Preface: Henan Shizhirui Trading, founded by Mr. Zhang Wenhai in 2015, primarily deals in all categories of daily chemicals, including washing, home cleaning, skincare, cosmetics, and oral care. It represents nearly 150 daily chemical brands, totaling 4,000 SKUs, with 180 employees and a warehouse area of over 10,000 square meters. Annual sales are around 300 million yuan, and it operates on a cash settlement model at the store level. Mr. Zhang Wenhai emphasizes that their business model is the "daily chemical whole-store output" model, rather than single-brand distribution or daily chemical package deals. How does Shizhirui Trading manage 4,000 SKUs with cash settlement? How did it develop step by step? This case holds significant reference value for FMCG distributors nationwide, whether in snacks, condiments, or daily chemicals. The following content is Shizhirui Trading's "business wisdom," personally narrated by its General Manager, Mr. Zhang Wenhai, first published at the "Tower Alliance—18th Distributor Boss Sharing Session," with slight abridgments. This article is divided into two core parts: 1. The Evolution of the Daily Chemical Whole-Store Output Model 2. The Operational Logic of the Daily Chemical Whole-Store Output Model
The Evolution of the Daily Chemical Whole-Store Output Model To explain the origin of the daily chemical whole-store output model, I must first talk about my entrepreneurial journey, so that everyone can understand why Shizhirui has taken a path different from mainstream daily chemical distributors. Before 2015, I was a business manager for Bawang shampoo, responsible for small store circulation channels in the city. At that time, I mainly dealt with stores of 200 square meters, where the washing category accounted for about 5% of store business, and stores generally didn't pay much attention to it. For 200-square-meter stores, the daily chemical category was basically supplied by distributors or wholesalers of Nice, Liby, Unilever, and P&G. Each distributor would deliver some goods to the store, a bit here, a bit there. But due to the selfishness of their own brands, they would squeeze each other's shelf space. No one maintained it, so there was no aesthetic display. Also, because the daily chemical category had low turnover, salespeople didn't visit frequently, and store owners didn't care. Over time, this led to best-selling items being out of stock, and slow-moving items gathering dust. At that time, Bawang's share in stores was relatively small, so I had spare time. I took the initiative to wipe the daily chemical shelf area with a cloth, and if other brands' goods weren't on the shelf, I would help arrange them. These small actions led store owners to propose that I manage the daily chemical area, including shampoo, conditioner, body wash, home cleaning, personal care, etc., to tidy up, take orders, and replenish promptly. Based on this opportunity, I officially started my business in 2015, providing daily chemical product supply for small stores, essentially acting as a daily chemical wholesaler and the store's daily chemical purchasing agent. In the early days, Shizhirui's core solution was to address the problem that store owners didn't have time or energy to manage the daily chemical shelves, and that single or multiple brand distributors had high markup rates due to slow turnover in small stores. I aggregated daily chemical products, proactively reduced some gross margin, and also improved product display, making store owners willing to cooperate with me. From 2016 to 2018, Shizhirui Trading was basically "running non-stop," 7 days a week, delivering goods during the day and organizing shelves at night, finishing one store per night. The logic for organizing shelves was simple: organize by category—shampoo, body wash, laundry detergent, dish soap, etc.—clearing each shelf section to improve display aesthetics. Best-selling items got more shelf space to ensure no stockouts. Slow-moving items were compressed or eventually not ordered. This was the prototype of Shizhirui's daily chemical whole-store output model. By 2019, Huayu Baijia Supermarket (a local premium supermarket in Zhengzhou), in order to cater to consumption upgrades, began to adjust its product structure, benchmarking against the retail benchmark Pangdonglai. They reduced traditional old brands like **Xiu and **Fang, which were homogeneous and lacked features, and introduced new and novel products that sold well in cities like Beijing and Shanghai. They removed 30% of "old products" and introduced 30% of "new products." After painful adjustments, daily chemical sales increased by 30% and gross margin increased by 10% within 2 months. This deeply impressed me and strengthened my confidence in continuously upgrading the daily chemical category. By 2021, Shizhirui cooperated with Taoxiaopang Supermarket (a 3,000-4,000 square meter supermarket, known in the industry as the "Zhengzhou version of Pangdonglai"), further enhancing Shizhirui's professional capabilities in daily chemical whole-store output. They introduced high-end imported cosmetics such as SK-II, Kiehl's, and Kérastase for Taoxiaopang, further enriching the daily chemical category structure. After 8 years of development, and following the transformation and upgrading trends of offline retail supermarkets, Shizhirui gradually developed its category management capabilities for daily chemicals in offline supermarkets. This is the complete origin of Shizhirui's daily chemical whole-store output model. Over 8 years of entrepreneurship, I have several insights about supermarket daily chemical management: First, the average decline in daily chemical business in mainstream supermarkets is 10%. Why the decline? Because customers see homogeneous products when they enter the store—shampoo like Rejoice, Head & Shoulders, Clear, and nothing else. All are the same, homogeneous products from major circulation, offering no surprises, so customers don't want to browse. Second, to meet consumers' "browsing" needs, supermarkets must first transform and upgrade the daily chemical category. They need to make customers stop, look more, smell more, and try more. Products with fragrances, makeup, scent beads, and new and novel good products. Third, the daily chemical category is not just about meeting basic physiological needs (like hunger or thirst); daily chemical products provide emotional value related to "beauty." Therefore, product display, product richness, and product differentiation are crucial elements in supermarket daily chemical management. From the above description, fellow distributor bosses can see that Shizhirui is no longer a traditional distributor considering the demands of one or two brands, but rather stands at the supermarket store level, considering consumer needs.
The Operational Logic of the Daily Chemical Whole-Store Output Model Next, I want to share the logic behind the whole-store output model. First, let me answer a question many distributors care about: how does Shizhirui achieve cash settlement? To make it easier to understand, I'll give a real case. Previously, a supermarket owner from Anhui (with a chain of 5 stores locally) visited Zhengzhou to tour Taoxiaopang and Huayu Baijia supermarkets. Seeing the product display and assortment in the daily chemical section, he found me through a sales guide and hoped I could help him adjust his daily chemical section. However, I required cash payment, so we didn't reach an agreement at the first meeting. About 10 days later, the owner came back, and after repeated communication and negotiation, we finally reached a cooperation. To secure cash settlement, I offered him the following benefits: 1. Product structure adjustment 2. Product display optimization 3. Retail price reduction by 20% 4. Gross margin increase by 10% 5. Sales increase by 30% After agreeing, the supermarket owner first selected his TOP3 stores for adjustment. After 2 months of adjustment, here's the daily chemical business situation for those stores: actual sales increased by 48%, and gross margin increased by 11%. You might wonder why such a significant improvement occurred after adjustment. I think it's partly due to Shizhirui's 8 years of accumulated daily chemical category management capabilities, and partly because the current state of daily chemical sections in supermarkets is entirely planned based on upstream brands, without considering consumer shopping experience. Regarding the overall logic of whole-store output, I summarize three points: First, product assortment Second, comprehensive gross margin Third, supply efficiency About product assortment. Take laundry as an example. In traditional supermarkets, 80% of the laundry shelf is occupied by first-tier brands like Diao, Liby, Omo, and Tide, with the remaining 20% likely being second- or third-tier brands. But Shizhirui's approach is: first-tier famous brands must be present, but only occupy 1/3 of the shelf; the remaining 1/3 is for imported products, and 1/3 for internet-famous products. To clarify, this doesn't mean every store strictly follows this ratio, but compared to traditional daily chemical product combinations, it offers consumers more diverse and varied choices. Of course, besides brand assortment differences, we also make finer functional distinctions within each category. For example, in the shampoo category, there are oil-control, anti-dandruff, anti-hair-loss, hair care, natural organic, etc., and we design specific SKU quantities based on different functions. About comprehensive gross margin. Similarly, let me give an example. For a store with 5 million yuan in daily chemical business, a package dealer would want a margin on every item. But for Shizhirui, maybe 1.5 million yuan only has a 10% margin, not making money. The other 3.5 million yuan has a margin. Without the 1.5 million yuan that doesn't make money, the 3.5 million yuan margin wouldn't be possible. For instance, a well-known best-selling shampoo has a purchase price of 10 yuan, with an official guide price of 19.9 yuan per bottle. But compared to online prices on JD.com and Taobao, the actual transaction price is 14.9 yuan per bottle. Shizhirui prices this shampoo at 14.9 yuan per bottle in stores. Any consumer, no matter how wealthy, doesn't want to waste money, and also wants to feel they're getting a bargain. Inflated prices often make people feel cheated. By setting a retail price of 14.9 yuan, Shizhirui often earns at least a minimal margin on this shampoo, but through other imported products and internet-famous products, combined with online e-commerce retail prices, it earns a reasonable margin. Shizhirui focuses on comprehensive gross margin, not single-product margin. About supply chain efficiency. Suppose a store is supplied by 4 daily chemical distributors, each with an average markup of over 20%, and they do 10,000 yuan in sales. On average, each distributor's gross profit is 500 yuan. But with Shizhirui, supplying all daily chemical categories with a 15% markup, Shizhirui's gross profit is 1,500 yuan. I previously visited Japan to study retail formats. A store of 500-800 square meters has no more than 5 suppliers, with each category handled by a major distributor. I believe future Chinese retail will be like this. The more distributors a supermarket has, the higher the service cost and the lower the efficiency. Shizhirui's "whole-store output" model combines products from n distributors to reduce costs and improve efficiency. This is not just about delivery and fulfillment efficiency, but truly about combining products from the perspective of the store and the consumer. Each of the n distributors has their own selfish interests, hoping for the most shelf sections and the best display positions for their own products, without considering customer needs.
Summary: Due to space limitations, I cannot elaborate on all of Shizhirui's business methodologies. Therefore, 「New Distribution」 will organize an in-depth study tour on November 28th, visiting Shizhirui Trading, to have an in-depth discussion with General Manager Zhang Wenhai on the changes in urban daily chemical distribution business, discussing Shizhirui's business model, development path, and the latest business strategies. Interested friends, scan the QR code to add WeChat and inquire about registration details.