Recently, New Distribution learned that Weijie City Distribution, a B2B warehousing and distribution logistics company, has officially completed a Series B+ financing round of over 100 million yuan, strategically led by China Resources Runxiang United Fund, with existing shareholder Falcon Capital following on.
-01- Weijie City Distribution Completes Series B+ Strategic Financing China Resources Runxiang United Fund Strategic Lead Investor
It is reported that the new round of financing will be used by Weijie City Distribution to expand and improve its national warehousing and distribution network and to continue upgrading its intelligent operation platform.
As a well-known third-party city distribution logistics company in China, Weijie previously completed Pre-A, A, and B financing rounds in December 2015, December 2016, and June 2018, respectively, with shareholders including well-known institutions such as Innovation Works, SAIF Capital, and Deyi Capital.
Wang Qi, founder and CEO of Weijie City Distribution, pointed out in a media interview: "With trends such as the continuous compression of new consumption supply chain levels, continuous improvement in distribution, and increasing digitalization requirements, a national warehousing and distribution network platform serving the full chain and all channels is entering a major strategic window period. After several years of accumulation and consolidation, Weijie City Distribution will further increase the construction of warehousing and distribution logistics networks and intelligent system networks, accelerating the realization of network-wide services, full-chain, and all-channel collaboration.
In its two main business lines of retail and catering, Weijie City Distribution, supported by warehousing and distribution operational capabilities and carried by intelligent information systems, provides brand owners, channel distributors, and chain terminal customers with multi-temperature, multi-city, all-channel integrated warehousing and distribution services, continuously improving efficient fulfillment and inventory management capabilities. Weijie also provides value-added services for operational process data through data collection and analysis capabilities, offering customers decision support for operational and business optimization, and enhancing supply chain digitalization capabilities."
After more than four years of development, Weijie City Distribution's warehousing and distribution network has begun to take shape. As of March 2020, Weijie City Distribution's service network covered 19 provinces and 37 cities, with hundreds of self-owned vehicles, over 4,000 contracted vehicles, and nearly 20,000 coordinated vehicles, as well as 200,000 square meters of ambient temperature warehouses and 87,000 square meters of cold storage.
It is worth mentioning that during the pandemic, home delivery business surged, with new retail formats such as Qianshima, Yipin Fresh, Hema Fresh, and Dingdong Maicai seeing order volumes skyrocket. Yet they were still able to maintain sufficient supply of all goods and timely order fulfillment, and behind this supply chain support, there was a contribution and empowerment from Weijie City Distribution.
To date, Weijie has served more than 400 enterprise-level customers, including industry-leading companies such as Suning, JD.com, Alibaba, Budweiser, Yihai Kerry, Xiabuxiabu, Xibei Youmiancun, Qianshima, Heli Supermarket, Yipin Fresh, Hema Fresh, Dingdong Maicai, Xiashang Group, Ajisen Ramen, Starbucks, and Maijindi. In addition, Weijie has served as the only catering logistics service provider for the BRICS Summit and the logistics service provider for the second China International Import Expo, demonstrating its capability to provide logistics services for top-level international conferences.
This time, China Resources Runxiang United Fund's decision to become the strategic lead investor in Weijie is not only based on the latter's strong technical strength and market layout, but more importantly, it can complement and strategically synergize with China Resources' internal industrial system, achieving a 1+1>2 effect.
China Resources owns a vast consumer industry system in China, with its retail, beer, gas, and pharmaceutical operations ranking among the top nationally. It owns nationally renowned brands such as Snow Beer, C'estbon Water, CR Vanguard, MixC, 999, Double Crane, and Dong'e Ejiao. This will undoubtedly bring Weijie City Distribution more advanced management systems and richer industrial resources, boosting Weijie to achieve faster and higher-quality leapfrog development.
He Jian, investment director of China Resources Runxiang United Fund, said: "To meet changes in consumer demand, the supply chain system of China's consumer industry is undergoing rapid transformation, and the 2B logistics system corresponding to commercial flow will also undergo structural adjustments, especially in the terminal distribution of retail and catering. Weijie City Distribution, as a network platform that develops with warehouses as core nodes and can provide national, digitalized, integrated warehousing and distribution terminal distribution, is expected to become the terminal capillaries in the consumer supply chain field, with immense value and extremely high competitive barriers."
-02- Is Spring Coming for Third-Party City Distribution?
Against the backdrop of economic downturn, it is indeed not easy for Weijie City Distribution to secure a Series B+ financing of over 100 million yuan strategically led by China Resources Runxiang United Fund. But does this mean that spring has come for third-party city distribution logistics companies?
New Distribution believes that with the outbreak of the pandemic, backward and inefficient production capacity, as well as organizational structures and business models with poor coordination capabilities and weak risk resistance, will be eliminated by the sudden changes. Business models and organizational structures that can withstand the test of the pandemic will surely radiate sustained vitality in future development. The pandemic cannot fundamentally change original consumption trends, but it has accelerated and catalyzed them. Among them, a typical trend is the third-party transformation of city distribution logistics.
During the pandemic, a large number of consumers were confined to their homes and restricted from going out, but consumer demand did not weaken as a result. On the contrary, due to prolonged time at home, some consumer categories even saw stronger demand. This required the supply chain behind the retail format to maintain stable and sustainable product supply and logistics fulfillment capabilities during the pandemic.
But in fact, most commercial circulation enterprises do not have such capabilities. On the one hand, retail stores were closed and employees could not return to work; on the other hand, due to policy reasons, transportation was blocked in some areas, making delivery impossible. The deeper reason is that the logistics fulfillment cost per order was too high, and the order frequency and density during the pandemic were insufficient to support logistics delivery costs. The direct consequence was business suspension and widespread out-of-stock situations in retail stores.
In addition, most traditional distributors previously relied heavily on salesperson visits for sales, and warehousing and distribution were often managed by relatives or acquaintances. In the past, when China's demographic dividend was still present and sales revenue maintained rapid growth, this extensive management model was feasible. Now, with growth slowing and labor and management costs increasing daily, while also facing competition from internet professional players such as JD New Channel and Alibaba Retail Link, refined operations have become an issue that distributors must consider.
Undoubtedly, distributors do not possess the capability for refined operations. Furthermore, the rise of new consumption scenarios such as unmanned retail, home e-commerce, and community group buying has forced traditional distributors to further upgrade. Professionalization, digitalization, mobility, and intensification have become new challenges for traditional commercial circulation enterprises, and those unable to adapt to these trends will inevitably be eliminated.
In this process, traditional commercial circulation enterprises can collaborate with third-party city distribution logistics companies like Weijie City Distribution to outsource cost centers such as warehousing and logistics to more professional teams. This not only avoids heavy investment in software technology, efficiency tools, and personnel, but more importantly, it allows them to free themselves from cumbersome affairs and devote more time and energy to market expansion and store maintenance and development, thereby creating more profits. This is also a good way for traditional distributors to achieve refined operations and digital transformation.
This time, Weijie City Distribution's completion of a Series B+ financing of over 100 million yuan not only represents the capital market's recognition of Weijie City Distribution and its team, but also affirms the enormous value and broad prospects of third-party city distribution logistics companies in the development of future business forms.
For traditional distributors, in the future development of their enterprises, whether in marketing, channel expansion, or logistics distribution, they will move toward more professional directions. The third-party transformation of logistics will inevitably become an irreversible trend. At the same time, this also means that for the trillion-level consumer goods circulation market, third-party city distribution logistics still has enormous development space.
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