The 3rd "FMCG + Internet Conference" hosted by New Distribution was grandly held at Chongqing Yuelai International Convention Center on November 8-9, 2017! It attracted thousands of industry distributors, manufacturers, and internet companies from all over the country, with a full house and unprecedented scale. The following is the speech delivered by Mr. Zhang Yichun, Chairman of Zhongshang Huimin, at the conference, organized by New Distribution for readers.

Zhang Yichun: Respected peers, guests, and friends, good morning! I am very glad to attend this conference on new retail + internet, or new distribution + internet, or FMCG + internet, because our model is more of a "+ internet" model rather than "internet +" model.

Now in the industry, everyone is talking about internet and B2B, saying that the spring of B2B has arrived. Today, when I talk about the way of survival, this topic may be a bit heavy. Has the spring of B2B truly arrived? In my view, not yet. The B2B industry has entered a deep-water zone, and it is not that optimistic.

I remember when we started this industry in 2013, Zhongshang Huimin was still a lonely pioneer. Gradually, we had companions, with nearly 30 friends engaged in FMCG B2B, covering 130,000 small stores. I remember in 2013, when we discussed the B2B model and online-offline integration with small stores, many did not understand. But now, whether it is the transformation of traditional distributors or the entry of new platforms, small stores have a high acceptance of B2B business. However, B2B is still not mainstream; we are just a supplement, so the market space is huge. Today, national giants like JD and Alibaba have all invested in this industry, and our partners have exceeded 70, with total financing over 5 billion yuan. This represents the future direction and development trend. From this industry's perspective, I think we can view it with a few words:

  • First, it is hard work. This industry is tough, not as easy as imagined. Many rush in, which is a siege phenomenon, some voluntarily, some involuntarily.
  • Second, it is slow work. This industry is slow; it won't be fast. Gaining customer recognition and brand recognition may take a long time.
  • Third, it is meticulous work. B2B is more rational; facing these mom-and-pop stores and long-time small store operators requires more patience and care.
  • Fourth, it is good work. It represents a direction. Whether it is a direct-operated platform or a matching platform, regional or national, if the direction is correct, it will form a big pattern for FMCG B2B.

Everyone has different opinions about FMCG B2B. We have been exploring which model is correct: matching or direct-operated? Some say matching has a future, others say direct-operated has a future. I think whether matching or direct-operated, in the end, it comes down to two aspects: efficiency and cost. Whether matching or direct-operated, does it improve industry efficiency and reduce costs? If yes, at least the direction is correct. But a correct direction does not guarantee survival. The key is whether it maximizes effectiveness, benefits, and efficiency. Some say horizontal is suitable, some say vertical is suitable. Ultimately, whether horizontal or vertical, the final target is the consumer, and what is reflected on consumers is the experience. The dispute between horizontal and vertical is actually a dispute over experience. In Mr. Zhao Bo's report this morning, he mentioned chain and franchise models. Whether it is a strongly controlled chain model or a franchise model, the competitiveness lies in the richness of value-added services and the empowerment of store control. For different models that focus on internet marketing management or traditional channel expansion, the competitiveness is not about online vs. offline, but determined by their own refined operation and management capabilities.

Some say this industry is actually a capital contest: if you have money, you do well; if not, you fail. I think it is not necessarily so. Having money is not necessarily a good thing; too much money can make you hot-headed. In this industry, sometimes you need to stay sober. Now investors are becoming more rational; they see more than we do. In the past few years when the capital market was active, everyone rushed in, but when they saw signs of trouble, they immediately withdrew. You should all have felt this: last year, it was said winter was coming, and suddenly it froze. This year, with new retail and unmanned convenience stores, capital has warmed up again.

So, in the whole industry, which model is correct? I want to sum it up: whether direct-operated or matching, horizontal or vertical, chain or franchise, online or offline, which one is not important. What is important is who you bring value to and who you create value for. That is the fundamental. Value is also the main line of my speech today.

Today we talk about the way of survival. Once the direction and concept are clear, we need to consider long-term survival. What does survival depend on? I think it depends on the enterprise's ability to integrate resources, team management capability, and refined operation capability.

With a good direction, only a few can come out. Not everyone can make it. Who can survive, or who can last longer? We often talk about internet thinking. Based on years of FMCG B2B platform experience, I say the core of internet thinking is one word: "cool" (shuang). Who should feel cool? You cannot just make yourself cool. If investors are not cool, you definitely cannot be cool. If only small stores are cool, but upstream brand owners are not, you cannot be cool for long. If brand owners are cool but small stores are not, it won't work either. So, first, make brand owners cool by following rules. Also, make small stores cool with complete products and good service. Make your consumers cool. Just now, JD talked about bringing value to users, which I strongly agree with, because the final landing is consumer coolness.

In recent years, it seems that if you don't talk about "new retail," you are not in the industry. But what exactly is new retail? Personally, I think: there is no new retail, only retail of the times. The development of China's entire retail industry has gone through several stages. From the earliest department store era, when shopping was entertainment and enjoyment, that was the new retail of that era. Later, large comprehensive supermarkets were also new retail, one-stop shopping. Then came e-commerce development, all reflecting retail formats of different periods. So, if we talk about new retail, it is actually retail of the times. Maybe in a few years, our current view of new retail will be outdated, because retail will incorporate more elements and technology. In the future, retail development will definitely come down from the internet; the return of humanity and community will be the process.

In the FMCG industry, new retail is reflected in four aspects: First, faster. In the internet economy era, people have higher demands on time. Second, more complete. I hope to not only meet the needs of this category of products but also satisfy other personalized needs and diverse service requirements. Third, warmer. More warm emotional needs. Whether a cup of milk tea or a glass of water, this warmth has emotion and service. Whether rational or emotional, in the end, it is the relationship between people. People are the core, so warmth is very important. Fourth, more understanding. It knows what you want, or knows what you want now, and also knows what you will want in the future. This is my understanding of new retail: faster, more complete, warmer, and more understanding.

Returning to today's speech theme, I think value determines everything. 2B distribution, matching, vertical, direct-operated are not important. What is important is who you create value for, for which links you create value. Whether your value is scarce, whether you have core competitiveness, and on this basis, whether you have strong resource support capabilities, whether national or regional, whether you have support, operation, and management capabilities, that is value. Whether improving efficiency or reducing costs, it is creating value.

So, Zhongshang Huimin also hopes to work with peers here to create value for the FMCG industry, create value for the B2B industry, and together win the arrival of the spring of FMCG B2B. Thank you!

Click Read Original to see more about the 3rd FMCG + Internet Conference... -END-