---
title: "Four Business Principles Behind Yishenghuo's Success as Regional King in Chongqing After 4 Years and 100 Warehouses"
description: "Yishenghuo, a B2B one-stop collective purchasing and delivery platform, has become the undisputed regional leader in Chongqing after four years, operating over 100 warehouses. By October 2017, it had aggregated tens of thousands of offline partner stores and nearly a thousand authorized franchise stores, with plans to expand its self-operated warehouse space to 50,000 square meters in 2018. The following is an excerpt from founder Xiang Shang's speech at the 4th FMCG + Internet Conference."
author: "向上"
publisher: "New Distribution"
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published: "2018-03-31"
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# Four Business Principles Behind Yishenghuo's Success as Regional King in Chongqing After 4 Years and 100 Warehouses

> Yishenghuo, a B2B one-stop collective purchasing and delivery platform, has become the undisputed regional leader in Chongqing after four years, operating over 100 warehouses. By October 2017, it had aggregated tens of thousands of offline partner stores and nearly a thousand authorized franchise stores, with plans to expand its self-operated warehouse space to 50,000 square meters in 2018. The following is an excerpt from founder Xiang Shang's speech at the 4th FMCG + Internet Conference.

**△ Founder of Yishenghuo: Xiang Shang**
**Yishenghuo** is a B2B "one-stop collective purchasing and delivery platform" that has focused on the Chongqing market for four years, with over 100 warehouses. As of October 2017, Yishenghuo had aggregated tens of thousands of offline partner stores in Chongqing that procure their operational needs through Yishenghuo, and nearly a thousand authorized franchise stores. Its self-operated supply chain capabilities have grown rapidly, with plans to expand its self-operated warehouse in Chongqing to 50,000 square meters in 2018.
The following is an excerpt from the on-site speech by Yishenghuo founder Xiang Shang at the "4th FMCG + Internet Conference," compiled by New Distribution for our readers.
Yishenghuo started B2B on August 18, 2014, and in terms of coverage and penetration in Chongqing, it is absolutely the market leader, truly deserving the title of "Regional King." Below are some of Yishenghuo's "journey" and insights.
**Yishenghuo's Two Phases**
First phase: There is a kind of failure called occupation. Yishenghuo almost became a so-called national platform. At that time, we developed a provincial-level trunk network originating from Chongqing, advancing into the southwest, facilitating large-scale commodity circulation, allocation, and cross-regional sales among five provinces and cities. However, this strategic intent quickly revealed problems, echoing the Western saying, "Whom God wishes to destroy, he first makes mad." This building without foundation, built on sand, and with premature growth and reckless expansion, inherently violated the laws of business.
Second phase: There is a kind of victory called retreat. Yishenghuo closed all businesses outside the main urban area of Chongqing within a few months, and then even abandoned markets around Chongqing's main urban area. As a result, we became the so-called regional king.
In reality, we are still far from our set goals, but when we communicate with our internal team and partners, everyone says we have truly become the regional king. This shows how low the standards in this industry are.
These two phases taught Yishenghuo to revere the way of business and the laws of nature.
**The "Pains" Yishenghuo Encountered**
Pain 1: Industry profits are as thin as a blade: The FMCG distribution system has been evolved by the market's invisible hand for decades and is already quite advanced, meaning profits in this industry are very thin because it is too mature.
Pain 2: The value created is not rigid enough: For example, in serving terminal small stores, everything we do now can basically be done by traditional distributors and supply chains. For brand owners, they hope to increase incremental volume and refine existing volume. Strong brands often achieve this through deep cultivation of existing volume, which is difficult for B2B because B2B personnel are far from sufficient, and creating incremental volume is inherently difficult. We survive in an awkward position.
Pain 3: Multilateral marketing and dynamic balance: For example, when building a warehouse, what size should it be? If too small, it cannot meet needs; if too large, operating costs increase. Moreover, the game with brand owners is a dynamic process, and the execution process is very painful.
Pain 4: Internet tactics don't work: The biggest advantage of the Internet is one-point access, full-network service, breaking through time and space, moving logistics, information flow, capital flow, and business flow to the "cloud." But for B2B, which I call "land" e-commerce, with localized warehousing, stores, and brand owners, it is jungle warfare requiring special forces and snipers.
Yishenghuo has fully experienced all the above pains, and after experiencing them, we reflected deeply. **We redefined four business principles for ourselves, and all our business actions revolve around these four principles. Following this method, success will greatly increase.**
**Four Business Principles for B2B**
**1. Begin with the End in Mind**
For any project, you must first have an ultimate blueprint and an ultimate goal; everything else is just annotations to achieve that goal. We return to the way of business. The essence of business is transaction, the essence of transaction is value exchange, and the essence of value is sustained profitability. Only by creating value can you have profitability. If the company can be profitable, the project is successful. If you cover 30 cities, that is a huge success. Here, success has three criteria:
First, the business model: This business model must be one that stores can "fight" for, can be deeply implemented, and can be defended. What does "defensible" mean? For example, controlling stores, chain franchising, even new technologies or new ecosystems—in short, you must build a "wall" around your stores.
Second, the commercial model: A validated, sustainable profit model with predictable future returns. As this project undergoes continuous quantitative to qualitative leaps, it eventually reaches a critical point. Now we must have a foundation for survival and achieve a sustainable leading model.
Third, relative competitive advantage: This advantage must be either the ability to control goods, control stores, or have exceptionally strong supply chain capabilities.
You can choose any one of these three. Of course, beyond relative competitive advantage, there are sudden competitions. Nowadays, cross-industry disruptions are too many. For example, the decline in chewing gum sales is not due to competition but because more consumers are looking at their phones at the checkout counter, reducing the probability of buying gum.
We must grasp the macro trends and not win against all competitors but lose to the era. If a city meets the above criteria, replicating it elsewhere is success. That is our goal.
**2. Positioning and Focus**
First, the three-end choice: You must have an advantage in one end. For example, if you have 3,000 outlets, or 3,000 chain direct-sale stores with strong control in a region, you definitely have bargaining power; or you have exceptionally strong supply chain capabilities, like Guangzhou's 1 Life with 82 forward warehouses; or your control over goods is very strong, and all brand owners are willing to extend olive branches to you.
Second, regional focus: First lock onto a sample market, then penetrate it thoroughly, achieving "dual success" in both business model and financial model.
Third, user focus: Community convenience stores and mom-and-pop stores are quite complex. We must learn to handle "thousand stores with thousand faces," choose one profile, lock onto it, and meet the needs of that type of store. Only by locking onto stores can you address the next issue—product focus—which can then be easily solved.
Fourth, product focus: Different stores can make your product width infinitely large. You must focus on users, then focus on products, and on that basis, do deep penetration and improve order fulfillment rates.
The intersection of these four dimensions forms the point-like area that is our business boundary.
**3. User-Driven**
All actions must not forget our ultimate users. The ultimate battlefield of new retail is convenience stores and mom-and-pop stores.
All convenience stores have these three operational needs (pain points in buying goods, selling goods, and management). In fact, convenience stores are not that high-end; they just buy goods, sell them, and earn the difference while engaging in some scientific and modern management.
Everyone entering the B2B industry is choosing to meet these three needs, but meeting all three simultaneously is actually very difficult. At this point, it is good enough to focus on one point and do it well.
When you have done the first point well—for example, only solving supply, or selling, or management issues—then extending to the other two points becomes possible.
User procurement needs are multidimensional: complete product range, fast delivery, good service, cost savings, frequent visits, and finally simple ordering. These six dimensions are indispensable, but it is impossible to excel in all six.
You must learn to position your advantages: one or two items should be above industry standards, and the rest should meet or equal industry standards. For example, if everything is done well, but today the driver delivering goods gets into a fight with the store owner, you will find that all previous efforts are nullified.
**4. Point, Line, Surface, Body**
**Tao Te Ching: The Tao gives birth to one, one gives birth to two, two gives birth to three, three gives birth to all things. The birth of one from nothing is the hardest.**
When "one" succeeds, simultaneously achieving success in business model, commercial model, and competitive model, that is the first city done well. Summarize your experience and do the second city. The characteristics of cities are slightly different. After succeeding in the second city, replicate to the third. When these three cities succeed, extract the common laws and you can say "three gives birth to all things," allowing fission to 30-300 cities.
Venture capital can accelerate the fission process, but it cannot perfect our business model. For successful projects undergoing rapid fission, capital can act as rocket thrust.
**These are the four principles we now follow: Begin with the End in Mind, User-Driven, Focused Positioning, and Point-Line-Surface-Body.**
Yishenghuo has fallen many times and walked through many pitfalls. We have been fearful and anxious. Now we are no longer afraid. We have returned to the essence of business. We do the right things by revering the way of business. If we were exploring in the dark before, today we are moving forward in the dawn.
Yishenghuo's three views: Our values are seeking truth from facts, focusing on the original intention, and being user-driven. Seeking truth from facts means seeing through phenomena to the essence, finding the truth, finding the laws, and revering the laws and the way of business. Focusing on the original intention means focusing on our business and not forgetting why we started while on the road. At the same time, all business actions are driven by user needs.
Our vision is to build the B2B platform with the best experience in China. Yishenghuo has tried convenience stores and unmanned stores in the past, but these businesses were withdrawn. We are sellers. Our mission is to make convenience store business easier. Our current positioning is to be a one-stop ordering expert for community convenience stores.
Click **Read Original** to see more highlights from the 4th FMCG + Internet Conference...
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