What is the most pressing pain point for a small shop owner? In daily life, millions of storefront businesses—restaurants, snack bars, supermarkets, small vegetable markets, beauty salons, barbershops, pharmacies, clinics, clothing and accessory stores, massage and foot therapy, auto parts and repair, hardware and fittings—are naturally formed terminals closest to consumers. They are core nodes connecting the B-side supply chain with C-side consumption. These are the small b's that have not yet been fully empowered by internet services. Last year, I wrote an article titled "Facing S2b: Without S, How to 2b?" analyzing the development direction of the three S's: Supply chain + SaaS + Service, from a service empowerment perspective. A year later, having tried more small b services, this article discusses the business of small shops from the perspective of small b. 1. Classification of small shops: supply-chain-oriented and service-oriented~ 2. What are the real pain points for small b in business? 3. Mom-and-pop stores vs. big chains: which has higher labor efficiency and sales per square meter? 4. Why didn't O2O home services disrupt the small b landscape? **-01- Types of Small Shops Stores can be classified from many angles. From the perspective of store attributes, stores can be divided into two categories: supply-chain-oriented and service-oriented. Supply-chain-oriented small b's aim to earn the price difference through product sales. For example, convenience stores and small vegetable markets focus on how to sell goods faster and better, and how to select and stock better products. Service-oriented small b's aim to provide human services as the main goal. For example, beauty salons, barbershops, auto repair shops, and clinics focus on how to provide professional human services and output skills in professional settings to earn income. Of course, with business evolution, a large number of composite small b's that combine both supply chain and services have naturally emerged. Supply-chain-oriented small b's provide some services while selling goods, such as vegetable stalls offering cleaned, pre-packaged, or delivery services; restaurants offering both dine-in and takeout. Service-oriented small b's naturally also sell some products, such as clinics selling medicine, and auto repair shops earning money from selling auto parts. Natural business development: small b's opening shops want to extend beyond their core business to make more money. Extending further, this leads to the logic of big players: treating stores as service nodes beyond sales and distribution. For example, using high-frequency businesses like fresh produce to drive traffic, while also selling one category and then N categories (selling vegetables can also sell fruits, seasonings, rice, cold drinks, etc.), distributed warehousing nodes, self-pickup and drop-off points, customer relationship services, and directing traffic to 24/7 online marketing—these multiple functions enhance user repurchase rates and extend customer lifetime value. Just thinking about it makes one smile. Doing business is ultimately a meticulous operation. If you want to forcibly empower or self-build in a short time, whether it works well can be seen in the massive money-burning projects like xx通, xx路, xx小店 by giants. -02- What are the real needs of small b? Opening a shop can make or lose money, and the pandemic has negatively impacted storefront businesses. Stores have various needs, but what is the most painful, rigid need? Obviously, the most direct need for opening a shop is to make more money. Whoever helps make more money, small b will follow. 1. Bringing customers When opening a shop, the most desired thing is more customers. However, bringing customers to small b means bringing traffic, and this is precisely what the internet finds difficult to do. The difficulties are: 1) For internet companies, if they have direct traffic, why not sell goods directly through e-commerce instead of directing traffic to small shops? 2) The natural service ecosystem of small shops has a familiarity effect; the internet tends to connect strangers. 3) C-end internet traffic has peaked; online customer acquisition is not more efficient or cheaper than offline. In the direction of bringing customers, for high-frequency, low-ticket items, it usually requires burning a lot of money to form a relative monopoly effect. For example, ride-hailing directs traffic to drivers, and food delivery platforms direct traffic to restaurants, but Didi and Meituan take a 20%-30% cut, which has been criticized. For low-frequency, high-ticket industries, such as SoYoung (新氧) acquiring C-end demand through plastic surgery communities and traffic投放, and directing traffic to medical aesthetic institutions, this works because the gross margin is extremely high and there is severe information asymmetry (a black box). 2. Cheaper goods This entirely involves improving supply chain efficiency, in the B2B direction of cost reduction and efficiency enhancement. Shortening supply chain links, changing the original multi-level distribution from manufacturers, first-tier wholesalers, second-tier wholesalers, to stores, and the multi-level stocking sales path, is the basic logic for improving supply chain efficiency. But when applied to different industries, it becomes clear that small b's needs vary greatly. For standard products recognized by consumers, such as 53-degree Feitian Moutai, AirPods Pro, and Kao diapers, these few hard-to-get items are usually used as traffic-generating products to attract users. But these hard-to-get standard products account for a very small proportion. Among a large number of highly differentiated SKUs, how to get products with better cost performance is the need for small shops. In the original channels, direct sales from manufacturers, agents/distributors, e-commerce platforms, and wholesale markets occupy different user procurement penetration rates. Besides providing products, they also play roles such as stocking, logistics and delivery, customer service, and account period financing. How can B2B platforms provide small b with cheaper goods and better cost-performance goods? The hidden supply chain issues are: how to leverage the industry, how to negotiate better trading conditions with manufacturers, how to avoid being resisted due to channel crossing, how to coexist with distributors—competition, co-opetition, or service—and how to improve logistics delivery efficiency and reduce costs from multiple warehousing. Regardless of who supplies, small b opening shops want to make money, want trust, and want convenient access to goods. 3. Lack of capital When opening a shop, most ambitious bosses hope to grow their business bigger—after opening one store, they want to open a second. This involves two aspects of capital: one is one-time asset investment, including decoration, equipment, hardware, etc.; the other is operational investment in the supply chain, including rent, labor, marketing expenses, and supply chain liquidity. Typically, when evaluating a small b's business, we can roughly assess whether it's a good business from perspectives like sales per square meter, labor efficiency, and payback period. When small b lacks capital, the first thing to consider is the purpose: one-time investment or liquidity supplement. As long as it's a reasonable capital need for small b, under the premise of a good business outlook, ensuring the use of funds and repayment methods, and excluding malicious fraud, this is true inclusive finance, and small b should be satisfied. But the challenge is that small b stores are typically not standardized. Many small b's don't even have a company account; it's common for the boss to use personal bank cards for payments; business cash flow is hard to verify; real data is hard to obtain; there are no financial statements; tax data is incomplete; supply chain management is random; most bosses don't even know how much they earned in a year; even with management systems, actual sales and inventory often don't match. Deciding which small b to provide financing to and how to do it is a real technical task. But industrial finance must be rooted in the industry, using supply chain finance logic, choosing appropriate and reasonable models, providing liquidity to the upstream and downstream of the entire industrial chain, and promoting the healthy and orderly development of small b businesses. 4. Brand chains On one hand, the value of brand chains is equally important for small b businesses. On the other hand, the theoretical foundation of service platforms for small b is the long-term existence of numerous small and scattered small b's; if they all became brand chains, the platform would not exist. The attractiveness of a small b is usually reflected in: convenience (distance) as a driver, trust (service attitude and skills, hardware and decoration, advertising), and supply chain advantages (SKU categories, quality, and price). Generally, brand chains can bring improvements in trust and supply chain through scale. Three questions everyone cares about:
A. Which types of industries are suitable for brand chains?
B. Will the market develop to a state where most are big chains?
C. What value do brand chains actually deliver, and which industries are suitable for chains? Based on my understanding: A. The more supply-chain-oriented the small b, the more suitable for brand chains, leveraging supply chain scale value.
B. The more service-oriented the small b, the more suitable for mom-and-pop stores and regional small chains, leveraging service value. Will the market develop to only a few big brand chains? Look at advanced developed countries like the US and Japan, and you'll reach the same conclusion as above. The scale value of brand chains, from the perspective of unit economics (UE) and replicability (Vintage) models, varies greatly across industries. Generally, the UE and Vintage models for supply-chain-oriented small b are relatively easier to judge, while service-oriented small b requires longer time and more refined operations to ensure the model doesn't deviate. For industries with large investment, slow returns, and long cycles, although single-store revenue may look good, due to headquarters costs and agency costs, lack of refined operations can easily lead to a situation of "chain without lock" (i.e., not truly integrated). Especially noteworthy is the hidden danger of chain expansion bleeding cash. In 2019, Web International English's nationwide store closures caused a huge shock. Among its paid students, installment loans accounted for 80%. After inducing students to pay upfront, Web provided substandard services and diverted large amounts of funds to open new stores and run promotional activities to acquire customers, leading to a capital chain rupture. Similar tragedies are common not only in education and training but also in home decoration, long-term rental apartments, and even beauty salons. Everyone has encountered a store that doesn't operate seriously, asks you to buy a card and recharge upon entry, locks up your funds, and then changes its sign overnight and refuses to honor it. Large American chains often develop gradually through decades of refined operations, improving the efficiency of each store. In contrast, brand chains that grow wildly under capital催熟 have a high probability of deviating into tools for "cutting leeks" (exploiting customers). 5. SaaS 50% of SaaS products launched to the market prove to be completely off track. Less than 10% of SaaS products can break even. Only 3%, or even 1%-2%, can have a significant impact on enterprise customers. --Jiang Yi I quote Jiang Yi to illustrate the current state of SaaS. It's not that SaaS has no value; it's precisely because the value is too high that directly entering from SaaS is extremely difficult. This is determined by the business model of service providers and the rigidity of small b's needs. Theoretically, SaaS targets small and medium b, while large B (including chains) actually requires strong customization for their personalized system needs. Unlike the environment for US SaaS providers, China's business environment is in rapid change and development, a non-steady state. Small b's operational needs always outweigh management needs. The management needs that SaaS addresses have relatively limited rigidity and willingness to pay for small b. Small b wants to improve operational management efficiency but fears that core user data will be monetized by SaaS providers. Small b needs informatization to improve management and marketing efficiency. What can be used to leverage small b? Refer to the points mentioned earlier. Or, why not start from the more rigid needs of small b? **-03- From O2O to B2B The O2O model didn't work because it reduced small b's efficiency. The first wave of models attempting to transform the small b service ecosystem, except for food delivery which survived as a high-frequency traffic entry point, most O2O services like car washing, beauty, massage, and nail art burned through money and died out. The logic of O2O was: by ordering online and providing services offline at home, it could improve user experience. The core reason O2O failed is that without the physical store scenario, the efficiency of service personnel going to customers (time spent on the road, inconvenience of carrying professional equipment) is greatly reduced compared to customers coming to the store. A model with greatly reduced efficiency can only serve the personalized needs of a small group, while the basic logic of the internet is to serve relatively common needs of the masses. After the baptism of O2O, it's finally time for B2B, which changes supply chain efficiency, to take the stage in improving the operational efficiency of tens of millions of small b's. **-04- How S2b Empowers Brand chains deeply intervene in small b operations through a heavy operation model, while S2b connects, influences, and promotes small b businesses through relatively lighter services and empowerment. Of course, in the current market environment, the theory of achieving monopoly profits through burning money at scale may not work in the B2B industry. Small b's are realistic; if you can't truly address their pain points and provide value, you'll gradually lose market recognition. For how S2b empowers, you can still refer to last year's article "Facing S2b: Without S, How to 2b?" which analyzed the development direction of the three S's: Supply chain + SaaS + Service, from a service/empowerment perspective. No matter how sexy the technology, how advanced the model, or how good the story, To b must return to business, return to cost reduction and efficiency, and return to profitability. After all: not making money ≈ being a hooligan. Source: 思维浓汤 (ID: ideasoup), Author: 思维浓汤 张帆 Tips: If your tip is adopted, we will pay 400-2000 yuan.