Greetings, I am Yuan Lai from New Distribution. Before the Chinese New Year, Mr. Wu Jinghe, Deputy General Manager of Caihua Trading (Yueheji), shared insights in the Ta Alliance community about how Caihua Trading empowers small stores, with annual sales of 2.5 billion yuan, 23,000 monthly active stores, and 4,000 SKUs. The sharing sparked heated discussions among Ta Alliance members. After the New Year, at the FMCG conference in Chengdu, we invited Mr. Wu to share again at the Ta Alliance closed-door meeting, and the audience was still full of applause. Therefore, following the suggestions of distributor friends, I also made a trip to Dongguan myself. Finally, it was decided that on April 18-19, we would organize outstanding distributors from across the country to visit Dongguan for on-site visits and exchanges. The following content is compiled based on Mr. Wu Jinghe's earlier sharing, to help you understand Caihua Trading (Yueheji) as a B2b supply chain platform and the business logic behind it. First, let me briefly introduce Caihua Trading (Yueheji).
Caihua Trading and Meiyijia convenience stores are sister companies, both under Dongguan Sugar and Wine Company. Caihua Trading was established in 2012 and is one of the earliest B2b supply chain platforms in China dedicated to serving small stores.
As of the end of 2024, revenue exceeded 2.5 billion yuan. Guangdong is the main market, accounting for 70% of total business. The total number of product barcodes is over 4,000.
Guangdong has 5 large warehouses, each with 2,800 SKUs, serving 2-3 cities.
- Caihua Trading serves stores under 80 square meters, with over 23,000 stores. The average monthly purchase amount per store is over 7,000 yuan, and the average order value is between 1,300 and 1,400 yuan. The following is an excerpt from Mr. Wu Jinghe's sharing on the key strategies for empowering small stores, including the point that price wars among small stores are meaningless. Price Wars Among Small Stores Are Meaningless Nowadays, more and more peers are doing B2b and small store business, and they basically adopt one tactic: price wars. This is almost an unavoidable situation in B2b now—either you initiate a price war or you are passively drawn into one. Although low-price competition has had some impact on us, Caihua Trading has always insisted on its own path—not engaging in price wars, but empowering small stores through products and services. Why? I believe price wars are unsustainable, especially for distributors transitioning to B2b; where would they get so much money to burn? In fact, in terms of price, Caihua has no advantage compared to many platforms, but why are we still the largest B2b platform in our region? Because we have really put a lot of effort into empowering small stores; the effort is below the iceberg. Everyone talks about empowering small stores, but most stay at the "talking" stage, still "selling whatever they have." Caihua's empowerment of small stores is about "helping small stores sell more." What does that mean? Distributors transitioning to B2b focus on "one-stop, full category, low price," so small stores can buy whatever they want. This is indeed what small stores need. But there are two problems here: First, "one-stop, full category, low price"—you can do it, and your peers will do the same, eventually leading to a price war. Second, what small store owners truly need is not a procurement channel that is "one-stop, full category, low price," but how to sell more. When we talk about "empowering" small stores, we should focus on how to help them sell more. If we don't think and act from this perspective, and still push whoever gives fees, or "sell whatever we have," you'll find that your SKU count increases, but product efficiency decreases; small store owners will take advantage of whoever offers benefits, and they won't form loyalty with you. So how do we "help small stores sell more"? Helping Small Stores Sell More The core of empowering small stores is "helping them sell more." First, we indeed started Caihua with a retail gene, with the original intention of providing small stores with proven, sellable products. Second, in the early days, we held customer symposiums, where some customers raised issues like: What if my business is taken by chain stores? What changes do I need if new competitors come? We found that customers don't just want to buy cheap and complete goods from you; they have real needs to improve their own business capabilities. We mainly did two things: First, product curation; second, display scenario creation. How to curate products? First, in terms of categories. We serve small stores, and based on their category needs, we have broken down categories. Currently, our products are divided into 47 major categories, over 200 medium categories, and over 500 sub-categories. For example, under the beverage category, there are sub-categories like mineral water and purified water, and further down, small bottles, medium bottles, etc. Another example: under the peanut category, there are shelled peanuts, etc. In terms of categories, what we ultimately look at is whether the sub-categories are complete. Second, in terms of price bands. Each category has products at high, medium, and low price points. For snacks, for example, we usually take the benchmark brand in that category as a baseline, convert to gram weight, and select products at different price points below that. If a supplier recommends a product, no matter how good the brand or how high the profit, if it doesn't fit our logic and has no place in our price bands, we won't sell it. Generally, a small store needs 1,200-1,500 SKUs, but we have over 2,800 in each warehouse because stores in different business districts and locations need different products. We recommend products based on the store's location. For small store owners, what is the population in their business district? What kind of goods and prices sell better? They lack this information. We talk about empowerment, but in practice it's difficult; both employees and store owners have low perception, so we translate it into specific actions: which products? Which types of stores to distribute to? What display scenarios to create? Besides recommendations from sales staff and the mall, we also have an important action: creating display scenarios. At the same time, we have also implemented tiered customer management. Based on the number of barcodes purchased, purchase amount, combined with other behavioral indicators such as login frequency to the mall and whether they place orders, we score customers and divide them into four levels: Diamond, Gold, Silver, and Regular. Different levels enjoy different benefits, which are not reflected in price but in what the store needs for its own operations. For example, for high-level customers, we provide on-site display scenario creation services. We only serve the convenience store format. We have created universal display diagrams for how many center island shelves, beverage coolers, and hanging bags are needed, and how much shelf space different categories should occupy. We tell customers: Are your categories missing? What products should you choose? How to display them? Previously, small stores only focused on fast-selling categories, selling others as an afterthought, with messy product selection and display. In recent years in the Guangdong market, the sales share of snacks, grain and oil, general merchandise, and daily chemicals in small stores has been increasing. Their business structure is healthier, and operations are improving. For example, most small stores didn't sell sanitary pads before, or sold very few; selling 200-300 yuan a month was considered good, but now some stores can sell over 1,000 yuan a month. The annual replacement rate of the product pool is 30%. We are tied to the top 20% of customers, and the system automatically pushes new products to them weekly. These are some of the things we do to empower small stores and "help them sell more." To sum up in one sentence, we are building an all-category curated mall for small stores in the industry, acting as buyers for small stores. To summarize:
To help small stores sell more, first curate products, optimizing our product pool in terms of categories and price bands based on small store operational needs.
Recommend products based on the actual business district of the small store, and help more small stores optimize their product structure through customer tiering and display scenario creation.
Caihua rarely does brand activities but does category activities, acting as a buyer for small stores, not a brand promoter. Due to space limitations, we cannot elaborate on all of Caihua Trading's operational methodologies. On April 18-19, we will discuss in detail with Caihua Trading on-site:
- Product assortment for small stores
- Tiered store management
- Platform category promotions
- Product replacement management
- In-store display creation
- Warehouse, picking, and distribution cost loopholes Interested friends can scan the QR code to add WeChat for details.