The following is the speech delivered by Mr. Zhou Bin, co-founder and COO of Renwoxing Technology, at the 'FMCG2019·China FMCG Conference' hosted by New Distribution, organized and published for readers.
Good afternoon, everyone. Thank you to the host and to New Distribution. Guanjiapo is a well-established brand in the ERP inventory and sales management software field for over 20 years. In the past 8 years, we have been providing enterprise + internet solutions. Since I started attending the New Distribution conference last year, I've noticed a trend: among the attendees, the proportion of brand owners has been increasing compared to distributors. The industrial internet has arrived. What exactly is the industrial internet? This morning, including JD.com, Tencent, and Alibaba, all are transitioning from consumer internet to industrial internet. The industrial internet is a big topic.
What exactly is it? It mainly consists of two aspects: first, the new manufacturing of the industrial internet, and second, the new commerce of the commercial internet, which is an internet solution based on commercial circulation. This morning, brand owners were discussing a topic: the biggest pain point in brand owner digitalization is the pressure and conflict in the existing market. Many B2B platform experts today talk about directly taking goods from brand owners and distributors and supplying them to C-end and small shops through unified warehousing and distribution. This overlooks the distributor and retail store links: distributors handle B-end wholesale channels for brand owners, and retailers handle C-end terminal retail. Both links are indispensable. So, today I want to discuss how to do industry + internet.
Is Your Business Online?
This morning, it was mentioned that consumers already have 1.12 billion WeChat users online, and 600 million online shoppers. Consumers are already online. Brand owners and distributors present here, are your businesses online? This is worth thinking about for everyone. What needs to be online behind the business?
1. Are Your Stores Online?
Is opening an online store on JD.com or Tmall considered being online? It's the same as opening a physical store, just in the sky. It doesn't deeply integrate with physical stores, nor does it achieve online-offline integration. Do you all have self-built online wholesale and retail stores that are integrated with ERP?
2. Is Your Inventory Online?
When we do internet+, is it one set of goods online and another offline? Are the two sets of goods integrated online and offline? Can all online orders and your physical orders achieve omni-channel integration, synchronize to ERP for unified inventory posting and sorting? Because Guanjiapo has always done ERP, we have a deep understanding of distributors. Combined with Renwoxing's Cloud Flow Supply Chain system, we can solve the online-offline integrated inventory online for front-end malls and back-end ERP.
3. Are Your Transactions Online?
Later, I'll share a case of a distributor we serve. You'll see that the distributor's transaction model is very backward: salespeople first run orders, write them by hand, then manually enter them into ERP. If inventory is insufficient, they have to explain returns to customers. If there is stock, they sort and deliver, then collect payment. This is inefficient and costly. How to digitize the entire chain from consumer C-end to retail end to distributor to brand owner, integrating online and offline, is a topic all brand owners and distributors need to think about.
Whether we do it or not, digitalization has come to us. Everyone is exploring the path of digitalization. How many have truly landed? How many have found their own unique solutions suitable for their channels? What we see more now are pure B2B platforms, because they are larger internet second-tier wholesalers, directly supplying more goods to small shops. How can brand owners manage their existing business well? Besides joining Tmall, JD.com, and pure B2B ordering platforms, they also need to build their own digital channels for existing business.
Brand owners have deeply cultivated physical distribution channels for at least ten or twenty years. Previously, they could only know how much goods distributors purchased, but not how much distributors sold, how much inventory they had, which small shops they sold to, or which consumers they sold to. Without online transaction integration for existing business, it's hard to know.
4. Is Your Data Online?
Without data guidance, our business methods are backward, making it hard to achieve efficient operations and precise data distribution.
5. Are Your Services Online?
A notable feature of China's FMCG industry is heavy reliance on ground promotion, manpower, and salespeople. For example, a major brand owner like Uni-President has as many as 10,000 salespeople and spends over 3 billion yuan annually on marketing. This is the pain point and current situation for brand owners.
6. Are Your External Connections Online?
Enterprises have various management systems. First, internal information is not well integrated, let alone connecting upstream suppliers and downstream distributors. In fact, most enterprises have not achieved upstream and downstream connections; they are still based on internal enterprise information.
7. Is Your Internal System Online?
Internally, there are information silos. Each department does its own thing. If the enterprise is not integrated internally, how can digitalization be achieved? Internal friction, low operational efficiency, and the more business segments, the higher the marginal labor costs.
8. Is Your Mindset Online?
Bosses want to do digitalization, but middle management and downstream employees don't know how to do it. When there's no consensus in the team, promotion is very difficult. When facing obstacles, many people doubt. Digitalization must be a top-down project, requiring high consistency in cognition across all levels of the enterprise to advance efficiently and orderly.
So, to achieve business online, you need to implement all the above.
Opening an Online Store vs. Physical + Internet
Speaking of going online, opening a store on JD.com or Alibaba is fine for selling goods and brand presence. But as a centralized platform, it's public domain traffic. Besides some sales and meager profits, you get nothing else. In fact, physical brand owners, who have been in business for ten, twenty, or even thirty years, have a large number of distributors, stores, and consumer resources. Why not activate your own territory? At this time, how to do your own private domain traffic well is very important.
Brand owners and distributor friends present here, sometimes when we envy others, others envy us. Each of us has physical resources cultivated over many years. How to achieve online-offline integration without burning money? This is the path that can take you further. Joining third-party centralized platforms, spending money to gain traffic and transaction volume, may not yield the results you want. In the end, channels and customers are in others' hands.
How to build private domain traffic is worth thinking about for all physical enterprises. This is why Guanjiapo insists on providing physical + internet solutions. Since we launched the entire Cloud Flow Supply Chain system in 2016, we have had over 30 major brand owners and distributors using our system.
The Three Steps of Digitalization
The three steps of digitalization are: business online, business datafication, and data-driven business. Only by turning business online into data can there be a future. As everyone knows, BAT internet companies are not doing transactions; they are doing data, finance, logistics, and internet infrastructure. What we do is help physical enterprises achieve business datafication. With data, you can profile users, analyze product movement, product development, precise marketing implementation, and finally achieve business scenario-based operations, guiding our business strategies. At this point, data-driven business is achieved.
Next, I'll share some typical cases we've done:
3.1 Brand Owner Digitalization F2B2b2C
First, let me share how a battery brand client achieved brand digitalization.
First, solve the online presence of existing business. They have been in business for over 30 years, with over 1,000 core distributors nationwide and over 1.3 million stores selling their batteries. But their category is too small and narrow. Although they hold 80% market share, annual transaction volume hovers around 3 billion yuan. How to break through? They didn't find a method. What you hear more is the term B2B platform, which integrates supply sources on one end and orders from small shops on the other. Rarely do we do full-chain, omni-channel digitalization for physical brand owners.
First, as a manufacturer, they need to penetrate their batteries to over 1,000 distributors and then to over 1.3 million stores. So, first, they need to know who distributors sell to and what their inventory is. This requires digitizing the battery supply chain.
Second, achieve incremental growth. Besides batteries, what else can they sell? With such a vast offline channel, using the internet's long-tail effect and scale effect, how many brand owners would want to join if opened up? They then introduce hot products, find hot products for distributors and stores, and empower them.
First, empowerment tools; second, empowerment products. When this capability is integrated, it solves the efficient circulation of existing battery business, achieves incremental growth, and makes distributors willing to use the system. Like Coca-Cola and other brand owners shared this morning, they also have digital systems. They mentioned that distributors and retail stores want comprehensive, one-stop multi-brand supply, while brand owners want to sell only their own products and penetrate more SKUs into distributors or stores. These two demands are inconsistent. In fact, distributors and stores must adopt a multi-supplier procurement model, which requires a combination of centralization and decentralization.
Distributors and stores need to run their own businesses. Besides selling brand owners' products, they also need online stores to sell other goods they organize themselves.
For example, in empowering salespeople, when they open the map, they immediately know which stores have been developed and which haven't, so they can recommend nearby stores. Also, traditional salesperson car sales models and salesperson order-substitution models are fully supported in all scenarios.
We have done many physical business scenarios, including empowering small stores. How can small stores achieve one-stop online procurement? Through official accounts, apps, mini-programs, QR codes, etc., various ordering scenarios are realized. At the same time, four ordering methods are supported: original manual order entry, store owner online ordering, QR code ordering, and salesperson order substitution. Achieve physical online-offline integration, treat the internet as a tool, and do physical business as usual, thereby reducing costs and increasing efficiency, optimizing supply chain efficiency, and also solving small stores' self-built micro-stores for O2O new retail. In terms of distributor empowerment, our clients display new products on distributors' or stores' phones. Originally, brand owners promoted new products through ordering conferences, staying in five-star hotels, eating and drinking, then ordering. This was costly and time-consuming, and new product promotion was slow. Now, with products and the entire business online, new products and promotional policies can be quickly pushed to distributors' and stores' phones. Distributors can also upload other products to sell, solving the conflict between brand owners and distributors. Through tool empowerment, distributors can save tens of thousands of yuan annually on SAAS ordering software fees.
At the same time, through product empowerment, manufacturers can provide hot products to help distributors expand categories. When a small store places an order on their phone, the brand owner can directly ship to the store or consumer. Distributors and stores don't need to stock; after sales, they just share profits. This is particularly liked by distributors. Because our goal is to empower channels and create value, not to replace the deeply cultivated channel players. Physical + internet and pure B2B platforms are bound to be a game of strategy, and distributors and brand owners also have a long-term game. This is an ecosystem that requires symbiosis and win-win.
3.2 Distributor Digitalization B2b2C
Let me share another distributor case: Yibin Lvyuan. How did they put their existing business online—400 million in wholesale and 600 million in retail? How did they unite more distributors to go online? How did they digitize their food city's over 1,000 suppliers, thousands of stores, and supermarkets? Let's look at the real scenario.
This is the familiar scene: salespeople writing orders, too busy to eat, handwriting orders at the dinner table. This is me accompanying partners to teach store owners how to install and experience the system. For example, how to view various front-end orders, and how the back-end warehouse and ERP inventory are integrated, with orders automatically pushed to the warehouse for packing and shipping. As Mr. Yang just mentioned, orders flow automatically.
We help clients train distributors and salespeople, enabling salespeople to develop small stores. Previously, store management used video surveillance; now, BI big data shows transaction situations. This client is a typical B2B2C solution. Besides solving small stores' B2B one-stop procurement, it also empowers small stores to do B2C new retail.
3.3 Government Procurement E-commerce
We also have a listed company in printer consumables with annual sales of 20 billion. We provided a professional government procurement version solution. Just now, we discussed brand owner and distributor digitalization. Now, let's see how government procurement can achieve e-commerce. First, the first phase is to digitize consumables procurement for provincial and municipal governments; the second phase is enterprise procurement e-commerce, such as solutions for central enterprises like PetroChina and Sinopec; the third phase is how to digitize the original distributor channels, similar to the battery brand client mentioned earlier, achieving connectivity from brand owner to distributor to terminal stores. We can discuss these cases in detail later.
3.4 Supply Chain Digitalization
We also have a food supply chain client with a logistics company under it, with daily transaction volume reaching tens of millions. They achieve multi-front-end order taking, strong middle-platform data analysis, and unified warehousing and distribution at the back end, with dozens of warehouses nationwide operating efficiently. Through supply chain digitalization, they achieve operational visibility, clear control of national store transaction data, and cost reduction and efficiency improvement. All the above clients have achieved business model iteration and upgrade through Renwoxing Cloud Flow solutions. Whether distributors or brand owners do digitalization, it's recommended to plan overall and implement in stages, rather than doing everything at once. We've noticed a phenomenon: previously, enterprises did informatization by installing a system, but once the model upgraded, they started from scratch. When all customer products and transactions are online, starting from scratch would be too costly.
Renwoxing·Cloud Flow's new business model can seamlessly iterate and upgrade, from one-to-many, many-to-many, to the entire supply chain new commerce, including continuous iteration and upgrade of the entire industrial internet. This is the solution of the entire Cloud Flow supply chain system, suitable for brand owners, large distributors, supply chain management companies, city distributors, professional markets, etc. If you want to do supply chain integration, Renwoxing's supply chain technology platform can support you.
This is our platform architecture and business model. Welcome to discuss in detail later.
Many of our current clients come from Guanjiapo's old customers. 60-70% of the distributors under your brand owners use Guanjiapo ERP. To achieve front-end mall orders and back-end ERP inventory integration, and realize online-offline integration, this is our unique advantage. At the same time, Cloud Flow solves the integration of platform centralization and role decentralization.
When brand owners promote supply chain digital platforms, it's crucial that distributors and small stores are willing to use them. Besides Guanjiapo ERP's seamless integration, Renwoxing Cloud Flow is essentially a connector for commercial circulation, achieving four integrations (upstream and downstream industry chain integration, front-end mall and back-end ERP integration, software and hardware integration, and finance and warehousing logistics integration). It uses internet tools to connect external business and informatization methods to integrate internal operations, truly realizing brand owners' online-offline integration, production-sales integration, omni-channel digitalization, and industrial internetization.
That's all for today. Welcome to visit Renwoxing Group headquarters in Chengdu for exchange and inspection.
Thank you all!