The following is the keynote speech delivered by Mr. Miao Dong, Vice President of Quanshi, at the 'New Food Era · New Distribution 2016 FMCG + Internet Summit' held on October 16. New Distribution has compiled the core content of his speech as follows:

Good afternoon, everyone! The previous speakers were all e-commerce big shots who drained the microphone battery, so I'm a bit nervous up here, but fortunately there's still a little juice left for me. Let me introduce myself first: your role determines your perspective, and your position shapes your thinking. Quanshi Commercial is a business segment of Fuhua Holdings, whose investments span finance, real estate, and retail. As you can see, this is a company that comes from a very heavy industry. The most famous segment of Quanshi Commercial Group is Quanshi Convenience Stores. So far, we can say we are the largest domestic brand of heavy-asset convenience stores. We have 300 stores in Beijing and 50 in Chengdu, totaling 350. Quanshi Life Pavilion is a community-based comprehensive convenience terminal we've developed for high-end residential areas, and we hope it will become a central node for community services in the future. The third business segment is Quanshi Hui, which targets socialized small and micro retail outlets—what we commonly call mom-and-pop stores—by integrating and upgrading their store image, store operations, and supply chain.

Why am I introducing this? Just now, all the e-commerce big shots were speaking, and their words were intimidating—each of them had raised hundreds of millions or billions in investment. But today is the Sugar and Wine Fair, and most of the audience here comes from traditional industries. I feel those e-commerce big shots have a strong tone of persuasion. Quanshi Hui comes from a very traditional physical retail enterprise, so we want to offer a different perspective: Can we, as physical retailers, also spread the wings of the internet and share in the joy of the e-commerce dividend?

What we do is empower and upgrade socialized small and micro retail. We position it as 'light, fast, and trendy.' Quanshi Convenience Stores are heavy-asset convenience stores targeting high-end young white-collar workers. This business positioning cannot achieve rapid nationwide expansion. In the era of O2O and mobile internet, while many traditional businesses have been beaten to the ground, the convenience store industry has achieved over 15% growth in the retail system for two consecutive years. That is to say, no matter how advanced e-commerce becomes, there will always be a need for physical retail; physical sales support the entire social service system. So we hope that by upgrading the existing social sales system, we can achieve the internetization and mobilization of the retail industry or traditional sales channels.

Quanshi Hui was launched on June 1 this year, so we are just stepping into the B2B industry. Currently, we cover 5,000 stores in Beijing, with an average of 900 orders per day and monthly sales of 27 million yuan, growing quite fast. So how do we drive the business development of Quanshi Hui? Let me introduce Quanshi Hui's 'three chariots.'

The first chariot is the storefront. Everyone talks about B2B and combining online and offline, but what you do with storefronts and what we do are two different things. Because we are in physical commerce, we must sell goods to consumers at our consumption terminals. Despite the maturity of e-commerce, a large number of terminal transactions still occur at these small and micro retail outlets. Therefore, we believe that the storefront is the core of our B2B, especially for traditional physical commercial channels; otherwise, all our transactions become water without a source. Additionally, through years of retail accumulation, we have rich practical retail experience. We can provide comprehensive services to small and micro retail terminals, including capital equipment, store image, product display, store management, and traffic introduction, offering valuable support for their improvement.

This is our Quanshi Hui small store model: three major unifications and eight major supports. You don't need to look at it; it's meant for small store owners. To truly achieve these points, we need to find the core and help these small stores improve. What does it take to do business with us? I very much agree with what Mr. Wang said earlier: in this process, if you only supply goods and rely on price differences, there's no business. From first-tier to second-tier distributors, they don't pay taxes, deliver goods by tricycle, use their homes as warehouses, and have no labor insurance or social security. For us, there's no competitive space in that. How do we profit from it? A business without profit cannot last. Small store owners are not C-end consumers; their pursuit of commercial profit is endless. If you don't give them a subsidy one day, they won't do business with you that day. When we in physical sales do B2B, we focus more on the growth of small stores, bringing them more business and better profit. That's what we should do. Just making Coke one cent cheaper today and Nongfu Spring two cents cheaper tomorrow won't work. The big shots earlier said the core is improving sales levels, and I fully agree. What does Quanshi Convenience have? Starting six years ago, we opened stores one by one. We have professional retail store management experience, experience in product selection and configuration, and experience in same-city cold chain delivery. These experiences are precisely the foundation for helping small stores improve their service standards. To keep these small stores with us, we need to use better service standards and product support to help them increase sales. Operational support, capital equipment support, and traffic introduction support—these are what small stores need. Moreover, we will upgrade relatively good small stores to Quanshi Convenience brand stores, converting them into heavy-asset convenience stores, providing an upward channel for small stores to continuously develop and advance.

Speaking of this, I come to our second chariot: the supply chain. Supply chain integration is definitely a top priority. A large number of small and micro retail outlets lack a complete product selection and collection system and lack fast, high-quality delivery systems, so we need to provide service support. Everyone just said the supply chain is the most painful. President Su must be most pained by underfilled trucks, and in summer, when mineral water sells the most, the goods have low value but high delivery costs. So why do we still do it? Because we are a physical economy with convenience stores that inherently need a city delivery system. We are expanding based on our existing delivery capabilities, using our redundant capacity. So, I remind everyone: we must amplify our core strengths rather than focusing on a single point. We will also leverage the group's financial capabilities to provide supply chain finance, solving the capital problems of small stores, and help these small and micro retail terminals improve from multiple angles. Whether you are a first-tier distributor, brand owner, second-tier distributor, or convenience store peers from other regions, to achieve this, you must deepen the advantages you've already established in offline retail and sales. If you lose that advantage, you have nothing. Hold onto that advantage, then leverage online resources, innovate, and use O2O to take off. We can see that all e-commerce companies doing O2O basically charge from the sky to the ground, while we charge from the ground to the sky. If they charge with the wrong posture, they'll fall hard. But if we can't fly, we can just continue opening stores, because falling to the ground won't hurt us as much as it hurts them.

The third is vertical e-commerce. Since we've entered the internet era, none of us can avoid it; rather than avoiding it, we might as well participate. After doing retail for so many years, when e-commerce came, many trades seemed fragile, indicating that physical retail has boundaries. Since there are boundaries, vertical e-commerce is a path for physical retail to compete in e-commerce, but not by building platforms. Taobao and JD.com can build platforms because they are big shots. For us, e-commerce should be based on localization and regional services. We help these retail small stores with backend services, encourage them to do marketing, and enable them to have online operational capabilities. That is our entry point into vertical e-commerce. So, we hope to achieve the e-commercialization of the entire channel. Once the channel is e-commercialized, we can introduce personalized products and solve the problem of low gross margins from selling FMCG in small stores. At the same time, we channel online traffic, offline traffic, and traffic from our logistics into our system, bringing more business to small stores. Only by increasing business for small stores can we aggregate greater traffic, ensuring our smooth development.

In fact, the 'Hui' in Quanshi Hui has several interpretations: The first is 'gathering' (汇聚), hoping to bring together various related industries and partners; the second is 'benefit' (惠聚), meaning we need to distribute benefits well and keep moving forward; the third is 'meeting' (会聚), making it a communication channel between any roles, so we can grow the business together, rather than simply changing a model or subverting channels. Revolution causes deaths, but reform allows progress. So I hope our physical retail brothers and partners will steadily achieve e-commerce development, achieving newer results while ensuring we don't lose our original advantages.

Finally, I want to say: Unity is business! This is Quanshi Hui's attitude. Whether you are a convenience store peer, e-commerce peer, brand supplier, distributor, or small store owner, it doesn't matter. Quanshi Hui will open its platform and resources. We will work together, unite to grow the business. Only when the business is big can we avoid risks, create more profits, and achieve more sustainable development. Thank you!

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