The author took a photo with Tan Xiaoping, founder of No.1 Life. The author's previous assumptions about the front-warehouse business model. After two days of exchange and market visits with Tan Xiaoping, founder of No.1 Life, in Guangzhou, the author gained an in-depth understanding of the company's current model and status. It was unexpected that with a product markup rate of only 5.2%, a single warehouse could achieve profitability. Let me briefly introduce this company: Dianba Technology was established in January 2015, initially starting as a food delivery service providing platforms and delivery services for catering merchants. It has since received seed, angel, and Series A funding totaling over 88 million RMB. It is reported that the No.1 Life project has completed a Series A+ financing of 78 million RMB, with investors including Hongdao Capital, Heli Investment, Huashan Capital, Langtaosha Capital, and Houxing Capital, with Xue Manzi following the investment. Their business model: Model: The business model of No.1 Life can be understood as a hybrid model. In terms of transactions, it includes both matchmaking and self-operated sales; in logistics, it adopts a combination of front warehouses and central warehouses. For small stores, it not only provides services but also offers managed franchising. In other words, all the service models currently seen in China can be found in their scenarios. No.1 Life focuses on the actual needs of customers and does not limit its business model. This is in stark contrast to large platforms such as JD New Channel, Alibaba Retail Link, and Zhongshang Huimin. Warehousing: Currently, No.1 Life has 1 large warehouse and 32 front warehouses in Guangzhou, covering more than 10,000 stores. In terms of business model, the large warehouse stores medium- and low-frequency other products and handles break-bulk operations. Front warehouses store high-frequency, low-margin products. Goods are directly delivered by suppliers to both warehouses. Each front warehouse is about 200 square meters and can store around 700 SKUs, basically meeting the procurement needs of small stores for best-selling products. Real photo of the front warehouse. Logistics: In terms of delivery speed, they adopt a "double 16" system: orders placed before 16:00 on the first day are delivered the same day, and orders placed after 16:00 are delivered before 16:00 the next day. To ensure delivery efficiency, No.1 Life does not accept returns and does not handle low-temperature short-shelf-life products. In terms of delivery range, a single warehouse covers a radius of about 3 kilometers. Beyond that range, they open another warehouse. Astonishingly, their tricycles deliver about 10 times a day on average, delivering to 30-40 stores per day, with a single vehicle's transaction volume reaching 25,000-30,000 RMB. Delivery vehicles. Products: The platform has a total of about 4,000 SKUs, basically meeting the one-stop procurement needs of small stores. In terms of procurement methods, a small portion is self-operated, while the majority is consignment and matchmaking. Technology: To ensure the accuracy of data across so many warehouses and retail stores, Tan Xiaoping invested heavily in building a complete supply chain ERP system covering B2B, retail store POS, WMS, TMS, and OMS. To ensure consistency between system and product data, all data is real-time online, with 39 verification steps from warehousing to delivery. It can be said that No.1 Life's high-efficiency operations are truly technology-driven. Summary: No.1 Life currently mainly covers Guangzhou and Shenzhen, cities characterized by high population density and extremely complex traffic conditions in the urban villages of old districts. Logistics delivery is extremely difficult. In such an environment, No.1 Life uses flexible, maneuverable electric tricycles and front warehouses to meet the rigid demand of small stores in first-tier cities for low inventory and fast delivery in the shortest time. If we summarize the core competitiveness of No.1 Life's delivery model in four words, it would be: fast, many, good, and economical. However, we should also note that although the combination of front warehouses and central warehouses improves delivery efficiency, it also has problems such as excessive product handling, high warehousing costs, and extremely high backend technical requirements. Since the core demand of small stores in first-tier cities for suppliers is fast delivery, followed by complete inventory and low prices, this model is not economical in non-first-tier cities.
Written at the end:
When B2B begins to rise, the traditional supply and marketing industry will inevitably be squeezed, and a large number of distributors will soon be marginalized. Of course, the distributor industry will not disappear, but that does not mean distributors will not die. When watching discussions, one must listen to the substance.
In the future, the functions of surviving distributors will change: either they will completely become pipeline merchants (solely warehousing and distribution functions, becoming local DCs and city distribution), or they will upgrade into supply chain companies.
High-frequency category distributors will become pipeline-oriented (vertical), low-frequency category distributors will become supply chain-oriented (centralized), first-tier city distributors will become pipeline-oriented, second- and third-tier city distributors will become supply chain-oriented, and fourth- and fifth-tier city distributors will become second-tier wholesalers. This is the overall trend. Marketing functions will be replaced by new methods.
Let me say it again: time for distributors is really running out. If you don't want to continue, sell quickly; if you want to continue, transform quickly. There are still one or two years left, and it's still possible.
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