+ SKUs, 500+ brands, 41% beverages / 24% alcohol / 13% snacks;
3. Cash payment terms: 100% online payment, 70% WeChat and 30% Alipay, 0 credit period;
4. Store coverage: 60,000+ registered ordering stores, 15,000+ monthly active stores.
It's the same business, but Kuaile Zhanggui has used a different operating logic compared to traditional distributors, taking product distribution coverage to the extreme. I hope that Kuaile Zhanggui's business philosophy can bring some inspiration and reflection to mainstream distributors. Here I emphasize business philosophy, not business methods. Because behind any model, there are organizational genes and many external environmental factors. For example, Shanghai is a high-density city, and the large number of stores brings low per-store service costs due to economies of scale. We hope to let more distributors see the business philosophy behind Kuaile Zhanggui, for reference and learning.
100% Digitalization, Clear Business Overview
"When an order is generated, I know the cost, gross profit, profit, and payment to third-party contractors for that store." This is the most impressive sentence after communicating with Mr. Yang Qiming. Kuaile Zhanggui's downstream customer stores use 100% online payment, with payment before delivery. If the store refuses delivery, Kuaile Zhanggui will deduct a 1% handling fee and refund to the original account. If they refuse a second time, a 4% handling fee is deducted. More than 3 times, they are directly listed as "black households," and their accounts are frozen; Kuaile Zhanggui will no longer provide services. Therefore, Kuaile Zhanggui has no unexpected orders; all orders are real. After the order is completed, it directly becomes a warehouse task, picking goods by vehicle, loading and delivering, completing local orders. From order generation to driver delivery, and of course, including goods receipt and warehousing, it is 100% digitalized. Once the business data of an order is available, the data for the day, week, and month is clear at a glance.
Outsourcing Drivers, Vehicles, and Picking
When the business reaches a certain scale, doing everything and managing everything is often the least efficient. Yang Qiming's understanding: everyone's management has boundaries; we cannot manage from start to finish. We just need to find the key points and control them. At Kuaile Zhanggui, from vehicles to drivers, to warehouse picking personnel, everything is outsourced. Kuaile Zhanggui introduces a third-party contractor mechanism to manage drivers and vehicles. The delivery fee is paid to contractors at an average of 2 yuan per piece, plus an additional 0.2% for breakage costs. Deeply bound with contractors, they plan next year's delivery tasks in advance to ensure basic tasks. Contractors will also find drivers based on the task volume. For drivers without vehicles, contractors and drivers co-purchase vehicles, each contributing 50% or an agreed ratio, with an agreed annual delivery volume. After completion, the vehicle belongs to the driver. From a cost perspective, although third-party contractors require a certain premium, without them, if Kuaile Zhanggui operated directly, they would still need a similar "logistics director" role. The manager's salary plus management communication costs, as well as the many uncertainties brought by self-operated vehicles. Overall, the cost of direct operation is definitely higher than that of third-party.
All Systems Serve Needs
Compared to other systems, Kuaile Zhanggui's own system is very simple, with only three core parts: First, the order information system, which solves the aggregation of business orders; Second, the warehouse production system, which aggregates orders into production tasks and matches corresponding vehicles; Third, an ERP system with OA functions for internal business analysis. There are no redundant functions, and many functions do not even show an interface. Each position only needs to receive one task at a time. On the store client side, in addition to seeing successful orders, they can also see real-time order status and product flow.
What Can Traditional Distributors Learn?
First, order online. An order is the smallest business unit. By integrating various operating costs and product purchase prices, the overall business data is clear. Through data, find key points for business growth, such as per-store output and item structure, quantify these key points into KPI indicators for front-end business or back-end procurement, and set up incentive mechanisms. Yang Qiming said, "I know the profitability every minute. My phone tells me; just refresh, and I can see how much money is made every minute, faster than my finance."
Second, warehouse and distribution contracting. Warehouse and distribution contracting. Of course, it's not complete contracting, but controllable contracting. Transfer the management costs, coordination costs, and uncontrollable, non-standardized unexpected factors of warehousing and logistics to third parties, focus on the main business of "product distribution," and improve distribution efficiency. Due to space limitations, I cannot elaborate on all the business philosophy and methods of Kuaile Zhanggui. Therefore, New Distribution and Tameng will organize an in-depth study tour on February 15-16, visiting Kuaile Zhanggui, with CEO Mr. Yang Qiming and General Manager Mr. Zhang Jianguo, to deeply discuss the digital operation of local trade and circulation business, and talk about the business model, development path, and current latest business strategies of trade and circulation. Kuaile Zhanggui will share everything, providing a model and practical cases for distributors covering all categories of small and medium stores. How to achieve 4,000+ SKU all-category operation, 500+ brands, 41% beverages / 24% alcohol / 13% snacks, and behind this, only 4 purchasers manage 4,000 SKUs. On the front-end business, with 15,000+ monthly active stores, 0 credit period, payment before delivery, and no returns, how is this achieved? Interested friends can scan the QR code to add WeChat for details.