---
title: "Catering B2B: The Matching Model Is More Likely to Produce a Super Unicorn!"
description: "If B2B is stripped of transactions, it is essentially a wholesale business, not a high-sounding logic. The essence of wholesale is saving, variety, quality, and speed. To win customer recognition, you must secure cheaper, better, and more diverse products, which requires sufficient procurement scale upstream in the supply chain. Only with sufficient procurement scale can you have enough bargaining power. In the past, the industry often compared platform and self-operated models, finding that the platform model is hard to sustain in FMCG. However, after recent exchanges with Gong Yanbin, founder of Tongying Tianxia, it appears that the platform model is viable in the catering industry and could even give rise to a super unicorn."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-07-29"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/-HSjptb2seE6HLu8c4hrTw"
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# Catering B2B: The Matching Model Is More Likely to Produce a Super Unicorn!

> If B2B is stripped of transactions, it is essentially a wholesale business, not a high-sounding logic. The essence of wholesale is saving, variety, quality, and speed. To win customer recognition, you must secure cheaper, better, and more diverse products, which requires sufficient procurement scale upstream in the supply chain. Only with sufficient procurement scale can you have enough bargaining power. In the past, the industry often compared platform and self-operated models, finding that the platform model is hard to sustain in FMCG. However, after recent exchanges with Gong Yanbin, founder of Tongying Tianxia, it appears that the platform model is viable in the catering industry and could even give rise to a super unicorn.

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**If B2B is stripped of transactions, it is essentially a wholesale business, not a high-sounding logic.**
The essence of wholesale is **saving, variety, quality, and speed**. To win customer recognition, you must secure cheaper, better, and more diverse products, which requires sufficient procurement scale upstream in the supply chain. Only with sufficient procurement scale can you have enough bargaining power.
In the past, the industry often compared platform and self-operated models, finding that the platform model is hard to sustain in FMCG. However, after recent exchanges with Gong Yanbin, founder of Tongying Tianxia, it appears that the platform model is viable in the catering industry and could even give rise to a super unicorn.
**In fact, whether it is a platform or self-operated model, it is closely related to the industrial structure, and it is also the result of China's specific historical and market factors.**
**Historical Factors**
Comparing the development paths of commercial circulation in China and the United States, the real watershed came after China proposed the theory of deep distribution, leading to a globally unique product distribution model.
The core of deep distribution is **emphasizing the integration of manufacturers and distributors, extending operational reach through distribution to the retail level, and gaining competitive advantage by building partnerships with distributors and retailers.**
This is fundamentally different from the wholesale distribution model in Europe and America. Deep distribution often requires distributors to be exclusive, compresses the space for secondary wholesalers, and directly supplies terminals. Over time, this has led to a weak wholesale business in China.
In the past, product distribution went from supply and marketing cooperatives to wholesale markets, and from wholesale markets to large distributors (provincial agents, city agents). After deep distribution, there are basically no large distributors left. **Deep distribution is essentially a process of continuously dismantling distributors and compressing secondary wholesalers.**
But in the United States, product distribution took a different path, especially from the early 20th century, when wholesalers continued to rise and evolve, eventually becoming super supply chain companies. Distributors often act as representatives of a region's production areas and categories, industry associations, coordinating prices, controlling markets, and helping production areas complete national or global wholesale business connections.
Take the wine category as an example: wine is divided into production areas, and in each production area, there are usually one or several related industry associations. These associations are essentially distributors; their function is to help the production area complete global production and sales connections. Each year, the association registers how much wine you can produce, compiles the data, and then uniformly labels it. Distributors seek large wholesalers globally and use super wholesalers to distribute the products.
**Industrial Factors**
China's unique "deep distribution" model has led to differences in product distribution between China and the United States; this is a historical factor. In addition, it is also closely related to the industry. Taking catering as an example, comparing the catering and FMCG industries reveals differences in the supply chain.
**First, the product categories at the catering terminal are vastly different.** For instance, hot pot restaurants and stir-fry restaurants have mostly different product categories.
**Second, due to the characteristics of Chinese food culture, standardization in the catering industry is very difficult.** With insufficient infrastructure, the degree of chain operation in catering is low, leading to relatively slow development of endogenous supply chain companies.
**Third, Chinese people have relatively high requirements for fresh vegetables.** Wholesale markets have natural advantages, so local fresh produce or agricultural markets have always been the mainstream channel for catering wholesale.
When these three factors are combined, it becomes clear that there is a huge opportunity for supply chain upgrading in the catering industry, specifically in the following two points:
**First, Endogenous Supply Chains**
**Large catering companies, in order to chain, usually need to standardize the front and back ends, which requires them to build central kitchens and supply chain systems.** Typical examples include Shuhai under Haidilao. Another example is Zhang Liang Malatang, which also has a supply chain company behind it. As its supply chain grows, to ensure profitability, they will consider business diversification, take on external orders, and gradually evolve into vertical supply chains.
I believe that many domestic catering chains' internal central kitchen systems will gradually evolve into similar supply chain companies, including many milk tea shops, which are typical vertical supply chain models.
However, self-built supply chains also have drawbacks, **the core being low operational efficiency in the early stages.** Although the number of chain stores is large, the density in a single city is too low, and when planning the supply chain, companies will inevitably design redundant capacity in advance, leading to extremely high operational and logistics costs in a closed system.
Gong from Tongying Tianxia once gave an analogy: Zhang Liang Malatang's OEM vinegar product cost is not high, even cheaper than what small shops buy themselves, but the company has to bear the logistics cost from Harbin to Tianjin, ranging from 15 to 20 yuan per item, resulting in shockingly high actual supply costs.
Another issue is that if a transfer warehouse is set up, it still increases the number of handling times without reducing supplier procurement costs. Although chains like Guming Milk Tea and Zhang Liang Malatang are profitable, the costs for downstream customers are not low.
At the same time, to ensure quality, Zhang Liang Malatang and Guming Milk Tea must build their own supply chains; otherwise, franchisees might cut corners, such as reducing costs and lowering raw material quality.
**Although there are many handling steps, low efficiency, and low profits, it can be seen that some vertical supply chain models work: product quality is closed and controllable, orders are stable, and there are other stacked profits to support supply chain operations.**
Comparing Meicai and Shuhai, you will find that Meicai's delivery backend is closed, relying entirely on its own procurement, warehousing, logistics, and capital for rolling development. Without a stable order cycle from the front end, this requires a relatively long pre-loss period. But fortunately, the catering industry has relatively high profit margins, so if operations reach a scale tipping point, I think there is still an opportunity to be profitable.
**Second, Open Supply Chains**
**This is a unique catering supply chain model in China, namely the platform model.** The platform model is essentially a matching service. Through platform operations, it brings more suppliers, purchasers, and logistics service providers into the platform, like an online wholesale market. As long as it can help small restaurant procure cheap goods and cover a sufficiently large number of stores, it will attract enough upstream and downstream suppliers.
As a platform operator, you only need to solve two things: 1. **Sufficiently diverse and rich product procurement; 2. Efficiency of last-mile logistics delivery. As scale expands, the platform's network effects and scale effects will gradually be released.**
What is network effect? Network effect is different from scale effect. **Scale effect means that the increase in business volume in a single city is unrelated to other cities; business growth comes from the accumulation of business volume.**
**We see that almost all self-operated and vertical supply chain systems gain marginal profits through scale effects, with linear growth. For example, the top five supply chain companies in the United States are all vertical supply chain systems.**
But network effect is different. Under network effect, the boundaries between business modules on the platform become very blurred. For example, a city's logistics service provider can also act as a supplier, supplying other purchasers on the platform. Similarly, a purchaser can also be a supplier, providing goods and services to other service providers or purchasers on the platform. Such business crossover and stacking will form an ecosystem.
**Why can this effect occur in the catering industry?**
The catering industry can exhibit scale and network effects mainly for several reasons:
**1. The product categories in the catering industry**, except for grain and oil, have relatively high profit margins compared to FMCG, which can support cross-regional logistics and distribution costs;
**2. Brand concentration is low.** Products in the catering industry generally require further processing, and consumers recognize the restaurant rather than the raw materials supplied, so whether the products are branded is not that important;
**3. Industry concentration is low.** There are about 6 million restaurants in the catering industry, but truly large-scale chains are rare.
Therefore, there is a huge opportunity for platform-based supply chains in catering. Some might ask, isn't Retail Link already running this platform model?
Yes, but the platform model in the FMCG industry may encounter unique invisible barriers. As mentioned earlier, the distribution and wholesale model in FMCG is already weak, especially for high-frequency products like beverages and dairy.
But why does Lin Xiaohai insist on the platform model? There may be two reasons: 1. **Alibaba's DNA is platform DNA; 2. Lin Xiaohai previously worked at P&G, and P&G uses a wholesale model for small shops,** so he believes that wholesale still has a large circulation volume in China. But although it is large, it is only in certain categories.
**In traditional circulation small shops, food and beverages are already deeply distributed, and the proportion of true wholesale business is actually not high. Even if there are secondary wholesalers, they are all ultra-short-radius distribution.**
Moreover, FMCG products have low value, high frequency, high logistics costs, and consumers have high brand awareness and loyalty. So "breaking through" these categories is very difficult.
Of course, you might say that snacks, daily chemicals, and general merchandise still have huge opportunities. I think yes, no problem, but the premise is that **if you cannot achieve closed procurement, small shops have the opportunity to source from outside. When it comes to price competition, doing business in China has never had a bottom line.**
Therefore, I am not optimistic about the platform model in the FMCG industry, or in the TT channel.
**In summary, the distribution model in the FMCG industry has only scale effects, not network effects.**
**Under a closed supply chain system, scale effects can generate strong bargaining power externally, but if the downstream is not closed and brand direct supply costs are lower than yours, the so-called "channel digitalization" is only an itch, not a pain point!**
**What is the real pain point in the entire industrial structure? Cost! It is the pain point of insufficient product competitiveness caused by low logistics efficiency, excessive handling, and high costs.**
**This pain point can only be solved by the brand owners themselves, because once you find a large platform, costs converge. There is still no competitiveness.**
Therefore, B2B in the FMCG industry can only adopt models like Meiyijia, either as category killers, import/export procurement, small commodities, or small appliance wholesale, but food and beverages are basically hopeless.


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