---
title: "Jiang Zhiyu: Channel + Private Label Will Be the Mainstream B2B E-commerce Business Model in the Future"
description: "Jiang Zhiyu, founder and chairman of Jinhuobao, recently visited Hexun Club to discuss the company's core product, the B2B procurement platform Jinhuobao. He revealed that Jinhuobao will develop finance, data, IoT, and private labels in the future, and the company is currently in the midst of its Series B financing round, with potential acquisitions in related fields."
author: "New Distribution"
publisher: "New Distribution"
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published: "2016-05-26"
language: "en"
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---

# Jiang Zhiyu: Channel + Private Label Will Be the Mainstream B2B E-commerce Business Model in the Future

> Jiang Zhiyu, founder and chairman of Jinhuobao, recently visited Hexun Club to discuss the company's core product, the B2B procurement platform Jinhuobao. He revealed that Jinhuobao will develop finance, data, IoT, and private labels in the future, and the company is currently in the midst of its Series B financing round, with potential acquisitions in related fields.

Jiang Zhiyu, founder and chairman of Jinhuobao, recently visited Hexun Club to discuss the company's core product, the B2B procurement platform Jinhuobao. He revealed that Jinhuobao will develop finance, data, IoT, and private labels in the future, and the company is currently in the midst of its Series B financing round, with potential acquisitions in related fields.

In September 2015, Beijing David's Choice Network Technology Co., Ltd. officially launched Jinhuobao, a mobile community commerce B2B procurement platform. Jinhuobao aims to directly connect brand manufacturers with millions of community small and micro merchants, with the goal of disintermediation to significantly improve the efficiency of traditional retail distribution. By providing e-commerce platform services, software services, intelligent logistics services, and internet financial services based on mobile internet and big data technology, it helps community small and micro merchants reduce procurement costs, improve production efficiency, and promote the industrial upgrading and development of community commerce, creating a new ecosystem for community commerce under the background of "Internet + channels."

**Why Build a B2B Procurement Platform?**

When asked why he chose to create Jinhuobao, Jiang Zhiyu explained that the customer acquisition cost for e-commerce platforms like Tmall and JD.com has become quite high, even exceeding offline costs, sometimes several times higher. Rather than being constrained by others, it's better to build your own channel system. Based on the parent company's (securities abbreviation: David's Choice, securities code: 834211) years of experience in the FMCG system, they discovered that community supermarkets are a large industry that no one has touched, and traditional channels remain an irreplaceable blue ocean market.

"Jinhuobao is like a pipeline. Once the pipeline is laid, whether we run oil, milk, or tap water through it is up to us." It is reported that Jinhuobao's "channel + private label" model is similar to Watsons, where the real profits come from private labels and emerging brands. **Selling high-volume products is just to attract users with traffic. "Selling beverages, instant noodles, etc. is for traffic; the core is still selling our own and agency products."**

Jiang Zhiyu stated that B-end customers have two obvious advantages: the fixed nature of the customer base and the certainty of product demand. As a typical B2B model, Jinhuobao benefits from the fact that business owners in the B-end tend to continuously purchase certain products and rarely switch, so compared to 2C companies, 2B platforms like Jinhuobao have a relatively better handle on supply sources and do not need a large team of buyers to constantly update inventory.

Currently, there is a minimum purchase price of 500 yuan. Jiang Zhiyu explained that this is based on the logic of wholesale and retail prices, as well as warehousing and transportation costs. Jinhuobao's current warehousing and transportation costs account for approximately 4.5% of sales, far lower than e-commerce platforms like JD.com and Dangdang, because Jinhuobao only does same-city delivery, not line-haul delivery, and implements a model of decentralized warehousing and unified delivery across the country.

**Adhering to the Direct Operation Model, Rejecting the Matching Model**

"Jinhuobao will adhere to the direct operation model and will not choose the matching model, as the matching model cannot avoid counterfeit goods issues." In the C-end, a consumer who buys a counterfeit product loses at most a few dozen to a few hundred yuan, but in the B-end, if a customer buys a counterfeit product, professional anti-counterfeiting teams will go to the small store and buy all products they believe to be counterfeit. With the current 1-to-60 compensation policy, this would be a devastating disaster for the small store, potentially bankrupting them. Therefore, in B2B, direct operation is essential; it is the only way to be truly responsible to consumers and users.

When talking about his own products, Jiang Zhiyu is full of confidence. "Internet companies must be national platforms. The internet model is about breaking regional restrictions. When we negotiate with manufacturers, we tell them that goods need to be supplied nationwide. If they cannot meet this requirement, we will not cooperate." It is reported that Jinhuobao's goal this year is to cover more than 30 cities, which will basically achieve nationwide coverage. It will have its own warehousing bases in each city, all with same-city delivery. According to Jiang Zhiyu's vision, in Beijing and Tianjin, "express delivery" can achieve delivery within 6 hours, while in other cities, delivery is basically within 24 hours. Jinhuobao's core logic is to establish its own warehouse in each city it enters.

**High Profit Margins, Profitability Expected in 2016**

According to reports, since its launch last year, Jinhuobao has already accumulated over 40,000 users. In the first month, transaction volume was around 3 million yuan, and by April this year, monthly transaction volume exceeded 40 million yuan, showing explosive growth. In Jiang Zhiyu's words, "In the B-end market, once a procurement relationship is formed, it is rarely changed, and user stickiness is particularly strong."

Jinhuobao's products are currently divided into three main categories: first, popular low-margin products like JDB and Coca-Cola, which are traffic products; second, agency products with a gross margin of about 35%; and third, self-operated high-margin products with a gross margin of over 50%. The latter two layers are the important profit points for Jinhuobao. According to the company's current development trend, it is expected to achieve profitability in 2016.

**Finance, Data, IoT, and Private Labels: Four Arrows Launched Simultaneously**

Jinhuobao will become the company's core flagship product. According to the company's latest announcement, David's Choice, listed on the New Third Board, will change its stock name to "Jinhuobao." The relevant announcement has been issued, and the next steps are pending.

When discussing the company's future strategy, Jiang Zhiyu spoke enthusiastically. Jinhuobao will be the core foundation of the company's future. In terms of products, it will develop private labels, maintaining the core concept of "channel + self-operated products." The second part is the extensible aspects based on Jinhuobao: finance, data, and IoT.

Jiang Zhiyu stated that Jinhuobao has already taken action in supply chain finance. Among all financial products in China, supply chain finance is the safest, with a bad debt rate of only a few ten-thousandths, much lower than current P2P and other internet finance risks. Jinhuobao happens to be doing supply chain integration. In the future, the company's financial products will rely on Jinhuobao but not be limited to Jinhuobao's model. Finance will be an important profit growth point for the entire group.

The second part is data. In Jiang Zhiyu's words, "As a big data architecture, whether it's simple advertising revenue, complex sales revenue, or even more complex expense management revenue, the core is essentially derived from data." Big data will be a long-term strategic development for the group.

The last part is IoT. According to the plan, David's Choice's IoT strategy will be launched after 2018. In this area, Jinhuobao has a unique advantage: it has its own warehouse system in every city it enters. Courier companies only know the direction of goods, but Jinhuobao clearly knows exactly what the goods are, even which specific product is moving. These are the foundations for Jinhuobao to do IoT.

According to Jiang Zhiyu's vision, in the future, Jinhuobao will advance on all fronts: finance, data, IoT, and private labels, with four arrows launched simultaneously. The group's strategy is very clear: everything will rely on the foundation of Jinhuobao.

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