- From CAS PhD to 'Handler'
- Why did this B2B platform take over a year to expand from one market to another?
- Why was it able to become the first B2B platform to hold regional outsourcing rights for Coca-Cola?
In 2017, New Distribution organized a survey visit to 22 major cities across China, systematically investigating the coverage, penetration, supply chain organization capabilities, platform operations, delivery capabilities, and service visits of various FMCG B2B platforms in different regions.
In the Jiangsu region, a regional B2B platform stood out for its coverage density and reputation among small shop owners, even outperforming first-tier internet companies like Alibaba and JD.com in overall competitiveness. This platform is Dianda. Recently, New Distribution exclusively interviewed Dianda Mall's founder, Rui Yun, hoping that Dianda's business model and development path can offer some insights.
1 From CAS PhD to 'Handler'
Public information shows that Dianda Mall was established in 2014 as a B2B platform focusing on 3rd to 5th tier cities. To date, Dianda Mall has covered over 20 cities nationwide, with more than 100,000 stores covered, and has basically achieved profitability in its early self-operated markets while issuing invoices. So why did Dianda enter the seemingly not-so-'sexy' retail business?
"My family ran a small shop," Rui Yun told New Distribution. "Traditional small retail shops are actually a very hardworking group. When I was a child, my mother had to go to the wholesale market to stock up. Transportation wasn't as convenient as it is now, and there were no information tools like WeChat. Every wholesale purchase was troublesome, and with frequent rain in the Jiangnan region, going to stock up on cloudy or rainy days was even more of a hassle."
During his time at the Chinese Academy of Sciences, Rui Yun researched the integration of new technologies with traditional industries, aiming to improve industry efficiency through information tools. His early experiences made him aware of the pain points in traditional retail, while his time at CAS strengthened his determination to transform the industry.
In 2014, Rui Yun saw an opportunity in the retail industry. In his view, the traditional retail market was large enough, and small shops were highly fragmented. For traditional retail stores, procurement channels were numerous and scattered, product quality could not be guaranteed, delivery was not timely, and stockouts were common.
Additionally, changes among 2nd to 4th tier brand manufacturers were another important reason for Rui Yun's entrepreneurial venture. He believed that in first-tier cities, big brands often invest heavily in market cultivation. However, for more small and medium-sized brands, they don't have that much market budget, so channel sinking is an obvious demand. In this context, highly fragmented small shops must rely on an efficient information system to complete channel sinking. If they continue to operate through traditional distribution systems, costs would be high and results uncertain.
2 Focus on One Market, No External Expansion
Unlike other B2B platforms, Dianda did not expand rapidly in its early stages, spending over a year only in the Changzhou market. In the internet industry, which pursues speed, such a market development pace seems unusual.
"Dianda has always insisted on regional focus because channel transformation in the FMCG industry is a long process. Regional focus means thoroughly developing one market first, gaining recognition and word-of-mouth from upstream suppliers and downstream users, and only then expanding regionally after the business model is confirmed to work. Market development must not be like casting a net everywhere." The effects of deep cultivation of regional markets and polishing the business model seem extremely obvious. "We spent nearly a year in Changzhou, but when we expanded to the Suzhou market, we acquired over 3,000 stores in just 7 days, with a customer retention rate above 70%," Rui Yun told New Distribution.
Regarding the internet industry's general pursuit of speed, Rui Yun believes this is a typical traffic-oriented business model. In the B2C field, speed can quickly build scale advantages, but in the B2B field, this approach may not work. The main reasons are as follows:
1. Fulfillment efficiency. The value of B2B is to help upstream brand manufacturers and distributors effectively improve the efficiency of goods circulation. If fulfillment efficiency cannot be improved, brand manufacturers and distributors will naturally not cooperate with B2B platforms; without creating incremental value, they cannot gain bargaining power with upstream brand manufacturers and distributors, making profitability impossible.
2. Supply chain. B2B connects upstream brand manufacturers and distributors, and downstream traditional retail stores. In this circulation chain, as long as B2B truly integrates, helps brand manufacturers with rapid distribution and precise marketing, it will naturally earn its due profits.
"Although cross-regional selling and burning money can gain market share in a short time, such rapid development is not sustainable. From the perspective of small shops, while they care about product prices, they value long-term sustainable development more. Development achieved by disrupting market order is hard to create store loyalty," Rui Yun told New Distribution.
3 Why Did It Get Coca-Cola's Regional Distribution Rights?
It is worth mentioning that Dianda recently signed a product outsourcing cooperation agreement with Swire Coca-Cola, making Dianda the first B2B platform to have exclusive outsourcing cooperation rights for its products in specific regions since Coca-Cola entered China.
"This is the result of our long-term market strategy, always adhering to mutual trust and cooperation with brand manufacturers," in Rui Yun's view, for brand manufacturers, especially first-tier brands, the offline stock is huge. The primary consideration in cooperating with B2B platforms is maintaining the stability of the offline stock market, which requires B2B platforms to strictly adhere to the manufacturer's price system, 'no cross-regional selling, no price chaos.' Because once there is a price difference, dumping occurs, breaking the original profit structure and destabilizing the previously stable market distribution system, which is exactly what brand manufacturers least want to see.
Secondly, B2B platforms should leverage their information and data systems to truly help brand manufacturers improve efficiency and conduct precise marketing. In the traditional distribution system, brand manufacturers' market expenses, such as promotions, new product launches, and materials, often cannot be effectively implemented at small shops, leading to wasted investment and poor results. However, B2B platforms, with information systems, can visualize all orders and products, making precise distribution and digital marketing possible for brand manufacturers.
Through self-operation and deep regional cultivation, Dianda connects upstream brand manufacturers and distributors, helping them improve efficiency and bring market increments. It also empowers traditional distributors by exporting technology and management models, thereby driving the digitalization of the entire industry. Its development model and approach are worth learning from. As Rui Yun said, "By solidly doing business, earning the profits we should, and being friends with suppliers; resisting temptation under the capital wind, not following trends, not blindly expanding, and being friends with time. Only by truly standing from the perspective of brand manufacturers and small shops, effectively helping upstream and downstream improve order efficiency, fulfillment efficiency, and marketing efficiency, staying true to our original intention, and doing valuable things, can we truly improve the efficiency of the entire industry."
-END-