---
title: "Uniting Supply Chain Strength to Seize the Cake"
description: "In an era of shrinking volumes, Zhenshimei Supply Chain Management Company builds a large distributor model to provide better services for supermarkets and higher growth for brands. At the 6th China FMCG Conference, General Manager Zhou Xu shared insights on how to seize growth by restructuring supply chains."
author: "周旭"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-09-05"
language: "en"
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# Uniting Supply Chain Strength to Seize the Cake

> In an era of shrinking volumes, Zhenshimei Supply Chain Management Company builds a large distributor model to provide better services for supermarkets and higher growth for brands. At the 6th China FMCG Conference, General Manager Zhou Xu shared insights on how to seize growth by restructuring supply chains.

"Efficient collaboration between zero-supply and retail, being a distributor that understands retail." In the era of shrinking volumes, Zhenshimei Supply Chain Management Company builds a large distributor model to provide better services for supermarkets and higher growth for brands. From August 20 to 22, the 6th China FMCG Conference with the theme "Navigating the Shrinking Volume Era" was held in Shanghai. During the conference, over 100 guest speakers and more than 2,000 manufacturer and distributor representatives from across the country explored how distributors and brands can seek growth in the current environment. Among them, Ms. Zhou Xu, General Manager of Zhenshimei Supply Chain Management Company, delivered a wonderful sharing session titled "Uniting Supply Chain Strength to Achieve Value Co-creation."

The following is the content of Ms. Zhou Xu's sharing, and New Distribution specially reports the essence of her speech for readers.

**From "Dividing the Cake" to "Seizing the Cake"**

What should we do in the face of the shrinking volume era? The shrinking volume era is different from the incremental era; **it is not about dividing the cake, but seizing the cake.** One partner said, "We must take away competitors' customers and prevent our customers from being taken away by competitors." In fact, to keep a company invincible and survive, we must seize the cake. So how exactly should we seize the cake? Large supermarkets, facing the current involution, cannot withstand low prices. To have low prices, the premise is low purchase prices. How can we achieve low purchase prices? The retail industry has long proposed finding and relying on large distributors. Among the distributor community, large distributors have an extra "large" in their name. Why are they large? Where is the largeness? Compared to other distributors, what are their advantages? To summarize, there are three points: **First, large scale; second, high efficiency; third, empowerment capability.** Large distributors need to cooperate with major brands, and the number of brands and product categories they cooperate with must be large, with SKU numbers reaching a certain volume to achieve higher sales. Moreover, they not only pursue more individual products but also higher product efficiency. How can we make manufacturers recognize the benefits of cooperating with large distributors? Zhenshimei has done a lot of work to connect with various manufacturers. In the process, we have identified six points.

> **First, channel expansion is difficult and costly.** Currently, brands wanting to open new terminals face high barriers such as barcode fees and entry fees. **Second, customers are unstable and capital is difficult.** **Third, market control is difficult, with chaotic cross-regional selling.** Low-price dumping leads to a flood of low-cost inventory in the market, making it impossible to earn the money that should be earned. **Fourth, new products are hard to accept and promote.** **Fifth, price control is difficult, with frequent price chaos.** As long as low-cost inventory flows into the market, prices will be chaotic. **Sixth, marketing implementation is difficult, with a narrow vision.** Many policies cannot be directly implemented in place according to manufacturer requirements.

After deconstructing these pain points of brands, how should we relieve the pain? That is to have large distributors operate. **Zhenshimei's Advantages**

Zhenshimei Supply Chain Management Company mainly serves the members of Baoting Commercial Alliance. One of its characteristics is that more than 20 shareholders are all Baoting Commercial Alliance supermarket enterprises. Zhenshimei was established in May 2023 and officially opened its warehouse on August 15 of the same year. On the day of opening, the Jinan warehouse operated 80 brands, and the Shenyang warehouse had nearly 200 brands. As a large distributor, besides the three points of large scale, high efficiency, and empowerment capability, what else can Zhenshimei bring to downstream customers? First, it is an enterprise jointly established by retailers, doing retail's own supply chain, with the boss personally handling business. We agree with brands on products, activities, and policies, and through a monthly ordering meeting, we promote them to customer enterprises. Second, the purchasing directors of each enterprise are business managers, who strongly support and give priority to all products represented by Zhenshimei. Most importantly, as a retail joint enterprise, everyone is a community of interests, sharing the results of supply chain management. **Zhenshimei's Scale Advantage**

Currently, it covers 8 provinces, including Heilongjiang, Jilin, Liaoning, Inner Mongolia, Hebei, Shandong, Henan, and Jiangsu. In these provinces, we have from 2 to over 10 customer enterprises each. Currently, 35 enterprises have entered the warehouse. **These 35 supermarkets have a total market share of 22 billion yuan and have more than 800 stores.**

**Zhenshimei's Category Advantage**

**Currently, we cooperate with more than 400 brands, with over 5,000 individual products. The core advantage is full category coverage.** Most distributors focus on one or two categories for deep cultivation, with other categories as auxiliary. As a large distributor serving regional retail chain stores, it is not enough to only cover one or two or even three or four categories. For the management of the two major categories of groceries and general merchandise, from a category management perspective, there are a total of 139 category groups. Currently, the products we serve cover all category groups, except for fresh and frozen products, which have not yet been launched.

**Zhenshimei's Organizational Structure**

Initially, we thought that after directly cooperating with manufacturers, we could reduce product costs by 15-20 percentage points and sell directly to retail enterprises. But in fact, we did not have the operational capability. Therefore, in June, we decided to establish a headquarters and build a dedicated business team, including a dedicated purchasing team, operations department, commercial flow department, planning department, HR department, and finance department. **After establishing the new headquarters, we can provide a complete set of brand operation capabilities.** In the organizational structure, there is a chairman and two vice chairmen. The two vice chairmen are the bosses of two customer enterprises, and I am the general manager of this company. The function of the news center is to broadcast the operation status of Zhenshimei's represented products twice a week, including the results of operations inspections and inspection reports, as well as brand presentations. In addition, we have set up an administration department, finance department, HR department, and commercial flow department. The commercial flow department is one of the highlights.

Zhenshimei's operating model is different from distributors' B2b model. We also use advanced intelligent management systems for ordering, but we do not pursue having customers take more inventory back to their warehouses. **Zhenshimei pays more attention to taking as much as sold, placing orders in a balanced manner.** In other words, Zhenshimei does not want customers to take a single product back and sell it for a month, but hopes they place orders twice a week, taking some of each product each time, to ensure that the products in the warehouse and on store shelves are the freshest and have the best appearance. Secondly, we have also set up an operations department and a planning department. The biggest function of the planning department is to make overall annual marketing plans for all customer enterprises. Every month, we conduct a product presentation for the ordering meeting, with individual products ranging from 200 to 600 or 700, each with a complete set of output plans. In purchasing business, we have set up 3 departments, with 3 business directors to handle all brand business connections. **At the same time, Zhenshimei also provides training courses to customer enterprises.** Training is conducted once a week at the Jinan office. The specific content teaches each enterprise how to sell goods. It also includes training on cost reduction and how to use hourly workers. Retail enterprises should learn how to analyze operational data, how to hold weekly meetings, which indicators to analyze in monthly data, how to identify categories with growth trends, and how to amplify brands with three increases in sales and gross margin. These are all conveyed to customer enterprises in the form of course presentations. In terms of operational data, here are a few small cases. The Qican brand mainly produces packaged seasonings. Qinhuangdao Jiahui is one of Zhenshimei's customers. Qican sold 70,000-80,000 yuan at Jiahui in 2023, but in the first half of 2024, it sold 123,000 yuan. Those who know data and operations know that if each brand can grow by 50% and the enterprise can grow by 50%, the probability of success is very high. Kaqi Guoba is a brand from Shenyang. Shandong's Jindu Department Store did not previously carry this brand. After cooperating with Zhenshimei, following the principle of priority introduction, Jindu Department Store achieved 260,000 yuan in one year, and the gross margin on this brand alone was 10 percentage points higher than other brands. Therefore, customer enterprises choose which brands to carry based on the brand's potential and profit space. Three Squirrels, Zhenshimei can make it a ten-million-yuan brand this year. Shandong's Linshu Huacheng previously did 100,000 yuan a year, but after entering the warehouse, it did 780,000 yuan. We have sorted out relatively promising brands. **After establishing the headquarters this year, 20 brands will exceed 20 million yuan, and more than 5 brands can achieve over 50 million yuan.** After establishing the headquarters, Zhenshimei has mainly focused its cooperation on first-line brands, such as Chubang, Sanyuan, Adopt a Cow, Hsu Fu Chi, Nestlé, Haidilao, Arawana, and Fulinmen, which are the latest cooperations started after the establishment of the headquarters. Many brand owners may have doubts: if Zhenshimei only does one brand among competitors, that brand may be better off. But if it does multiple brands in the same category, does it lose its absolute advantage?

**"Seizing the Cake" is Zhenshimei's Main Direction**

Competition among brands is inevitable in China. China is a major production country, and involution among brands will continue in the next decade. The consensus we have reached with brands is: **Zhenshimei's goal in representing brands is to create incremental growth for the brand.** The existing 35 brand customers, if they do not cooperate with Zhenshimei and instead cooperate with regional distributors, the volume they do is one thing. After switching to Zhenshimei, if they still do the same volume, Zhenshimei does not accept that. **What Zhenshimei wants to do is seize the cake, not divide it, nor simply move the original share over.** We do not choose all brands. For brands that both sides choose, we must be responsible to each other. If Zhenshimei and the brand choose each other, then the customer enterprise must implement all policies as a third party, and sales must increase significantly. That is a true strategic cooperation with the brand. Compared with traditional distributors, Zhenshimei does not want to take away everyone's business. In different fields and different business formats, Zhenshimei's main customers are very clear: regional retail chain stores. Only by clarifying our positioning can we better carry out business. Facing the current ecological environment, Zhenshimei is not a disruptor, but simply restructures and rebuilds the structure.

**Zhenshimei's Future Vision**

Looking at the commodity circulation diagram. Japan's current situation: products from factories cooperate with large trading companies. The current large wholesalers only add a 3-point profit. Large trading companies wholesale to logistics centers, which add 5 points to stores. The 5 points include delivery from warehouse to store, which is 2 points more than in China. From retail to customers is 15 points, so from factory to customer there is only a 23-point space. In China, it is currently 38 points. Zhenshimei's large distributor model, as a collection and distribution warehouse, aims to let Chinese customers buy goods at a lower cost in the future. This is also the first point of the current collection and distribution warehouse: from factory, Zhenshimei adds 5%, gives to urban retail chains or urban warehouses, chains give 3 points for distribution to stores, stores add 18 points profit, and to customers it is 26 points. **In the future, Zhenshimei's pursuit is to add 5% to stores, and stores add 18 points to customers.**

**Zhenshimei's mission is to connect the upstream and downstream of the industry, making commodity circulation more efficient.** Upstream refers to brand owners and manufacturers, while downstream is retail terminals.

_PS: Friends interested in the on-site speech content can follow the recent push of the New Distribution WeChat official account. We will organize and publish the guests' speeches for readers._

_Click **Read Original** to view more about the 6th China FMCG Conference and the 3rd China FMCG Hard Discount Conference & the 3rd China FMCG Distributor Conference..._


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