The following is the speech delivered by Mr. Zhang Yichun, Founder & Chairman of Zhongshang Huimin, at the 5th FMCG + Internet Conference hosted by New Distribution, edited and published for readers.
Distinguished guests, good morning. Today's theme is FMCG + Internet, a short theme: "Break and Establish." What are we breaking, and what are we establishing? What has the B2B industry experienced in the past few years, and what do we need to break? In the future, how should B2B establish itself in the FMCG industry?
In recent years, we have heard a lot about "industrial internet" and "internet plus," but I believe the challenges brought by the current industrial structural transformation are enormous, ultimately reflected in your core competitiveness or core value. What core competitiveness should our 2B industry possess? How does it change at each stage? The competition in the B2B industry began around 2013, when the industry started to enter the market, and it was also the year we started our business. During this period, product competition and price competition were the core, and I define this era as the 1.0 competition era, where it was all about price, product, and resources. If I could get the product and a good price, I would win half the battle.
However, I believe this era of competition was only a shallow, primitive competitive era, which did not truly reflect the value that the B2B industry brings to the entire FMCG industry. After the 1.0 shallow competition era, it gradually entered the 2.0 era of industry competition, which was competition in supply chain and competition in loading more services.
In fact, there were no winners in the 1.0 competition era, including Zhongshang Huimin. Over the years of development, we have stumbled and suffered a lot. We have continuously summarized our experiences, transitioning from rapid expansion to steady development.
In the 2.0 competition era, loading more services became the content of competition in the 2B industry. From then on, we invested heavily in research and development on our respective platforms, spending a lot of funds to create so-called one-stop services, not only integrating channels but also adding services such as air tickets, lottery, utilities, and gas to empower small stores. We continuously developed more platform functions, hoping to bring users the best experience through rich platform features. After several years, Zhongshang Huimin found that the path of empowerment was correct, but the timing was not right. After deep exploration, we learned that having the richest product features and perfect user experience does not necessarily mean the best business model. If an enterprise wants to provide more services to customers, it needs to clearly think about the cost of such empowerment services and whether it can afford them. Including our pursuit of absolute delivery time, we once proposed half-day delivery: order in the morning, deliver in the afternoon; order in the afternoon, deliver the next day. From the logic of user experience, this seems right, but there are misunderstandings in implementation because the FMCG B2B industry itself is a low-profit, low-margin industry. We need to continuously add service functions and use various marketing methods to retain customers, which is very costly for a low-margin industry. In the 2.0 competition era, we took many detours. This era was an era of pseudo-service loading, where functional stacking produced false value. In this era, we need to eliminate the false and retain the true. It is not about adding everything without selection, nor empowering without screening, nor is it that the fastest speed and the most complete products are the best. Instead, we need to select additional services and consider the matching degree of services. So I think the 2.0 era of FMCG B2B should be an era of service empowerment.
Just now, several industry experts made profound and sharp judgments about the past and future of this industry. How will this industry develop in the future? Whether it is the second half or the middle game, what is the overall direction of the 2B industry? I believe digitalization is its future direction, and building digital supply chain service capabilities is the core. The final competition will not be about capital and resources, nor product functions and services, but the ability of channel digitalization. How can channel digitalization create value for upstream and downstream services? Zhongshang Huimin has made many attempts and explorations in recent years, establishing a relatively complete Huimin big data architecture system: through the front-end ordering intelligent terminal equipped with ERP, EHR, Huiyan, Huijing, and other systems, we achieve a three-step process from data warehouse to data mining and finally to data-driven decision-making. The self-developed "Huijing" system has achieved real-time processing of massive data, using technological innovation to improve efficiency, helping small store owners start with product selection, inventory management, business empowerment, and increasing sales per square foot; helping manufacturers start with transforming sales channels, opening up the national market, laying out key cities, and providing real-time feedback of real data, truly achieving data-driven business and empowering upstream and downstream of the industry. Of course, technology-empowered data is not only reflected in the front end. At the core supply chain level of FMCG, the combination of TMS, WMS, DMS, GIS, and intelligent reports not only greatly improves efficiency and business coverage but also achieves data-driven supply chain efficiency improvement, upgrading both consumer experience and cost efficiency.
This industry is a tough business; FMCG itself is a hard job. But how to dig deeper into the hardship and draw out sweet well water? Understanding the real needs of small stores is particularly important.
Technology has driven our small store ordering from the original PC to mobile. Digitalization has given our small stores inventory management, real-time understanding of their goods, and automatic order generation based on data analysis. The owners find it much more convenient. Do you know how long it used to take for an owner to order our products? About an hour, with eyes blurred from searching. So last year, Zhongshang Huimin developed an intelligent ordering system. In the digital application of the ordering system, Huimin is still at the forefront, continuously exploring. Today, all Zhongshang Huimin Haijia chain convenience stores use our self-developed system, which can automatically place orders. Originally, ordering once took an hour; now it only takes a few minutes, with just minor modifications needed.
The front-end architecture demonstrates the value of digitalization, but the back-end service capability and warehousing supply chain capability are the core of digitalization. Through digital big data, we improve efficiency and reduce costs. Zhongshang Huimin's DMS system collects data from all aspects of "warehouse" to "distribution," used to analyze the efficiency of each operation link, cost evaluation, performance management, etc., providing effective data for supply chain management decisions. At the same time, the digitalization of logistics distribution in the supply chain system plays a decisive role in reducing costs and increasing efficiency in vehicle management, loading operation management, order line arrangement management, dispatch allocation management, GPS driving management, and other links, while also supporting management strategies for each link.
Currently, Huimin's intelligent management systems in procurement, warehousing, and order management have all been fully launched. In procurement and order management, Huimin has been continuously iterating intelligently, using the system to automatically complete precise procurement, reasonable inventory management, and other tasks to reasonably improve capital utilization.
At the same time, based on the analysis of all historical transaction behaviors such as customer behavior, sales, orders, and returns, combined with customer profiles, operational tags, and indicator contributions, we provide precise data support and scientific basis for upstream brand owners to stabilize sales channels, increase sales, and support new product launch, promotion, and placement.
So after five years of development, Zhongshang Huimin has been continuously improving its digitalization capabilities, transforming from extensive management to refined management, from low efficiency to high efficiency empowerment, meeting real needs and creating real value for the industry.
Finally, I hope to have the opportunity to discuss with our partners, whether they are distributors, self-operated, or matching platforms, the direction of change in our industry. One thing is certain: digitalization will be the most important force driving industry change. Finally, I wish the FMCG B2B industry a better tomorrow. Thank you all.