Why did a former senior engineer at Microsoft and Facebook return to China to start a business, targeting the FMCG sector?
What is a tech company really up to by investing heavily in warehousing and distribution?
Why is 80% of unified warehousing and distribution done wrong?
As the internet penetrates various industries at an accelerating pace, traditional FMCG distribution channels are facing increasing impact. Especially since the development of FMCG B2B in 2013, restructuring the distribution tiers of FMCG and digitizing the product pathway has become a pressing issue for many industry participants.
On one hand, self-operated B2B platforms like JD New Pathway and Yijiupai compress channel tiers, connecting upstream to brand owners and downstream directly to traditional grocery stores. On the other hand, platform-based companies like Alibaba Retail Link and Hui Xiadan, under the banner of empowering the supply chain and serving brand owners, attempt to digitize the entire FMCG transaction process. Under this dual pressure, traditional distributors, as the main offline distribution channel, are experiencing an increasingly severe crisis: Where is the way out for distributors?
Of course, in the process of channel digitization, some take a different approach from giants like New Pathway and Retail Link. They provide information-based software systems and advanced management and operations systems, enabling regional traditional distributors to evolve and transform themselves. Zhoupu Data is one such representative.
1 Opportunities in the FMCG Industry
China's vast territory exhibits significant regional differences, forcing brand owners to rely on a manpower-intensive approach to achieve deep distribution, as exemplified by Master Kong and Jinmailang. However, with the accelerated penetration of digital tools and technologies, problems in the traditional distribution system such as information opacity, inefficiency, and high costs are becoming apparent. For Zhoupu, founded at the end of 2015, this represents an opportunity.
"People in technology generally have two beliefs: all problems can be solved with technology; all decision optimization relies on data." Zou Wenbiao, co-founder and CMO of Zhoupu Data, told New Distribution that in the 7 trillion yuan FMCG retail market, traditional distributors remain the main channel for products to flow from manufacturers to consumers. However, in the daily operations of distributors, the proportion of technology investment is extremely low. Among distributors with annual sales of 80 million to 100 million yuan, many invest less than one ten-thousandth of their revenue in technology.
The low penetration of information technology leads to a lack of data in the industry, especially for mid- and downstream distributors, where insufficient data directly results in low operational efficiency. This also indicates that there is enormous room for improvement in the efficiency and processes of the entire FMCG industry.
At the end of 2015, Miao Jiangbo, who had worked at Microsoft and Facebook for many years, returned to China to found Zhoupu Data. Later, Zou Wenbiao, with rich marketing experience, joined the team. Additionally, they were joined by Mu Wei, a senior engineer from Google who had been focused on AI.
After identifying the industry opportunity, the startup team faced the question of how to enter the industry.
After years of development, the traditional offline business model is deeply entrenched in the minds of retail industry operators, especially for small and scattered distributors and grocery stores. To complete their digital transformation, the first step is to digitize the entire transaction process.
At this point, Zhoupu had only two options: either build its own B2B platform to redo transactions and digitize the commercial flow, or help traditional distributors move transactions online to achieve digital restoration of the transaction process. Zhoupu chose the latter.
In Zou Wenbiao's view, building a self-operated B2B platform is much more difficult than B2C. Most B2B orders are still facilitated by offline salespeople in the region, and unlike B2C, it cannot create greater market demand for merchants. If a platform cannot create transactions, it has no value. Additionally, due to the regional characteristics of FMCG, each single market requires building supply chain systems for different categories to match the regional market. Without complete supply chain infrastructure, this path is difficult to sustain.
What Zhoupu does is provide a complete set of information tools to distributors without affecting their original business operations, moving the traditional distribution business online and digitizing the entire transaction process.
2 "Confidence and Boldness"
The FMCG industry is one that emphasizes efficiency, whether in warehousing and distribution, capital, or orders. With sluggish performance growth and high costs, optimizing internal operational efficiency is crucial for distributors.
"Efficiency comes from the flow of goods, information, and capital. The speed of flow between various processes determines operational efficiency. For distributors' daily management, order collection and analysis, product sorting, delivery route optimization, and financial decision-making require a fully integrated system across the entire chain. This is something many unified warehousing and distribution platforms without a tech background cannot achieve. They can only handle one segment, or if they handle all segments, the integration between them is not smooth. The lack of integration across multi-segment systems is the bottleneck affecting efficiency," said Zou Wenbiao.
The most typical case is the disconnect between the front-end order transaction system and the back-end warehousing and distribution information system. When users place orders, real-time inventory is not displayed, and only during order picking do they discover shortages or missing items. Warehouse staff then have to meet user needs through transfers or exchanges, increasing time costs for back-end staff and negatively impacting the user's ordering experience.
"Few people realize that unified warehousing and distribution is a technical task," Zou Wenbiao told New Distribution. Unified warehousing and distribution without technology easily falls into a complexity trap. A 5,000-square-meter warehouse can meet the needs of 3-5 customers, but when customers increase to 10 or more, using tens of thousands of square meters may not yield optimal efficiency or cost. That is, the larger the scale, the higher the marginal cost, and the lower the efficiency.
Zhoupu's self-developed intelligent logistics management system
After nearly two years of development, Zhoupu has integrated its order transaction system (Zhoupu Cloud Business), full-process business management system (Zhoupu Cloud Steward), and warehousing and distribution system (Zhoupu Cloud Warehouse), achieving seamless automatic integration of the entire chain. Continuous technical refinement has made Zhoupu's full system increasingly mature, enabling it to help distributors improve internal operational efficiency.
Deep technical accumulation has helped Zhoupu automate and intellectualize the entire supply chain process and business logic, while strong execution ensures rapid implementation of Zhoupu's strategies. It is reported that Zhoupu co-founder and COO Song Wei graduated from the PLA Institute of International Relations, Vice President Yu Lei graduated from the PLA Institute of International Relations and Renmin University of China, and Logistics Director Xiao Jiangjun held senior positions at SF Express for many years and served in a border defense unit. Although they hold different positions, they share similar military or military academy backgrounds, which provides strong support for Zhoupu's backend implementation when facing different business needs.
Zou Wenbiao describes this as "confidence and boldness." For most system service providers, software update cycles are relatively long, and the human and material costs are high. Even after software is completed, various problems arise during execution. The direct consequence is that even if business logic issues are found, general software companies will not easily iterate on the system.
"In actual operations, if distributors have new ideas or approaches, we can make software adjustments immediately. We are not afraid of distributors trying new things in their business because we can use technology to cover the growing complexity of business. Last year, our software was not fully mature, but with time and iteration, this year our software is stronger than many competitors. That is our confidence," said Zou Wenbiao.
For example, in March of this year, Zhoupu achieved fully paperless operations within its cloud warehouses. While it may seem like a small thing, it represents a major breakthrough in the entire supply chain.
The traditional business logic is that after the order system cuts off orders, all order information is printed centrally. Once orders increase, printing picking lists, outbound orders, and other documents is time-consuming and labor-intensive, and pickers and delivery drivers are all stuck at the order printing stage.
With paperless operations, all orders can be pushed in real-time to pickers' PDAs, reducing time waste. More importantly, paperless operations put order information and product information online, allowing timely adjustments to backend operational strategies and achieving real-time scheduling. For example, for two orders with similar products, traditional picking methods require picking orders one by one in sequence, meaning pickers repeat the same picking path twice. With paperless operations, however, by consolidating order items, pickers can pick items for both orders in one pass.
3 Building a Warehousing and Distribution System to Refine and Validate the System
If technology and execution are prerequisites for correct system logic, continuous refinement and validation are key to system improvement. Zhoupu validates its software by building a complete cloud warehousing and distribution system.
To date, Zhoupu Data has established fully self-operated warehousing and distribution systems—Zhoupu Cloud Warehouse—in four locations in Jiangsu: Ganyu, Haizhou, Xuzhou, and Yancheng, with warehousing space totaling tens of thousands of square meters. By establishing executable regional warehousing and distribution systems supported by intelligent logistics systems, Zhoupu transforms the traditional fragmented warehousing and distribution of distributors into centralized warehousing and distribution, providing one-stop managed services.
As a tech company, why does Zhoupu invest heavily in unified warehousing and distribution?
Zou Wenbiao told New Distribution: "We must step on the pitfalls ourselves; we cannot let others pay for us. If we don't do warehousing and distribution ourselves and don't delve into the basics, we cannot understand the differences between product categories and scenarios, and the system cannot be well-built. Our four warehouses are in cities with different forms. In urban areas, there are more split-case orders, while in townships, whole-case orders are higher. The product types covered by different warehouses also vary. Different stores have different product prices and payment terms. Even for the same product, different shelf life leads to different prices. Some categories involve issues like bottle returns and cap returns. The flexibility of operations, product complexity, and delivery diversity all place high demands on backend software development. Our purpose in building our own warehousing and distribution is to recognize the differences in products and scenarios, and continuously refine the product. At the same time, we establish a standardized training base for distributors, not only providing tools but also teaching distributors how to optimize efficiency. "
At the software development level, Zhoupu can identify differences in business processes that different distributors focus on based on the frequency of module usage. Some distributors focus more on salesperson field operations, others on store transaction amounts, and still others on financial accounts. Zhoupu makes targeted adjustments and optimizations for different modules.
In daily operations, through the Zhoupu Cloud Steward backend, distributors can clearly see each store's purchase volume, items per store, daily store visits by salespeople, and inventory status. For example, if a distributor is particularly concerned about product shelf life, Zhoupu will send reminders in the system one month or several months before expiration, allowing distributors to plan promotions in advance.
On the backend supply chain side, Zhoupu's intelligent order scheduling system can intelligently assign orders based on factors such as picker location, familiarity with shelves, operating habits, and matching of people, goods, and order routes. Practice shows that with this system, for the same volume of goods, pickers' steps in the warehouse dropped from 20,000 to 15,000, greatly optimizing picking efficiency.
In the order review stage, Zhoupu has established a complete intelligent review system that can perform intelligent dynamic sampling of orders based on person-goods matching analysis, thereby reducing the number of reviewers from 7 to 3 without increasing error rates. In the future, with continuous system optimization and iteration, the number of reviewers can be reduced to no more than 2 for the same volume.
As the number of partner distributors grows, the transaction data stored on Zhoupu's servers increases. Since Zhoupu only acts as a service provider in the original transaction channel, this data is more objective and authentic compared to B2B platforms. In the future, this data will enable Zhoupu to cooperate with brand owners and financial institutions.
When discussing the future of traditional distributors and whether they will be replaced by B2B platforms, Zou Wenbiao told New Distribution that no matter how the market environment changes, the service function for retail stores will always be needed, which places higher demands on distributors' professional and service capabilities. Distributors will not disappear, but those with weak professional capabilities are highly likely to be replaced. In this context, it is crucial to strip away non-core functions and continuously enhance terminal service capabilities!
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