---
title: "Enhancing Traditional Distributor Efficiency and Arming Retail Stores to the Teeth: Alibaba Retail Link Decodes Its Business Model for the First Time"
description: "At the second China 'Internet + FMCG' Summit Forum on July 15, Alibaba Retail Link publicly explained its business model for the first time, emphasizing its commitment to empowering distributors and small retailers through data-driven solutions, including the 'Super Member' project to transform product assortments and boost sales."
author: "New Distribution"
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published: "2017-07-18"
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# Enhancing Traditional Distributor Efficiency and Arming Retail Stores to the Teeth: Alibaba Retail Link Decodes Its Business Model for the First Time

> At the second China 'Internet + FMCG' Summit Forum on July 15, Alibaba Retail Link publicly explained its business model for the first time, emphasizing its commitment to empowering distributors and small retailers through data-driven solutions, including the 'Super Member' project to transform product assortments and boost sales.

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"Every day thinking about eliminating distributors—what did distributors do to deserve this? What we want to do is help them go digital and improve their efficiency. On the small store side, we hope to enable store owners to know who their potential consumers are and what they want through a data platform. Our 'Super Member' project is designed to fundamentally change the product structure of retail stores and arm them to the teeth!"
On July 15, at the second China 'Internet + FMCG' Summit Forum, the usually low-profile Alibaba Retail Link publicly analyzed its business model in full for the first time. On that day, Tu Xiaoyu, General Manager of Retail Link's Marketing Center, elaborated on Retail Link's systematic approach to new retail from the perspectives of brand owners, channel partners, and retail stores.
It is understood that Retail Link currently focuses on second- to sixth-tier cities, with the intelligent and data-driven transformation of retail stores as its core. Tu Xiaoyu stated that Retail Link is working to digitize the entire chain from brand owners, suppliers, distributors, and retail stores to end consumers, using data-driven methods to reconstruct people, goods, and scenes.
**Compatible with Distributors: Making Distribution Visible and Efficient**
Previously, many FMCG platforms talked about eliminating intermediate links and channel partners. But in Tu Xiaoyu's view, such a model merely turns the platform into the largest distributor, ultimately leaving brand owners with 'only an upper body, no lower body.'
"Every day thinking about eliminating distributors—what did distributors do to deserve this?" Tu Xiaoyu said that distributors have played a crucial role over the past few decades, connecting brand owners and retail stores. "They earn very thin margins; they are just earning a mover's wage. What we want to do is empower distributors to embrace new retail."
In the traditional distribution model, costs increase as you go down the chain. If a brand wants to cover 1 million stores, it needs a team of 10,000 people. If a small store wants to stock products from 10 brands, 10 brands would each send a person to deliver. Therefore, when introducing brands, Retail Link chooses to cooperate with brand-designated distributors to make the channel more efficient rather than replacing the existing channel. Tu Xiaoyu believes that distributors should be online in real time, clearly grasping inventory and logistics information to control costs.
"Our choice is compatibility and empowerment. We are an open platform, and an open platform must be compatible and empowering. We provide empowerment services including logistics, finance, data, marketing, and systems—far more than just supply. We help these brand owners digitize their distributors and improve their efficiency."
In fact, while brand owners want to compress channel links to reduce costs, they also do not want to rely entirely on self-operated platforms. On one hand, existing distribution channels mainly serve their own brands and also handle warehousing and distribution functions; on the other hand, brand marketing and new product promotions can be constrained by self-operated platforms, even leading to cross-regional selling and low-price competition.
Tu Xiaoyu revealed that Retail Link will empower distributors in all aspects, including operational data and warehousing. This includes improving distributor efficiency in warehousing, systems, training, sales management, and finance. "We will let distributors directly enter our platform and become enterprise partners of Retail Link. We help them connect their warehouses to the Cainiao network, and customize combinations based on the needs of brand owners and distributors in terms of people, warehouses, goods, and distribution."
**Empowering Small Stores: Using Data to Change Product Structure**
Every street-corner store has a notebook filled with products that the owner thinks sell well, along with various purchase prices and ordering phone numbers. In Tu Xiaoyu's view, this manual record-keeping method can be improved by Retail Link in terms of both purchasing methods and product structure.
Currently, Retail Link has over 10,000 SKUs, the highest in the industry. But for each street-corner store, shelf space is limited. How to help small stores introduce new products, ensure quality, and reduce operating costs is the biggest driver of Retail Link's business growth.
Beyond sourcing, Retail Link's greater value lies in Alibaba's big data. This data can even understand customer needs better than the store owner. "We hope to make small store business simpler, allowing them to know who consumers are through an intelligent data platform, how to stock goods, which instant noodles are selling well recently, and even whether the store can sell fresh produce or coffee."
It is understood that Retail Link has launched an interest-free credit service for small stores, which grades each store owner based on their historical order amounts on the platform. The more they order, the higher their level, and the larger the credit limit they can apply for, allowing store owners to stock up smoothly even when they are short on cash.
Tu Xiaoyu revealed that Retail Link is piloting a project called 'Super Member,' which connects small store POS systems to a cloud management platform. He said this can not only fundamentally change the product structure of small stores but also arm them to the teeth. "We provide a complete intelligent management platform, including professional services and priority access to financial services, to improve their business. In some stores in Hangzhou, based on consumer analysis, we only restructured the product assortment, and these stores' sales increased by 70% to 100%."
**Empowering Brand Owners: Channel Penetration and Ending the Sales Black Hole**
Relevant statistics show that there are currently about 6.8 million convenience stores nationwide. For brand owners, these are 6.8 million shelves that must be stocked. Relying solely on the existing distribution system is not enough to get products onto these shelves.
Retail Link is helping brand owners achieve channel penetration and cover more incremental markets. For brand owners, Retail Link's significance lies in directly reaching and serving store owners and consumers at the retail end. Tu Xiaoyu cited an example: although Qingfeng tissue has over 400,000 active sales points nationwide, Retail Link can still bring it 20,000 new stores per month.
In addition to visible incremental markets and channel penetration, Tu Xiaoyu believes that Retail Link's change for brand owners is the optimization of the entire supply chain. "Brand owners distribute goods to retail stores through distributors or wholesalers, and then nothing happens. They all think it's a black hole. The data is isolated across different links and not connected. We don't know who is buying our products or which small stores the goods are distributed to."
Nestlé sells 50% of its products through traditional channels like small shops and grocery stores. Once goods are given to 'second-tier' or 'third-tier' wholesalers, it is difficult to get detailed sales feedback, such as where products sell well or whether a new product or flavor is popular. By digitizing the entire sales channel, this sales data can be fed back to brand owners, making the sales destinations of nearly half of their products clear instead of vague.
For example, not long ago, Oreo launched a 'Moonlight Box' based on data feedback, changing the packaging from a pack with a dozen cookies to individual small packs, giving children with limited pocket money or consumers who only want a few cookies more choices in small stores.
Tmall brands that grew from the Alibaba ecosystem have also entered the offline market through Retail Link. For example, Baicaowei deployed its products in 400,000 retail stores nationwide in less than a week, something previously unimaginable.
Tu Xiaoyu concluded that retail stores will not just be a sales or distribution channel but the main battlefield for brand owners' marketing. From product innovation to brand marketing and channel management, everything will be comprehensively digitized and data-driven. Ultimately, we can help brand owners and retail stores manage their true consumers.
**Source: E-commerce Reference******
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