Over the past decade and the next, both distributors and the market they face have undergone tremendous changes. Mr. Xu Hongyao, Vice President of Dongguan Sugar & Wine Group and General Manager of Caihua Trading (Yueheji), shared his practical experience over the past decade and his thoughts for the next decade, using Caihua Trading (Yueheji) as a case study. From a retailer's perspective, he illustrated the opportunities and challenges in the evolution of distributor business. __ Practice of the Past Decade Looking back at the past decade, Caihua Trading (Yueheji) has made many efforts and attempts. Since entering the trading sector in 2011, Caihua Trading (Yueheji) started in Dongguan and Shenzhen, later expanded to Guangzhou and Huizhou, and gradually attempted to go beyond Guangdong Province to develop nationwide coverage. Currently, it has basically formed a regional layout that deeply cultivates Guangdong and covers the whole country. In terms of product management, Caihua Trading (Yueheji) initially focused on cooperation with leading brands, expanding and refining categories through category expansion and product selection. Later, it moved to selecting marketable products while incubating its own brands and agency brands, and now it has a product structure combining self-operated products and products from入驻 merchants. In terms of the warehousing and distribution system, Caihua Trading (Yueheji) grew from initially having only 1 central warehouse to 2 central warehouses, then to 4 central warehouses and 1 central warehouse per province, gradually developing into the current 8 central warehouses plus over 30 alliance warehouses. In terms of service positioning, it evolved from an initial one-stop procurement service platform, to a convenience store free alliance in 2017-2018, and now to the Yueheji Retail Terminal Comprehensive Service Platform. From 2011 to the present, Caihua Trading (Yueheji) has focused on serving retail terminal stores, following a clear path that it will continue to adhere to: Focus on serving retail terminal stores and build a comprehensive service system for retail terminals. For terminal stores, it provides: the Yueheji Mall for basic product support, central warehouses + alliance warehouses to meet operational efficiency, and store operation specialists for professional team services. With the diversification of industry competition and store operational needs, it offers the Yuehuitong visit system for precise store services, the Yuexiaopu 2C mall to connect stores with consumers, and integrates upstream brand distribution and establishes its own brands to provide a differentiated product structure. Effectively and efficiently link upstream brand manufacturers, professional industry service providers, and terminal stores together, aggregating them on the platform to form a strong marketing closed loop. ****Looking back at the past decade, Xu Hongyao said, “It is meaningful, a bit regrettable, and worth persisting.” The meaning comes from the initial founding of Caihua Trading (Yueheji). Xu Hongyao discovered that in the market, besides chain convenience stores like Meiyijia, there are many mom-and-pop stores. Behind each small store is a family, but such stores encounter many problems and difficulties in their operations. He thought about whether the convenience store operation system could be socialized to serve small retail terminal stores. Small retail terminal stores are closest to consumers. If there is an opportunity to serve and unite these small retail terminal stores, they can also meet consumers' convenience needs. This is a very meaningful endeavor, and because of this original intention, Caihua Trading (Yueheji) has persisted for over a decade. Regarding regrets, Xu Hongyao said, “Caihua Trading (Yueheji) started serving small stores as early as 2012. In 2014-2015, capital entered, sparking a B2B wave. At that time, competition was fierce, and survival was precarious, but Caihua Trading (Yueheji) held on, and we were also glad that everyone jointly educated the market. The only regret is that during rapid growth, we did not fundamentally solve some problems, so we fell slightly behind and were a bit late. But after years of refinement, the retail terminal comprehensive service platform we present now is equally worth looking forward to.” Thoughts for the Next Decade For the next decade, there are several thoughts: First, the question is not “whether to do it,” but “how to achieve it and how to do it well.” Each enterprise's development is linear, not leapfrogging. There are many good practices in the market, but if an enterprise lacks the capability to adopt them, it cannot learn them. Therefore, we must combine our own situation, find our own pace, learn but not follow trends blindly. Second, retail terminals will exist long-term, but the content and methods of providing goods and services to consumers will change. The form of retail terminals will exist long-term, but the goods and services they provide to consumers, or the way they provide them, will continuously change. We need to think about how to grasp the operational needs of these retail terminals and how to empower them efficiently and at low cost. Third, the role of distributors will exist long-term, but their functions and positioning in the entire FMCG chain will change. The form of retail terminals will exist long-term, meaning the demand for operational improvement will also exist long-term. Therefore, as distributors serving these retail terminals, we believe their role will also exist long-term. But can we truly grasp the operational needs of these retail terminals? Do we really have the capability to serve them? How to find the long-term value point of the enterprise in the entire chain is a question we need to focus on. “Special Channel” Retailers and “Platform-based” Supply Chain Service Providers In the future, Caihua Trading (Yueheji) will continue to deepen its services around retail terminals and distributors. It positions itself as a “special channel” retailer and a “platform-based” supply chain service provider. For retail terminals, the most critical issue is how to make the entire operation worry-free and effortless in an efficient and low-cost way, while also solving the problem of organizational belonging. The operational needs of retail terminals can be divided into three aspects:

1. Solve the problems of product operation, including product selection, pricing, promotion, marketing, and online operation; 2. Solve the problems of overall operation, including store image, spatial layout, store management, etc.; 3. Solve the needs for operational improvement and social interaction, avoiding fighting alone. As a “special channel” retailer, Caihua Trading (Yueheji) starts from the operational needs of terminals. In addition to providing service capabilities, it builds a platform membership level system, implements differentiated resource allocation for level-based customers, reduces the cost of opening a new store for store owners, makes terminal store operations worry-free, effortless, and cost-effective, while also providing a sense of belonging to the alliance organization. Unite small terminal stores to jointly study consumer trends, jointly study market trends, empower precisely, and co-create the market. In the entire FMCG chain, the Yueheji B2B platform can provide brand manufacturers with clear product flow and service conversion effects at terminals, allowing each role's capabilities to be fully utilized. As a platform-based supply chain service provider, Caihua Trading (Yueheji) divides its platform service capabilities into the following parts, and works with platform role partners to “co-create, co-build, share, and win together.”

  • Product and brand portfolio: Through a self-operated + merchant model, provide a product operation structure suitable for convenience stores and differentiated
  • Channel and regional expansion: From Guangdong to nationwide layout, based on individual retail terminals, integrate new channel formats and channel customers
  • Warehousing and distribution system: Warehouse logistics system + store logistics system, central warehouse + alliance warehouse to efficiently serve regional terminal customers
  • Channel digitalization: Based on Yueheji platform data + third-party data, provide digital applications such as marketing tools, business teams, and sales forecasting We hope to provide brand owners with an offline precision marketing platform and sales growth platform through channel data, marketing and operation tools, and business team service capabilities. Become a “platform-based” supply chain service provider to truly empower the distributor community. Professional Division of Labor, Efficient Collaboration If a person or enterprise fights alone for a long time and is unwilling to collaborate, they will gradually find that all parties in the entire chain become their opponents. But if they can find their own value point, deepen it precisely, and cooperate with an open mind, then all parties in the chain are their partners. Caihua Trading (Yueheji) always focuses on retail terminals, starting from the operational needs of terminals. In addition to providing service capabilities, it builds a platform membership level system, implements differentiated resource allocation for level-based customers, reduces the cost of opening a new store for store owners, makes terminal store operations worry-free, effortless, and cost-effective, while also providing a sense of belonging to the alliance organization. As one of the advocates of the distributor alliance, Caihua Trading (Yueheji) also looks forward to regional distributors serving retail terminals contacting us to join the alliance, learn and grow together, complement and develop together, and jointly speak for retail terminals. Professional division of labor and efficient collaboration are the optimal path for the development of the entire chain and also the optimal path for social progress. The future market requires everyone to co-create, co-build, share, and win together. [This article is compiled from the speech delivered by Mr. Xu Hongyao at the 5th China FMCG Innovation Conference, organized for readers (partially edited)]. PS: Friends interested in the on-site speech content can follow the recent posts on the “New Distribution” WeChat official account. We will compile and publish all guest speeches for readers. Click Read Original to see more highlights of the 5th China FMCG Conference and the 1st China FMCG Distributor Conference...