Core Resources Flock to B2B, Total Funding Soars 699%, B2B to Produce BAT-Level Stars

A series of signs indicate that To B is one of the few areas retaining a spring-like atmosphere in the capital winter, and is the most likely to become the biggest internet trend after O2O. Big names have recently spoken out in favor of To B.

In early 2016, several notable events in the internet sector showed special trends.

One was Zhaogang.com's 1.1 billion yuan financing, the highest since Meituan-Dianping. Another was the well-known host Lang Yongchun resigning from CCTV to join Zhaogang.com.

A series of signs indicate that To B (enterprise-oriented internet services) is one of the few areas retaining a spring-like atmosphere in the capital winter, and is the most likely to become the biggest internet trend after O2O.

Resources are gathering towards To B

Big names have recently spoken out in favor of To B.

Lei Jun said that the next decade is still a golden period for entrepreneurship, and entrepreneurs still have plenty of opportunities, with enterprise-level and rural markets being two major directions.

A series of key data indicate that core resources are gathering towards the To B field. Core resources can be summarized into three: capital, talent, and traffic.

Capital

Three years ago, To B was rarely sought after, but now it is almost a must-see area for every venture capital institution.

According to data, compared with 2014, the number of investments in the To B field in 2015 increased by 329%, and the total amount of investment received increased by 699%.

Talent

Earlier this year, Lang Yongchun joined Zhaogang.com, becoming a landmark event, indicating that the attractiveness of the To B field has radiated to elite figures outside the circle. Just as when O2O was at its peak, Gao Sheng's Liu Qing joined Didi, and when sports and entertainment investment was at its peak, Zhang Yimou and Liu Jianhong joined LeEco. When a field can attract outstanding talent across industries, it indicates that it has taken a central position in society.

Traffic

Traffic is as important to internet companies as land is to real estate companies.

Take the keyword "B2B" as an example. Using Google News search, there were 77,800 results in 2014, and in 2015 it soared by 300% to 228,000 results.

The logic of the trend

To B can become a trend because:

To B is still a wilderness with huge "reclamation dividends". From consumer internet to industrial internet, along with PC internet to mobile internet, and internet to IoT, it has become one of the three recognized future directions.
Why did it break out exactly in these two years? The two major problems currently plaguing China's economy have become catalysts for the development of enterprise-level internet. One problem is overcapacity, which has forced originally strong bulk commodity sellers to lower their profiles and participate in online matchmaking transactions, leading to the rise of vertical e-commerce platforms like Zhaogang.com and Zhaosuliao.com. Another problem is rising costs. From 2008 to 2014, labor costs doubled, giving enterprises the motivation to use the internet to reduce costs, leading to the explosion of internet services such as Zhubajie in trademark registration, and Macaolo.com and Maca Finance in small and medium enterprise bookkeeping, fiscal and tax social security, human resources, and finance.
Venture capital is heavily betting on the To B field because "it can become very big", in the words of Xiong Xiaoge, possibly giving birth to the next BAT.

The South Slope North Slope Theory

After the rapid development of To B in 2015, what stage is it at now? Two sentences to summarize: first, "many heroes competing, the country is not yet decided"; second, "competition of paths and models".

There is a famous "South Slope North Slope Theory" in the internet industry. Yidao started from car rental to enter the travel market, targeting a small group, and did not achieve dominance for many years; Didi started from taxis, expanding the target group dozens of times, and became a giant in a short time.

So in the current To B field, who will win?

Three models

Currently, representative companies in the To B field can be divided into three categories:

First, SaaS

SaaS is short for Software as a Service, mainly targeting enterprise sales management, collaborative office, and other needs, entering the market from tool software.

Fenxiang Xiaoke has received three rounds of financing within one year, nearly 200 million US dollars, and is a representative company in this field.

Fenxiang Xiaoke was established in December 2011. Its initial market breakthrough was as a sales team management tool, using the information flow form of Weibo and WeChat to provide functions such as field check-in, customer management, sales logs, and mobile approval.

It hit the pain point of "how to know the real-time status of external sales teams and how to manage them anytime", and after launch, the user volume grew rapidly, making it a leader in this field.

In terms of domain, Fenxiang Xiaoke started from sales, and in recent months has gradually covered PR, Marketing, and customer service.

Second, vertical e-commerce

Targeting the trading needs of bulk commodities, rooted in one industry, entering the market from vertical transactions.

Representative company Zhaogang.com. Coinciding with steel overcapacity, the once strong steel mills could not sell their products and had to lower their profiles to cooperate with new e-commerce platforms like Zhaogang.com.

Zhaogang.com first did information publishing, where buyers and sellers published supply and demand information online, and then Zhaogang.com helped match and facilitate transactions.

After matchmaking transactions reached a certain scale, Zhaogang.com started its own business, selling products itself. A few months later, it opened a platform and launched direct sales, allowing other large distributors and agents to sell steel on Zhaogang.com.

At this point, Zhaogang's main business expanded to three parts: "matchmaking is equivalent to Taobao, self-operated is equivalent to JD, and open platform is equivalent to Tmall."

Next, Zhaogang.com attempted to extend this model from one industry chain to multiple industry chains, gradually involving copper, oil, glass, etc.

Third, comprehensive service platform

Targeting enterprise supply chain finance needs, fiscal and tax needs, and small loan needs, entering the market from services.

Representative company Macaolo.com, which has been established for 9 years, not only survives but has become a leading SME data platform, and is now facing the biggest trend of "enterprise-level internet services".

When Macaolo started B2B e-commerce in 2007, there were already strong players like Alibaba and HC360 in the field. How to attract users to its own B2B platform? Macaolo made an important change by implementing a free strategy.

This move was effective. Macaolo quickly gained a large number of users and entered the first tier of B2B, becoming one of China's leading enterprise platforms.

In addition to the free strategy, Macaolo's other competitive weapon is technology. Its search engine uses efficient index compression and decompression algorithms and retrieval algorithms, with performance about 200% higher than other retrieval services.

Objectively speaking, if it had not encountered the outbreak of the To B trend, Macaolo might still be living a comfortable life in a secondary field. The To B trend turned the secondary field into a front-line battlefield.

Around this time, Macaolo completed its own transformation, extending from procurement search to more core areas of the industry chain such as bulk commodity trading, supply chain finance, and enterprise fiscal and tax services.

Macaolo's expansion has a clear logic, namely "hot start + data-driven".

Many startups have to adopt a cold start for new projects, starting from zero to build users and markets. Macaolo has 16 million registered SME users, enabling it to mine new needs and start new projects based on existing users. This is called a hot start. This model has been proven by Zhubajie.com, which is valued at over 10 billion.

Zhubajie.com was originally a trading platform that helped SMEs design logos and build websites. More than a year ago, it launched a trademark registration business and achieved national leadership within a few months. The main reason is the result of a hot start—the original user base was huge, and users who designed logos naturally had a large demand for trademark registration.

Hot starts are extremely effective. Macaolo entered the vertical e-commerce of PVC chemical products and achieved national leadership within a few months.

Who will win

Three representative paths have a common point: they all aim to build a platform ecosystem, as the old saying in the internet industry goes: "Application companies are worth 1 billion, platform companies are worth 10 billion, and ecosystem companies are worth 100 billion."

The difference lies in the entry point and path, which will determine growth speed and final form.

The immediate questions are:

Which path will go faster and higher?
Will the final pattern of To B be three into one, with only one winner? Or will it be like the oligopoly coexistence of BAT in the To C field, where different paths all reach the peak?

Some key indicators can show the general trend. These indicators include: users, team, capital, and barriers.

1. Users

Users are the cornerstone of everything.

To B users are quite different from To C users:

They are not easily moved by discounts or subsidies. Whether it's Meituan or Nuomi users, give them 5 yuan more and they come. B-end users look at whether problems can be solved and whether it is easy to use. Enterprise users are quite rational.
Once an enterprise becomes your user, loyalty is quite high. After using a service, enterprises tend to develop strong dependence.

Three representative companies have the following user characteristics:

Due to different models, the user numbers of the three companies cannot be compared on the same level, but they also show some characteristics of the three companies.

Macaolo has the most users, Fenxiang Xiaoke has the strongest user stickiness, and Zhaogang.com users have the strongest transaction attributes and are closest to money.

Customer acquisition cost indicates the difficulty of acquiring a user. The SaaS model has the highest customer acquisition cost. A SaaS company costs about 70 yuan to acquire a registered user, and 2000 yuan to convert them into a paying user.

Companies like Macaolo.com have the lowest customer acquisition cost. First, it has a huge user base. Second, once enterprise users choose a service provider, they develop trust and loyalty.

2. Team

When the To B industry first emerged, there was a debate about whether To B could replicate the To C internet model, where a complete outsider disrupts the entire industry, just as Diao Ye transformed the nail industry, Jia Yueting innovated the TV industry, and Musk disrupted the automotive industry. Will such outsiders appear in the To B industry?

Now there is a basic consensus in the industry that for To B entrepreneurs, "deep understanding of the industry" is placed first, followed by the ability to embrace new technologies and understand the rules of the capital market.

The founders of the three representative companies all have experience related to traditional industries.

It can be seen that all three founders have experience in traditional industries, with Macaolo founder Su Jiting having the deepest involvement, having started his own business and being familiar with the enterprise ecosystem.

3. Capital

In this era driven by venture capital, without the support of this key resource, no company is likely to grow big.

There are two criteria to measure capital recognition: first, whether it is a well-known investor; second, the amount of financing.

All three have well-known investors "blessing" them. Zhaogang.com received the most financing. Fenxiang Xiaoke had three rounds of financing in one year, leading in the SaaS field. Macaolo is already profitable in multiple business lines and is relatively stable in financing, which is related to the founder's experience in industry.

4. Barriers

Whether a barrier can be formed is a necessary condition for becoming a giant.

Companies with three representative models are all building their own barriers.

Fenxiang Xiaoke's barrier is user stickiness and user behavior reshaping. Once users get used to this set of procedures, it is difficult to leave and use other tools, thus forming a barrier.

Macaolo's barrier is customer acquisition cost and data-driven. As a comprehensive platform, Macaolo has a very low customer acquisition cost. Nine years of accumulation has given it sufficient user behavior data, and data is increasingly becoming the key to all core competitiveness.

Zhaogang.com's barrier is vertical depth, heaviness, and scale.

Whether it is the SaaS model, vertical trading platform, or comprehensive service platform, all are trying to redefine the boundaries of enterprises. In the future, the internal circulation system of traditional enterprises—people, finance, goods, production, supply, and sales—will be connected with the external circulation, and data will flow through the entire chain, ultimately achieving intelligence.

In this process, companies with data accumulation and data-driven capabilities will take the lead. Macaolo is using this strength to smoothly expand from information services to transaction services, financial services, and enterprise services. Zhaogang.com also wants to use data to achieve intelligent logistics management.

To B has always been a slow market, not sexy, not driven by adrenaline and hormones. It is a long-distance race. On the road to the main peak, it is often the silent ones who erupt and the hidden ones who win. Which company will be the BAT in the To B field? Or which few companies with distinctive application scenarios will win? It is still difficult to conclude now.

This platform will soon organize interested distributors who want to build B2B platforms to visit and learn from some B2B platforms. Friends who are willing to learn with the editor can add the editor's WeChat to understand together. When adding, please reply with the keyword: 学习

- END-

Domestic best FMCG distributor learning platform Focus on providing professional, practical, and applicable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry