Dear readers, I'm Yuan Lai from New Distribution. In the past two years, distributors have generally faced difficult business conditions. By category, the hardest hit are snack food and daily chemical distributors. Snack distributors are affected by discount snack stores, while daily chemical distributors suffer from online e-commerce competition and declining sales in traditional supermarkets. I have previously written many cases on growth paths for snack distributors, but growth cases for daily chemical distributors are relatively scarce. Few cases doesn't mean none. Recently, I met a daily chemical distributor and had two in-depth exchanges. Let me first share this distributor's business changes over the past two years: 2023 saw a 48% increase compared to 2022, and the 2024 target is 50% growth. Moreover, this distributor maintains rapid growth even at a scale of 200 million yuan. This distributor is Henan Shirui Trading Co., Ltd. What's even more surprising is that, unlike traditional daily chemical distributors that offer credit terms to stores, Shirui adopts a cash-only, zero-credit cooperation model with downstream stores. General Manager Mr. Zhang Wenhai emphasized his business model: "We operate a 'whole-store output' model for daily chemicals, not single-brand distribution or category takeover." How does Shirui manage 5,000 SKUs with cash settlement? How did it develop step by step? After reading this case, I believe it holds significant reference value for Chinese FMCG distributors, whether in snacks, condiments, or daily chemicals. Now, let's officially begin the case of Shirui Trading. Shelf Organization in Small Stores' Daily Chemical Sections Before 2015, Zhang Wenhai was a business manager for Bawang shampoo, responsible for small store circulation channels in his city. In channels that others overlooked, Zhang saw business opportunities. Zhang recalled that at the time, he dealt with stores of about 200 square meters, where daily chemicals accounted for about 5% of total store sales, and store owners didn't pay much attention. When store business was good, they easily neglected the daily chemical category. Diao Pai, Nice, and Liby would deliver some goods; P&G and Unilever's corresponding distributors or wholesalers would also deliver some. Everyone delivered a bit, squeezing each other's shelf space, with no one managing it, and no attention to display aesthetics. This led to best-selling items often being out of stock, while slow-moving items piled up and eventually expired. "At that time, Bawang's share in stores was relatively small, so I had spare time. I proactively wiped the daily chemical shelves clean, and if others' goods weren't on the shelves, I helped arrange them. These small actions led store owners to propose that I manage the daily chemical section, tidy up, take orders, replenish out-of-stock items promptly, and deliver goods." Based on this opportunity, Zhang officially started his business in 2015, supplying daily chemical products to circulation stores. Zhang said that at the start, the core problem he solved was that store owners lacked time and energy to manage the daily chemical shelves and couldn't keep up with what sold well. Meanwhile, single or few-brand daily chemical distributors, due to slow turnover in small stores, generally had high markup rates. I aggregated these daily chemical products, acting as a comprehensive wholesaler, and proactively reduced some gross margin to supply stores. From 2016 to 2018, Shirui Trading was essentially "running non-stop," working 7 days a week, delivering goods during the day and organizing shelves at night, completing one store per night. The shelf logic was simple: organize by category—shampoo, body wash, laundry detergent, dish soap, etc.—clearing each shelf section to improve aesthetics. Best-selling items got more display space to ensure no stockouts. Slow-moving items had their display space reduced and were eventually discontinued. This was the prototype of Shirui's "whole-store output" model for daily chemicals. Product Upgrades in Large Stores' Daily Chemical Sections By 2019, Zhengzhou's Huayu Baijia Supermarket, aiming to align with retail benchmark Pangdonglai and cater to consumption upgrades, began adjusting its product mix. This meant removing traditional old brands, homogeneous products, and introducing trendy and imported items that consumers preferred. Although Zhang and store managers were somewhat resistant before the change, fearing consumer rejection, daily chemical sales immediately rose in the second month after the adjustment. This strengthened Zhang's confidence in continuously upgrading the daily chemical category. Customers have sharp eyes; no consumer rejects good products. Shirui's value lies in "finding good products for stores and displaying them on shelves for customers." In 2022, cooperation with Taoxiaopang Supermarket (known as "Zhengzhou's version of Pangdonglai") further enhanced Shirui's professional capabilities in "whole-store output" for daily chemicals. Zhang mentioned that previously they thought high-end cosmetics had no display value in offline supermarkets due to slow turnover and high value, often costing thousands of yuan. But cooperation with Taoxiaopang allowed Shirui to introduce imported high-end cosmetics like SK-II and Kiehl's, further enriching the daily chemical category structure. After 8 years of development, and with the transformation and upgrading of offline retail supermarkets, Shirui gradually developed professional category management capabilities for daily chemicals in offline stores. The Logic Behind Shirui's "Whole-Store Output" Model The above is the development history of Shirui's business. Of course, beyond the process, it's essential to understand the core differences in Shirui's store-level operations: First, product combination based on category logic. Take laundry as an example: in traditional supermarkets, 80% of the laundry category shelf is occupied by first-tier brands like Diao Pai, Liby, Omo, and Tide, with the remaining 20% likely being second- and third-tier brands. But Shirui's approach is: first-tier brands must be present but only occupy 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 combinations, it offers consumers more diverse choices. Of course, besides brand mix differences, Shirui further differentiates by function within each category, such as shampoo subcategories including oil control, anti-dandruff, anti-hair loss, hair care, natural organic, etc., designing specific SKU combinations based on different functions. Second, focus on overall gross margin rather than single product margin. For a store with 5 million yuan in daily chemical sales, a category takeover operator wants margin on every item, but for Shirui, maybe 1.5 million yuan has zero margin, and only 3.5 million yuan has margin. Without the zero-margin 1.5 million in sales, the 3.5 million margin wouldn't be possible. What does that mean? For example, a well-known best-selling shampoo has a purchase price of 10 yuan, with an official guide price of 19.9 yuan, but online prices on JD.com and Taobao are 14.9 yuan per bottle, which is the actual transaction price. Shirui prices this shampoo at 14.9 yuan per bottle in stores. Zhang explained: "Any consumer, even if wealthy, doesn't want to waste money and also wants to feel they got a bargain. Inflated prices often make them feel cheated." By pricing at 14.9 yuan, Shirui often earns no margin on this shampoo, but through other imported and internet-famous products, it earns reasonable margins based on online retail prices. Third, replace multiple distributors to improve efficiency. Suppose a store is supplied by 4 daily chemical distributors, each with a markup of over 20%, and they do 10,000 yuan in sales. The average gross profit per distributor is 500 yuan. In contrast, Shirui supplies the entire daily chemical category with a 10% markup, earning 1,000 yuan in gross profit. Zhang mentioned that when he studied retail in Japan, a store of 500-800 square meters had no more than 5 suppliers, with each category handled by a major distributor. He believes future Chinese retail will follow suit. "The more distributors, the higher service costs and lower efficiency." Shirui's "whole-store output" model combines products from n distributors to reduce costs and improve efficiency. This isn't just about delivery and fulfillment efficiency; it's about truly combining products from the perspective of the store and consumer. Each distributor has their own self-interest, wanting the most shelf sections and best display positions for their products, without considering customer needs. To help distributors better understand the differences between Shirui's "whole-store output" model and traditional distributor operations, I've created a comparison chart. Due to space limitations, I can't elaborate on all of Henan Shirui's business methodologies. Therefore, Mr. Zhang Wenhai, General Manager of Henan Shirui Trading, will attend the 3rd China FMCG Distributor Conference and deliver a keynote speech titled "48% Growth Last Year, 50% Target This Year: The Growth Path of a Daily Chemical Whole-Store Output Service Provider," sharing Shirui's latest thoughts on the whole-store output model. Interested friends, don't miss it! Also held concurrently is the "3rd China FMCG Hard Discount Conference," where the "Strategy Guide Report on B2b Platformization for FMCG Distributors" and the "2024 Survey Report on FMCG Distributor Operating Conditions" will be released. Interested friends, feel free to scan the QR code to inquire about the conference details!