---
title: "Wumart's 'Next Stop': Expanding into B2B, Focusing on Small Formats, and Aiming to Increase Online Sales to 15%"
description: "Despite reduced industry attention since its delisting from the Hong Kong stock market in 2015, Wumart remains a significant force in physical retail, especially after the return of its founder Zhang Wenzhong. With 2017 sales of 47.5 billion yuan, ranking 11th among China's top 100 chain stores, Wumart is a profitable company with conservative annual net profits exceeding 1 billion yuan. The company is now strategically expanding into B2B, small-format stores, and deepening digitalization to boost online sales."
author: "赵向阳"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-09-18"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/wumart-s-next-stop-expanding-into-b2b-focusing-on-small-formats-and-aimi-e68e48dc/"
markdown: "https://xinjignxiao.com/en/articles/wumart-s-next-stop-expanding-into-b2b-focusing-on-small-formats-and-aimi-e68e48dc.md"
original_source: "https://mp.weixin.qq.com/s/ZjV5ENSm1w6vzQgCMw-bpA"
translation: "https://xinjignxiao.com/zh/articles/%E7%89%A9%E7%BE%8E-%E4%B8%8B%E4%B8%80%E7%AB%99-%E5%B8%83%E5%B1%80b2b-%E5%8F%91%E5%8A%9B%E5%B0%8F%E4%B8%9A%E6%80%81-%E5%B0%86%E7%BA%BF%E4%B8%8A%E5%8D%A0%E6%AF%94%E6%8F%90%E5%8D%87%E5%88%B015-e68e48dc.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/wumart-s-next-stop-expanding-into-b2b-focusing-on-small-formats-and-aimi-e68e48dc/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Wumart's 'Next Stop': Expanding into B2B, Focusing on Small Formats, and Aiming to Increase Online Sales to 15%

> Despite reduced industry attention since its delisting from the Hong Kong stock market in 2015, Wumart remains a significant force in physical retail, especially after the return of its founder Zhang Wenzhong. With 2017 sales of 47.5 billion yuan, ranking 11th among China's top 100 chain stores, Wumart is a profitable company with conservative annual net profits exceeding 1 billion yuan. The company is now strategically expanding into B2B, small-format stores, and deepening digitalization to boost online sales.

Click 'Read Original' for details.
Despite reduced industry attention since its delisting from the Hong Kong stock market in 2015, Wumart still represents a force in physical retail that cannot be ignored, both in terms of sales scale and recent actions, especially after the return of its founder Zhang Wenzhong.
According to the 2017 China Chain Store Top 100 data, Wumart ranked 11th with sales of 47.5 billion yuan. It is understood that although Wumart has not publicly released financial statements since privatization, it is actually a fairly profitable company, with conservative estimates of annual net profits exceeding 1 billion yuan.
On May 31 this year, the Supreme People's Court retried the case of Wumart founder Zhang Wenzhong and ruled in court that the three charges of fraud, unit bribery, and misappropriation of funds were all unfounded, clearing Zhang's name. Prior to this, Zhang had already returned to Wumart Group to lead its operations.
'Third Eye Retail' believes that after Zhang's return, Wumart will enter a new development phase, with a series of actions revealing three key directions:
First, entering the B2B field. Wumart is leveraging its affiliated company Lianshang Yougong to develop a B2B model, creating a three-tier urban distribution system of 'warehouse-station-point'. In this system, Wumart's logistics subsidiary handles distribution and storage; Duodian's home delivery team handles last-mile delivery; and Wumart stores serve as forward warehouses.
Second, taking over Linjia Convenience to expand small-format stores. Media reports indicate that Wumart intends to take over Linjia Convenience, which is in trouble due to a broken capital chain, and Linjia CEO Wang Lei has already started working at Wumart. Earlier in June, Wumart partnered with Beijing Vegetable Basket Group to create a new generation of community stores with the 'Pin Supermarket + Vegetable Basket + Duodian' model. These actions indicate that Wumart will focus on small formats as an important growth area, complementing its hypermarket business.
Third, continuing to deepen digitalization. Zhang Wenzhong, who has a strong interest in computers and business intelligence, has always believed that deep digitalization is the only way for physical stores, and Wumart's digitalization mission relies heavily on Duodian. It is reported that with the Duodian platform, online sales currently account for 12% of Wumart's system, with a target of 15% by the end of this year.
The long-term view is essential. The founder's imprisonment and the 2015 Hong Kong delisting once gradually faded Wumart from public view, but Zhang's series of measures after his return show that this retail enterprise, with the largest market share in Beijing, still has enormous room for maneuver and market opportunities.
**Expanding into B2B**
**Building a Three-Tier Urban Distribution System of 'Warehouse-Station-Point'**
An insider told 'Third Eye Retail' that Wumart is preparing to develop its B2B business, which will be carried by an internet supply chain platform called Lianshang Yougong. A Wumart executive confirmed this to the author.
Official data shows that Lianshang Yougong was founded by Xiao Yang, a former senior director at Baidu, and completed its first round of financing of $12.5 million in September 2015, and in the same year reached a strategic cooperation agreement with Wumart Group.
'Third Eye Retail' checked business registration information and learned that Wumart founder Zhang Wenzhong holds 5% of the shares of Beijing Lianshang E-commerce Co., Ltd., the company to which Lianshang Yougong belongs. This means that, like Duodian, through the founder's equity ties, Lianshang Yougong forms a close partnership with Wumart, ultimately leveraging Wumart's merchandise and store resources and Lianshang Yougong's internet genes to become part of the 'Wumart Business Ecosystem'.
The insider said that Wumart's B2B business is being implemented in two steps. The first step starts with fresh produce and related categories, providing food distribution for corporate procurement, institutional canteens, and catering clients. This overlaps with the field of Meicai.com, but differs in model.
Meicai's logistics model delivers directly from warehouses to customers. It is understood that Meicai has about 1,000 Jinbei vans in Beijing for delivery services. The difference in Wumart's B2B model is that Wumart uses its stores as forward warehouses (stations), forming a three-tier logistics system of 'warehouse-store-customer'. Throughout the process, Wumart's existing logistics system, Duodian's delivery team, and store resources are fully utilized.
In cooperation with Lianshang Yougong, Wumart's logistics subsidiary can handle the distribution from warehouses to stores (stations) in the B2B business, as well as storage tasks as the central warehouse; Duodian's last-mile team handles delivery from stores (stations) to small B-end customers; Lianshang Yougong serves as an internet supply chain platform, handling order collection, distribution, and data connection. It is essentially an asset-light model.
The second step of Wumart's B2B business extends from fresh produce to food and non-food, eventually expanding to all categories. In this step, Wumart's B2B benchmarks against B2B companies like Beijing Chaopi and Zhongshang Huimin. In this step, Wumart also leverages its stores as forward warehouse network advantages.
'Wumart's B2B is different from pure internet platforms doing B2B because Wumart's logistics system is already established, and stores can fully cover the cost of infrastructure. At this point, the B2B business increases the utilization of vehicles and warehousing, thereby achieving the lowest cost,' the insider said. 'According to calculations, Wumart's B2B warehousing and distribution costs are about 10%, while the gross margin is 11%, basically covering costs.'
Currently, Wumart's B2B business is mainly concentrated in the Beijing market. Since it is just starting, it has not yet fully integrated with Wumart's original procurement system, which will be a difficult process of negotiation with brand owners. 'Brand owners naturally do not want a single system to dominate and control the market. The integration of Wumart's B2B business with traditional retail procurement will be a difficult process,' an analyst said.
Additionally, due to limited warehousing space in the Beijing market, this will become a major constraint for Wumart's B2B development. It is understood that Wumart's logistics center in Beijing is already operating at full capacity.
**Taking Over Linjia Convenience**
**Developing Small Formats to Increase Store Density**
Not long ago, Beijing's Linjia Convenience fell into trouble due to capital chain problems. Subsequently, multiple media outlets reported that Wumart intended to take over Linjia, and reported that Linjia CEO Wang Lei had already started working at Wumart.
The latest information obtained by 'Third Eye Retail': the news of Wumart taking over Linjia is basically confirmed. Linjia's headquarters staff have moved to an office in Jiuxianqiao, which originally belonged to Lotte Mart's Beijing headquarters. After Wumart acquired Lotte Mart's 21 Beijing stores, Lotte staff were arranged to work at Wumart Tower on the West Fourth Ring Road, leaving the vacant office for Linjia's team.
Taking over Linjia reflects Wumart's ambition in small stores. In June this year, Wumart officially signed a contract with Beijing Vegetable Basket Group. The two parties agreed that the first batch of cooperation would involve 30 stores in Chaoyang, Tongzhou, Yizhuang, and Jiugong, and by the end of June, 8 stores would be opened first with the innovative model of 'Pin Supermarket + Vegetable Basket + Duodian'.
Data from the '2017 Convenience Store TOP70' released by the China Chain Store & Franchise Association shows that Wumart Group had 183 convenience stores last year. Adding the 160 stores from acquiring Linjia, and the community stores opened in cooperation with Beijing Vegetable Basket, Wumart's small-format stores in Beijing will reach nearly 400 by the end of the year.
'Third Eye Retail' believes that Wumart's focus on small formats will ultimately complement its hypermarket business, creating scale advantages in store network, which will create favorable conditions for Wumart to fully utilize its logistics resources and optimize logistics costs. In recent years, in the context of omni-channel, store density has become an indispensable resource and advantage. To this end, Qian Dama has increased the interval between stores to 250 meters; set up smart lockers in residential areas; and even plans to deploy forward warehouses, all to increase store density in regional markets.
Considering Wumart's efforts in the B2B field, especially its 'warehouse-station-point' three-tier urban distribution system using stores as forward warehouses, Wumart's requirements for store density are higher than any other competitor in the Beijing market.
In summary, Wumart's various measures are all carried out from the perspective of 'things'. 'Third Eye Retail' believes that Zhang Wenzhong's 'revitalization' of Wumart should also consider problems from the perspective of 'people':
First, activate the team and rebuild the organization. After Zhang Wenzhong was imprisoned, Wumart was once in a state of being without a leader, causing the middle and senior management to form their own factions, and the grassroots team lacked motivation. A Wumart insider said that due to relatively low compensation, employees lacked enthusiasm and the company lacked vitality. However, Zhang seems to have realized this and is actively improving the situation. Not long ago, Zhang announced that he would allocate 100 million yuan to establish a special fund to solve practical difficulties for employees.
Second, repair the relationship with suppliers. In the past, Wumart's relationship with suppliers was tense at times, with various fees causing suppliers to suffer. Reports of disputes between Wumart and suppliers often appeared in the media. If Wumart wants to be competitive in merchandise in the future, it must reconsider its relationship with suppliers, which should be recalculated from the perspective of the business model.
Source: Third Eye Retail (retailobservation), author: Zhao Xiangyang. This article is reprinted with permission. For reprinting, please contact the original author.
**October 23-24, during the Autumn Sugar and Wine Fair, the '2018 FMCG City Distribution Logistics Conference' hosted by New Distribution** will be held. We will invite industry experts, FMCG warehousing and distribution specialists, and distributors who have transformed to unified warehousing and distribution platforms to discuss and answer questions about the future development trends of FMCG city distribution logistics and practical cases of distributor transformation to unified warehousing and distribution, hoping to bring you different inspiration and thinking!
-END-


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671