Caizi Trading Company, located in Nanjing, Jiangsu, is the brand operator for Niulanshan, covering five cities in Jiangsu: Nanjing, Yangzhou, Taizhou, Zhenjiang, and Yancheng. In addition, Caizi Trading has actively developed the 'Niudianshang' B2B platform, which now has nearly 50,000 registered outlet users. Recently, New Distribution interviewed Zhu Guorong, Chairman of Caizi Trading, to learn about his operational insights as a regional 'Niu merchant' and how he responded to the rise of the internet.
01 Operational Insights of a Regional Niu Merchant Caizi Trading was established in 2004. In the early days of representing Niulanshan, sales were not as hot as they are now. Zhu Guorong told New Distribution that Niulanshan truly became popular starting in 2014. During the decade of agency operations, peak sales were only around 30 million yuan, and for most of the time, Niulanshan's sales were stagnant. The reason he was willing to persist and not give up was that Zhu Guorong had insight into Niulanshan's potential.
He believes that in a competitive business environment, each category typically has at least two outstanding brands, such as Pepsi and Coca-Cola, Master Kong and Uni-President, Wanglaoji and JDB, etc. In 2004, among the Erguotou baijiu category, Hongxing Erguotou was the most well-known, while other brands had average recognition. When he saw the Niulanshan brand, Zhu Guorong deeply analyzed its origins, history, and background, and ultimately concluded that Niulanshan had the potential to 'rival' Hongxing.
Zhu Guorong told New Distribution, 'A distributor's success relies on brand growth, but brand growth takes time. Whether you can hold on before it becomes famous and sharpen your sword for ten years depends on your insight. Of course, besides insight in selecting products, you also need to test your business management capabilities.'
The 'business management capabilities' Zhu Guorong mentioned are reflected in model and sales. With nearly 14 years of distribution experience, he fully understands the functional characteristics of channel distribution. To ensure rapid product distribution while achieving product sell-through, Caizi adopts a multi-level distribution system that separates business flow and logistics, building its own core business model. He told New Distribution that although it is a multi-level distribution system, this is only reflected in the logistics function. In terms of business flow, Caizi uses flat management to directly control terminal outlets, ensuring Caizi's control over the market and enabling upstream brand promotional policies and marketing activities to be implemented smoothly and efficiently.
In sales management, Zhu Guorong emphasized, 'Our sales staff are not judged by sales volume alone; they cannot rest on their laurels. What we want is process building. All assessments of salespeople always revolve around a series of actions on the shelf. The contribution each salesperson brings to the company is not how many cases you sold, but how many new outlets you added and how many new products you placed on the shelf. If you meet the company's standards, then you are the best salesperson.'
Currently, Caizi Trading has 8 regional directors, over 60 distribution partners, and nearly 500 frontline sales staff across 5 cities, covering more than 50,000 outlets, with annual sales in the hundreds of millions. Even at this scale, Caizi still feels a sense of crisis and pressure in the face of the internet.
02 Thinking Ahead in Times of Peace: Building Niudianshang In April 2017, Caizi Trading and Zhoupu Data jointly established Niu Shang Lian Meng E-commerce Co., Ltd. By December, it had achieved sales revenue of 300 million yuan. Zhu Guorong believes that the internet has solved many inefficiency problems for the traditional FMCG industry. The value of distributors is to help upstream brands increase market share, but now many distributors are just delivering goods and taking orders, paying salespeople's salaries while doing the work of porters.
He said, 'The internet going offline is actually improving our operational efficiency. In the past, salespeople were very inefficient in information exchange, lacking communication, especially with terminals. We leverage internet technology and use Niudianshang's efficient information tools to improve order transaction efficiency, allowing distributors and salespeople to focus on their core marketing and promotion functions.'
Zhu Guorong told New Distribution that since Niudianshang went live over a year ago, it has exceeded his expectations and brought unexpected gains. In some counties such as Jianhu, Funing, and Xinghua, the platform's SKU count exceeds 1,000. He said, 'Many players in the B2B field either invest too much to bear or cannot find a suitable entry point. But in just over a year, we have reached 50,000 outlets online. Even the local retail staff were surprised.'
Currently, Niudianshang is still in the 'road-building' stage and is actively iterating and optimizing the second generation of Niudianshang. The next step is to further improve efficiency for regional distributors. Besides efficient ordering, it will assist distributors in reducing large accounts and secondary wholesalers, and by configuring front warehouses, reduce logistics and distribution costs in remote townships.
Zhu Guorong emphasized that for the layout of Niudianshang, 'We don't have many models and concepts; we plan and configure our platform based on distributor needs.' By the end of May, Niudianshang will configure a small number of front warehouses in certain areas, iterate through small-scale trials, and then gradually promote after success.
Zhu Guorong told New Distribution, 'In the future, we will walk on two legs. Caizi Trading will focus on the Niulanshan brand, promoting business flow and implementing marketing policies, strengthening the core promotion function of the trading company. Niudianshang will build a regional matching platform to help other distributors efficiently obtain orders online, and by importing Niulanshan traffic, boost sales of other brands.'
03 The Future Distributor is a Marketer Zhu Guorong believes that the internet will reconstruct the FMCG channel distribution system. Facing the crisis, some distributors use internet tools to improve their operational efficiency, greatly enhancing their competitiveness in regional markets, while those who stick to traditional thinking and low efficiency will be eliminated.
In the FMCG channel distribution system, the distributor group has gone through three generations. The 1.0 generation distributors, before the reform and opening up, were mainly department stores and supply and marketing cooperatives, with distributors being 'official merchants.' The 2.0 generation distributors, after the reform and opening up, some people jumped out of rigid mechanisms like supply and marketing cooperatives to facilitate centralized purchasing for those with procurement needs, gradually forming wholesale markets, then called 'sitting merchants.' The 3.0 generation, channel merchants, is the current mainstream distributor form. As competition intensified, sitting merchants went out to take orders, do logistics distribution, do terminal displays, and execute promotional policies.
Zhu Guorong told New Distribution that distributors are currently evolving toward the 4.0 era—marketers—but the role of distributors will never disappear. The value of distributors is reflected in four aspects: 1. Capital pool: No platform can solve the capital needs of all manufacturers, but the hundreds of thousands of distributors nationwide can share and meet manufacturers' capital requirements. 2. Market capture: Distributors can achieve exclusivity in distribution, which platforms cannot do. For example, Caizi represents Niulanshan and will not represent Hongxing, and will maximize Niulanshan's share in the regional market. 3. Service: After-sales services such as displays, prize redemption, and price tag posting cannot be done by platforms. 4. Voice: No brand is willing to place all its products on one or a few platforms.
Zhu Guorong believes that although distributors will not disappear, they must evolve to survive. Besides those with strength and forward-thinking ideas who transform into unified warehousing and distribution logistics providers or B2B trading platforms, most distributors cannot undergo comprehensive transformation. The most suitable approach is to evolve based on their own situation, to slim down and strengthen. Slimming down means abandoning inefficient functions, such as warehousing and order processing, handing them over to professional platforms with internet technology, gradually letting go and trying. Strengthening means returning to and focusing on the core functions of distributors: business promotion and outlet service, becoming a regional marketer.
Final Thoughts The above is the evolution and exploration path of Caizi Trading. In the view of New Distribution, Caizi Trading's 'two-legged' model provides a feasible reference case for the transformation and upgrading of liquor distributors.
Previously, New Distribution has expressed that liquor distributors, compared to other FMCG products, deal with essential, high-frequency products with high brand concentration. Upstream manufacturers have strict control over distributors. If distributors directly transform from their originally stable business structure, moving existing inventory online and completely changing the business structure, it would inevitably cause market turbulence.
Caizi Trading retained its main business, independently formed a team or jointly established a company with a software system provider, and laid out a B2B platform. In the early stage, they piloted products in a small area, and after validating the model, replicated it across the entire region. The benefits are: First, the original liquor agency business is not affected, ensuring that quarterly and annual tasks or terminal-related policies from upstream manufacturers can be completed smoothly, without excessive burden on the business department, maintaining focus on terminal business. Second, the preparation, launch, and subsequent maintenance of the B2B platform belong to operational thinking, not traditional business thinking. Establishing an independent team avoids basic operational logic errors.
The above are some observations and thoughts from New Distribution on distributor transformation practices. During the actual transformation process, distributors may encounter various specific problems due to different local conditions. Friends are welcome to add the author's WeChat to discuss and exchange ideas.
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