Recently, Yijiupi announced a strategic merger with Zhangshang Kuaixiao, a leading FMCG B2B company in South China, and will hold 100% equity of Zhangshang Kuaixiao after the merger. Concurrently, following the D+ round financing from Warburg Pincus earlier this year, Yijiupi also announced a D4 round of special financing for this merger, jointly invested by Meituan Longzhu Capital, logistics asset management giant GLP, and existing shareholder Source Code Capital. LightSource Capital continued to serve as the exclusive financial advisor for this merger. Founded in 2014, Yijiupi started from alcohol B2B and rapidly developed into a national, full-category, full-industry-chain empowering FMCG industrial internet platform, and is one of the most representative unicorn companies in China's industrial internet sector. As of 2019, Yijiupi had operations in 138 cities and over 500 counties nationwide, covering 800,000 stores, with annual GMV of 20 billion yuan, leading the country in actual warehouse shipment volume. Yijiupi firmly practices its corporate mission of "making good products cheaper through technology," improving the circulation efficiency of the FMCG industry chain through digital transformation. Around its supply chain business, it has developed Yijiupi warehousing and logistics platform, Yierhui/Yijiupiling retail franchise management, Weijiudai supply chain financial services, Yijingxiao merchant onboarding, and other businesses. Founded in August 2016, Zhangshang Kuaixiao is the largest FMCG B2B company in South China, operating in 13 cities and 30 counties in Guangdong and Fujian provinces, serving 100,000 stores. Zhangshang Kuaixiao has the deepest coverage density in its markets, has built an efficient fulfillment system and excellent brand service system, and is a standout and typical representative among regional FMCG B2B players in China. Wang Chaocheng, founder of Yijiupi, said: South China is a key region for the FMCG industry, and Zhangshang Kuaixiao's market performance in South China is impressive. This merger is an important measure in Yijiupi's "national, full-category" strategy, and I believe this merger will become a successful practice of national platform advantages empowering regional refined operations. The Zhangshang Kuaixiao team is excellent and has deep insights into the FMCG industry. Their joining will also help Yijiupi gather talent in the industrial internet, continuously providing better services and creating more value for upstream and downstream industry players. "At a meeting, I was deeply impressed by Ben's (Zheng Yubin) speech for the first time, because we share a very consistent understanding of the development path and value of the FMCG industrial internet," said Chen Shengqiang, co-founder and COO of Yijiupi, describing his evaluation of this merger. "First, talent integration: the high-quality core team of Zhangshang Kuaixiao joins Yijiupi; second, market integration: Yijiupi will gain major market share in the developed provinces of Fujian and Guangdong; third, category integration: this will help Yijiupi explore new cooperation models in the highest-frequency water and beverage category in FMCG." Zheng Yubin, founder of Zhangshang Kuaixiao, said: We firmly believe in the future of the FMCG industrial internet. Since our founding, we have pursued with great enthusiasm many explorations and breakthroughs in efficient fulfillment systems and brand service capabilities. In deep communication with the Yijiupi management team, I deeply felt the enormous momentum generated by Yijiupi's national, multi-category, full-chain empowerment. The Yijiupi team's passion for the industry, technology and operations iteration capabilities, and strategic determination deeply inspired me. This merger will allow Zhangshang Kuaixiao to create value for the industry on a larger platform. Cao Yi, founding partner of Source Code Capital, said: China's FMCG industrial internet is a layout we value highly. By 2018, nearly 70% of small stores were purchasing on B2B platforms, and order frequency and wallet share are rapidly increasing. The onlineization of small store procurement is an irreversible trend. The FMCG market is huge, and we firmly believe that in this wave, a new generation of supply chain giants with national, full-brand, multi-channel, and full-chain empowerment will emerge. Yijiupi has rapidly grown into the absolutely leading player in this track. While maintaining rapid growth, its steady financial performance and business integration momentum are increasingly evident. We look forward to this merger of two excellent teams bringing greater development momentum to the industry. Zhu Yonghua, founding partner of Meituan Longzhu Capital, said: Digital reform on the supply side is a direction we firmly support. The FMCG market size exceeds 4 trillion yuan, and FMCG B2B is rapidly and irreversibly penetrating the traditional distribution system. As outstanding representatives of national and regional players, the merger of Yijiupi and Zhangshang Kuaixiao will accelerate the industry's digital transformation. We highly value the strategic determination and execution of the Yijiupi team, and believe this merger will help it continue to leverage its competitive advantages, maintain growth momentum, and lead new industry development. The development of mobile internet has driven the rapid development of the industrial internet in China, and in recent years, a number of vertical industry industrial internet unicorns have emerged. After a period of fierce competition, the industry will enter a consolidation phase. Yijiupi's merger with regional leader Zhangshang Kuaixiao marks a new stage in the development of China's FMCG industrial internet. New Distribution believes that since 2013, the FMCG B2B industry has experienced a budding period and a rapid development period, and has now undoubtedly entered a stage of mergers and consolidation. According to New Distribution research, small store owners commonly use 2.6 apps, which determines that only a few B2B platforms will become the optimal solution for small store owners' procurement. Competition among B2B platforms has become increasingly fierce at this stage. This strategic merger of Yijiupi with Zhangshang Kuaixiao is undoubtedly a positive for the entire B2B industry. It not only leverages both parties' resources to accelerate the former's market expansion and coverage, enabling Yijiupi to occupy a more active and advantageous position in competition with head platforms such as JD New Channel and Alibaba Retail Link, but also helps optimize industry resources from the supply side, avoiding duplicate investment in industry infrastructure and market construction, thereby promoting the healthy and benign development of B2B. By comparing the development history of European and American supply chain companies, it can be seen that the development process of supply chain enterprises is essentially a process of mergers and consolidation. Through continuous capital investment and integration, the FMCG supply chain can rapidly develop and grow. Recalling the previous strategic merger of Yijiupi with the Southwest snack food B2B platform Hui Jinhuo, we have reason to believe that Yijiupi's merger with Zhangshang Kuaixiao is not the end. Comments on this merger by Zhao Bo of New Distribution:

  1. In the cold winter, Yijiupi has the courage to merge Zhangshang Kuaixiao, once again verifying Yijiupi's financial strength and business capabilities in the B2B industry.
  2. With food and beverage manufacturers strictly controlling downstream product circulation, Yijiupi has grown to its current size under the siege of two internet giants, Alibaba and JD.com, demonstrating its strength! This also proves the correctness and sustainability of Yijiupi's business model from another angle.
  3. This merger by Yijiupi is a landmark event. The window for capital integration and mergers in the FMCG B2B industry has arrived, but we should not be overly optimistic. The premise of a merger is that the target has high-quality assets and teams, but most regional B2B companies do not have acquisition value.
  4. The scale advantages of B2B are gradually emerging. Supply chain services, supply chain finance, retail empowerment, digital marketing, and one-stop services are capabilities that brand owners cannot achieve on their own.
  5. During this epidemic, online orders for B2B nationwide saw a large-scale surge, with order growth exceeding 50%-100% in many regions. This also indirectly verifies the advantages of B2B supply chain capabilities in special times. The epidemic will not change the course of history, but it will accelerate the process.
  6. It is recommended that brand owners increase investment and cooperation in B2B when adjusting their 2020 marketing budgets. The onlineization of transactions, digitalization of channels, chainization of retail, and scaling of supply chain services are the general trends. Brand owners should adapt to trends rather than resist them.
  7. In 2020, I believe it will be a small spring for the industrial internet. The epidemic has educated consumers, retail terminals, and brand owners. Not only has home delivery business surged, but all To C businesses must be supported by strong supply chain capabilities, so the improvement of B2B is inevitable.