The 3rd "FMCG + Internet Conference" hosted by New Distribution was held on November 8-9, 2017 at the Yuelai International Convention Center in Chongqing, attracting thousands of distributors, manufacturers, and internet companies from all over the country. The venue was packed, and the event was unprecedented. The following is the speech by Lu Yuan, Information Director of 36524, at the conference, organized by New Distribution for readers.
Hello everyone, I am Lu Yuan from 36524. Today I will share with you my thoughts on the partner information system. This is our second time doing a partner project, and after two years of development, we have a little bit of self-satisfaction. Because we have always been operating self-operated stores, when we started franchising, we found it difficult because franchisees couldn't tolerate the management system of direct-operated stores. At that time, we began to think about building an information system for the franchise system. From scratch, we were a bit complacent, feeling that it might not be the best, but it was probably the most suitable system for us. However, yesterday, Mr. Lv from our group company formally proposed at our 20th anniversary celebration that we should build four types of members: customer members, employee members, supplier members, and store members. At that moment, it was another major challenge and reform for our information system. So, what we have done in the past two years is just a small start of a long march for the company.
Let me briefly introduce the company. 365 Life Tong Network Technology Hebei Co., Ltd. is an internet high-tech retail enterprise under the 365 Group, established in 1999, mainly developing 24-hour 36524 urban community convenience stores and O2O retail stores. This is our service platform: FMCG platform, e-commerce platform, logistics service platform, financial service platform, communication service platform, housekeeping service platform, new media service platform, and innovation and entrepreneurship platform. We had done this before but not very successfully. In 2016, we restarted the partner project. Currently, there are 150 partner stores, covering Shijiazhuang urban area and 4 counties. Among them, there are 50 3.0 stores, with an average daily performance of over 6,000 yuan, an increase of more than 20% compared to before the transformation, and a gross margin of over 22%. The average daily order amount per store is over 2,000 yuan. There was a young man who said he agreed with 36524's management philosophy and was very willing to join. In two years, he opened five stores, and two more are in preparation.
Before launching the new system, let's analyze the pain points. The biggest issues were low performance, insufficient customer and store stickiness, uncertain supply sources, uncertain product items, and unguaranteed product quality. Because they could source from anywhere, when they sold a product well and wanted to restock, the distributor would say sorry, I'm not doing this anymore, so they couldn't stably guarantee supply. In fact, many partners turned their inventory into dead stock. This is FMCG; after three to five months, products expire and cannot be sold. Capital turnover was high, and if they wanted to open more stores, they lacked funds.
In-depth analysis: lack of information system support, inability to do big data analysis, and experience-driven management. Products lacked core competitiveness, no private labels, no imported goods, and no differentiated business characteristics. Online and offline integration was not done well, and new models were not formed.
These are our six advantages: we have store opening experience, management models, strong brand effect to increase customer traffic, logistics distribution and information system application, larger profit margins, plus scenario marketing, adjusting category structure, and fast food sales can increase profits by 20%. We improve training and supervision systems, leverage supervision roles, and enhance employee training skills. Differentiated product management: we have over 1,000 types of general distribution and general agency products, and the injection of cross-border purchase products meets customers' demand for overseas products.
Our system support mainly includes the following aspects: first, Ordering Bao, which mainly solves the problem of store ordering; second, Supervision APP, responsible for supervision tracking management and performance assessment. Qianfan Sales, the store front-end sales system, and the marketing system for online and offline interaction. When it was first launched, for partners, the first priority was to ensure the safety of funds. So when it went online in early 2016, we first established a capital pool management system, managing partners' separate fund accounts. Then there was the ordering issue, using mobile ordering to improve efficiency and solve payment problems. We launched marketing activities to bring continuous customer traffic to stores. Also, we solved the flexibility of inventory management and improved our stickiness with customers and increased order quantities.
Everyone in the B2B industry feels this: the first pain point is that partners will say prices are high, then incomplete product variety, differences in delivery quantities, inability to replenish due to arrears, and issues with new product introduction, not keeping pace with the market. In response, our solution is that our prices are 3% lower than county-level wholesalers, so they can't complain about high prices. We have established a separate purchasing and delivery system, solving differentiated products through transit distribution. We have many franchise stores in suburban counties, and many manufacturers are unwilling to deliver to counties, so we have formed a separate distribution center and solve these problems through transit pre-order. For product delivery, we implement a separate distribution price difference for partners, completely separating the direct-operated and franchise systems. The ordering platform is called Ordering Bao, which is integrated with inventory, real-time synchronization, ensuring inventory arrival rate. It supports Alipay, WeChat, and third-party payments like Quick Money. Ordering Bao is like a simple small website, with updates and activities recommended to partners. These are the marketing activities we did: this is the activity of ordering products to receive red packets, this is limited-time marketing, with very low-priced water for flash sales, sold out within 2 hours.
Marketing system support: through various coupon marketing and mini-program marketing, we provide stickiness to stores and increase their stickiness with customers. This is a WeChat group built by the store itself. They promote our mini-program to customers, and entering the mini-program allows them to receive coupons. At the same time, we cooperate with third-party payments. This is my August data: third-party payments increased by 29% compared to August last year, and now third-party payments account for 48%. In November, there were many third-party payment activities, and now third-party payments account for 60% of sales. Through third-party payments, I brought a million yuan in dividends to partners, including encouragement funds, 1 yuan pancakes, single-item discounts, brand coupons, etc. So as long as the company has any activity, they absolutely support it because they can gain more profits.
This is our mini-program data analysis. We offer coupons in the mini-program. For shopping over 10 yuan, buying breakfast or lunch ready-to-eat food can save 2 yuan. 7-8 is the morning peak, 11-12, and 19-20, which are exactly the three marketing peaks of morning, noon, and evening. Especially the lunch peak, through this consumption, we achieve the purpose of guiding consumption. Stores from 15-21 are not peak hours, but through the mini-program, we have raised this time period to peak, and the coupon sales ratio reached 60%, and at 19:00 it reached 79.2%.
The Qianfan Sales System has a big feature: simple operation, can be mastered with 20 minutes of training, very convenient. Second, replenishment based on sales volume reduces reliance on inventory. Partners don't have much concept of inventory, so we have to go step by step. Third, product labels for category analysis. Fourth, independent price changes with high flexibility. Fifth, business analysis with more standardized reports. This is the report display, with very complete business indicators. We guide partners to improve performance using layer-by-layer analysis. If sales are low, is it the average transaction value or customer traffic that is low? We teach them step by step.
Supervision APP: supervisors are the bridge between the company and stores. How do we strengthen management of them and promote their personal incentive improvement? It is very beneficial for stores and the company. It mainly includes four points: performance inquiry, order inquiry, proxy ordering, and performance assessment. Proxy ordering: some partners don't know which products are good or bad because they lack experience. We have experience, so we can help them place orders. After ordering, we need to do order inquiry to check if they have paid and if the goods are fully delivered, and also track performance. There is also incentive assessment. I have incentive assessment for supervisors. If the store's overall order volume reaches a certain level, I give rewards to supervisors. Let me give you a real example: a supervisor earns 4,000 yuan, and last month he received nearly 2,000 in incentives, so his salary last month was 6,000 yuan. This is very motivating for supervisors.
I will end with the partners' own words: "I am honored to join the 36524 family. Thank you very much for tailoring a Qianfan Shopkeeper system for franchise stores." "Sitting under a big tree makes it easy to enjoy the shade. I hope there will be more functions for me to use, truly playing a bridge role, making us stronger and stronger." "The Qianfan system is very good. I hope we can continue to work hard, and the system will become more considerate in the future. Happy cooperation!" Thank you everyone!
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