Yunmei Co., Ltd.'s Cloud Warehousing Division head Chu Zheng receives award on stage At the 3rd China FMCG + Internet Conference (CFIC) held in Chongqing on November 8-9, Yunmei Co., Ltd. attracted high attention with its Xunmao Smart Commerce System and was awarded "2017 China FMCG Supply Chain Quality Service Provider." In April this year, Liu Qiangdong announced plans to build over 1 million JD convenience stores nationwide in five years, and in August, Alibaba Retail Link announced cooperation with distributors to build 2,000 forward warehouses covering 1 million retail stores. As early as 2014, Shandong Yunmei Co., Ltd. had already proposed the slogan of intelligent upgrading and transformation for one million stores and existing distributors. "Million Store" Plan to Capture National Convenience Store Market: A Comprehensive Analysis of the Operating Models of Alibaba, Yunmei, and JD - Who Will Win in the Fierce Competition? With equally grand national "million store" plans, what are the differences in business models among the three? Which operation is more conducive to the healthy and sustainable development of the entire industry? The editor has sorted out the differences between Alibaba and JD, and Yunmei, the most representative enterprise in the smart commerce field, in terms of layout regions and categories, supply chain and logistics distribution, and business models: Layout Regions and Categories Overall, Alibaba tends to favor first- and second-tier regions, while JD focuses more on fourth- to sixth-tier regions. Yunmei, centered in Shandong, steadily expands to cover the whole country. In terms of categories, the three are broadly similar, mainly FMCG daily necessities, but Yunmei's "Xunmao Smart Convenience Store" leans more towards community convenience value-added services. Alibaba's "City Partners" focus on community retail stores, indicating a preference for large cities. This aligns with its product positioning of imported goods and rural Taobao products. In terms of categories, it mainly deals with imported goods and rural specialty agricultural products as daily FMCG, not considering IT digital products for now. JD's "New Path Business Unit" talks about promoting brands to fourth- to sixth-tier regions, emphasizing relatively closed areas like townships. Categories are not disclosed, but when giving examples, they mention mobile phones, likely including daily FMCG and IT digital products where JD has advantages. Yunmei, centered in Shandong, gradually radiates to the whole country. Yunmei's "Xunmao Smart Convenience Store" not only provides FMCG, daily necessities, and fresh retail but also leans more towards community convenience value-added services such as bill payment, express delivery, housekeeping, travel, and home delivery. It also helps small and medium supermarkets build standardization, carry out intelligent upgrades and transformations, and improve their competitiveness. Supply Chain and Logistics Distribution B2B has entered the 2.0 stage, no longer just simple information and consultation, but deep into online transactions, committed to forming a closed-loop transaction. Supply chain and logistics distribution are important links for B2B enterprises to lay out the industry chain. Warehousing and logistics are heavy asset construction. Some platforms self-operate and self-build large warehousing and logistics centers to improve supply efficiency and guarantee, but expansion speed is relatively slow, such as JD New Path. Some use an open platform model, integrating brand and third-party logistics resources through informatization, such as Alibaba Retail Link. Others focus on regional distributed and localized logistics services to optimize last-mile efficiency, such as Yunmei Co., Ltd. Alibaba uses Cainiao's warehousing capabilities established in first- and second-tier cities to integrate supplier resources and organize localized sources of goods. The sources of FMCG goods for Alibaba Retail Link mainly come from channels of first-level authorized distributors of brand owners. Establish a compatible and efficient three-level warehousing and distribution system. To accommodate brand owners with different distribution depths, Retail Link plans to set up a three-level warehousing and distribution system, including regional warehouses, city warehouses, and forward warehouses. JD will also leverage its regional sub-warehousing value as a distribution center for its convenience stores, hoping that after ordering via the APP, goods can be delivered the next day. JD introduced that JD convenience store goods sources are divided into two modes: 100% procurement and partial procurement. Store owners order on JD's Zhangguibao, and JD is responsible for logistics delivery to the store. Stores that procure 100% from JD will receive more support from JD. Yunmei's independently developed smart supply chain system integrates resources of city distributors, wholesalers, and logistics providers into a unified management system. The "Yunmei Cloud Warehousing" it has built focuses on business and users, achieving efficient scheduling of the smart supply chain. FMCG distributors using Yunmei Cloud Warehousing can not only easily achieve integrated management of purchase, sales, inventory, and finance but also achieve 24-hour online associated sales of goods, dynamic personnel management, and monopolistic regional order acquisition. In addition, Yunmei Cloud Warehousing has highly intelligent inventory management, product management, financial management, warehouse inventory, and employee management functions, which can solve key issues such as redundant personnel, reduce warehousing costs, improve work efficiency, and increase warehousing turnover. Business Model Operations Different business models mean different cooperation methods and resource utilization. The business models of these three are different, with Alibaba and JD adopting their usual models. Alibaba follows an open cooperation model, cooperating with brand manufacturers to build an open platform without involving goods. This effectively utilizes the original distribution channels and resources of manufacturers to deliver goods directly to community retail stores. Retail Link is an internet one-stop procurement platform launched by Alibaba's B2B business group for offline retail stores, providing ordering, logistics, marketing, and value-added services for urban community retail stores, and helping store owners with store renovation, data management, and marketing plan formulation. Retail Link hopes to bring value to brand owners: efficient distribution coverage, precise channel marketing, omni-channel services, and comprehensive digital support. It also stated that it will deeply cooperate with FMCG industry distributors, and together with brand owners and distributors, build a smart distribution network, sharing the low-cost, high-efficiency warehousing, distribution, and personnel of the distributor system with the entire FMCG industry, allowing brand owners to cover stores more efficiently and accurately. JD follows its usual self-operated model, and this time it should still choose self-operation. JD self-built logistics can form a closed loop of shopping, warehousing and distribution, express delivery, and after-sales, providing users with a one-stop solution from platform purchase to logistics delivery. JD New Path project lays out low-tier cities, bypassing distributors and second-tier wholesalers, using its self-built JD logistics to deliver goods directly to retail stores. The new value of New Path lies in JD's strong e-commerce capabilities and excellent teams for brand manufacturers and terminal stores, improving industry efficiency and user experience, and reducing distribution costs. Yunmei focuses on providing intelligent upgrade services for distributors and wholesalers. It mainly builds bridges between local small and medium supermarkets and suppliers, creating a new local FMCG supply chain platform, an efficient online ordering platform for supermarkets, and emphasizing service. Its Xunmao Smart Commerce System is an intelligent service platform based on internet technology that provides software services for all circulation links of the business ecosystem, and is an overall solution for business system intelligence. It aims to create a smart ecosystem model for the FMCG supply chain, optimize existing resources, and share the ecosystem. Relying on the company's strong intelligent ecosystem, it breaks industry boundaries, systematizes and networks the original manufacturing, logistics, warehousing, retail terminals, and related industrial information, achieving intelligent upgrading of the entire industry, placing the circulation of the entire business ecosystem in the "cloud," and creating a new business format for the intelligent supply chain of the physical business economy. Summary: JD New Path project lays out low-tier cities, bypassing distributors and second-tier wholesalers, using its self-built JD logistics to deliver goods directly to retail stores. New Path chooses to enter low-tier markets, seizing the pain points of terminal stores and brand channels, and relying on JD Mall's rich product and supply chain resources, it is quite attractive to both manufacturers and small stores. Retail Link's data technology and category optimization can improve retail store efficiency. Retail Link should also have a positive effect on eliminating counterfeit goods and quality control, and is conducive to the rise of new brands, providing opportunities for manufacturing upgrades and accelerating commercial transformation and manufacturing replacement. But if the commercial profits of such scale, size, and efficiency cannot be transferred to social redistribution, it may cause huge unemployment in the entire commercial channel. Moreover, these giants also have unmanned store extinction actions. With such hollowed-out employment, where does consumption power come from? In addition, there are many intermediate links in FMCG, from brand owners to regional general agents, to agents, to wholesalers or distributors, to wholesale-retail stores, to community convenience stores, and even rural small stores, with multiple levels in between, and each level has multiple merchants. With the entry of e-commerce giants like Alibaba and JD, the B2B wholesale procurement system will form an encirclement of middlemen through operations. The first to lose business will be the smaller agents and wholesalers in the lower reaches of the intermediate links. Previously, a brand might have 7-8 different agents, but through B2B platforms, 3-4 links can be reduced. What is worrying is that the aggressive Retail Link and New Path may become a nightmare for traditional wholesale markets, distributors, and brands not on the platform. Different from Alibaba and JD, Yunmei's principle is that local merchants supply local customers. Through intelligent upgrading and transformation of local distributors and wholesalers, it creates local GDP, retains local taxes, and improves local employment. Its intelligent upgrading project for the FMCG industry, worth tens of billions of yuan, targeting distributors and wholesalers nationwide, is quite popular in the industry. The project plans to gradually invest over 20 billion yuan in special support funds for Yunmei Cloud Warehousing in more than 300 prefecture-level cities and over 2,000 county-level cities nationwide, helping more than 35,000 distributors upgrade intelligently to cloud warehousing. It empowers brand owners, distributors, and wholesalers in the FMCG industry nationwide, helping them strengthen their main business, optimize existing resources, share and coexist, and create win-win outcomes. -END-