Editor's Note:

In an era of stock competition, all enterprises care about where incremental growth comes from. "Making increments in channels with increments" is a relatively certain answer, which is why instant retail has become the fastest-growing channel in the alcoholic beverage industry. Studying instant retail for alcoholic beverages, 'Jiu Xiao'er' as a leading platform in this track is an unavoidable brand. Founded in 2015, 'Jiu Xiao'er' has built a super retail channel covering 17 provinces, 450+ city and county markets, and 2000+ front warehouses over the past decade, with an estimated GMV exceeding 4 billion yuan in 2024. How did 'Jiu Xiao'er' grow? How does its nearly 10,000-person delivery team operate? Why can its operating model break the "front warehouse model must lose money" curse? Is its emergence a threat or an opportunity for traditional alcoholic beverage distributors? We hope this article will help industry insiders understand these issues.

Pioneer of New Instant Retail for Alcoholic Beverages

With dramatic changes in consumption habits, consumers' reliance on instant retail continues to increase, and enjoying instant retail services is becoming a new lifestyle. According to data released by relevant authorities, from January to August 2024, the market size growth rate of instant retail reached 26.2%, showing that shifting from traditional retail models to instant retail models has become a certain new channel for merchants' revenue growth. As a pioneer of the instant retail business model for alcoholic beverages, 'Jiu Xiao'er' had already determined its instant new retail operating model at its inception in 2015, compared to the proposal of new retail in 2019 and the full-scale launch of instant retail businesses by giants like Douyin, Tmall, Taobao, and JD.com in 2023. After ten years of market cultivation, 'Jiu Xiao'er', the largest instant retail platform for alcoholic beverages by national order volume, has gradually become a pioneering enterprise attracting attention from the consumer market and capital market. With its growing influence, many imitators and followers of this model have emerged in the industry. According to annual production and sales data for China's alcoholic beverage industry: beer production and sales in 2023 were over 37 million kiloliters, down 27% from 50.62 million kiloliters in 2013; baijiu production and sales in 2023 were 6.29 million kiloliters, down nearly 50% from 12.57 million kiloliters in 2013. But contrary to the overall decline in alcoholic beverage market sales, 'Jiu Xiao'er' has charted an exceptionally steep growth curve over the past decade: the first front warehouse was set up in 2015; GMV exceeded 100 million yuan in 2017; GMV reached 1.5 billion yuan in 2021, and is expected to exceed 4 billion yuan in 2024. As of June 2024, 'Jiu Xiao'er' has established over 2,000 front warehouses, has a self-built delivery team of nearly 10,000 people, and provides instant delivery services for over 30 million registered alcoholic beverage consumers with an average delivery time of 15 minutes. Against the backdrop of generally sluggish performance across the upstream and downstream alcoholic beverage industry, 'Jiu Xiao'er' still achieved a compound growth rate of 71%, attracting widespread attention from the industry. With a retail scale of 4 billion yuan, 'Jiu Xiao'er' has become the leader in the instant retail track for alcoholic beverages. As market penetration continues to increase and market layout continues to improve, 'Jiu Xiao'er' still has enormous room for future development.

The Underlying Logic of 'Jiu Xiao'er's Ten-Year Rapid Growth

Marked by the birth of WeChat in 2011, the industrial "transformation" or "revolution" of the mobile internet has continued, bringing pain to traditional industries but also new opportunities. Looking back, entrepreneurial teams from major internet companies used "burning money to acquire traffic" as a method to "encroach on" the stock of traditional industries. This business model achieved great success, but there were also many failures. A group of people in traditional industries who were good at learning captured business opportunities in the market, applied the new productive forces of internet models, and combined them with the experience and advantages of physical operations, achieving success. 'Jiu Xiao'er' is one of them. The rapid and steady development of 'Jiu Xiao'er' over the past decade is attributed to its unique "entrepreneurial background" and correct business strategies. The founder of 'Jiu Xiao'er' is a very senior alcoholic beverage distributor in the industry, representing a transformation from traditional distributor to new instant retail. With twenty years of deep experience in the alcoholic beverage industry and channels, the 'Jiu Xiao'er' team deeply understands the essence and pain points of industry operations. From the beginning, its starting point was to solve the problem that the traditional alcoholic beverage industry only focuses on channel construction but fails to meet the new needs of C-end users in the new historical stage. Because of its different industry background, 'Jiu Xiao'er' appeared "very non-internet" in its early days. For example, 'Jiu Xiao'er' respects the original sales channels and price systems of brand owners, clearly opposes "cross-regional selling" and "product diversion," accepts brand owners' price guidance, does not engage in price wars, and does not acquire users by lowering product prices. Instead, it adopts a "product + value-added service" model to provide consumers with a better wine-buying experience, thereby acquiring users. Its team also believes that merchants who have made tremendous efforts to build their brands should be respected. As a result, 'Jiu Xiao'er' has received strategic support from over 600 brand enterprises, including first-tier brands. Therefore, the core of 'Jiu Xiao'er's business is not selling wine but selling service! In addition, 'Jiu Xiao'er's operating model of "building strong fortresses and fighting steady battles" is somewhat incompatible with the "lighter, faster" internet model. "Building strong fortresses and fighting steady battles" is a tactical strategy proposed by Zeng Guofan, which means not seeking temporary speed in each region but making steady progress and developing steadily. In practice, this is manifested in adopting a city operator model rather than a franchise model. Therefore, higher requirements are placed on city operators. Although this model sacrifices expansion speed, it lays a solid foundation for long-term future operations, a perfect embodiment of long-termism. The development trajectory of 'Jiu Xiao'er' is a reflection of this strategy. Since its establishment in 2015, it did not expand beyond Guangxi until 2018, entered the Shenzhen market in 2019, and has received strategic investments from first-tier capital multiple times since 2020. After nearly four years of rapid development, 'Jiu Xiao'er' has established a solid foundation and mature operating model, and the profitability model of front warehouses has been fully verified.

'Jiu Xiao'er' Operating System

How to Achieve "Fast, Many, Authentic, and Economical"?

'Jiu Xiao'er' has spent ten years building an instant new retail system for alcoholic beverages, covering all consumption scenarios including "entertainment, restaurants, home, and outdoor." This system can be divided into two parts: [Sky Net] and [Ground Net]: Ground Net: Composed of thousands of front warehouses and nearly 10,000 delivery personnel. Sky Net: Includes its own platforms (APP, WeChat mini-program) and all major e-commerce and instant retail platforms (such as Taotian, JD.com, Douyin, Meituan Waimai, Ele.me, etc.). 'Jiu Xiao'er' accepts all instant alcoholic beverage orders and can complete high-quality fulfillment with an "average of 15 minutes." Through this operating system, it provides users with a "fast, many, authentic, and economical" wine-buying experience. First, "fast." 'Jiu Xiao'er's heavy operating model has always pursued the ultimate in "fast." From setting up warehouses within a 3-kilometer radius to a 2-kilometer radius, from "delivery within 25 minutes" to "average delivery within 15 minutes." To ensure controllability of timeliness and service quality, 'Jiu Xiao'er's nearly 10,000 delivery personnel are all self-built, with the goal of ensuring users have the ultra-fast service experience of "wine arrives before dishes are fully served." Second, "many." 'Jiu Xiao'er's "many" is reflected in three aspects: many categories, many scenarios, and long business hours; First, many categories , 'Jiu Xiao'er's model aligns with the trend of diversification and personalization in alcoholic beverage consumption: front warehouses store thousands of alcoholic beverage SKUs, and online shelves facilitate precise searches to meet consumers' different product needs. Second, many scenarios , 'Jiu Xiao'er covers all consumption scenarios including "entertainment, restaurants, home, and outdoor." Whether it's a small gathering of friends, family dinner, business banquet, or outdoor barbecue, camping, etc., 'Jiu Xiao'er can provide corresponding alcoholic beverage choices to meet consumption needs in different scenarios. Finally, long business hours , 'Jiu Xiao'er's business hours extend from 11:00 AM to 3:00 AM the next day, covering almost all drinking periods, ensuring that consumers' drinking needs can be met at almost any time. As for "authentic" , every product of 'Jiu Xiao'er is authorized by the manufacturer and traceable. In addition, self-built front warehouses and delivery teams ensure the authenticity of the entire alcoholic beverage supply chain. 'Jiu Xiao'er always cherishes and respects the market and is responsible to consumers, which is also its core value. Finally, "economical" , 'Jiu Xiao'er's "economical" comes from three aspects: saving money, saving effort, and saving worry. First, saving money. First, it reconstructs the circulation chain, achieving a flattened alcoholic beverage supply chain. In the traditional model, alcoholic beverage products generally go through three levels of distribution, sub-distribution, and terminals before reaching consumers. In the 'Jiu Xiao'er' model, products reach consumers directly, eliminating costs from intermediate links and passing savings to consumers. This is the first saving. Second, it can help brand owners directly reach consumers, so brand owners are often more willing to provide strategic resource support to 'Jiu Xiao'er' for promotion. Therefore, on the 'Jiu Xiao'er' platform, various discounts and welfare activities are always ongoing, creating a second "saving" for users. Second, saving effort , 'Jiu Xiao'er displays various alcoholic beverages to consumers through its platform mall, realizing a "wine finds people" service model, allowing consumers to easily purchase their desired alcoholic beverages on the 'Jiu Xiao'er' platform, greatly saving consumers' time and energy in searching for and purchasing alcoholic beverages. Third, saving worry , 'Jiu Xiao'er provides consumers with a certain one-stop wine purchasing service. Consumers do not need to worry about category selection, product quality, price, or after-sales issues. From ordering to receiving, 'Jiu Xiao'er provides the certain service of delivering wine to the door in an average of 15 minutes.

'Jiu Xiao'er' Model Provides Excellent Opportunities

for Traditional Distributor Enterprise Transformation

With changes in lifestyles and consumption scenarios, the instant new retail model for alcoholic beverages has become a development trend. As a leading brand in the instant retail industry for alcoholic beverages, 'Jiu Xiao'er' has achieved great success in the southern market, and its operating model has been fully verified. Recently, on the occasion of its tenth anniversary, 'Jiu Xiao'er' has begun to perfect its national layout, meaning that the region north of the Yangtze River will be the next key development market for 'Jiu Xiao'er'. 'Jiu Xiao'er's operating model and supply chain resource advantages, combined with the localized services of traditional distributors in the national market, it is foreseeable that 'Jiu Xiao'er' will have very large development space in the national market, and it will also have a huge impact on traditional alcoholic beverage retail in the national market. With the expansion of 'Jiu Xiao'er's national layout, it provides excellent cooperation opportunities for interested parties. As a leading brand in the industry, 'Jiu Xiao'er' already has strong market appeal and influence. 'Jiu Xiao'er's brand effect and the tactics and strategies accumulated over the years reduce the difficulty and cost of initial promotion for franchisees, help them quickly and easily open the market, provide assistance in winning consumer trust, and provide sufficient confidence and guarantee for franchisees to achieve rapid profitability.