Preface: Henan Shizhirui Trading is a company founded by Mr. Zhang Wenhai in 2015. Currently, it primarily deals in all categories of daily chemicals, including washing, household cleaning, skincare, cosmetics, and oral care. It represents nearly 200 daily chemical brands, totaling 6,000 SKUs, with nearly 300 employees, a warehouse area of over 10,000 square meters, and annual sales of around 400 million yuan. It also implements a cash settlement model at the store level. Mr. Zhang Wenhai emphasizes that his business model is a "whole-store output" model for daily chemicals, rather than a single brand distribution agency or a daily chemical package model. How does Shizhirui Trading manage 6,000 SKUs with cash settlement? How did it develop step by step? This case has important reference value for FMCG distributors nationwide, whether in snacks, condiments, or daily chemicals. The following content is Shizhirui Trading's "business philosophy," as personally narrated by its General Manager, Mr. Zhang Wenhai, with slight deletions. This article is divided into two core parts: 1. The Evolution of the Daily Chemical Whole-Store Output Model 2. The Business 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 the small store circulation channels in my city. At that time, I mainly dealt with stores of 200 square meters, where the washing category accounted for about 5% of the store's business, and the 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 and a bit there. But due to the selfishness of their own distribution brands, they would crowd each other's shelf space. No one maintained it, so there was no aesthetic display. At the same time, because the daily chemical category had low turnover, salespeople didn't visit frequently, and store owners didn't pay attention, leading to a situation where best-selling items were out of stock, and slow-moving items gathered dust. At that time, Bawang's share of store business was relatively small, so I had spare time. I took the initiative to wipe the daily chemical shelf area clean with a cloth, and if other brands' goods weren't on the shelves, I helped arrange them. These small, unnoticed actions led the store owner to propose that I take over the daily chemical area, including shampoo, conditioner, body wash, household cleaning, personal care, etc., to tidy up, take orders, and replenish stock promptly. Based on this opportunity, I officially started my business in 2015, providing daily chemical product supply to circulation small stores, essentially acting as a daily chemical purchasing agent for small stores. In the early days of the business, 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 several brand distributors had high markup rates due to slow turnover in small stores. I aggregated daily chemical products, proactively reduced some gross profit, and also improved product display, making store owners willing to cooperate with me. From 2016 to 2018, Shizhirui Trading was basically "running non-stop," working 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, such as shampoo, body wash, laundry detergent, dishwashing liquid, etc., clearing each shelf section to improve display aesthetics. Best-selling items were displayed more to ensure no stockouts. Slow-moving items were actively compressed or removed from future orders. This was the prototype of Shizhirui's daily chemical whole-store output model. By 2019, Huayu Baijia Supermarket in Zhengzhou (a local boutique supermarket) began to adjust its product structure to cater to consumption upgrades, benchmarking against the retail benchmark Pangdonglai. They reduced traditional old brands like **Xiu and **Fang, which lacked features and were homogeneous, and introduced products that sold well in cities like Beijing, Shanghai, and Guangzhou, as well as novel and unique items. They removed 30% of "old products" and introduced 30% of "new products." After a painful adjustment, daily chemical sales increased by 30% and gross profit increased by 10% within 2 months. This had a significant impact on me and strengthened my confidence in the continuous upgrading of the daily chemical category. By 2021, Shizhirui cooperated with Taoxiaopang Supermarket (a 3,000-4,000 square meter supermarket, known as the "Zhengzhou version of Pangdonglai" in the industry), 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 to Taoxiaopang, further enriching the daily chemical category structure. After 8 years of development, 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. After 8 years of entrepreneurship, I have several insights about supermarket daily chemical management: First, the average decline in daily chemical category 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 that's it. All the same, all homogeneous products from major circulation, no surprises for customers, so they don't want to browse. Second, to meet consumers' need to "browse," supermarkets must first transform and upgrade the daily chemical category. They need to make customers stop, look more, smell more, and try more. There should be fragrances, cosmetics, scent beads, and novel and unique good products. Third, the daily chemical category does not satisfy consumers' most basic physiological needs (like hunger or thirst); daily chemical products bring consumers emotional value related to "beauty." Therefore, product display, product richness, and product differentiation are very key elements in supermarket daily chemical management. From the above description, 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 Business 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 a cash settlement model? To make it easier to understand, I'll give a real case. Previously, a supermarket owner from Anhui (with 5 chain stores locally) visited Zhengzhou to tour Taoxiaopang and Huayu Baijia supermarkets. Seeing the product display and product mix in the daily chemical section, he found me through a salesperson and hoped I could help him adjust his daily chemical section. But I required cash, and we didn't reach a cooperation 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, the benefits I gave him were: 1. Product structure adjustment 2. Product display optimization 3. Product retail price reduced by 20% 4. Product gross profit margin increased by 10% 5. Product sales increased by 30% After agreeing, the supermarket owner first selected his TOP 3 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 profit increased by 11%. You might also be curious why such a big improvement occurred after the adjustment. I think it's partly due to Shizhirui's accumulated category management capabilities over the past 8 years, 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 Mix Second, Comprehensive Gross Profit Third, Supply Efficiency Regarding Product Mix. Take laundry as an example. In traditional supermarkets, 80% of the laundry category 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 Trading's approach is that first-tier famous brands must be present, but only up to 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 mixes, it provides consumers with more diverse and varied choices. Of course, besides brand mix differences, we also make further functional differentiation within each category. For example, in the shampoo category, there are oil-control, anti-dandruff, anti-hair-loss, conditioning, natural organic, etc., and we design specific SKU combinations based on different functions. Regarding Comprehensive Gross Profit. Similarly, let me give an example. For a store with 5 million yuan in daily chemical business, for a package operator, they want gross profit on every item. But for Shizhirui, maybe 1.5 million yuan only has a 10% gross profit, not making money. The other 3.5 million yuan has gross profit. Without the 1.5 million that doesn't make money, it's impossible to have the 3.5 million with gross profit. For instance, a well-known best-selling shampoo has a purchase price of 10 yuan, and the official suggested retail price is 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. Excessively high prices often make people feel cheated. By setting the retail price at 14.9 yuan, Shizhirui often earns very little gross profit on this shampoo, but through other imported and internet-famous products, combined with online e-commerce retail prices, it earns a reasonable gross profit. Shizhirui focuses on comprehensive gross profit, not single-product gross profit. Regarding Supply Efficiency. Suppose a store is supplied by 4 daily chemical distributors, each with an average markup of over 20%, doing 10,000 yuan in sales. On average, each distributor earns 500 yuan in gross profit. But Shizhirui, supplying the entire daily chemical category with a 15% markup, earns 1,500 yuan in gross profit. I previously went to 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 the products of n distributors to reduce costs and improve efficiency. This is not just about delivery and distribution 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 July 13th, visiting Shizhirui Trading, to have in-depth discussions with General Manager Zhang Wenhai about 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.