Click the image to sign up Is the restaurant supply chain undergoing transformation? Recently, Feiyu (the editor) received a tip that JD New Channel is suspected of entering the restaurant B2B market. Procurement managers from New Channel have already begun preliminary research and discussions with small and medium-sized restaurant businesses. JD New Channel has been active since the beginning of 2018, first announcing its store opening targets and now reportedly entering the restaurant B2B industry to build a one-stop procurement platform for small and medium-sized restaurant clients. According to Feiyu, this project has not yet been officially named and currently covers categories such as rice, flour, cooking oil, dried goods, and seasonings. However, based on New Channel's goals announced at the end of 2017, fresh produce categories such as aquatic products, meat, eggs, and vegetables are likely within its expansion scope. Feiyu speculates that there is no dominant player in this track yet, and JD New Channel aims to establish itself as the leader. Why is restaurant B2B so attractive? Data released by the National Bureau of Statistics shows that China's restaurant industry began transforming in 2012. The market size reached 3 trillion yuan in 2015, surpassed 3.5 trillion in 2016, and is expected to exceed 4 trillion in 2017. With such a massive market, everyone wants a piece of the pie. Behind this rapid growth, the scale of food ingredient procurement in China has reached 900 billion yuan! Behind every restaurant, there is a weekly procurement demand of several thousand yuan. Compared with the rapidly developing restaurant industry, the supply chain remains relatively traditional. Except for well-known chain restaurants like Haidilao and Xibei, which have built their own supply chain companies, the procurement and supply for small and medium-sized restaurants, which account for 65% of the total, is still very traditional. In many small restaurants, the owner holds the procurement tightly. The owner often doubles as the purchaser and cashier, controlling the flow of money. Even if they cannot do it themselves, they appoint a trusted person for these tasks. They often buy from nearby wet markets or supermarkets, which is time-consuming and labor-intensive. The most common practice is to have a professional supplier contract to supply all beverages and seasonings, with delivery on demand. There are two benefits to cooperating with such suppliers: one is the ability to buy on credit, and the other is rebates. However, this is limited to high-quality customers with long-term cooperation and stable business. Even with these professional contractors, business transactions remain traditional, often via phone orders or scheduled visits to take orders, which is inefficient and not conducive to product innovation. Moreover, there is no data accumulation to feed back to manufacturers for product improvement. With the proliferation of smart devices in the mobile internet era and the gradual maturity of B2B solutions, the restaurant supply chain is in urgent need of transformation. This nearly trillion-yuan market has attracted numerous internet startups, but these early entrants in the restaurant B2B field are not doing well; some have already been ruthlessly washed ashore by the market. Is restaurant B2B a pitfall? I haven't counted how many startup companies have been buried in this seemingly promising track, but according to media reports, several active restaurant B2B companies such as Meicai, Liannong, and Youpei Liangpin have not achieved profitability, let alone become industry unicorns with capital support. Why is this the case? Is restaurant B2B a pitfall? An entrepreneur once summarized his failed startup experience in the media: "In the restaurant supply B2B business, if you don't burn money to become one of the top three, it's a dead end. Even if you become a top-three player, without extending upstream in the supply chain to dig deeper, it's hard to be profitable. Moreover, if you can't solve customers' personalized needs, what you've done is just a good story." In fact, what hindered his development were logistics and supply chain. Whether building self-owned warehousing and logistics or outsourcing logistics, it was impossible to balance cost reduction and customer experience improvement. Additionally, despite accumulating a large number of orders and gaining some bargaining power, logistics, labor, and warehouse rent basically ate up all profits, leaving no room for profit. So, given the big pitfall in the restaurant B2B industry, why is JD jumping in? Behind JD New Channel's move into restaurant B2B Liu Qiangdong once said in an article titled "Organizational Transformation under the Fourth Retail Revolution": "The essence of the fourth retail revolution is borderless retail, with the ultimate goal of reconstructing retail costs, efficiency, and experience based on 'knowing people, knowing goods, and knowing places'." Clearly, the restaurant supply chain is still a huge market with extremely low e-commerce penetration, and target customers have a high conversion rate for goods. Such a high-traffic offline consumption scenario is naturally the best sample for reconstruction. JD New Channel already operates FMCG B2B, so this business can easily extend its services with low cost and high returns. At the same time, JD has become China's largest fresh e-commerce cold chain home delivery platform, with cold warehouses covering four temperature zones (deep cold, frozen, chilled, and temperature-controlled) nationwide, meeting the personalized storage needs of different fresh categories. This lays a solid foundation for JD New Channel to expand into fresh produce. Compared with the crazy growth of restaurants, the restaurant supply chain and service side is still a market cake that hasn't been fully sliced. While startup peers are exhausted by fresh supply warehousing, what market situation will JD New Channel face as it re-enters the arena? Will it successfully capture the high ground of the restaurant B2B market? We'll wait and see...