"82 warehouses, 182,000 m² of storage area, average warehouse size over 3,000 m², over 370 vehicles, more than 320 full-time BDs, serving nearly 25,000 stores. No 10 billion, no leaving Guangdong; no 10,000 convenience stores, no national expansion. Where does No.1 Life's confidence come from?"

With the development of mobile internet and information technology, digitalization is accelerating its penetration into the traditional retail industry. Since 2013, internet giants such as Zhongshang Huimin, Yijiupi, and even Alibaba and JD.com have joined the race to transform the traditional FMCG supply chain, attempting to upgrade and reconstruct the trillion-yuan offline retail market through the internet.

In the internet industry, which emphasizes "speed is the only thing that matters," development speed has gradually become the sole creed for many enterprises. Especially under the "wind vane" theory, speed has become the primary indicator for capital to measure internet companies. Among the many participants in the FMCG B2B industry, No.1 Life, founded in Guangzhou, is extremely unique. No.1 Life insists on self-operating everything from systems, warehousing, logistics and distribution to business teams, investing over 200 million yuan in systems alone. So what is No.1 Life's core competitiveness? Where does its confidence come from in declaring it won't leave Guangdong until reaching 10 billion in sales? New Distribution will interpret this for you one by one.

01 Operational Synergy

In the FMCG industry, due to extremely low product gross margins, it is very difficult for B2B platforms to achieve rapid profitability. Especially the huge investments in warehousing, logistics, and products further extend the platform's profit cycle. Therefore, many B2B platforms have gradually introduced the cloud warehouse model during development, cooperating with local distributors to build warehouses and deliver goods. On one hand, this transfers cost pressures such as warehousing, distribution, and products; on the other hand, it helps platforms achieve rapid expansion nationwide. However, No.1 Life, founded in 2015, can be said to have taken a different path from other B2B platforms from the very beginning.

No.1 Life is the first FMCG B2B platform in Guangzhou to implement the front-warehouse model. By storing high-frequency seasonal products in warehouses closest to the market to meet the procurement needs of stores within 3 kilometers, it not only ensures a balance between warehousing efficiency and distribution efficiency but also guarantees the platform's unique competitiveness in competition with distributors and secondary wholesalers. No.1 Life operates its systems, products, warehousing and distribution entirely in-house. New Distribution believes the main reasons are as follows:

1. Self-built information systems ensure efficient operation of warehousing, distribution, products, and operations. For startup companies, business models and daily operation management systems are updated and iterated relatively frequently, requiring the backend information system to have rapid response capabilities to achieve maximum synergy across all operational links. If the information system is outsourced, response and operational efficiency will be greatly reduced.

Currently, No.1 Life has built a complete supply chain ERP system covering B2B, retail store POS, WMS, TMS, and OMS. To ensure consistency between systems and product data, all data is real-time online, truly achieving technology-driven efficient operations.

2. Self-operated products and warehousing/distribution systems ensure the platform has a certain voice with upstream brand owners and distributors. In the early stages of B2B platform development, support from brand owners and distributors is crucial. Only with a self-operated warehousing and distribution system will brand owners and distributors be more willing to establish trust and cooperation with the platform, and the platform can obtain higher product support and credit lines from brand owners and distributors.

3. Self-operated warehousing and distribution help the platform achieve internal product flow synergy and reduce losses. Consumer preferences differ by region, leading to different product turnover rates in different warehouses. Some warehouses have fast product turnover, while others are relatively slower.

By controlling products and warehousing/distribution systems, the platform can achieve rapid transfer of long-tail products between different warehouses. In simple terms, products that move slowly in one warehouse can be quickly transferred to warehouses where they move faster, allowing internal digestion within the platform, thereby minimizing issues like product expiration caused by slow turnover and reducing internal product losses.

Essentially, the speed of product turnover determines the level of product gross margin. To ensure sufficiently fast product turnover, enterprises need full control over product, warehouse, and logistics links, thereby achieving maximum internal synergy.

02 Regional Synergy

Under the coercion of capital, many B2B platforms are currently blindly expanding to seize market share through subsidies, discounts, and other means, aiming to achieve scale effects nationwide as quickly as possible.

But in the view of Tan Xiaoping, founder of No.1 Life, a national market cannot establish scale advantages. No matter how many outlets a national B2B platform covers, when averaged across each city, the number is very small. Moreover, in terms of product procurement, national centralized procurement ultimately cannot cover the cost of unified distribution from various warehouses nationwide; if each market procures independently, order density cannot bring price advantages in product procurement.

No.1 Life insists on first building volume within a region before expanding nationally. Relevant data shows that within Guangdong Province alone, No.1 Life has established 82 warehouses, covering multiple cities such as Foshan, Dongguan, Huizhou, and Meizhou, with a total storage area of 180,000 m². The sufficiently high density of covered regional outlets brings the direct benefit that all products can be centrally procured, which in turn gives more bargaining power with upstream brand owners and distributors.

Take certain long-tail products as an example: due to sufficient outlet density, No.1 Life can conduct unified procurement, thereby gaining more price advantages, and then distribute to different warehouses. However, if a national B2B platform conducts unified procurement and then distributes to various warehouses nationwide, logistics costs would be very high; if procuring locally, due to small quantities, it cannot gain sufficient price advantages.

03 Upstream and Downstream Synergy

In addition to its layout in the upstream supply chain, No.1 Life has also launched its own four closely managed franchise store brands for the retail industry: Yundou Convenience Store, Duimi Mini Store, Youmei Life Supermarket, and Fujin Life Supermarket. As of now, No.1 Life has deployed nearly 1,000 convenience stores in Guangdong, expanding at a rapid pace of 300 new stores per month, once again proving that supply chain capability and store expansion are closely linked.

When asked why it opened offline convenience stores, Tan Xiaoping told New Distribution that opening offline convenience stores can effectively improve the platform's product mix. The supply of full-category products ensures the platform forms core competitiveness in the region and builds competitive barriers.

Currently, in the FMCG B2B industry, most B2B platforms enter with beverages and alcohol as the entry point. The high-frequency, rigid-demand characteristics of beverages and alcohol allow platforms to quickly break through in market development, but the high fulfillment costs and long profit cycles further limit the development of FMCG B2B platforms.

Because in Guangdong, products like snacks and daily chemicals are generally sold through vehicle sales, where distributors or wholesalers drive directly to stores to sell, making it difficult for B2B platforms to compete with local distributors and secondary wholesalers. Additionally, due to the relatively short shelf life of snacks and daily chemicals, stores have very high requirements for return and exchange services, so small store owners only choose promotional products on the platform, making it difficult to build strong relationships and usage stickiness. Before opening convenience stores, No.1 Life had only about 700 active SKUs per month.

After market exploration, No.1 Life decisively decided to deeply lay out downstream convenience chains while doing well upstream. From the initial brand output, operation system, and information system to category management, No.1 Life exercises strong control over mom-and-pop stores, and their operations fully follow No.1 Life's requirements.

Through strong control, No.1 Life's supply chain expanded from 700 monthly active SKUs to 5,000 SKUs, gradually achieving full-category product supply. Because of strong control, the platform's product mix has become very reasonable.

Since the second half of 2017, some poorly managed B2B platforms have begun to exit, and some platforms are trying to transform to other models. At the capital level, enthusiasm for B2B seems to have cooled, and the entire industry seems to have entered a cold snap.

But no one can deny that the FMCG industry's channels are undergoing a digital upgrade revolution. The supply chain is evolving from the past multi-level, opaque, and inefficient model to data-driven, visualized, routed, and financialized. The problems that some individual B2B platforms are experiencing at this stage do not mean the industry has stagnated; rather, it is the result of the industry's self-iteration and metabolism.

No.1 Life connects upward to undertake agency and self-operated products of emerging brands, and downward connects to small stores, achieving user connection through stores, forming a full industry chain from products to users. By using technology to connect all links of the supply chain, insisting on not leaving Guangdong, building density, deeply cultivating the region, and insisting on using informatization and technology to upgrade and transform the traditional supply chain, it is worth learning from for every B2B practitioner. Only by structurally changing the traditional distribution model can the industry truly achieve digital upgrade and efficiency improvement.

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