Most FMCG manufacturers find it extremely difficult to achieve growth this year, a harsh and concrete reality. Amid a complex and volatile economic environment, weak consumer confidence, sluggish demand, and intense competition pose unprecedented challenges. In response, the state has rolled out a series of policies to expand domestic demand and boost consumption. However, in an era of stock, how can industry partners seize these opportunities? Improving efficiency and reducing costs from the supply chain, and channeling financial liquidity, is a very good path. On November 21, the '2024 JD Supply Chain Finance Technology Consumer Industry Conference' was held in Guangzhou. At this conference, themed 'Using Supply Chain Finance to Boost Consumption and Drive Growth,' many consumer industry clients who have benefited from supply chain finance's efficiency and cost reduction shared their successful practices.
Funding Issues Are the Enemy of Distributor Growth For FMCG enterprises, distributor channels often account for over 70% of sales. Therefore, when distributors achieve sales growth, it often means growth for the FMCG enterprise. But today, funding issues are precisely becoming the biggest enemy of distributor growth. JD Supply Chain Finance Technology believes that 'in the consumer industry, distributors are in the middle layer, and today's operational pressure has significantly increased.' The overall increasing funding pressure is the most direct manifestation of the growing operational pressure on distributors. Facing downstream terminal customers, distributors often sell on credit, and as competition intensifies, payment terms become longer. Facing upstream manufacturers, they need to prepay for inventory. Is reducing inventory feasible? In most cases, it's difficult.
Reason 1: Upstream brand owners transfer growth pressure to distributors. Strong brands require distributors to strictly follow annual plans for picking up goods, leaving little room for negotiation; weaker brands launch aggressive channel promotions, which, as retail prices continue to drop, can even become the main profit source for distributors, making it hard to give up.
Reason 2: Consumption uncertainty is increasing, and stockouts are the biggest disaster. Distributors must keep sufficient inventory to seize every sales opportunity. In the off-season, sales are poor, so the peak season becomes the key opportunity to maintain sales and profits, and manufacturers have promotions, so inventory must be sufficient; new channels have uncertain increments, such as discount channels and live-streaming channels, where you don't know which day which product will go viral, so inventory needs some redundancy.
Therefore, the biggest problem for distributors arises: they don't know how much money is needed to run this business. In the off-season, sales are poor, less money is used, and having more cash on hand is unnecessary; in the peak season or when a product goes viral, preparing inventory in advance requires finding money at high cost and with difficulty.
Financial Support Is Becoming an Important Means of Empowering Distributors More and more leading brands have recognized the funding pressure on distributors and have begun to use financial empowerment as one of the important channel empowerment tools.
Huang Tao, Commercial Director of TCL Group's Financial Services, stated that bank financing is not easy, with high thresholds, complex processes, and lack of flexibility, making it difficult to match distributors' funding needs. In contrast, JD Technology's 'Supply Loan' and 'Procurement Financing' products offer fast response, short processing times, and flexible borrowing and repayment, better matching distributors' business rhythms.
For example, in the 3C and home appliance industries, around TCL Group as the core enterprise, its upstream suppliers of raw materials such as TVs and air conditioners use JD Supply Chain Finance Technology's 'Supply Loan' service. This service allows suppliers to 'get a loan upon supply,' fully online, unsecured, and based solely on credit, with credit limits of several million yuan based on historical transaction records. Its downstream nearly 100 air conditioner distributors use procurement financing services, achieving efficient coordination across the supply chain. In the beer industry of FMCG, beer promotions in summer require fast turnover; the difference between 4% and 7% annual interest is actually minimal. At this time, the pursuit is faster response; after getting the money, they can quickly distribute goods, and after quick sales, they can repay at any time. High efficiency and flexibility mean the overall cost of capital use is actually very low. JD Technology data shows that in the FMCG industry, customers using its 'Procurement Financing' product have sales about 20% higher than other customers. And due to the flexibility of borrowing and repaying at any time, the minimum financing cost for distributors can be reduced to around 2%, which is generally bearable for distributors under fast turnover. In June this year, JD Technology deeply integrated beer business characteristics in its cooperation with Budweiser; within 10 days of launch, the balance exceeded 80 million yuan, enabling Budweiser to achieve 170% of its sales target.
In fact, across the entire consumer sector, JD Technology is using corresponding supply chain finance products to solve financing problems for distributors, accelerating the flow of funds between manufacturers and distributors, thereby seizing more sales opportunities and achieving greater growth. In the cooperation between JD Technology and Gujing Gongjiu, it broke through the industry limitation of not being able to serve 'secondary distributors,' not only helping primary distributors solve financing problems but also helping them solve receivables issues. To address distributors' distribution receivables, JD Technology assisted Gujing Group in building a supply chain financial service platform, including upstream supplier financing management systems, downstream distributor business systems, second-tier terminal business systems, and bill service systems. This platform, with Gujing Gongjiu at its core, connects upstream suppliers and downstream primary distributors and secondary distributors throughout the entire distribution chain. After integrating business data, it can provide credit to Gujing's suppliers upstream and solve distributors' sales collection issues by providing credit to secondary distributors downstream. Once distributors' collection issues are resolved, not only is there no collection risk, but rapid collection also reduces their own capital costs. Through this system, within one year, it successfully provided 300 million yuan in financing to nearly 500 secondary distributors of Gujing Gongjiu.
Professor Song Hua from Renmin University of China Business School believes that from a higher level, the essence of supply chain finance is not just capital lending or financing, but optimizing industrial cash flow to improve the operational efficiency and service quality of the entire industry. The innovative cooperation between JD Technology and Gujing Gongjiu demonstrates and realizes this higher-level value of supply chain finance.
'Four Integrations' Strategy Supporting Sustained FMCG Growth Last year, JD Technology, perceiving the evolution trend of the consumer industry, proposed the 'Four Integrations' development strategy for supply chain finance: upstream + downstream, internal + external, technology + finance, and B2B + B2C. Over the past year, it has achieved tangible results. During the recent JD 11.11, JD Supply Chain Finance Technology provided 250,000 customers with 53 billion yuan in financing limits, and through various preferential measures, directly saved customers a cumulative financing cost of over 50 million yuan. Over the past year, the procurement financing service helped customers in industries such as smartphones, tablets, and pharmaceutical health increase financing amounts by 12 times, boosting consumer merchant transaction volumes by 3 times. During this year, Jingbaobei served 140 suppliers of first- and second-tier energy-efficient home appliances upstream of JD, providing 2.369 billion yuan in financing disbursements.
At this conference, many consumer industry customers also came to the scene to share their practical cases of using supply chain financial services to keep up with the growth wave. Digital China, as a well-known IT service enterprise, used customized Jingbaobei products in JD's internal marketplace and procurement financing and positive factoring services in JD's external marketplace, successfully connecting internal and external capital flows. Honor is also a JD Technology customer, using procurement financing services in the B2B internal marketplace to support expanding production scale and enhancing market competitiveness; in the B2C market, it uses JD's Baitiao and Jintiao services to provide consumer demand, achieving full-scenario coverage of B2B and B2C.
In the process of serving customers and upgrading products, JD Supply Chain Finance Technology has also proposed new 'Three Pillars': expanding new scenarios, expanding new products, and expanding new services, providing strong support for the implementation of the 'Four Integrations' strategy.
First, expanding new scenarios. JD Supply Chain Finance Technology's service scope has expanded from industries such as 3C, ICT, and home appliances to FMCG industries such as agricultural and sideline products, alcohol, and beverages, as well as segmented scenarios like motorcycles, electric bicycles, jewelry, and chain hotels. Additionally, emerging industries such as new energy vehicles, smartphones, smart homes, and biomedicine have gradually become service priorities.
Second, expanding new products. Targeting the needs of enterprises at different supply chain stages, it continuously launches diversified financial products: for the production stage, credit transfer, factoring financing, and bank acceptance bill instant discounting for upstream enterprises; for the commodity circulation stage, financial leasing products for core enterprises; for the distribution, logistics, and service stages, inventory pledge loans and order financing for downstream enterprises.
At this conference, JD Supply Chain Finance Technology also launched new financing tools such as the 'Jingbaobei Direct Factoring' model and 'Supply Loan,' providing enterprises with more flexible and diverse financing options.
Third, expanding new services. This year, it also incorporated wealth management business into its system, launching 'Enterprise Treasury' to help enterprises preserve and increase the value of their funds. While addressing enterprises' funding needs, it also provides comprehensive wealth management services.
We can see that under the 'Four Integrations' strategy, JD Technology, through a full industry chain product system, successfully connects online and offline, self-operated and external, achieving full-scenario coverage, thereby building a penetrating financial service system that seamlessly links B2B and B2C. It is this supply chain financial service system, deeply rooted in the consumer industry chain, that is becoming an important support for more and more core enterprises, distributors, and sub-distributors to achieve sustained growth in the era of stock.