---
title: "Rongcheng Yigou's Qin Xian: The Past Three Years of Transformation Were the Best Three Years in My 15 Years as a Distributor!"
description: "The following is the speech delivered by Mr. Qin Xian, founder of Rongcheng Yigou, at the 5th FMCG + Internet Conference hosted by New Distribution, organized and published for readers. He shares his journey of transforming from a traditional distributor to a regional B2B platform, emphasizing the importance of digitalization and upgrading."
author: "覃宪"
publisher: "New Distribution"
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published: "2019-03-25"
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# Rongcheng Yigou's Qin Xian: The Past Three Years of Transformation Were the Best Three Years in My 15 Years as a Distributor!

> The following is the speech delivered by Mr. Qin Xian, founder of Rongcheng Yigou, at the 5th FMCG + Internet Conference hosted by New Distribution, organized and published for readers. He shares his journey of transforming from a traditional distributor to a regional B2B platform, emphasizing the importance of digitalization and upgrading.

The following is the speech delivered by Mr. Qin Xian, founder of Rongcheng Yigou, at the **5th FMCG + Internet Conference** hosted by New Distribution, organized and published for readers.

Hello everyone, I warmly welcome distributor friends and bosses from all over the country to Chengdu. I am Qin Xian, founder of Chengdu Rongcheng Yigou.

This morning's sessions have been discussing industry internet perspectives and national platforms. Now, I will speak purely from the perspective of a regional distributor. I started my business in my sophomore year, and now I have been an entrepreneur for 15 consecutive years. Before 2009, I mainly did daily chemical agency, and Chengdu's Hongqi, Laolinju, and Wudongfeng were once our customers. In 2009, I transitioned to food and established Chengdu Qinxian Food Co., Ltd. During these 15 years of entrepreneurship, we experienced the transformation from traditional distribution to the internet. So, the topics I will discuss are mainly from the perspective of a traditional distributor transforming into a regional platform.

In the past, the situation faced by traditional distributors was:

**First, heavy reliance on talent.** Especially dependence on people. For example, if a long-term familiar salesperson leaves a traditional distributor, it can cause significant losses to the company. Or if a skilled picker leaves, hiring a new one may require three months of training to get up to speed.

**Second, cost and profit.** In recent years, the overall profits of distributors have been declining. In 2013, when we did distribution, it was normal to achieve 20 to 25 percentage points of profit. But in recent years, profits have been continuously declining. We distributors used to make money mainly because information was not transparent. Of course, the main reason for the profit decline now is also due to data and information transparency.

**Third, management.** Distributor management is very "chaotic." We used to have 1,000 to 1,500 SKUs; today Rongcheng Yigou has nearly 8,000 SKUs. The main products sold haven't changed, still mainly scattered snacks. Although we now have full categories, water and beverages are not our focus. How do we transform this management model?

**Fourth, facing cross-industry disruption.** This subverts the traditional distributor's price difference model.

All of this makes traditional distributors very "confused"!

Because we started to cut into the transformation of traditional distributors in the second half of 2014, relatively early, Rongcheng Yigou officially launched in June 2015. Many friends asked me during this period, "Can we not transform?" I said: **"If you still insist on tradition, there may be no way out."** Of course, this is my personal opinion.

In my 15 years as a distributor, the past three years of transformation have probably been the best three years in my entire entrepreneurial period.

Why do I say that?

From 2009 to 2013, we did traditional food trading, which was traditional wholesale. At that time, our role, looking back now, should be considered second-generation distributors. Starting in 2013, we tried various things, first turning to distribution. But traditional distribution didn't work, wholesale didn't work, and waiting for customers to come to us didn't work. So what did we do? We started delivering to customers' doors to improve customer service, and we did that until 2014. In 2015, the economy became very difficult. Because we were doing traditional distribution, our performance improved, and profits improved, but our costs also increased almost proportionally. Operations were very difficult, and we even had thoughts of giving up several times. So in 2014, when "+Internet" appeared and the state advocated it, in response to the national call for "+Internet," I began to transform to "+Internet." We now believe that transforming to "+Internet" means combining all online and offline business to achieve digital transformation. After that, we were considered fourth-generation distributors, a new generation of distributors.

But starting at the end of last year, I have been exploring how the fifth-generation distributor should be done. Some people now say that the fifth-generation distributor may go to the C-end and do BBC. I have been practicing this path. I believe that in the future, regional distributors and regional B2B platforms will definitely exist, and this volume, as I said in a viewpoint last year, may account for 80% or even 90% of the future regional B2B platform volume. Next, I will elaborate on this viewpoint.

**As a new generation of distributors or a regional B2B platform, first we must understand: who is our service object?** In the past traditional distributor stage, we all thought we served the stores. Today, in addition to serving our customers, the terminal stores, we also serve our partner brands. What value can we bring to brands? This morning, I heard some guests talk about what value the supply chain leader can bring, and what value we bring to the team in the middle. This is what I want to share with you, which is exactly the same as improving the core competitiveness of the entire B2B production system.

In terms of marketing planning, traditional distributors were very weak in this area. Basically, a brand had one plan, used nationwide, and the distributor just executed it. If execution was not in place, there might be corresponding penalties. Today, as a new generation of distributors, we can provide corresponding solutions. For example, if a new Nestlé bucket coffee comes out, we can quickly achieve placement in 3,000 to 5,000 stores in the region within a week. How? All of this comes from the digital solution of the entire backend system. Now we manage customers with tags: community stores, channels, channel types, school stores, airport stores, or other supermarkets. Community stores are also distinguished by store size, such as below 50 square meters, 50 to 80 square meters, 80 to 120 square meters, and above 150 square meters, or daily turnover tags, such as average daily turnover below 1,500, 1,500 to 2,000, 2,500 to 3,000, etc. Various forms of tagging. What do brands need from us? We can do precise placement. For example, if they need stores with daily turnover above 2,000, the system data automatically matches, maybe 800 community stores. The brand selects 400 for precise placement. **This is the plan we give to brands on the marketing side: we make the local plan, they review, and then we execute.**

**Second, on the market promotion side, we hope for precise visits by personnel.** Currently, all warehousing and distribution is executed by grabbing orders. A task is issued from the warehouse, and pickers grab orders. Those who grab get orders to pick; those who don't don't. According to this logic, some might think it would be good if there were no orders to pick, but in reality, the backend data is completely transparent, and individual efficiency is clear at a glance. If you don't pick, first you have no income, and second, you fail the company's KPI assessment, and eventually you will be eliminated. The same applies to salespeople. For example, on Mondays, Tuesdays, and Wednesdays, what is required? Our salespeople might visit customers who haven't ordered in the last 7 to 15 days, generating three routes for precise visits, reducing the waste of time from traditional door-to-door visits.

**Third, order processing with intelligent operations.** In the past, orders basically required 5 people to process about 1,000 orders per day, with one person specifically responsible for printing orders. Now no one does that; it's not needed. The system does it itself. The entire warehousing and distribution runs 24 hours, like a factory production line. After goods come out of the system warehouse, orders are automatically printed. The same for order review: previously, the ERP system had 2 reviewers; now the design logic automatically aggregates and operates, reducing labor costs. **I always believe that the core of any business model is high efficiency and low cost: higher efficiency and lower cost.**

**Fourth, our logistics and distribution.** Three years ago, we proposed to be one hour faster than JD.com, meaning orders placed before midnight are delivered the next morning. Currently, our delivery may be the fastest. Our logic is that customers don't need inventory; all our products can be ordered by the bag and delivered quickly!

**Finally, internal efficient management.** This is a truth everyone understands, so I won't elaborate too much.

**For distributors' transformation and upgrading, "transformation" may not be the right word, but upgrading is necessary.** Today, you see Kodak disappeared because our digital is faster and more convenient; similarly, today's electric trains have replaced the steam engines of the past. If you don't upgrade, you will eventually be replaced and eliminated, so upgrading is absolutely necessary.

Now I will explain the above points in detail.

First, about data sources. Our entire data comes from our own sales data, cooperation data, and data from partner brands. All data is in the database. To get the data you want, you can accurately extract it as needed. Second, in data integration, we strengthen data management and analysis, then tag it, all with tag management. Third, in data application, we strengthen some operations, such as making plans and promotions, and digital marketing. During the entire promotion and marketing process, we continuously correct some of our data results, thereby strengthening data accuracy and feeding back into the data resource library!

Through data, we determine what we should do, how to do it, and when to do it. On the business operation side, for the market business side, for convenience stores, we have one database per store. As mentioned earlier, we have tag management, entering fully tagged customer management, such as which district the address is in. We have 18 administrative districts and counties in Chengdu. Other tags include channel, type, and even the number of cash registers. This is the so-called customer profile. In interactive marketing and precise visit management, we can use all data analysis logic to locate, visit, and then achieve customer conversion and retention.

In warehousing and distribution, the warehouse accepts and processes orders 24 hours a day, with 12-hour delivery. Then it reaches the ERP for financial settlement. The entire process is handled in a streamlined manner with different systems interfacing! I can share with you here: we support online payment and offline payment. The offline payment rate is very high. Maybe after the driver loads the goods, our entire delivery route is generated, and navigation immediately reaches each store. Finally, you can see how much you collected via Alipay, WeChat, and cash in the backend immediately. Unlike traditional distributors, where you had to count after coming down, which was very troublesome.

For terminal store services, I just talked about services on both ends. For terminal store services, we need to understand what terminal stores and supermarkets really need.

**First, a one-stop ordering experience.** Because before 2016, we only did snack foods, with nearly 3,500 SKUs. After a market survey in 2016, we found that customers hope you can provide them with more products, of course, when each product has advantages. In the past few years, Rongcheng Yigou in Chengdu witnessed the development of B2B from 2013 to 2016, and also experienced two reshuffles in 2016 and 2017. At the end of 2013, national platforms like Zhongshang Huimin entered Chengdu. For traditional distributors, it seemed there was no way out; all ordering was online. When we sought transformation, we also found that for supermarkets, they hope to order without leaving home, and can order more complete and more advantageous products.

**Second, stable customer relationships.** Customers need regular return visits from personnel, including handling returns and exchanges for FMCG. In fact, even if the boss doesn't have returns, he still hopes you visit regularly to see him. Seeing you means what? Peace of mind and reassurance. This is also the most basic need.

**Third, timely delivery service.** For our B-end ordering, you don't need it delivered immediately; many products don't require that. But you require delivery within the fastest possible time. 12-hour delivery is the most reasonable and ideal coordination time between customer and delivery!

**Fourth, they also need more resource investment.** Where do these resources come from? Many aspects. For example, I have a lot of displays with brands, and new product promotion costs are invested in stores. We also cooperate with banks, such as free agricultural equipment, including POS machines, payment scanning, free payment collection, and free withdrawal, and other resource investments.

**Fifth, convenience store owners don't need to take risks now.** In the past, when renting a space for a supermarket, maybe one-third was used as a warehouse, with the supermarket in front and the warehouse in the back. Today, convenience store owners basically have no warehouse, of course, partly because rent is getting more expensive. But our convenient ordering with zero inventory model is also an important reason.

**Sixth, we think convenience store owners will have a big need in the future: not only do you sell products to them, but you also need to help them sell them out.** This is what we call BBC today.

For brand services, brand needs are simple. Summarized in four points:

**First, faster.** When a new product launches, can you push it to 3,000, 5,000, or 10,000 stores in your region? How long does it take? In the past, it might take a year or half to push to 10,000 stores. Today, you find that within less than two months, or even less than a month, dozens or hundreds of similar packaged products enter the market. What really determines whether a product becomes the first brand in its category? It's what brands are sold in each place! It's not the existing brand. Today, brands also hope that when they launch a product, it can be seen in every store quickly.

**Second, more accurate and precise.** Where should my product be pushed? For example, if we put a product with a retail price of about 200,000 yuan in a small store of 10 or 20 square meters, actually, its movement will be problematic. Brands prefer more precise promotion: if my product is aimed at a certain consumer, I want to invest in stores that match.

**Third, higher requirements.** In the past, what did brands focus on? Your sales volume. If you can achieve 50 million in sales in a year, they focus on that. Today, we find brands are different; they need data, not only how much you sold, but also where it was sold and how it was sold. So a large number of brands have gone down the channel, making it more necessary for distributors at the wholesale level to upgrade.

**Fourth, better.** Today, we talk about how, besides brands having many distributors to push products, there are more distributors who provide funding support, warehouses, and orders. Brands bring the orders, and you just need to deliver. Today, we find that for brands, the manufacturer's personnel are decreasing, and they need you to provide some promotions. For example, they give you a target: build 1,000 campus stores, what product, when to enter, you come up with a plan, what resources you need, the brand reviews, and if approved, you execute.

These are some pictures of Rongcheng Yigou's online and offline interaction since 2015. I believe that in the future, whether it's the so-called new generation of distributors or B2B platforms, there is no strict distinction; they need high integration.

At this moment, dozens of brands' promotions online are completed in a week. This process still realizes online and offline integration. In the future, more functions need to be transferred to convenience stores, letting them take some actions. We may not be able to go down directly. For example, for 1,000 community stores, what store resources to invest, the brand releases it, the corresponding convenience store owner receives it and executes, uploads, OK, our company checks, and the brand supervises and inspects.

Currently, Rongcheng Yigou cooperates with more than 400 brands. We hope to make big value out of every small product within a single brand. I have come all the way from distributor transformation. For the future, I hope and am willing to share all of Rongcheng Yigou's resources, including information systems, operations, and resources, with my distributor friends and national regional platforms!

We always believe that only when you are more valuable to others do you have greater value. This is my way. Welcome friends from the same industry to exchange ideas. Thank you all.


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