On August 28, the press conference themed "Combining Wood to Form a Forest, Containing Rivers into the Sea" was held by Alibaba Retail Link at Yunqi Town, Hangzhou. At the event, Lin Xiaohai, Vice President of Alibaba Group and General Manager of Retail Link, delivered a keynote speech. The following content was compiled and published by New Distribution based on the live recording.

Changes at Retail Link

Welcome and thanks to partners from brand owners, distributors, small stores, city partners, and the Alibaba digital economy ecosystem. Good afternoon! As a channel distribution solution, it requires basic capabilities in logistics, capital flow, and information flow, which in traditional distribution channels are borne by distributors. Additionally, it needs DSPM—the four major solutions of Distribution, Shelf, Pricing, and Marketing. How is Retail Link performing in channel digitalization solutions?

Let's first look at the channel distribution infrastructure:

Logistics. Today, Retail Link, together with Cainiao, has built a fulfillment network consisting of 5 regional warehouses, 34 city warehouses, 6,000 distributor warehouses, and over 40,000 drivers, capable of covering 80% of market capacity and handling hundreds of thousands of daily orders. Capital flow. Based on Alipay's full-chain digital payment solutions, merchants on Retail Link can enjoy financial services such as prepaid ordering, warehouse receipt pledge, and instant settlement, while small stores can also apply for credit purchase services. Information flow. On the Retail Link platform, key information nodes in the distribution chain—brand owners, distributors, small stores, and sales representatives—have achieved 100% information closure.

After three years of effort, the basic capabilities of logistics, capital flow, and information flow built by Retail Link have become the largest, most capable, and lowest-cost digital distribution infrastructure in the FMCG industry. Now let's look at Retail Link's progress in DSPM—the four major solutions of Distribution, Shelf, Pricing, and Marketing.

The Tianyan data product can clearly determine the optimal product mix for every city in China, greatly improving brand owners' product deployment and achieving efficient distribution. Shelf Eye's image recognition accuracy for store shelves exceeds 95%. Our shelf display reports allow brand owners to see their products' display share in every small store without leaving their offices. Based on volume-price models, the price management product combining monitoring data with algorithm capabilities has already helped brand owners achieve store-specific pricing under store-product relationships. Precision marketing tools driven by store-product relationships help brand owners execute targeted promotions across 16 store types and 96 store relationships.

Alibaba is building a digital business operating system, and Retail Link is its digital channel distribution solution. This is our strategic positioning, and it is also the strategic positioning we expect brand owners to have for Retail Link. Based on this strategic positioning, we hope to become the main battlefield for brand owners to operate offline stores. As the main battlefield, we need to gradually expand from small stores to multiple channels. From a single channel to multiple channels, the change is not just an increase in channel types, but more importantly, Retail Link must complete an upgrade of its solutions. We firmly believe that only with the ability to provide different solutions for different channels can Retail Link truly become the main battlefield for brand owners to operate offline stores.

This year, Retail Link plans to deeply cooperate with 10 brands in 10 provinces, integrating multiple channels! Many brand owners must have a question: If I use Retail Link as a distribution solution and connect all offline channels to Retail Link, will I lose control over my channels? Will I become too dependent on Retail Link and be constrained by it? Looking back three years, from the perspective of a brand owner's marketing president, I fully understand this concern. Moreover, in the past three years, Retail Link adopted a semi-closed operating model to quickly build infrastructure. Brand owners connect to customer service representatives, who connect to partners, who connect to small stores—this is a chain operation system rather than a network operation system.

Returning to Retail Link's original intention of building an intelligent distribution network, we need to make the platform more open, giving brand owners more opportunities and capabilities to directly face small stores, reach them, and operate them. I believe no brand owner now worries about being too dependent on Tmall, because Tmall is the battlefield for brand owners to operate consumers. Similarly, brand owners need not worry about being too dependent on Retail Link, because Retail Link is the battlefield for brand owners to operate offline stores. In fact, you can understand Retail Link as the B2B Tmall. Openness is not just an attitude but also a capability. To return the operational battlefield to brand owners, Retail Link needs to establish private domain battlefields and operational tools for brand owners.

Today, Retail Link's storefronts have been opened to 2,000 distributors and brand owners, with over 5,000 brand owner sales representatives connected. Empowering brand owners to directly operate small stores is Retail Link's unwavering direction. I hope Retail Link becomes the main battlefield for brand owners to operate offline stores, allowing brand owners to shift from operating through customer service representatives to directly operating small stores. Over the past decade, digitalization has been the most important keyword in China's business sector. Tmall and Taobao have driven the digitalization of China's retail. Channel digitalization is the shared dream of everyone in this venue. If retail digitalization is the construction of a new district, then channel digitalization is the renovation of an old city. Channel digitalization will be more complex and arduous.

Changes Happening in the Industry

Small stores are the largest channel, accounting for over 40% of the FMCG industry. Small stores are closest to consumers, most warm, and lowest cost. Driven by internet entrepreneurship waves such as FMCG B2B, community group buying, and O2O, they have gained internet wings, and old trees are blooming new flowers, undergoing a series of subtle changes.

New people: The first change is the younger age of store owners. In the past year, the proportion of owners born in the 1980s and 1990s increased from 61% to 68%. The proportion with college degrees or above increased from 23% to 30%, and owners with internet industry backgrounds increased by 30%. New products: The second change is the newness of products. In the past year, new products contributed 40% of the FMCG industry's growth, and 80% of Retail Link users regularly search for new products on the platform. Among stores deeply cooperating with us, the number of new products introduced and store operating revenue are more than 50% higher than ordinary stores. New supply: The third change is in supply channels. 70% of small stores purchase from FMCG B2B platforms, averaging more than 5 times per month, with total purchases exceeding 5,000 yuan. Stores purchasing over 10,000 yuan account for more than 13%.

Alibaba has two visions: one is to live for 102 years; the other is to serve 2 billion users, create 100 million jobs, and help 10 million small and medium-sized entrepreneurs profit by 2036. Three years ago, I was inspired by this mission and joined Alibaba. When I was assigned to Retail Link three months after joining, looking at the then one brand, one warehouse, a very rough APP, over 100 partners, and several thousand signed small stores, I realized the gap between mission and reality! Over the past three years, we have been immersed in the endless challenges of entrepreneurship, rapid strategic iteration, and rapid platform growth. Until this year, when we served 1.3 million small stores, and when we and brand owners have moved from doubt to acceptance, to embrace, and now toward integration, we found that the small stores we serve still view Retail Link as a trial!

Small stores remain the hardest business. A small store is run by a family of 2-3 people. Once the store opens, they must also do purchasing, store operations, in-store sales, after-sales service, even cleaning and security, accounting and cashier work... covering almost all job types, typical all-rounders!

In recent years, the rapid development of FMCG B2B has not changed the difficulty of running small stores; at most, it has added a few more purchasing channel options! That is because whether it is the traditional offline distribution and wholesale channel or the online B2B platform, they are all solving the needs of brand owners. So far, no one has completely solved the most core and simplest need of small stores, which is good products, good prices, and good service from the perspective of small stores!

Retail Link, after three years of rapid development, is already the No. 1 FMCG B2B platform. Now, we need to return to Alibaba's mission of making it easy to do business anywhere, and to the vision of helping 10 million small and medium-sized enterprises profit. We need to think about how to make it easy for small stores to do business, and how to make millions of small stores more profitable and less burdensome! With the full support and strategic cooperation of all the brand owners present, we are confident and responsible to jointly redefine "good products, good prices, and good service" in the ERTM era, making it easy for small stores to do business!

Trendy Fast Food

Remember a few years ago, convenience food in small stores shrank by 3% annually, mainly due to the rapid expansion of the food delivery market, as restaurant takeout took away much of the small stores' business. But in recent years, some small stores have seen recovery in the convenience fast food category. These recovering stores introduced trendy fast food priced at 6-20 yuan, with more fashionable and varied flavors, and healthier and more substantial ingredients. Trendy fast food is more expensive than instant noodles, but compared to takeout, it is cheaper, more hygienic, and more timely. Today, over 80 brands and more than 800 products have joined Retail Link's trendy fast food category. In the past year, over 200,000 small stores have begun to redefine the convenience food category through trendy fast food, winning back customer traffic for small stores.

Redefining Small Store Product Categories

In the past three years, Retail Link has focused on improving the circulation efficiency of existing high-volume products, providing small stores with higher quality, more competitive prices, and more stable supply. Starting this year, we hope to offer small stores more differentiated products, helping them redefine product categories to achieve higher efficiency for incremental products. The main innovators in products remain KA major brands. The FMCG industry's overall market capacity grew by 14% last year, and 40% of that growth came from new products. Previously, major brands' innovations were mainly carried out in hypermarkets and e-commerce, while small store channels typically only sold high-volume products, because distribution efficiency in small store channels was low, and there was no capability for consumer education on new products. At the same time, Retail Link has built capabilities such as new product scenarios, sampling, in-store posters, and screen advertising to solve the consumer education problem.

Higher Efficiency for Incremental Products, Increasing Store Productivity by 30%

Based on Retail Link's full-domain data, efficient distribution and precision marketing make it possible for brand owners to design and produce products for small stores and the consumers behind them! Redefining small store product categories, providing small stores with customized products, new products, internet-famous products, and source factory goods. We expect to make existing products more efficient and incremental products more profitable, increasing store productivity by 30%!

Redefining ERTM Services

Starting today, Retail Link, together with brand owners, Cainiao, and Ant Financial, based on characteristics such as online behavior and traceability, will redefine the ERTM service system with a "compensation" approach based on trust and credit.

How do we achieve 'I accompany you to earn'?

First, compensation for delay. Small stores need certainty and timeliness in delivery. Retail Link officially launches the "Delay Compensation" service today, allowing small stores to clearly see the expected delivery date for each product and guaranteeing on-time delivery, with compensation for late arrival! If the delivery personnel fail to complete delivery within the agreed time, an online application can be submitted.

Second, compensation for expiration. Another major concern for small stores when stocking up is: what if products don't sell? If products expire, they have to bear the loss! After small stores purchase goods, once products expire, they can initiate "Expiration Compensation." They can apply for up to 100% of the order amount, without returning the goods.

Third, compensation for slow-moving goods. For products not sold within 60 to 180 days after receipt, small stores can initiate "Slow-Moving Compensation," up to 100% of the order amount.

Fourth, compensation for price differences. For selected products in core categories, if after payment, small stores find that the same product on other B2B platforms is priced lower than Retail Link's purchase price, they can contact their partner. After verification, the partner will issue a price difference subsidy to the small store, up to 30% of the product price, with a maximum of 50 yuan per product per order. "Price Difference Compensation" makes purchasing more cost-effective and reassuring for small stores. We dare to compensate not because we have deep pockets, but because it is a commitment. We are confident that in the future, there will be no need for compensation; I accompany you to earn.

At last year's strategic press conference, we grandly launched Ruyi. We believe Ruyi is the key for small stores to open new retail. We believe Ruyi is not just a cash register, but a cash register that can make money, a smart store manager tailored for millions of small stores. Traditional POS machines have fixed functions after leaving the factory, but Ruyi is a cloud POS machine, so its functions can be continuously upgraded and iterated. Over the past year, we have invested over 10,000 person-days in Ruyi's development, releasing 38 versions in total!

We believe Ruyi will redefine the way small stores operate! To this end, Ruyi has built a service center and a marketing center:

In the service center, Ruyi integrates various resources from the Alibaba ecosystem to help small stores expand value-added services, such as brand sampling, virtual recharge, card and broadband processing, lottery, parcel collection, and Amap store registration. In the marketing center, Ruyi integrates brand owners' marketing resources, enabling small stores to easily carry out various marketing activities for consumers—resources that were previously only available to hypermarkets and large e-commerce platforms.

Ruyi continuously accumulates in-store traffic through the Alipay mini-program for convenient shopping, turning offline traffic online. By connecting with Ele.me food delivery, it provides home delivery services for consumers. Diversified operational battlefields not only expand the service boundaries of small stores but also support small stores in effectively and continuously operating their consumers.

Ruyi's design philosophy is to solve the problems of data support, resource support, and operational battlefield while retaining the characteristics of being closer to consumers, having more neighborhood warmth, and lower cost, achieving 70% of 7-11's capabilities with 11% of the cost!

Lingli Plan

Today, Retail Link launches the "Lingli" public welfare plan to the whole society, initially covering 10 cities and 2,000 Tmall small stores. The first brand to join the Lingli plan is Nongfu Spring. Together with Nongfu Spring, we donate 2 million bottles of water, welcoming sanitation workers, couriers, and food delivery riders to enter stores and get free water.

In the future, we will gradually expand to Tmall small stores nationwide, providing free drinking water for outdoor workers year-round. We will join more brand owners to provide raincoats and umbrellas on rainy days, gloves and warm packs in winter, and masks on hazy days. Here, I call on more brand owners to join the Lingli plan, and together with Retail Link and Tmall small stores, make Tmall small stores a haven and station for all outdoor workers!

Retail Link makes it easy for small stores to do business; the Tmall small store Lingli plan shelters millions of outdoor workers from wind and rain.

New Distribution Commentary

Three-year-old Alibaba Retail Link has grown into the industry's leading FMCG B2B platform. Whether in basic capabilities such as logistics, information flow, capital flow, and warehousing, or in services to brand owners and traditional retail stores, Retail Link is constantly trying to optimize and upgrade the traditional FMCG distribution channel.

From this press conference, Alibaba Retail Link's strategy is clearer than before. The core focus has quietly shifted from brand owners to small stores, and the strategy is more systematic. Whether it is improving the efficiency of business flow, logistics, and information flow on the supply chain side, or reconstructing people, goods, and scenes on the retail side, Alibaba Retail Link already has relatively systematic and complete solutions.

It is worth mentioning that, relying on Alibaba's strong ecosystem and technical strength, Retail Link can seamlessly connect online e-commerce, offline traditional retail, and O2O services, and can quickly implement 100,000 stores in a short period—something ordinary enterprises cannot achieve. Perhaps as Lin Xiaohai said, if retail digitalization is the construction of a new district, then channel digitalization is the renovation of an old city, and the latter is bound to be much more difficult than the former. This also determines that Retail Link's future development will inevitably have enormous imagination space.

Tips will be paid 400-2000 yuan once adopted.