On April 28, Lin Xiaohai, Vice President of Alibaba Group and General Manager of Retail Link, officially announced a digital assistance plan for six million small stores. In addition, Lin Xiaohai shared his thoughts on small store businesses, Alibaba Retail Link's support for small stores during the pandemic, and the core advantages of empowering six million retail small stores. As an industry media, New Distribution had the privilege of participating in the press conference; the following content is organized based on the on-site proceedings:

-01- Thoughts on Small Store Businesses

China has a vast number of small stores. According to incomplete statistics, there are still 6 million small stores nationwide, meaning that within every 300 meters, there is a small store. These small stores may seem inconspicuous, but when 6 million small stores come together as a group, they form a powerful commercial organization.

The largest channel in the FMCG industry is not e-commerce, nor hypermarkets, but the 6 million small stores. Although each store is very small, the collective of 6 million stores accounts for 40% of the market share in the FMCG industry.

Moreover, over the past decade, the market share of small stores has not declined with the large-scale development of e-commerce, and their market performance has remained relatively stable. The immediacy and convenience of offline small stores' consumption scenarios give them advantages that internet e-commerce, supermarkets, and hypermarkets cannot match. Traditional retail small stores have three characteristics: low channel costs, familiarity with surrounding consumers, and warm service. They also directly and indirectly solve employment for at least 20 million people, creating immense social value.

During the pandemic, the survival of small stores has drawn increasing attention. In reality, because they are at the end of the entire supply chain, retail small stores face obvious pain points, such as uncompetitive product prices, poor shelf life, unguaranteed product quality, and subpar service.

Therefore, Retail Link has been thinking: how can we make millions of small stores live differently, with more value and dignity? This is also the original intention behind Retail Link's proposal of 'Serving every store, for every home.' Coinciding with the Ministry of Commerce's proposal of 'convenience store-ization of small stores' and the concept of 'six unifications,' Retail Link also began to consider how to move millions of retail small stores toward 'quasi-convenience store-ization.' To achieve this goal, in the future, Alibaba Retail Link will build a shared supply chain system with brand owners to help millions of retail small stores achieve unified products, unified logistics, and unified services. At the same time, Retail Link will join hands with millions of small stores to achieve store digitalization, helping stores achieve unified systems, unified management, and unified signage.

-02- Alibaba Retail Link Joins Small Stores in Fighting the Pandemic

During the pandemic, most small store businesses came to a halt. Even so, 50% of stores nationwide persisted in operating. Affected by the pandemic, the sales of retail small stores that remained open were only 50% of the same period last year. Yet, for the stability of the community, small stores continued to operate, demonstrating their perseverance and responsibility during the pandemic. To help small stores overcome difficulties, Alibaba Retail Link implemented the following measures during the pandemic:

1. Ensuring supply: Resumed operations and opened warehouses from the sixth day of the Lunar New Year, striving to ensure stores could purchase sufficient goods. To guarantee an adequate upstream supply, Alibaba Retail Link signed exclusive distribution agreements with brand owners and promised not to raise prices during the pandemic, ensuring small stores could enjoy sustained and stable prices. 2. 'Slow-moving compensation': For gift boxes that were slow-moving due to the pandemic's impact on year-end sales, compensation in the form of a certain amount of money or goods could be obtained through 'slow-moving compensation,' alleviating small stores' concerns. 3. Credit purchase: During the pandemic, many stores were closed and lost their income sources. To help stores continue normal operations, Alibaba Retail Link launched the 'credit purchase' service ahead of schedule, providing stores with free credit purchase services for goods. 4. Food delivery: For merchants who had installed Ruyi POS, Retail Link remotely assisted small stores in opening online stores on Ele.me, helping stores earn money from both online and offline channels.

Thanks to the policies implemented during the pandemic, Retail Link's nationwide warehousing and distribution network resumed operations on January 30. Throughout the pandemic, Retail Link's logistics supply chain consistently covered 193 cities and 13,370 townships. In February, Alibaba Retail Link achieved a threefold market growth.

At the same time, in response to the call of the Alibaba economy and the Alibaba Group's Spring Thunder Plan, Retail Link also launched a brand owner alliance themed 'Protect Small Stores, Stabilize Employment.' The originally planned 50-seat brand owner alliance has attracted the enthusiastic participation of over 120 brand owners. Through the joint efforts of brand owners, Alibaba Retail Link and brand owners jointly promised small stores:

  1. Stimulate small store demand, help stores with online operations, and open up multi-channel sales; 2. Empower small stores, helping them build digital operation capabilities; 3. Provide small stores with fast and preferential financial support policies to alleviate financial pressure; 4. Ensure stable supply and no price increases, guaranteeing small stores can purchase a rich variety of products at stable prices.

Not only helping stores survive, Retail Link will also help stores achieve a new way of life in the future, moving toward quasi-convenience store-ization. The foundation and foothold of quasi-convenience store-ization is the digital capability based on APP and POS systems.

-03- Core Advantages of Alibaba Retail Link

After several years of development, Alibaba Retail Link has become the undisputed TOP 1 FMCG B2B platform in China. When discussing Retail Link's core advantages compared to other B2B platforms, Lin Xiaohai stated that Retail Link's advantages mainly lie in the following four aspects:

1. The power of the platform

Because it is a platform, Retail Link has a strategic cooperative relationship with brand owners. It does not replace brand owners' distribution networks but digitalizes and shares them. Precisely because of the platform model, Retail Link's data, systems, and supply chain can connect millions of small stores, thereby encouraging brand owners to provide small stores with good products, prices, and services.

2. The power of the ecosystem

As an important part of the Alibaba economy, Retail Link can achieve efficient linkage with internal BUs within the Alibaba system.

Retail Link cooperates with Cainiao to provide logistics services to small stores, with Ant Financial to provide financial services, with Ele.me to provide food delivery services, and with the entire Alibaba big data infrastructure to provide POS services. Currently, apart from Retail Link, no other platform can provide such comprehensive services to small stores. This is the power of the ecosystem.

3. The power of data

Small stores purchase products on the Retail Link APP, manage their stores through POS, and thereby share the big data of the Alibaba economy. Based on consumption data from Taobao, Amap, Ele.me, etc., Ruyi POS can also profile consumers around small stores and recommend products preferred by surrounding consumers. At the same time, Ruyi POS can help small stores obtain marketing benefits such as gifts, discounts, and red packets from 5,000 brand owners.

4. The power of the original intention

Lin Xiaohai stated that Alibaba's original intention is 'to make it easy to do business anywhere,' and Retail Link's mission is 'to make it easy for small stores to do business anywhere.' Because of this original intention, Retail Link is different from other FMCG B2B platforms, and it also makes it easier for Retail Link to gain the trust of small stores.

New Distribution Commentary:

Under the pandemic, FMCG B2B has attracted widespread attention from small stores and brand owners due to its characteristics of online products, online transactions, online marketing, and efficient delivery. At the same time, as a key project for people's livelihood, FMCG B2B has also received extensive support from local governments during the pandemic. As the TOP 1 FMCG B2B platform in China, during the pandemic, it joined forces with brand owners to ensure supply, stabilize prices, and ensure the normal operation of hundreds of thousands of stores. This not only reflects Alibaba Retail Link's corporate social responsibility but also embodies its industry influence, digital operation capabilities, industry ecosystem capabilities, and efficient organizational capabilities. The proposal of 'quasi-convenience store-ization' by Retail Link undoubtedly opens a new path for the B2B industry in serving retail stores.

Looking at the current ways in which FMCG B2B platforms empower stores through rebranding, they can be basically divided into three categories:

1. Represented by JD New Path, which strictly implements the 'six unifications' strategy, an empowerment approach that controls stores and goods. The platform has strong control over stores, not only providing operational guidance but also strictly controlling store procurement channels and conducting vertical category store exclusivity, such as mother-and-baby stores and tobacco and liquor stores. While ensuring the operating profits of franchised stores, it can also expand the platform's brand exposure and influence offline.

2. Represented by Meiyijia, which adopts an integrated production-supply-marketing and close franchise model, controlling goods and stores. Although the speed is slow in the early stages of development, through the organic combination of its own brands and leading brands in various categories, while ensuring the speed of store sell-through, it can also balance the operating profits of the platform and stores, with good profitability.

3. The third type is the loose 'six unifications' franchise strategy represented by Alibaba Retail Link, which provides stores with supply chain, technical marketing, and operational guidance support, but does not control goods or stores. Stores still retain independent procurement rights, and the platform's control over stores is relatively limited, but the development speed is fast and easy to replicate.

As the FMCG B2B industry enters the deep water zone, refined operations of stores and product categories have become the top priority for all platforms. How to achieve profitability has also become a problem troubling all B2B platforms at this stage. New Distribution believes that through category operations, adjusting the sales proportion of different categories, or developing private brand product gross margins through product operations, is currently a relatively effective way and means for B2B platforms to achieve profitability. However, without control over stores and products, whether platforms can achieve profitability in the short term may still require a big question mark.

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