---
title: "The 'Resilient' Distributor: Covering 13,000+ KTV and Other Special Channels, Redoubling Efforts in Local Community Group Buying Amid the Pandemic"
description: "This article profiles Shanghai Huanyu Yigou, a distributor specializing in special channels like KTV, cinemas, and bars, covering over 13,000 stores. Despite the pandemic's severe impact, the company has shown resilience by pivoting to community group buying, leveraging its supply chain strengths and innovative strategies."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-09-05"
language: "en"
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# The 'Resilient' Distributor: Covering 13,000+ KTV and Other Special Channels, Redoubling Efforts in Local Community Group Buying Amid the Pandemic

> This article profiles Shanghai Huanyu Yigou, a distributor specializing in special channels like KTV, cinemas, and bars, covering over 13,000 stores. Despite the pandemic's severe impact, the company has shown resilience by pivoting to community group buying, leveraging its supply chain strengths and innovative strategies.

In the past, the distributors covered by 'New Distribution 100' were those operating in mainstream channels. Today's protagonist, Shanghai Huanyu Yigou, is somewhat special. Initially, it was a manufacturer in the upstream supply chain, operating dozens of proprietary brands such as Yaba, Aifengle, and Halike. Later, it expanded into distribution, adding another identity as a distributor focused on special channels in the entertainment industry, including KTVs, cinemas, and bars. It covers over 13,000 KTV and cinema stores and has established strategic partnerships with dozens of well-known brands like Lay's, Want Want, Qiaqia, and Jiujiuyu.

With a supply chain background, how does Huanyu Yigou excel in special channels? Recently, New Distribution had the opportunity to talk with Zhang Jianli, founder of Huanyu Yigou, and had an in-depth exchange about his entrepreneurial journey from supply chain to distribution, as well as the path and methods of transformation. It is very worth learning and thinking about, and we hope it brings some inspiration to distributor friends.

**01 Channel Success: Role Transformation from Finding Distributors to Being a Distributor**
Before 2008, Zhang Jianli mainly ran a supply chain business, operating multiple proprietary brands like Halike and Yaba, using a distribution system with over 400 distributors nationwide, mainly covering special channels in the entertainment industry such as KTVs and cinemas.

Starting from 2003, Zhang Jianli began expanding categories around special channels like KTV. From duck products and popcorn to meat products, nuts, preserved fruits, and dried fruits, the categories gradually enriched.

With a richer product range, sufficient channels were needed for sales, but distributors in entertainment channels like KTV were mostly weak and fragmented, lacking channel control and unable to distribute so many products effectively.

Therefore, in 2008, Zhang Jianli piloted in Shanghai, cutting off Shanghai distributors and establishing Shanghai Lingxian Food (the predecessor of Huanyu Yigou) to focus on channels himself.

**KTV channels differ from traditional channels; product demand is mainly for alcoholic beverages and leisure snacks, usually one-stop procurement.** For distributors, having a comprehensive product range is extremely important.

Thus, **in product strategy, Shanghai Lingxian Food, based on its proprietary brands, further expanded into foreign wines, red wines, premixed drinks, and other alcoholic products, and also acted as an agent for well-known brands like Lay's, Want Want, Qiaqia, and Jiujiuyu, with SKU numbers exceeding 10,000.**

With the advantage of a comprehensive product range, Shanghai Lingxian Food's expansion in the KTV channel accelerated significantly, achieving a coverage rate of over 95% in Shanghai's KTV channel.

Starting from zero in 2008, by 2012, Shanghai Lingxian Food achieved sales of 70 million yuan, while the original distributor only sold 5 million yuan a year, achieving more than tenfold growth.

After succeeding in Shanghai, Zhang Jianli began thinking about the next step: how to replicate the model to more regions.

The model operated in Shanghai was relatively traditional: visiting customers, discussing products, prices, and payment terms, and sometimes negotiating rebates and buybacks with procurement.

If expanding to other markets using the traditional model, it would be difficult to manage.

**First, the risk of payment terms is high.** Special channels like the entertainment industry have a typical characteristic: when the macro environment is good, the risk of payment terms is low, but once the environment deteriorates, entertainment venues like KTVs are severely impacted, leading to closures and bad debts.

**Second, operating costs are high.** It requires negotiating products and prices with terminals, which consumes significant time and resources, and any changes across regions need timely handling and communication.

Coincidentally, at that time, B2C e-commerce like JD.com and Taobao were rapidly rising. Zhang Jianli began to think: could he move his products online and create a vertical online platform for the entertainment industry? This would reduce the risk of payment terms and reduce investment in personnel and resources.

Thus, 'Huanyu Yigou' was born.

**02 Building 'Huanyu Yigou': A Vertical B2B Procurement and Sales Platform**
In 2013, Zhang Jianli set up an IT team and began building a vertical procurement and sales platform for the entertainment industry—Huanyu Yigou, with the name meaning: Global Entertainment, One-Stop Easy Procurement.

In March 2014, Huanyu Yigou conducted small-scale testing, and on July 18, 2014, the platform was officially launched. The first stop was in Zhejiang, not Shanghai.

First, the new model was a completely new attempt, and its success remained to be seen. If the model didn't work, it wouldn't affect the basic business.

Second, Zhejiang is close to Shanghai, and Shanghai's warehousing and distribution could fully radiate to Zhejiang, reducing logistics fulfillment costs.

Zhang Jianli told New Distribution that the establishment of Huanyu Yigou not only solved internal development issues but also catered to market development needs.

Before 2014, KTVs were easy to make money, with very high gross margins, and operators were not sensitive to procurement costs.

After that, the entire entertainment industry became oversupplied and fell into involution competition, and store owners began to pay attention to supply chain procurement costs.

The emergence of Huanyu Yigou precisely solved this pain point. It eliminated the inevitable intermediate price differences in procurement, and prices were transparent with no hidden costs.

Of course, a favorable environment only gave Huanyu Yigou the opportunity to develop, but when actually doing it, many problems arose. Because any store is not a single operating entity but an operating organization.

In platform promotion, Huanyu Yigou specially made an introduction booklet. **The booklet mainly explained three advantages: complete product range, transparent prices, and no intermediate operations.**

**All field promotion personnel, when entering a store, must give out three copies: one to the store manager, one to procurement, and one to finance.** Store managers and procurement have a certain range of decision-making power, while in KTV stores, finance often acts as the owner's confidant to think about cost issues.

During promotion, the biggest resistance came from store managers and procurement because there were usually some private transactions offline.

**To address this, Huanyu Yigou launched K-points on the platform. In the points mall, K-points could be exchanged for physical goods such as phone cards, mobile phones, brand-name cosmetics, and other high-frequency consumer items.**

The more orders placed on the platform, the more K-points earned, and the more items could be exchanged. For store owners, procurement costs decreased, and store managers and procurement could also receive corresponding rewards, naturally making them willing to order on the platform.

In 2015, one year after launch, sales in Zhejiang and Jiangsu reached about 140 million yuan.

At that time, many capital investors extended olive branches to Huanyu. Although the cash flow on the books was very healthy, Zhang Jianli believed that for further development, it was necessary to engage with capital, so he accepted a Series A funding of 20 million yuan from a capital firm.

After that, Huanyu Yigou entered the fast lane and began national expansion.

But new problems arose. During expansion, many practitioners from traditional channels were recruited, such as regional managers and marketing personnel from FMCG companies. Although these people understood FMCG, they didn't understand the special channel of the entertainment industry, leading to low efficiency and high costs.

For example, in Fuzhou, Fujian, 8 people were invested, but after half a year, the output only matched the input costs.

Therefore, starting from 2018, a partnership system was implemented. **For cities that were difficult to conquer, all field promotion staff were directly turned into city partners, with Huanyu Yigou becoming a platform provider + service provider.**

**Partners have market operation rights and profit distribution rights. Logistics costs and market expenses are self-accounted by partners, while after-sales and stores are handled by headquarters, and partners give a certain rebate to headquarters.**

Partners can decide whether to participate in market activities; if not, those market expenses are not incurred. For partners, as market operators, they naturally take responsibility for revenue and profit. This approach to conquering markets is faster and more efficient.

**03 Under the Pandemic, Seeking a Second Growth Curve**
In 2020, when facing the first pandemic, Zhang Jianli immediately put all employees on standby, then notified customers to handle inventory, and shut down the backend return system to prevent warehouse overflow.

Then he counted inventory, conducted promotions in various parks, and arranged the IT team to build a self-operated B2C mini-program for online promotion, reducing potential losses from nearly 40 million yuan to 27 million yuan.

As the pandemic became normalized, Zhang Jianli also tried opening offline supermarkets and doing B2C e-commerce, actively seeking a second growth curve.

In March 2022, Shanghai suddenly experienced a severe outbreak, worse than before, dealing a heavy blow to the industry and posing a major challenge to Huanyu Yigou.

Business came to a halt, and offices were under control. In anxiety, Zhang Jianli noticed a strong demand for community group buying, so he decisively took action, first securing supply guarantee opportunities, then organizing group buying.

**First, warehouse staff counted goods and recruited temporary workers in the park to solve sorting, warehousing, and logistics issues.**

**Second, quickly develop group leaders.** Employees, relatives, and friends were mobilized to recruit group leaders, and brand support was obtained to jointly launch community group buying. Brands like PepsiCo Foods, Qiaqia, and Jiujiuyu actively helped Huanyu Yigou organize group buying. The number of group leaders quickly exceeded 5,000, ensuring a steady stream of orders.

**Third, create product combinations based on consumer preferences.** Chips, sunflower seeds, chicken feet, duck necks, etc., in the warehouse were made into combination packages, not only meeting consumers' diverse needs for leisure snacks but also blurring price ranges.

All products were sold through community group buying, with impressive order volumes. During peak times, sales could exceed one million yuan. After the pandemic subsided, daily sales remained around 100,000 yuan.

Although the outbreak of group buying was more a product of the pandemic, Zhang Jianli believes that the community group buying business still has development potential.

Any retail model that grows big cannot do without consumer education. The repeated pandemic has deeply educated consumers about the community group buying model, and consumers have formed a perception of community group buying in their minds.

Especially for leisure snacks, which are not an immediate consumption category, consumers are more willing to buy on platforms. In the future, Huanyu Yigou will continue to invest in community group buying and expand this segment through more innovative gameplay.

**04 Final Thoughts**
The case of Huanyu Yigou can be best described in two words: **resilience**.

Under the pandemic, many distributors complain about difficult business, but no matter how hard it is, few face pressure as great as Huanyu Yigou.

As a distributor operating in the entertainment industry's special channels, the winter it faces is longer than that of traditional channel distributors, but even in such an environment, Zhang Jianli continues to try new things, daring to think and act.

From upstream supply chain to channel distribution, to testing offline supermarkets and online B2C, and finally to community group buying, one can truly see Huanyu Yigou's resilience, blooming and growing in adversity.

This resilience is worth learning from for everyone.


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