---
title: "Benlai Market Fu Xiaoyun: What Is the Most Efficient Channel in the Internet Era?"
description: "The following is the core content of the speech delivered by Ms. Fu Xiaoyun, Vice President of Benlai Life and General Manager of Benlai Market, at the \"New Food Era · New Distribution 2016 FMCG + Internet Summit\" held on October 16. New Distribution has compiled the key points of her speech as follows: Good morning, let me introduce myself first. My name is Fu Xiaoyun, Vice President of Benlai Life and General Manager of Benlai Market. First, I would like to thank the organizers for giving Benlai Market this opportunity to participate in the \"2016 China FMCG + Internet Summit\" and to discuss the development of FMCG with industry professionals present."
author: "符小芸"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-10-17"
categories: "Brand Marketing"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/kH6UW_0WsitYs7RsJyxcTg"
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citation: "符小芸. “Benlai Market Fu Xiaoyun: What Is the Most Efficient Channel in the Internet Era?.” New Distribution, 2016-10-17. https://xinjignxiao.com/en/articles/benlai-market-fu-xiaoyun-what-is-the-most-efficient-channel-in-the-inter-a6d2a845/"
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---

# Benlai Market Fu Xiaoyun: What Is the Most Efficient Channel in the Internet Era?

> The following is the core content of the speech delivered by Ms. Fu Xiaoyun, Vice President of Benlai Life and General Manager of Benlai Market, at the "New Food Era · New Distribution 2016 FMCG + Internet Summit" held on October 16. New Distribution has compiled the key points of her speech as follows: Good morning, let me introduce myself first. My name is Fu Xiaoyun, Vice President of Benlai Life and General Manager of Benlai Market. First, I would like to thank the organizers for giving Benlai Market this opportunity to participate in the "2016 China FMCG + Internet Summit" and to discuss the development of FMCG with industry professionals present.

The following is the core content of the speech delivered by Ms. Fu Xiaoyun, Vice President of Benlai Life and General Manager of Benlai Market, at the "New Food Era · New Distribution 2016 FMCG + Internet Summit" held on October 16. New Distribution has compiled the key points of her speech as follows:

Good morning, let me introduce myself first. My name is Fu Xiaoyun, Vice President of Benlai Life and General Manager of Benlai Market.

First, I would like to thank the organizers for giving Benlai Market this opportunity to participate in the "2016 China FMCG + Internet Summit" and to discuss the development of FMCG with industry professionals present. It is our honor, and we are very happy to attend such an industry event. Thank you, organizers.

Today, the theme I will share with you is **"Channel Efficiency in the Internet Era"**.

Everyone here is an expert in the FMCG field, and you are the ones we respect and learn from. We are newcomers to FMCG, having just entered this field. When we entered, we studied a lot of industry history and found a very interesting phenomenon.

From the 1980s to today, over the past 30 years, FMCG has always been solving three problems:

**Consumer education, channel refinement, and logistics efficiency.**

Do you know?

Take beer as an example: consumer education accounts for about 2% of costs, channels 35%, and logistics 10%.

Some companies have even higher costs if not well controlled.

In the Internet era, the cost of consumer education is getting higher and higher. **Consumer education can be summarized in two words: push and pull.**

**Pull:** Through advertising and brand marketing, a huge brand pull is generated to attract consumers, making them dependent on the brand and prompting purchases. In the Internet era, consumer attention is completely fragmented, making consumer education more costly and difficult. Even in such times, without brand pull, there is no place for FMCG products.

**Push comes from channel refinement**, through extensive ground promotion, supervision, store displays, promotional rewards, etc., to achieve sales targets.

There are many FMCG channels, each with its own characteristics. All manufacturers hope for full coverage across all channels, but resources and capabilities determine that most cannot achieve this. Over the past 30 years, the ones that have truly achieved channel refinement and created their own unique models are Coca-Cola's 101 model and Wahaha's joint distribution model.

China has about 5.6 million retail outlets. Coca-Cola's 101 model allowed it to achieve extremely wide coverage, and its channel sinking capability is almost terrifyingly detailed. Its core concept is to reduce intermediate links and directly control terminals.

In fact, every manufacturer dreams of directly controlling terminals, because FMCG differs from other consumer goods in that its biggest characteristic is "instant consumption." Imagine you are thirsty, walk into a small store, go to the beverage section to buy a drink. Even if you are the most loyal fan of a certain brand, you have to give up if it's not there. So, if your brand is not there, you lose the sales opportunity. It's that simple. Therefore, "winning at the terminal" has become the only way for FMCG to gain sales.

**What can controlling terminals bring to a brand?**

First, you can obtain more authentic and reliable information, unfiltered and unblocked, allowing you to adjust production in time, improve production efficiency, and control inventory and capital turnover. Of course, you can also develop new products close to the market and formulate correct market and sales policies.

Second, after directly controlling terminals, manufacturers and brands have more price differences, allowing you to increase market investment, enhance competitive advantages, and better control supply and pricing.

Ideals are full, but reality is cruel. Most manufacturers do not have the unicorn strength of companies like Coca-Cola and Pepsi. Direct terminal control requires strong investment in manpower and materials, systematic management capabilities, organizational structure, and professional support. This investment is not something ordinary brands can bear.

So another model emerged: Wahaha's joint distribution model. As everyone knows, this was founded by Wahaha's founder Zong Qinghou, known as the "master of network weaving." He wove a huge spider web for Wahaha. Since 2001, Wahaha launched this ambitious spider campaign, implementing quantitative management of its channels: one wholesaler per 50,000 population, one distributor per 30 square kilometers, and one marketing staff for every 5 million yuan in sales.

**The joint distribution model gave Wahaha a huge competitive advantage. Wahaha could roll out a new product to every corner of the country within 7 days.** This is the ZARA of the beverage industry. In martial arts, nothing is unbreakable; only speed is unbeatable.

But this joint distribution model has a decisive factor: **"hierarchical profit guarantee."** In the channel process, each level needs to pay a "toll," so the problem arises: **At a certain time, if product profits can guarantee profits at all levels of the joint distribution system, the above advantages will form. But if everyone's goals are inconsistent and profits cannot be guaranteed, it will have a counterproductive effect.**

**So the joint distribution model also has drawbacks: it does not directly control terminals, so there are many uncontrollable links, high management costs, and it can lead to a situation where all links engage in game-playing.**

Whichever model is chosen, it is based on the company's own characteristics. However, behind these two models, they are actually interconnected: finding a path between the manufacturer and the terminal. But who wants to take a long route between two points? Who wants to always pay tolls? So shortening the distance and reducing intermediate links is the general trend. Especially in the Internet era, the Internet provides infinite possibilities to accelerate this change.

**Now let's discuss the issue of logistics efficiency.**

According to KPMG statistics, China's average logistics cost as a percentage of GDP has remained around 18%, and it has been hovering there. Do you know what the world average is? It is 6.5% lower than ours.

We visited many large and small FMCG distributors, as well as many well-known convenience store chains, including some manufacturers. Everyone invests a lot in sales, but very little in logistics. (Pause) Of course, no one wants to do the dirty, hard, and tiring work, so they outsource it. But there are also those who are not afraid of hardship and do it themselves, but they struggle. Old warehouses, almost all flat warehouses, occasionally a few high-end three-dimensional warehouses, but management is still at a very primitive level.

Why is logistics efficiency so difficult? Why has logistics become a stumbling block for FMCG?

**In the final analysis, it is a logistics software problem.** This is like buying clothes: you buy according to your body shape and size; not everyone can wear a one-size-fits-all. Unfortunately, the logistics software everyone uses now is one-size-fits-all. It can be worn, but it doesn't fit. Modifying it is too expensive; not modifying it is too tiring to use.

To build the strongest logistics, you need the strongest brain. This brain is the **logistics information command system**, because anyone can rent warehouses, buy shelves, pallets, and pallet jacks, and the wealthy can even hoard land. But without a brain, without an information command center, even the best hardware and personnel cannot function. However, software is not something you can develop just by hiring a bunch of tech experts with money. It is a comprehensive system that requires an organic combination of various talents and experience. This is like the construction of highways and railways in our country: those who build highways cannot build railways. Both are transportation infrastructure, but building a highway requires at most 4-5 professional talents. Do you know how many professional talents are needed to build a railway? 23 professional talents. Signaling, electricity, vehicles, stations, etc., almost 4-5 times more than building a highway.

In addition to software, logistics also requires **highly intensive integration**, because only through high intensification can logistics distribution efficiency be improved and costs reduced. A single manufacturer or local terminal cannot achieve high intensification.

Take Benlai Market's APP business as an example: a 10,000 square meter warehouse, with an investment of 3 million yuan, 40 on-site workers, can manage more than 4,000 SKUs through the logistics information system, covering more than 10 major FMCG categories, processing more than 1,000 B2B orders per day. 20% of deliveries are made by self-owned vehicles, and 80% by social vehicles. Logistics costs will show different figures: with an annual delivery value of 300 million yuan, logistics costs are 4%; 200 million, 6%; 150 million, 8%; 100 million, 12%.

If your warehouse has only a single customer or single-type business, your pressure will be great. But if it is a multi-format operation, such as having both B and C, and the B business is also of different formats, we have calculated that with the same warehouse mentioned earlier,

Generally speaking, for bulk business, the average logistics cost is 3%; for fixed B-end route business, 4%; for C-end, 15%. If these businesses are organically combined, logistics costs can all drop by 1-3 percentage points.

So Benlai Market wants to focus on doing logistics well, providing logistics services for manufacturers, brands, and distributors. Through logistics integration, we achieve high intensification. Currently, Benlai Logistics has the characteristics of bulk, whole-piece, and split-piece operations, and can fully undertake the above businesses in the logistics system. We are exploring comprehensive warehouses, multi-format simultaneous operations, and integrating multiple businesses together. **Maximizing the sharing and utilization of resources is the major direction for future FMCG logistics development.** We plan to spend 3-5 years focusing on building an industry-leading warehousing and logistics center.

In summary, logistics is the first thing Benlai Market wants to do.

Next, let us introduce the second thing Benlai Market wants to do.

This brings us to Benlai Market's parent company, Benlai Life, a company focused on the entire food supply chain. Since its birth in 2012, it has made providing safe and reliable food its most sacred mission. We started from the most difficult area of food - fresh food. The company's founder, Yu Huafeng, like Zhong Shanshan, founder of Yangshengtang, is a media person. Zhong Shanshan worked as a journalist at Zhejiang Daily for 5 years, then entered the FMCG field. Over 20 years, he successively launched well-known brands such as Nongfu Spring, Scream, Oriental Leaf, and Tea Pai. Benlai Life's Yu Huafeng founded Southern Metropolis Daily and The Beijing News. Benlai Life has also launched many agricultural and sideline product brands, such as the well-known "Chu Orange," which we built into the public's "inspirational orange," and created the touching advertising slogan "Life has ups and downs, but the spirit can be passed on," and set the standard for good oranges with a "24:1 sweet-to-sour ratio." Liu Tao, Pan Apple, Li Yushuang Rice, Yu Sannan Champion Crab, and other brands have been successfully promoted to the public by us.

So we do fresh e-commerce differently from others. We go to the fields to find good food, which is in line with media digging for social news materials. This is the trait of media people. **So the second thing we want to do well is to leverage our media genes and traits to continue providing consumer education and marketing services.** We will have in-depth communication with manufacturers and brands, establish strategic cooperative relationships, and provide marketing and promotion services for their products like we did for Chu Orange, making many brands touch people's hearts, resonate with the public, and become popular brands.

In 2015, Benlai Life began its omni-channel strategy for food, entering the B2B field through Benlai Market and Benlai Guofang. Benlai Market carries the group's mission of "building a smart ecosystem for FMCG," and we focus on integrating the FMCG supply chain.

So we advocate **building a harmonious ecosystem with sharing economy and Internet ecosystem thinking**. We never believe that unicorns can control the world. No one can eliminate anyone. The real economy and the Internet can embrace each other. Everyone can coexist harmoniously like nature and support each other. Our B2B platform is open to everyone. You can join us. We provide ground promotion, operations and marketing, and logistics distribution. You can directly sell to retail terminals through our platform. We hope that all forces that meet Benlai Market's standards will participate and create value together with upstream and downstream partners.

Finally, I want to say, **"Life always has ups and downs, but the spirit can be passed on."** Please remember this B2B platform with feelings, dreams, and craftsmanship: Benlai Market. Please remember the three things we want to do: **build an industry-leading logistics center, brand marketing, and jointly build an FMCG ecosystem.** Thank you all.

-END-

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## Citation metadata

- Publisher: New Distribution
- Author: 符小芸
- Published: 2016-10-17
- Canonical: https://xinjignxiao.com/en/articles/benlai-market-fu-xiaoyun-what-is-the-most-efficient-channel-in-the-inter-a6d2a845/
- Original source: https://mp.weixin.qq.com/s/kH6UW_0WsitYs7RsJyxcTg

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