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Cheetah Mobile CEO Fu Sheng said that the gap in cognition is the gap between people.
Full HD images, first-time detailed display, with Teacher Liu Chunxiong's commentary quotes.
After Teacher Liu Chunxiong inspected New Gaoqiao, he commented on New Gaoqiao at an internal executive meeting. Here are seven conclusions in advance:
- Changsha's 2B environment is rare nationwide because retail stores have been educated as a whole.
- New Gaoqiao's model was already working five years ago, when there was no FMCG B2B yet.
- The core of FMCG B2B is "category or integrated supply chain facing retail."
- New Gaoqiao is not a super second-tier distributor, nor a first-tier distributor, but a super "1.5-tier distributor."
- New Gaoqiao's backend is profitable, which enters a positive cycle.
- Weak central warehouse, strong front warehouse is the appropriate configuration for B2B.
- The stickiness of B2B lies in the redistribution of retail traffic.
On April 16, the famous marketing management consulting expert, professor at Zhengzhou University, senior researcher at "Sales and Marketing," flag bearer of Chinese-style marketing, and B2B e-commerce expert Teacher Liu Chunxiong visited New Gaoqiao. Teacher Liu Chunxiong smiled and said that he had been observing New Gaoqiao for a while, especially after hearing several speeches by New Gaoqiao CEO Mr. Tang at the second Internet Conference. He had some doubts in his mind, feeling that the information New Gaoqiao conveyed externally was asymmetric with the actual results, and there must be some issues not clearly explained, so he wanted to conduct an on-site investigation to verify.
Teacher Liu said: Many people study enterprises by deriving causes from results. In fact, in many cases, results are illusions. We need to trace the source to restore the enterprise.
New Gaoqiao CEO Assistant Ren Xiaodong said that at the same time, some in the industry also said they couldn't understand New Gaoqiao. How to do B2B? Just let us follow Teacher Liu to walk around New Gaoqiao and see. Maybe we will come to different conclusions:
Table of Contents ⊙1. "Something went wrong!" ⊙2. "Why ask so many questions?" ⊙3. Five mind-bending interpretations, you have to admire them!
1 "Something went wrong!"
New Gaoqiao CEO Tang Guangliang introduced to Teacher Liu the background, business model, key turning points, and development direction of New Gaoqiao.
But—something went wrong!
Teacher Liu said: "I won't listen! I want to follow the driver to deliver goods!"
Alright! Mr. Tang arranged CEO Assistant Ren Xiaodong as the driver, and Teacher Liu said wherever he wanted to go, he went!
When inspecting a company, don't listen to what the CEO says! — Liu Chunxiong
2 "Who is this person following the delivery driver and asking questions everywhere?" — A store owner
▲ Teacher Liu asked the owner of Kuailehui Supermarket about order frequency, average order value, and ordering platform usage habits. ▲ Teacher Liu went to New Gaoqiao's Changsha North sub-warehouse (Xingsha warehouse) to understand delivery conditions, picking efficiency, number of employees, and warehouse distribution cost rate. ▲ Teacher Liu Chunxiong went to New Gaoqiao's Changsha Hexi (High-tech) warehouse to conduct on-site research on delivery product mix, average order value, and delivery density. ▲ Teacher Liu Chunxiong learned about New Gaoqiao's B2B backend data: a customer's monthly order frequency, average order value, and product mix. ▲ Teacher Liu asked the driver about daily delivery frequency, delivery routes, and customer service, and walked to three delivery stores. ▲ Teacher Liu took a group photo with the Xingsha warehouse operations team. ▲ Teacher Liu held a discussion with New Gaoqiao's senior management team.
3 "The secrets of New Gaoqiao have all been revealed by Teacher Liu" (Compiled based on Teacher Liu's speech)
I have observed many FMCG B2B e-commerce companies and have also visited many companies for field research. I am a person who emphasizes on-site research. Generally, I don't believe what any enterprise CEO says, but I fully believe what grassroots employees and customers say (everyone laughs). This time I came to New Gaoqiao to verify some questions and doubts in my mind. Through these two days of on-site research, my doubts have been resolved (Mr. Tang interjected: No wonder Teacher Liu didn't listen to my detailed explanation as soon as he arrived! He went straight to the scene!). Let me share with you my feelings on seven aspects:
1. Changsha's 2B environment is rare nationwide because retail stores have been educated as a whole.
Teacher Liu's speech: Changsha has about 30,000 retail stores. Excluding chain stores that have formed internal supply chains, and some stores that are indifferent, New Gaoqiao has occupied 10,000 stores, which shows that New Gaoqiao has formed a barrier in Changsha.
I asked retail stores that salesmen from manufacturers in other cities do distribution and shelf management, but retail stores in Changsha are very resistant to this because without overall category distribution and shelf management, it is harmful to stores. It is commendable that retail stores in Changsha recognize this. So, perhaps Changsha's B2C is not ranked nationally, but the B2B environment can be said to be the best in the country.
In the past two days, I visited some stores and found that supermarket owners have a relatively high acceptance and usage habits of B2B platforms. Changsha's convenience store market is very mature. New Gaoqiao occupies 60% of this market share, which is quite good. Other cities in China are not as good. I saw that many ordering platforms are being promoted in Changsha, including XXX, XXX, XXX, XXX, etc., a total of 8. I asked supermarket owners: they are still used to using New Gaoqiao and XXX, and no more than 3 others.
In other places, salespeople are still needed to educate supermarket owners on usage. New Gaoqiao has basically achieved customer self-service usage, and the order frequency is so high. So I say, Hunan has natural B2B soil. The day before yesterday, I heard Mr. Tang talk about Kuailehui starting in 2008. New Gaoqiao can be said to be the earliest B2B platform! Changsha's B2B atmosphere is good! The future imagination space is huge!
Ren Xiaodong's speech: Last year's data showed that Changsha's convenience store growth ranked fourth nationally, with the fastest growth rate. Currently, Kuailehui has more than 5,000 stores in Changsha, and the total number of convenience stores in Changsha does not exceed 10,000.
Mr. Tang added: Changsha's good atmosphere also stems from the fact that New Gaoqiao is located in a city with one of the four famous comprehensive wholesale markets in China, Gaoqiao Market!
New Gaoqiao has the best peers to jointly develop the market, such as external Dongguan Meiyijia, local Furong Xingsheng, and Changsha is also the first city where Yijiupi started. Zhongshang Huimin also has a branch in Changsha. Thank peers for their repeated education of stores! This is good for the industry! Let's do it together. New Gaoqiao is willing to become a representative of new channels and new marketing together with peers!
2. New Gaoqiao's model was already working five years ago, when there was no concept of FMCG B2B.
Teacher Liu's speech: Why is Changsha's B2B environment so good? Because since 2008, a group of people, including Mr. Tang, have been doing retail store integration work, which was called loose franchising at the time. New Gaoqiao's predecessor "Kuailehui" started from this work, and at that time it already had more than 3,000 stores in loose chain, and it was profitable. Later, many enterprises doing store integration eventually became 3. What Kuailehui did can be said to be "B2B without a label."
Now many B2B models have not yet been proven, and many still use C-end thinking to do B-end. I once said, Before the model is proven, never run traffic.
New Gaoqiao's model was already proven during the Kuailehui period. New Gaoqiao then used platform and internet thinking, just need to do vertical deep cultivation and horizontal expansion.
Proving a model is a painful process. It's not that once you have money, the model works. It takes time. Even if others come to New Gaoqiao to learn, they may not understand because they cannot restore the history of "Kuailehui."
3. The core of FMCG B2B is "category or integrated supply chain facing retail."
Teacher Liu's speech: What is FMCG B2B? Why is a distributor not B2B, even if they use an ordering system? A distributor is just a brand provider.
In the internet context, B2B roughly has two meanings: one is using internet platform tools, which will derive many values. "Kuailehui" also did category integration and store integration before, but it only laid the groundwork for New Gaoqiao, not yet B2B; the second is category integration or cross-category integration.
I think FMCG B2B should be defined as: category or integrated supply chain service provider facing retail stores. I particularly emphasize category integration. Only category integration can bring maximum benefits to stores. Some B2B companies use just-needed brands to drive traffic, but they don't have a deep understanding of categories.
I was deeply impressed that New Gaoqiao set up "category managers." Of course, the function of category managers is still primitive, but at least there is awareness of category integration. I have seen that the best B2B companies are basically those that originally did a certain category and then developed rapidly with internet tools. Category integration capability can only be explored in practice. China's original business environment only had brand awareness, no category awareness.
4. New Gaoqiao is not a super second-tier distributor, nor a first-tier distributor, but a "super 1.5-tier distributor."
Teacher Liu's speech: The two characteristics of a second-tier distributor are: first, no agency rights; second, serving small areas. Second-tier distributors have no loyalty to brands. They use just-needed products to drive traffic and then push third- and fourth-tier products to make money. The defect is no category organization capability!
We see the chaos in store categories is determined by the way second-tier distributors match categories.
Now we say many B2B companies are super second-tier distributors, and many people are proud of it. Anyway, when I say this word, it is derogatory. Because they only take just-needed brand products from distributors, of course they are second-tier. Some seem to get goods from manufacturers, but they get second-tier prices, essentially still second-tier. These can't be hidden from me.
A first-tier distributor has the ability to cover the market, but the defect is that they can only be an agent for a certain brand, at most a few first-line brands, and also lack category organization capability or cross-category organization capability!
Why is New Gaoqiao a "super 1.5-tier distributor"?
Because it already has the capability of a first-tier distributor in Changsha, not a simple second-tier. At the same time, most products do not have agency rights, so it is not a first-tier. New Gaoqiao's current network data (10,000+ stores), warehousing and distribution capabilities, and market service capabilities can all be done like a first-tier, but it currently does not have the ability to advance funds for manufacturers, so it is not a first-tier either!
New Gaoqiao's advantage is based on this, with insights and experience of convenience store retail customers, organizing product categories that fit the convenience store scenario. This requires time to accumulate. This is New Gaoqiao's barrier and threshold!
So I call New Gaoqiao not a super second-tier distributor, nor a first-tier distributor, but a "super 1.5-tier distributor."
Mr. Tang added: The number of Kuailehui supermarkets under New Gaoqiao has provided guarantees for early supply chain efficiency, sources, and manufacturer docking. The number of Kuailehui supermarket stores has accumulated into a famous retail convenience store brand. With brand influence, manufacturers will automatically come to cooperate. It will be an IP, with its own traffic. We are regionally leading, regional king, which manufacturers like to see. At the same time, we have also tested that a store that has not joined and a store that has joined Kuailehui have different value in consumers' minds. They subconsciously think that stores with unified visual identity and unified display have more guaranteed service, and they are more willing to visit stores that have joined! This awareness is of great significance for us in promoting franchising. Many entrepreneurs or mom-and-pop stores choose to cooperate with New Gaoqiao because they clearly recognize this! This shows that our 8 years of efforts have brand value. So, after developing to 10,000+ stores, after May Day this year, our service fee has increased!
For the New Gaoqiao B2B platform, the minimum requirement for products is authenticity, and counterfeit goods are not allowed! You know, how many wholesale markets across the country are rampant with counterfeit goods, and how many individual stores have entered counterfeit goods without knowing it!
Of course, I have reservations about Teacher Liu calling New Gaoqiao a 1.5-tier distributor (everyone laughs...). The specific name is temporarily confidential.
Ren Xiaodong added: The value of FMCG B2B also lies in turning the offline scattered and diverse small and medium retail supermarket customer groups into members and digitizing them. The accumulated big data can accurately analyze the customer's business district, business area, average monthly sales, and sales of various categories. Based on this, algorithms can be used to intelligently recommend more matching product combinations and even store formats. This has incremental value for mom-and-pop store owners. For many non-first-line manufacturers, it can achieve faster, larger-scale, and more precise distribution and promotion! Moreover, we are densely covered in the region, not spreading points across all cities nationwide, but putting pressure on the region, implementing regional king, dense distribution, warehouses, people, and vehicles.
5. New Gaoqiao's backend is profitable, which enters a positive cycle.
Teacher Liu: Ordinary people look at B2B mainly by traffic. Someone asked me what B2B platforms are doing. I said they are doing homework assigned by capital. What homework? It is running traffic at all costs.
When I followed the delivery vehicle, I saw your store order amounts, some over 2,000, some over 5,000. I asked supermarket owners, the monthly order frequency is more than 4 times. Many B2B companies would envy you to death (everyone laughs). I walked between several stores, which shows your order density is good!
I look at whether B2B is healthy mainly by two indicators: One is the combination of "big head" and "long tail" products; The other is whether the backend is profitable.
One is the front end, the other is the back end. Starbucks boss has a famous saying: Front end scores, back end wins.
"Big head" products are just-needed, everyone knows they can run traffic, but gross profit is low. The real category combination capability depends on the "long tail." Without the combination capability of the "long tail," the front end may be "traffic without gross profit."
How does backend distribution make money? The conclusion I reached with Zhao Bo is, one is order density, the other is average order value. Now everyone accepts this statement. But these two indicators are results. If you only use "big head" products, you will definitely not have this result. Because "big head" products have no stickiness, stickiness is generated by the "long tail." But the weakness of current B2B giants is precisely in the "long tail." This is also New Gaoqiao's advantage.
As long as it is a positive cycle, development is not burning money, but the faster the development, the more money you make. This is what I appreciate about New Gaoqiao.
Mr. Tang's speech: On the basis of category managers, we have further divided a win-win brand department, specifically to promote high gross profit, fast-moving brands, with OEM and ODM.
6. Weak central warehouse, strong front warehouse is the appropriate configuration for B2B.
Teacher Liu: How to configure the backend? There are about three modes now: one is the central warehouse mode. I deny this mode, but many B2B companies have no order density, so they have to use the central warehouse mode. This is a helpless move; the second is central warehouse + front warehouse. Central warehouse for turnover, front warehouse for distribution.
I am against increasing the number of handling times. Every additional loading and unloading link increases cost by one or two percentage points. So, central warehouse + front warehouse seems very reasonable, but actually it is unreasonable.
I advocate weak central warehouse, strong front warehouse. To do a market, you must scale up to the point where the upstream supply chain can directly deliver to the front warehouse, thereby reducing handling times. Otherwise, don't do it.
Why still have a weak central warehouse? Because some categories have low sales but have orders. The upstream supply chain cannot connect with the front warehouse, so they have to go through the central warehouse for turnover. This is one reason; second, in the early stage of a new market, the scale has not yet reached the level of connecting with the upstream supply chain, so a central warehouse is still needed.
Mr. Tang: Our sub-warehouse layout is also in line with Teacher Liu's thinking. Please continue to guide us in the future. Our approach is that all just-needed categories are in sub-warehouse mode, with a sub-warehouse set every 50 kilometers of delivery radius. Goods are directly stored from manufacturers, then to stores. Only non-just-needed, high-frequency long-tail products and high gross profit products are set up in the central warehouse.
7. Increment or stock is not important; changing the traffic distribution of terminals is important.
Teacher Liu: Wei Zhe said: B2C has increment, B2B has no increment. Teacher Fang Gang said that only the retail part has increment.
This is only half the story, the other key half is not said. Although B2B has no increment, it can redistribute the stock.
I looked at the category mix of stores, which is a bit better than other cities. I also learned about the changes in store operating data. New Gaoqiao's category combination capability and the changes in operating data before and after store franchising actually have incremental value.
The stores integrated by New Gaoqiao have increment, which means they have taken away the stock of other stores. Because the total has not changed. Of course, retail overall is also growing.
Price does not generate stickiness, so just-needed brands can only run traffic, no stickiness. This is also why many B2B companies have low order density. Where does store increment come from? It comes from category integration, from the "long tail" of categories.
New Gaoqiao is actually a supply chain service brand. It strengthens this supply chain brand through customer franchising, product mix, unified product sales methods, and service standardization (Ren Xiaodong added: from shallow trust to medium trust to high trust, this is the stickiness of stores, not relying on burning money to bring customer loyalty. Store owners have no loyalty purely from burning money. Many of our peers only see front-end competition, not back-end competition. Fortunately, many peers have started to learn from New Gaoqiao).
A valuable B2B platform must have strong traffic redistribution capability!
This is also a barrier. It is recommended to continue strengthening this capability (Mr. Tang interjected: We have 6 category managers at headquarters).
For categories with fragmented upstream and downstream, B2B platforms have strong traffic redistribution capability! They have the ability to re-cover the network and re-optimize!
Suggestions for New Gaoqiao: (1) Many B2B companies have not yet figured out the logic and are still trying and erroring everywhere, but New Gaoqiao's logic has long been figured out. It is recommended to continue optimizing distribution efficiency, warehouse operation efficiency, and redesign and optimize processes from the upstream and downstream perspectives; (2) Deepen customer relationship management, change from passive customer management after the event to proactive customer management before the event, set levels, standards, and goals, and further intelligentize.
If you don't push people to the limit, how can you attack?
Finally, let me say that my comments were made internally. I suggest you don't spread them. If you spread them, it is doing public welfare for the industry. If there are mistakes, please criticize.
Conclusion Nationwide B2B looks at Hunan Hunan looks at New Gaoqiao
Mr. Tang's summary: Thank you very much, Teacher Liu Chunxiong, for visiting New Gaoqiao to guide our work. Through Teacher Liu's in-depth on-site combing and understanding, we are more confident in our model. We have done hard work for 8 years, which has created our current threshold and barrier. Here I can't help but bombard again: Actually, Beijing, Shanghai, Guangzhou, and Shenzhen are not suitable for B2B! (Everyone laughs: always firing cannons!) Too much capital, too many technical experts, always wanting to raise a lot of money with an Idea, and then change an industry! This works in B2C, but in FMCG B2B, I can only say, there are too many pits! (Teacher Liu joked, nationwide B2B looks at Hunan, Changsha has such good B2B soil. Mr. Tang added, Nationwide B2B looks at Hunan, Hunan looks at New Gaoqiao! Laughing...)
Source: New Gaoqiao B2B FMCG Online Wholesale Mall -END-