The 3rd "FMCG + Internet Conference" hosted by New Distribution was grandly held at Chongqing Yuelai International Conference Center on November 8-9, 2017! It attracted over a thousand industry distributors, manufacturers, and internet companies from across the country, with a full house and unprecedented scale. The following is the speech delivered by Ms. Wu Shuangxi from JD Group's New Channel Business Unit on November 8, which New Distribution has organized for our readers.

Wu Shuangxi: Dear leaders and colleagues in the B2B industry, good morning!

This is the first time JD New Channel has participated in the New Distribution Conference, and I thank the organizers. JD New Channel will mark its second anniversary this December. In this relatively short time, we have done a lot to build retail infrastructure, including the JD Convenience Stores that everyone is most concerned about.

Everyone should be familiar with Mr. Liu's microblog post in April: In the next five years, JD plans to open one million JD Convenience Stores nationwide, half of which will be in rural areas. We hope JD can bring genuine products to consumers in lower-tier cities and rural areas—this is the original intention of JD New Channel. It is also why JD New Channel never engages in price subsidies, because what we want to do is fundamentally open up the upstream and downstream channels, not just make one-off deals.

Within three days of the JD Convenience Store plan announcement, we received over 100,000 applications, and now they are blooming across the country. A store manager in Shanxi saw daily sales exceed 26,000 yuan on the first day of opening; a store manager in Guangxi said, "I sold over 20,000 yuan just on the day I hung the sign"; and a small store in a Hebei village sold over 30,000 yuan on its opening day, equivalent to a month's sales in the past. These numbers may not compare to large stores in first-tier cities, but for these small stores, it's a qualitative leap.

Actually, JD Convenience Stores are not strictly convenience stores; our goal is to create a half-hour living circle. JD has been talking about borderless retail, including online-offline integration, fragmentation of sales scenarios, and the plasticity and modeling of infrastructure. In the future, these will be used to empower small stores. Over a decade ago, Mr. Liu said that e-commerce is not the ultimate form of future retail; it's just a transitional form. Ultimately, there will be full integration of online and offline, and the internet is just a tool and platform. So, the product supply function of JD Convenience Stores is just the basic part; we also provide various services, such as virtual consignment. Consumers can have JD Convenience Store owners select and order any product from JD Mall—home appliances, 3C, travel... the entire JD catalog can be sold. JD Convenience Stores also integrate many life services, such as utility bill payments, repair services, and phone card sales, as well as financial services. Consumers can purchase JD's wealth management and insurance products through the store owner. In the future, due to the integration of multiple services, JD Convenience Stores will become like community centers, where nearby consumers can come for leisure and socializing. It will be a very human, warm place.

We have full confidence in what we are doing, and this confidence comes from many aspects. First, we thank consumers for their trust. Because we have insisted on genuine products for so many years, when JD goes to lower-tier channels, the consumer awareness base is very good. Second, JD's strong system R&D capability. As everyone knows, once any business concept is linked to the internet+, the demand for system development becomes urgent. JD has a strong R&D team supporting B2B business development, which is our excellent logistical support. Third, JD's ability to integrate upstream and downstream resources accumulated over the years. To do JD Convenience Stores, we not only need to cooperate with FMCG manufacturers but also engage in cross-industry cooperation; these are our upstream resources. The downstream resources are these mom-and-pop stores. Relying on JD's supply chain and logistics advantages, we can integrate more supply and demand.

Upgrading small and medium stores to JD Convenience Stores benefits brands, makes terminals more controllable, and sales more intelligent. First, after upgrading, foot traffic will surge, and the customer base will become younger, leading to transaction growth that many store owners previously couldn't imagine. Additionally, store owners feel a sense of belonging after linking with the JD brand, and their stocking habits are reinforced. One of our JD Convenience Stores in Shandong, after upgrading with JD's help, increased its product assortment from 1,100 to 2,300 items, and the average order value rose from 14 yuan to 19 yuan. These changes prompted the store owner to increase the proportion of purchases from JD's Zhanggui Bao from about 25% to 70%-80%. Secondly, customer stickiness has also changed qualitatively. A store in Renqiu, Hebei, added multiple value-added services such as virtual consignment, package collection, and utility bill payments, increasing the average monthly store visits by 3-5 times, and the time spent per visit significantly extended, leading to multiplied sales opportunities and increased product repurchase.

Furthermore, for B2B platforms or the FMCG + internet industry, a well-developed backend system acts as a booster, but a poorly developed one severely hampers progress. JD New Channel has built its systems in three parts: First, the Huiyan Big Data System, which transparently and openly feeds back sales information across the entire chain to upstream manufacturers. Second, the Xingzhe Sales Promotion Platform, a dedicated offline sales execution platform for manufacturers, and it's the point where we've applied internet thinking most in our model design. Third, the Smart Store Management System. All B2B companies know that connecting small stores' inventory management is one of our crucial tasks. We not only want small stores to use it but also to find it easy to use. This system will continuously iterate to make information exchange between manufacturers and stores more "borderless."

Terminal marketing is a major pain point for brand manufacturers, especially when it comes to mom-and-pop stores, small and medium stores, and rural-level stores, which many manufacturers cannot reach. Individual brand resources are limited, investment costs are high, and once invested, you can't see the results. We've talked with many brand manufacturers; it might take a month for a new product to reach the final store, which is considered fast. But with New Channel, a new product can be delivered from the manufacturer's warehouse to the terminal store's shelves and complete display exposure in just 3 days. During this process, manufacturers can see exactly where the product was sold and which stores accepted the display tasks.

Another great opportunity JD Convenience Stores offer is for manufacturers to have strong exposure during new store opening promotions. The role of opening events in offline retail scenarios cannot be underestimated. JD Convenience Stores will prepare gift packages with manufacturer products and giveaways during opening promotions, seizing the opportunity for maximum foot traffic exposure, gaining first-mover advantage to cultivate consumer sentiment and store owner dependence. Many manufacturers are very willing to have their first contact with JD Convenience Stores through opening promotion cooperation, and the results are excellent. For example, with maternal and infant products, consumers are very cautious when choosing them; they are willing to travel far to find large supermarkets. Previously, it was hard to see rural small stores selling maternal and infant products, and even towns might not have them. JD Convenience Stores can solve the trust issue—people trust JD to sell only genuine products, and combined with the store owner's accumulated neighborhood relationships, this dispels such concerns.

In the era of borderless retail, within the half-hour living circle, every place, every matter, and every moment is a sales opportunity. Standing here today, I really want to say: All colleagues and predecessors in the B2B industry are worthy of respect because we are all doing things that improve the efficiency of social commodity circulation. I see everyone actively embracing the changes of this era. And the changes of the times, the accelerated integration of online and offline, are our opportunities.

Roundtable Forum: How Should Brand Manufacturers Complete Channel Transformation?

Forum Guests: Famous marketing expert Liu Chunxiong, Founder of Youqingxu Technology Li Qian, JD Group New Channel Business Unit Wu Shuangxi, CEO of Dinghuobao Jiang Tao, and Channel Director of Yili Group's Business Unit Zhang Zhenhua

Liu Chunxiong: I'll turn to the platform side. Ms. Wu, you've emphasized more the benefits to stores, because benefits to stores bring benefits to consumers. You rarely mention the cooperation model with brand owners. Let's address these two companies. You've expressed what you can bring to them. First, Mr. Li, if his product goes to your platform, what do you do? Do you accept it?

Wu Shuangxi: When New Channel was first established, we drew on many industry models and researched the pain points of many brand manufacturers, thinking of solutions for them. For example, our data system is open to manufacturers, meaning the entire supply chain process, inventory data, sales situation, and sales movement can be seen by manufacturers. We also have a resource placement platform for brand manufacturers, where you can see where sales promotion resources are placed, in what kind of stores, and what types of consumers are covered. Manufacturers can then precisely target their placement direction based on their product characteristics and target user groups.

I strongly agree with Mr. Li's viewpoint: Whether doing retail or channels, ultimately we must pay attention to consumer trends. Whatever the consumer situation is, our sales should reflect that. Originally, it was people looking for goods; in the future, it may be goods looking for people. The premise of goods looking for people is that your brand has a precise positioning—what consumer group you target and what channels you use to sell the product. A brand won't always be a first-tier brand because many emerging brands are growing. The emergence of new channels will bring new growth opportunities for these emerging brands. Only by closely following consumer needs can a brand have long-term vitality.

Liu Chunxiong: If she entrusts her product to you, how does your platform assume her channel function? Does she still need to perform another channel function with the platform?

Wu Shuangxi: This is a question every B2B practitioner should think about. In the past year or more, besides first-tier brands, we've also worked with many previously unknown brands, and these products have sold very well in our terminal stores. These brands have strong production capabilities, and some have good marketing, but they are weaker in channels and supply chains. JD can make up for their channel shortcomings—this is JD's core competitiveness built over decades.

Liu Chunxiong: Normally, the moderator shouldn't express opinions, but I think I should. I believe the best thing B2B platforms do is the long tail. This product is a long-tail product; snack foods are actually the most differentiated. When you do convenience stores, you're also working on long-tail products. Second question: How do you establish a symbiotic and mutually prosperous channel system with a brand like Yili, rather than a potentially harmful one?

Wu Shuangxi: Yili is a very representative brand. Its original channels are relatively mature, with many offline personnel and years of deep channel cultivation. Now, many older-generation distributors are at a stage of transition. Distributors also need B2B platforms to penetrate like catfish and activate the system. Many first-tier manufacturers have thousands of products, but fewer than ten are commonly seen in the market. When new products come out, distributors are unwilling to promote them. There is a conflict between supply and demand that urgently needs reform. JD New Channel can use its platform-integrated supply chain capabilities to respond to industry iteration, continuously repairing and improving traditional brand manufacturers' channel coverage, especially terminal coverage in 4-6 tier cities. So, we and Yili can have many complementary roles in traditional channels.

Liu Chunxiong: In this process, you undertake many transaction and promotion functions. In the next step of the cooperation system, what role do you think distributors play?

Wu Shuangxi: It's not just my opinion; the entire B2B industry, as various guests have mentioned, future distributors must transform. Teacher Liu, your own speech just answered this question. In the future, there will be a division of labor among trading platforms, distribution platforms, and promotion platforms. Traditional distributors have their pain points and their advantages. The reconstruction of the supply chain will certainly preserve the value of distributors.

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