As the head of Retail Link, the industry's leading FMCG B2B platform, how does Lin Xiaohai view the industry's development? After three years, what results has Retail Link delivered? And how does it manage relationships with brand owners, distributors, and competitors?
On August 28, Alibaba Retail Link's "Together We Grow" conference was held at the Yunqi Town International Convention Center in Hangzhou. Before the event, Lin Xiaohai, Vice President of Alibaba Group and General Manager of Alibaba Retail Link, briefed media including New Distribution and Innovation Retail on Retail Link's recent progress and answered questions.
The following is based on a recording by Innovation Retail.
Hello everyone, Alibaba Retail Link has been committed to providing capital flow and information flow for brand owners, distributors, and traditional retail stores. Our main solutions include distribution, shelf management, pricing, and marketing.
With this strategic shift, we hope that brand owners will no longer view Retail Link merely as a small-store channel, but as a means to expand into more channels—small stores, large stores, chain stores, etc. In the future, we aim to provide brand owners with comprehensive services.
Second is the operational model. Previously, brand owners handed over goods and didn't worry about them—a quasi-self-operated model. Now we are more open, hoping brand owners can directly operate small stores on the Retail Link platform. That's the second major change.
Third, along with these changes in business scope and operations, we need brand owners' organizational structures to evolve. We hope every brand owner will establish a dedicated Retail Link business unit internally.
In the new eRTM era, we must redefine what good products, good prices, and good service mean for small stores, ensuring that small stores have no difficult business. That's our core philosophy.
To achieve this, we have launched three solutions:
First, redefine small store products.
Second, service. We will provide small stores with exceptional service. We promise that within core categories, our prices will be the most competitive among all competitors. We guarantee our logistics will be reliable, and the products we offer will be of the highest quality and best value. We also promise not to overload small stores with inventory, ensuring optimal stock turnover.
We want to eliminate all concerns. If you hear about our compensation promises, you might think we're foolish. But we dare to make these promises based on two things:
First, trust in small stores. We believe small stores run neighborhood businesses. Their work is tough and underappreciated, yet they persist, so they must be good people.
Second, a credit system. Alibaba has a big data system, so we've built a credit system with Ant Financial and brand owners. We'll offer a credit system to all small stores; the higher their credit, the more rewards they get. This is about nurturing trust and credit, using compensation to redefine our eRTM service. We hope our services can reduce small stores' operating costs by 30%.
Third, digitalization. Our mission is not only to provide good conditions and services but also to enable them to use new retail, which requires digitalizing their stores. So we will further upgrade the Ruyi POS system.
These features help small stores solve three major problems: data support, resources, and operational platforms.
First, data support. Previously, store owners made decisions on their own. Now, we monitor store operations in real-time and provide recommendations on product selection, restocking, and pricing. They'll know what nearby stores charge for a single item, the sales volume at that price, and can thus decide on their own pricing. With this data, small stores become incredibly smart.
Second, resource support. Once they purchase the Ruyi POS, they enter Alibaba's entire ecosystem. They can offer virtual top-ups, points redemption, parcel collection, and even lottery services—all with low barriers. We'll also connect them with brand marketing; over 3,000 brand owners will provide brand coupons, new product samples, poverty-alleviation ads, and other marketing scenarios.
Third, operational platforms. Previously, small stores had no operations—they just waited for customers. Now we give them two tools: one for in-store, the Alipay Convenience mini-program, which improves conversion; and one for home delivery, connecting them to delivery services. Different platforms change their business model, expanding product offerings and enabling repeat customer engagement.
In summary, at the store level, we aim to redefine products to increase sales per square foot by 30%. We want to redefine services to cut operating costs by 30%. And we want to redefine operations to boost profits by 30%. That's our plan to ensure small stores have no difficult business.
So this afternoon's conference covers three areas. First, as a channel distribution infrastructure, we hope brand owners' strategic positioning of Retail Link changes, moving from single-channel to multi-channel, from brand-operated to future small-store integration, and upgrading internal organizational structures.
In the second half, we focus on small stores, redefining products, public welfare services, and operational methods. That's the gist of today's conference. I've summarized a two-hour presentation in about ten minutes. Now I'd like to hear your questions.
Q: Retail Link launched in 2017. Suning also introduced Suning Xiaodian. What are Retail Link's distinctive features compared to such formats?
A: The FMCG B2B sector has seen massive capital investment over the past five years. We've recorded over 170 platforms doing similar business; your mentioned competitor is one.
The peak of hot money was around 2017. But in 2018-2019, due to economic conditions and the entry of major platforms, many smaller platforms faced financing challenges. Last year, over 40 platforms exited the market. The FMCG B2B space has been hotter than bike-sharing; bikes had only ten colors, but B2B has countless regional and national players. Compared to competitors, our biggest difference lies in our vision: to build a smart distribution network and let mom-and-pop stores embrace new retail.
We don't aim to become the largest offline distributor, nor do we want to separate brand owners from small stores. We want to build infrastructure and a platform where brand owners and their distributors work, using data to efficiently reach small stores.
Retail Link's future direction is to become a B2B Tmall for FMCG brands. We're more of a platform. We want to help brand owners and distributors succeed, not just ourselves. That's our biggest difference.
Your mentioned competitor actually opens its own stores—a franchise system. We offer a channel solution. That's a significant difference, though our approach is more labor-intensive, especially early on, because goods belong to brand owners, but we must provide the best products at the lowest prices.
But our original intention remains unchanged. Even if it's tough, we want to move in this direction. In the initial phase, we adopted a semi-closed model to quickly expand stores and improve efficiency, deeply participating in brand owners' operations.
But starting this year, as the platform matures, we're opening up our capabilities, allowing more brand resources to come in and operate stores directly. That's our biggest difference.
Q: Last year, Alibaba Retail Link announced a three-year goal of reaching 2 million small stores. How is that progressing? Also, you mentioned revenue growth this year. What scale is Retail Link currently at?
A: We covered 1 million small stores last year. This afternoon, we'll announce we've now covered 1.3 million. So the 2 million figure is within our plan. However, especially since the second half of last year, our focus has shifted from store count growth to the depth of store cooperation. We believe providing deeper services to top-tier stores is more important for brand owners and Retail Link at this stage.
So our focus alternates between market expansion and per-store service, depending on the stage.
Regarding revenue, total GMV isn't appropriate to disclose, but I can share our targets. Our transaction volume grew 14-fold in the first year, tripled in the second, and this year we expect to double. Our competitive research shows our scale is roughly double that of our nearest competitor. As for Tmall Small Stores, we have about 5,000 this year, but we've deliberately slowed down.
I'll give a sneak peek: starting this year, we've raised requirements for Tmall Small Stores. Previously, stores could hang the sign after paying a deposit and meeting order volumes. Now, all franchisees must use the Ruyi POS system—a hard requirement. Over 80% have already switched, and we're pushing the remaining 20%.
If they don't switch within the next three months, we'll stop cooperating. We believe that for Tmall Small Stores, as long as products are genuine, the source doesn't matter; what matters is the flow of store data.
We want to use Ruyi to redefine store operations. So over the past six months, we've slowed Tmall Small Store expansion to improve quality. Only when Ruyi truly delivers value to this group will we scale up further.
Third, I've noticed that of the 170+ platforms, over 40 have closed. I believe this year, under capital winter challenges, more platforms may face difficulties. But we're all working together to transform channels digitally. Without these competitors, Retail Link alone couldn't have progressed this fast.
For example, when we ask brand owners to make customized products, if only Retail Link existed, we couldn't meet minimum order quantities. But with many competitors ordering, we can collectively enable brand owners to serve small stores.
First, I feel fortunate to have several excellent competitors pushing us to improve.
I believe this industry won't have just one player. There will be 3-5, each with unique strengths—some better in certain categories, others in certain regions. But the fundamental business model differences won't be huge. Who gains the largest market share depends on who works harder and creates more value for customers.
That's my prediction.
Q: Traditional retail stores face pain in transitioning to new retail, involving operational thinking and technology. How does Retail Link address this? Also, how do you ensure complete service to small stores?
A: Over three years, I've seen huge changes in small stores. Three years ago, our biggest challenge was that store owners didn't have Alipay, couldn't use apps, and many lacked broadband. This year, we rarely encounter such issues.
In three years, every store has a QR code, solving payment. The internet's progress, including WeChat's expansion, has made almost everyone capable of using smartphones. So many former problems are no longer issues.
Here's a data point: people thought most store owners were elderly, but the proportion of post-80s and post-90s owners is now 61% last year and 68% this year. Post-80s aren't young, but they're younger than me, which accelerates the retailer group's digitalization.
What was the common practice in FMCG B2B? It relied on red packets, promotions, and single products. That's the "three dependencies." But this pulse-style approach makes it hard for stores to form stable restocking habits. If a store owner gets a red packet today, they think it's cheap; tomorrow without one, they think it's expensive. This doesn't build platform loyalty.
Among all 170+ platforms, due to the long online operational chain, none has been able to offer return/exchange services like traditional distributors. With unstable prices and incomplete service systems, how can stores entrust their entire business to you? That's a huge challenge for us.
Our compensation promises aren't the goal. We don't want to pay out; it's a commitment to give you peace of mind. We promise to deliver, and if we fail, we compensate. But we dare to promise because we're confident we won't have to pay.
For example, our platform rules: we can't sell products past half their shelf life, and we won't accept goods past one-third. But currently, goods often arrive at our warehouse less than a month from expiry, while our inventory turnover is under 20 days. That means we can deliver to stores within two months, whereas traditional channels take six months. So we're confident in product quality.
Why would products become unsold?
Because distributors overstock. Stores aren't stupid; they won't buy five boxes if they can't sell them. But sometimes they buy five because of a promotion—buy five get one free—so they're forced. We need restraint. We now precisely calculate minimum order quantities to prevent over-ordering. Additionally, with many stores using Ruyi, we provide suggested orders based on inventory, optimizing stock. So I can guarantee compensation for expired goods.
Q: How can the daily chemical category leverage Retail Link for deep distribution and precise store operations? How to truly connect from brand to shopper?
A: Our platform hosts a rich variety of brand owners: food, daily chemicals, beverages, grain and oil, vegetarian products. Most major Chinese daily chemical brands have joined. But categories differ greatly. For instance, daily chemical brands have shallow distribution, while water and beverage deep distribution reaches over 2 million stores, with broader coverage than Retail Link.
For water and beverage brands and their distributor systems, we use a cloud warehouse service model. We digitize existing distributors, delivery systems, and sales reps, moving offline business online. Goods don't enter our warehouse; the sales team remains, but they use our tools. That's the cloud warehouse system.
For daily chemicals, due to shallow distribution and lack of extensive distributor networks, most brands ship from their DC to our DC, with a pallet provider handling capital flow. After receiving orders, Cainiao's transport delivers to stores. This is essentially a physical warehouse service system.
So service depth varies by brand. If you have a robust distribution system, we digitize it; if not, you hand over goods and we sell them. Inventory may be in our warehouse, and our partners visit stores, but all data is open to brand owners. They can see which of the 1 million stores have distribution and which don't. They can check competitor distribution, set different marketing activities, target stores with distribution for more sales, or launch plans. They can also assign tasks to city partners, like placing products in a certain position for a 10-yuan reward.
Such activities can be published in the backend. We share this marketing and execution system with brand owners. For daily chemical warehousing and distribution, it likely falls under the physical warehouse system.
Q: If Retail Link guarantees the lowest prices, won't that disrupt traditional distribution pricing? Also, what's Retail Link's competitive edge over traditional delivery systems?
A: Actually, many team members thought we shouldn't do this, saying it's a bottomless pit. How can you compete? If competitors deliberately lower prices, should we follow? We debated long, but ultimately decided to proceed.
First, our price promise is scoped: we define 12 core categories. For example, sanitary napkins are core. Second, we define top products within core categories—SKUs accounting for 50% of sales, possibly dozens. Products meeting both criteria are "core selected products," a pool of a few hundred SKUs. With current efforts, we can ensure competitive prices.
Second, we have a price feedback mechanism. Stores can report price issues. We have a sample threshold: if only one person reports, it's likely brand subsidy. If 20 people in a city say we're more expensive, I'll believe we are and approach the brand to adjust.
Brands participating in this program sign an agreement: they don't expect to be cheapest, but they don't want to be more expensive. If we find our price is higher, we adjust to a reasonable level. We have a price determination mechanism and a price adjustment mechanism. Under these, if a store still finds us expensive, they can claim compensation.
Next is delivery efficiency. Because management costs are high, we achieve maximum product variety within a limited SKU range. If we had unlimited variety, costs would soar, and prices would rise. So we're very careful with city warehouse selection. Each city warehouse carries only 2,000-3,000 SKUs. That can't meet all store needs, but we use a data product called Tianyan to select the most essential categories currently sold in city stores. We must have those. Tianyan also covers Tmall and Taobao search and sales data to predict trends and add potentially hot products. Through this calculation, we determine the optimal SKU mix for each city warehouse. So our variety is calculated, not unlimited. We have 108 categories total, but we aim to excel in 12. We may not fulfill all store needs, but within those 12 core categories, we'll have everything they need.
We hope to become the primary or even sole supplier for stores in these 12 core categories.
Logistics also matters. Faster delivery costs more. 30-minute or next-day delivery requires investment, so we're restrained: we choose T+2 nationwide. Even for Hangzhou warehouse delivering to Hangzhou, T+2 allows cost savings. Stores have inventory, so reliability is more important than speed.
So we guarantee T+2 delivery; if not, we compensate. But we don't promise T+1, to save costs and offer lower prices. It's a trade-off. If you want the richest variety, fastest delivery, and lowest prices, the company would go bankrupt quickly. We've chosen to be cheap, so we curate products and set reasonable delivery times.
Q: Will Retail Link cooperate further with Tmall Supermarket?
A: We cooperate with Tmall Supermarket, RT-Mart, and all Alibaba ecosystem brothers—we fight together. On one hand, support departments like Cainiao, Alipay, Alibaba Cloud, and DingTalk are part of us.
But with vertical businesses like Tmall Supermarket, RT-Mart, and Hema, we have cooperation: joint business plans with brands, data sharing on selection and pricing, and future strategic division of labor. Ultimately, we want to piece together a comprehensive FMCG map, each with our own positioning. So cooperation definitely exists.
Regarding distribution channels, we know 90% of effort is on online distribution digitalization. But we haven't heard about providing distributors with new supply or increments. Our digitalization for distributors started with putting their products online, then digitizing their delivery systems. Last year, we helped many digitize warehouse inventory; this year, we've digitized their sales reps. So we're gradually moving their entire system online. To date, our distributor operation system has formed a closed loop: using store SKUs to judge offline coverage, maintaining consistency with online coverage, and ensuring information alignment. Brand owners and distributors can also open their own shops on Retail Link, so with 2C platforms, plus distributors' sales reps using Retail Link's Yunxiaobao for store visits, and the store-side app, these four elements form a C2B loop. So Alibaba's engagement with distributors is quite fast.
We now have over 7,000 merchants onboard, 5,000+ sales reps, and 40,000+ drivers using Retail Link. Our engagement system is expanding.
Q: The FMCG chain is brand factory - general agent - wholesaler - retail store. What are Retail Link's relationships with brands, distributors, and wholesalers?
A: Different industries have different solutions. For deep-distribution categories like dairy and water, the distributor system will continue to exist. We just digitize it; we don't replace it because it has value.
For medium-distribution brands, their distributor systems may be restructured due to channel digitalization. Many basic services Retail Link can do more efficiently, so they may transition to service providers.
For shallow-distribution brands like Tmall brands or factories that previously had no channels, Retail Link becomes their channel. So for different industries, distributors will change differently. They'll gain internet wings to add value. Those without value may need to transform or change roles.
Channels will definitely shorten, and brand owners will increasingly want to operate stores and consumers directly. If I don't drive channel digitalization, competitors will. It's an unstoppable trend.
Q: You mentioned the industry has been brutal, with dozens of platforms exiting. Regional platforms fare better, but national platforms struggle to profit when expanding across regions. How do you view this? When will FMCG B2B truly become profitable? Some platforms are doing ODM/OEM, others moving downstream into retail. What's the future?
A: Indeed, the industry is tough. B2B has higher barriers than B2C. This year, more platforms may face challenges due to funding, thin margins, and high costs, making profitability difficult.
For healthy development, we must create more value for customers. The main payers are brand owners, so we need to deliver enough value to them.
Currently, most FMCG B2B platforms earn channel distribution fees, which are limited. Even if you do well, costs may not be covered. So the future lies in expanding from distribution to marketing, data services, and financial services. When you create more value, brand owners will pay more.
Second, you must create value for users. User loyalty is extremely low; these business owners are savvier than average consumers. So platforms must prove their service value. As I said, redefining products, services, and operations—only by making stores more profitable, lowering costs, and increasing earnings will they connect with you, enabling platforms to create more value for brands.
In the future, the industry will be diverse. There will still be several national platforms, some more profitable than others, but few will survive—maybe just a few.
We'll focus on channel digitalization and store digital upgrades. Regarding trends like unmanned shelves last year and community group buying this year, we've assessed them. Retail Link's current capabilities and genes aren't sufficient to support these innovations. Our market share is still tiny, and our capability gap is large, so we'll concentrate on our current position while monitoring market changes.
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