Kuailai Zhanggui is the largest FMCG B2B trading platform in East China and a nationally renowned one. Since its launch in 2015, it has expanded operations across multiple cities in Jiangsu, Zhejiang, and Shanghai, and has empowered distributors in Guiyang, Qingdao, and Hangzhou with its self-developed digital management system and SaaS solutions. It has served over 110,000 retail stores, with annual sales revenue exceeding 1 billion yuan and cumulative transaction value surpassing 5 billion yuan. At the 8th FMCG Innovation Conference, Yang Qiming, CEO and founding partner of Kuailai Zhanggui, delivered a keynote speech titled "How to Run a Continuously Profitable B2B Enterprise," proposing that "thoroughly data-driven operations and management methods form the foundation of a company's business."
B2B enterprises find it hard to sustain profitability. In recent years, B2B enterprises have experienced highs and lows, and have now returned to the spotlight. The core reason is that such enterprises can easily achieve large scale but struggle to maintain profitability. When the capital market demands profits, they are often forgotten, but when everyone cannot obtain large profits and turns attention to scale, B2B returns to the limelight. As a veteran, Kuailai Zhanggui has some experience worth sharing, namely refined operations and sustained profitability.
Behind sustained profitability, there are many factors. It is a consensus that B2B enterprises find it very difficult to sustain profitability. First, what kind of soil should a normal B2B enterprise grow in? It should emerge from a large FMCG distributor. Because large distributors have a better understanding of business, possess the infrastructure for operating big single products, ultra-large warehouses, various inventory management, dense professional sales management talent, and have sharp judgment on market demand analysis, and have some experience in gathering high-end enterprise management talent. Thus, such large distributors transitioning to B2B are more likely to achieve sustained profitability. On the other hand, the real situation large distributors face is that the core single products have large volume but thin profits, and they have poor control over brands. Their profitability is completely dominated by big single products, basically relying on the operating region granted by the brand, using the region to generate sales and profits. Special attention should be paid: the bargaining power between single-product large distributors and brand regional managers is very weak. Therefore, enterprises often face situations such as heavy tasks, low rebates, high operational pressure, and the operating environment can easily undergo major changes due to brand relationships. These are very real problems, and enterprises need the ability to cope.
FMCG requires a large amount of capital; do not underestimate FMCG. The previous speaker introduced his company using 5,000 square meters for B2B, but needing 15,000 square meters of warehouse to help brands stockpile goods. What is stockpiling? It is money tied up in the warehouse. Brands not only simply stockpile goods but also offer rebates and free goods, annual rebates, quarterly rebates, monthly rebates. Anyone who has been a distributor knows that behind this are various capital traps and tricks. We need various means to negotiate with brands. At the same time, facing such an operating environment, we suddenly find that we large distributors have become appendages of the brands. Where are our own value and customer needs? No one cares. We have attended many conferences, from O2O to B2B to B2B2C, and also private domain traffic, community marketing. These conceptual things, we have learned a lot of professional knowledge, but we haven't made money, so it seems meaningless. Where are customers? What are their needs? Brands won't tell you, and the important results of brand managers' research won't tell you either. What forms business? Demand forms business. What generates profit? Solving customer problems generates profit. Why is there no profit in scaling up? Because customer problems are not solved. Why can't things be sold? Because there is no demand. These are simple business facts.
The pressure from upstream brands is increasing, becoming more vertical and segmented, and assessments of distributors are becoming stricter. But the needs of small store customers, under the pressure of brand masters and doctors, remain the same as before: they sell what they sell, and they sell how they sell. Large distributors are at a junior high school level, and small stores may be at an elementary school level. They cannot cope with so many brands' vertical ordering and deep distribution. These brand management tools cannot be loaded onto small store owners; they all become pressure on distributors, consuming a lot of ineffective management costs. A small store has to face the systems of dozens of brand salespeople, such as Coca-Cola, Pepsi, Uni-President, and Master Kong. Each brand's system is both professional and fragmented. Moreover, there are brands' deep management demands. Taken together, running a small store is more complex than being a master or doctor in brand management. To say something brands may not like to hear: the display cost calculations made by masters and doctors have basically become a tool for brand managers' personal exploitation. For large distributors, this is a common phenomenon, not a specific one. Some brands also use vehicle sales and vehicle distribution, which violate market laws, as their successful experience. They don't know how much a truckload of goods will sell; if it doesn't sell, they bring it back, and the cost is left for distributors to handle. These phenomena all exist. Do distributors have the ability to resist? It seems not. Instead, it destroys profits and the operational rules that require precise calculation.
How to carry out refined operations? In the digital trend, digitalization itself is not the goal. If digitalization can bring benefits and generate profits, that is the goal. Kuailai Zhanggui is a company that builds its own systems, its own commercial flow, and its own logistics. The system is not as complex as everyone thinks; of course, this may be related to personal background. Kuailai Zhanggui has used the latest technologies, from C language to Java to now Python. The new system is different from the technology of ten years ago, requiring less manpower and lower open-source costs. So it's not that the longer the development history, the better, nor the more developers, the better.
Return to one-stop shopping. Kuailai Zhanggui believes that the core issue is not to become a brand's master or doctor or to have such high learning, but to solve customer problems. The first problem to solve is one-stop shopping. If this problem cannot be solved, as a large distributor, what is the value of selling a few single products with annual sales of one billion? What is the use of contacting terminal small stores, to make them order in a more fragmented way? Definitely not. We must change our operating state and return to one-stop shopping. Customers can use the tools we provide to reduce operating costs, pressure, and burden. So, have you achieved one-stop shopping for customers? Kuailai Zhanggui has. How much capital does it take to do 1 billion in a year? Without bragging or concepts, less than 10 million yuan. Kuailai Zhanggui uses less than 10 million yuan of its own funds to achieve annual sales of over 1 billion yuan. How much procurement amount can one purchaser manage? How many SKUs? 1,200 SKUs, with a total of less than 5,000 SKUs, and only four purchasers manage all products. For a company with a 1 billion transaction level, compliance in Shanghai is very important. We have hired one of the top 100 accounting firms in the country to conduct compliance audits for three consecutive years, covering all sales processes, procurement and warehousing compliance, and supplier settlements. How many stores can a field promotion template manage? Our experience is that it can manage over 1,000 stores.
Accounts receivable must be zero. Many distributors have warehouses of tens of thousands of square meters, which makes Kuailai Zhanggui envious. Kuailai Zhanggui achieves annual sales of 1 billion yuan with an internal warehouse area of only 10,000 square meters. There is no other way; land in Shanghai is very expensive. Our Pudong central warehouse is to be demolished this month. After demolition, the houses sold are said to reach 150,000 yuan per square meter. Think about how expensive this warehouse is! Because the warehouse is expensive, how long can each product stay in the warehouse? Our experience is less than 7 days. If it exceeds 7 days, profitability will be halved. At the same time, accounts receivable must be zero. Especially during this pandemic, you might have earned profits from a store for three years, but if the store closes due to the pandemic and there are accounts receivable, the enterprise bears all of it. If 2 out of 100 customers run away, several years of profits may be gone. This risk must be avoided.
The concept of digitalization. How many vehicles can a warehouse dispatch in a day? Many places in Shanghai have height restrictions and various requirements. Basically, vans are used for delivery, and the daily dispatch capacity exceeds 300 vehicles, requiring systematic tools. It's not about relying on the dispatcher's intuition to know which area to dispatch and what to load. Whether to dispatch 300, 280, or 320 vehicles a day is very important and greatly affects operating costs. In 2022, Kuailai Zhanggui's Shanghai sales revenue was 1.058 billion yuan, with each purchaser contributing 260 million yuan in sales, each managing over 1,200 SKUs, and this year each person's efficiency exceeds 20 million yuan. Few people show data. In the digitalization just mentioned, there is an expanded concept. Digitalization is divided into two types. Are you familiar with football and basketball? Most bosses are still using football digitalization: a few assistants, a few good managers, telling them what to do, forming a tactic. This is a kind of digitalization. The digitalization Kuailai Zhanggui advocates is NBA digitalization. The language you hear is "What is the half-court success rate, the success rate per unit time, the attack rate in seconds, the three-point shooting success rate" - all such digitalization. Pay attention to the difference. The difference between football and basketball digitalization is very important. In basketball digitalization, you can imagine how a commentator can tell you the half-court success rate and three-point shooting percentage in minutes. There must be software prompting on the screen. Every player's possession time, attack success rate, and shooting percentage are updated in real time. We need to reflect every step of the company on the dashboard like NBA digitalization.
Refine warehouse management characteristics. A 10,000-square-meter warehouse has a daily operation capacity of loading and unloading over 900 tons. The warehouse is an assembly factory. It must know precisely how many trucks to unload, how many to load later, and which platforms can provide loading. This requires the system to provide very complete and detailed numbers every day. Every day there are 80,000 boxes. How to store them? How to pick them? In a warehouse of over 10,000 square meters, picking so many boxes a day, if done manually one by one, people would run away in a month. Each person would handle hundreds of kilograms, and with 2,000 to 3,000 orders a day, it would be impossible. I suggest you take the opportunity to visit Kuailai Zhanggui. Many people have been there. See how a warehouse-type factory operates. It's simple, but that's fine. We can complete these orders at the lowest cost. Kuailai Zhanggui uses online payment exclusively, with 70% WeChat and 30% Alipay.
Let me share the actual situation in Shanghai recently. In the past five years, Pepsi and Coca-Cola have been the top payers. For Uni-President beverages and Master Kong beverages, Kuailai Zhanggui is the largest distributor in Shanghai. Our Budweiser beer sales in Shanghai are so large that it's not convenient to disclose. These are brands with relatively high cooperation. In 2022 and 2020, during the two years of the Shanghai pandemic, without using our own warehouse (the main warehouse was sealed for 93 days), we borrowed temporary warehouses and still completed sales of over 500,000 cases of Coca-Cola cans. We expect to achieve sales of 1.6 billion yuan in 2023. This is not GMV, but pure sales revenue.
Results of digitalization. There are over 50,000 merchants in Shanghai, with a repurchase rate of 79%, an average order value of over 1,200 yuan, and average daily sales revenue of around 3 million yuan. This is a diagram of the internal dispatch system. On the left, each point reflects the loading capacity of each trip. With 300 vehicles a day, which vehicle delivers to which area? Without software to help, it's hard to do refined operations. This is a very important intelligent dispatch system. The sales forecast system shows the company's sales revenue and daily sales forecast, updated every 30 minutes. By noon, the accuracy of the daily sales forecast has reached 90%. Everyone's work can be planned based on the forecast, including profits, which can be captured at any time. Each order can obtain real-time profit. What are the results of digitalization? For example, a certain staff member on March 14 had a task of picking goods for 159 vehicles. He picked for 44 vehicles, 484 orders, and 2,836 pieces. This is the daily work assignment table. After work, wages are paid. The warehouse picker is paid based on how many vehicles he picked. He picks up tasks himself, and after completion, without on-site supervision, he prints the task list and completes it, and we know how much salary to pay him. Every position at Kuailai Zhanggui is like this, guided by numbers. Data tools have become half of the company's ecosystem here, not just a management tool, but a daily pillar tool, like riding a bicycle to work; the system is the bicycle.
If the company's personnel efficiency and the product efficiency of orders and warehouses cannot be accurately linked, digitalization is empty, and machines are empty. Only when these numbers form an internal driving force, data drives the enterprise to improve business order development. Do you know the average complaint rate and the rate of complaints that can be resolved? What are the order completion rate and on-time rate? Use these indicators to drive employees forward, not like big capitalists relying on confidants. Work must be evaluated by numbers. Learn the basic requirements of shooting sports, let data drive performance improvement, let enterprise management be built on the basis of data, and let every cent of operations be controlled by precise calculation. When the system guides our daily B2B work, we truly implement digital tools. There are two revelations here: selling systems is not about being older; the core is whether development has super learning ability and sustained curiosity, including new business, how to classify, how to manage, how to profit. These all need corresponding digital paths. So, the dual shaping of observation and curiosity - you must master these two points. In addition, establish digital management and solid goals.