The 2017 (2nd) China FMCG + Internet Conference concluded perfectly yesterday. Centering on the theme of 'Empowerment and Evolution', Direct Delivery CEO Lai Xuanren shared his views on new retail and delivered a vivid speech on the survival and development of channel transformation. Mr. Lai directly addressed the biggest practical dilemma in current new retail development: not making money! Although some distributors or B2B companies have large order volumes, high transaction values, many customers, and good service quality, the terminal market is fragmented with low loyalty; market changes are rapid with low predictability, leading to most distributors or B2B companies not being profitable. Many distributors attempt to tackle this from logistics, warehousing, and distribution. However, if they continue to use the old flood-irrigation approach to distribution, without effective market feedback and without accurately targeting consumers, they are merely wearing new shoes on the old path of traditional channels, yielding minimal results. For the FMCG market, everything is changing rapidly. In the past, the retail supply chain was simple: distributor to store, or distributor to supplier to store. The operating model relied on traditional vehicle sales, with few core customers and being far from the market, unable to meet the efficient changes and demands of the market. In the Internet+ era, they seek new ways out through the Internet of Things (i.e., online), or build B2B platforms, combining offline physical retail with online e-commerce sales to achieve profitability. But ultimately, their methods still focus on logistics, warehousing, and distribution, failing to precisely identify target customers and provide consumers with a seamless omnichannel experience. On the other hand, Mr. Lai also conducted an in-depth analysis of the future customer base for distributors and B2B suppliers, pointing out that without reform, there will be no stores to supply in the future!
For large retail customers (i.e., KA), including international and domestic, although they account for a large proportion in various cities, judging from the gradual decline of KA in Japan, domestic KA will also undergo large-scale transformation in the future. For example, the attempts of Yonghui's 'Super Species' indirectly prove that KA will be marginalized.
As for individual small stores, although they are numerous, they have poor image, small scale, and weak competitiveness, and urgently need transformation.
Traditional convenience stores are even more self-evident: their profit model is single, and terminal development is slow.
The development and rise of new formats such as Hema Fresh, Super Species, and 7-Eleven... It is like having wolves in front and tigers behind; whether distributors or B2B, finding a new way out is extremely urgent. Mr. Lai further analyzed several forms of B2B business models currently in the market: Directly changing the signboard: Undoubtedly, apart from advertising effects, it is difficult to form a real brand, with poor results and no stickiness. Franchise, joint venture franchise, or direct-operated convenience stores: Strong terminal control, good supply chain transformation, and brand influence, but slow terminal promotion, difficult transformation, hard to scale, heavy costs, long time, and supply chain advantages are hard to form. Light franchise: Fast terminal development, quick formation of scale and brand influence, low cost, but weak terminal control, which can be compensated by operations and tools. For most distributors and B2B companies, they already have existing customers, good customer relationships, mature supply chains, and battle-tested promotion teams. At this point, as long as you add convenience store operation services, control over terminal data, and certain brand value, you will have a huge incremental market. Therefore, in the future of new retail, building your own light franchise chain brand will be the general trend. Centered on consumers, based on the digitalization of people, goods and services, supply chain, and other aspects, using data flow to connect various consumption scenarios, and leveraging digital technology to achieve comprehensive integration of physical and virtual retail supply chains, transaction payment chains, and service chains, providing consumers with a seamless omnichannel consumption experience, quickly and effectively forming a brand, and seeking survival and development. As for his own product, Mr. Lai summarized it in one sentence: Through the store SaaS system, it supports distributors and B2B in building their own chain brands; it is the management tool for chain convenience stores. The full PPT of the speech is attached below:** For more on-site highlights, click the 'Read Original' link below. -END-