News Yesterday afternoon, a piece of news exploded in the FMCG B2B circle: Zhongshang Huimin held a press conference in Beijing, announcing a 1.3 billion yuan Series B financing round, co-led by Zhongchuang Capital, Zhonghe Guarantee, and Western Securities, with Dimension Capital, Renzhong Capital, and Tongxi Capital participating, and Series A shareholders such as Zhejiang Venture Capital, Daochen Venture Capital, and Jinfu Fund following up. The pre-money valuation is rumored to be $2 billion. The press conference did not disclose specific sales and gross profit figures, but it is said that its 2016 sales are expected to reach 10 billion yuan. Founded in May 2013, Zhongshang Huimin's business model is to connect brand owners with terminal convenience stores through its self-operated e-commerce platform, providing one-stop online procurement services for mom-and-pop stores. To date, it has established subsidiaries in 22 provinces and municipalities including Beijing, Tianjin, and Guangdong, with over 450,000 convenience stores nationwide and nearly 50 distribution centers. The company's warehousing and logistics personnel exceed 2,000, with a total staff of over 5,000. The company received angel investment from Sheng Xitai, founder of Hongtai Fund, in 2014, followed by a nearly $100 million Series A round in January 2015, led by Daochen Venture Capital and Jinfu Capital, with participation from CITIC Fund, Zhejiang Venture Capital, and Fosun Kinzon. It was the first community O2O project in China to receive nearly $100 million in investment. Chairman Zhang Yichun explained the model: "Zhongshang Huimin's rapid growth from 1 million to 10 billion in three years shows that its development aligns with the choices of the times and the market. Our business logic is the 'one machine, two wings' strategy: the machine is to build an innovative community O2O platform, and the two wings refer to community convenience services and community financial services. Using internet technology to give traditional convenience stores wings, turning them into a fully internet-capable, integrated online-offline community service platform—that is Zhongshang Huimin's 'Internet+' model." Currently, Zhongshang Huimin holds a relatively leading position in the FMCG B2B industry, and its heavy asset investment has created strong industry barriers. However, B2B e-commerce penetration in the market of over ten million mom-and-pop convenience stores nationwide remains low. Although channel flattening is considered a trend to improve efficiency, replacing the traditional multi-level distribution system still has a long way to go. In terms of operating model, its self-operated model faces several persistent industry-wide challenges: Mainstream consumer goods are relatively concentrated upstream, with flat and stable channel supply. Most A-class products cannot obtain brand agency rights in regional markets, so they are mostly purchased at second-tier wholesale prices, resulting in extremely low margins. After deducting 6-7% logistics costs, early on with insufficient traffic, basically every order is a loss. Due to the long offline penetration cycle, there will be a prolonged loss period. The traditional chain is highly efficient, with each link having its value. Warehousing and logistics, finance, sales, public relations, and service are the five essential elements for FMCG to move from factory to store. These functions were originally handled by distributors and second-tier wholesalers. Since self-operated B2B is meant to replace distributors and second-tier wholesalers, it must also take on the channel functions they carried. For example: first-tier beverage manufacturers, to stagger production and sales peaks, typically start collecting payments from terminals in November, collect from second-tier wholesalers and distributors in December, produce in January, fill distributor warehouses in February, fill second-tier warehouses in March, fill store warehouses in April, and do terminal displays in May (terminal freezing). Distributors and second-tier wholesalers play a crucial role in inventory transfer; the transfer of time and space requires channel players. Distributors and second-tier wholesalers cooperate to handle warehousing, distribution, sales, finance, service, and public relations, thereby delivering the channel power of the product. In fact, no platform has yet been able to solve this industry-wide problem. Of course, without competition, it would not be difficult for Huimin to narrow losses. But the problem is that with numerous B2B platforms and increasing competition, relying on traffic to narrow losses may be difficult. According to incomplete statistics by the author, there are over 120 countable FMCG B2B platforms in China, and countless more uncounted. These include internet giants like JD.com and Alibaba, as well as various models like Zhanghe Tianxia, Diashang Interconnect, Jinhuobao, and Piduo. There are also second-tier platforms like Yijiupi and 51 Ordering that enter the FMCG main battlefield after becoming profitable in their verticals. They will continuously erode the consumer goods categories in small stores to gain market share, posing potential competitive threats to Zhongshang Huimin in the future. At the same time, from Zhongshang Huimin's 'one machine, two wings' strategy, we see that they are centered around the internetization of convenience stores, extending community convenience services and community financial services through the community O2O platform. They aim to gain corresponding returns by adding value to retail stores. This suggests that Zhongshang Huimin's current B2B business may just be supply chain preparation for future O2O business. It is not ruled out that Zhongshang Huimin will open its own direct-operated convenience stores or adopt managed franchising for existing retail stores. Eventually, it may form an 'Internet+ convenience store' model similar to Meiyijia, and then achieve profitability through its extended convenience services and community financial services. In the mobile internet era, O2O community convenience stores are playing a greater role beyond traditional functions. Their accessibility and convenience are bringing consumers back, thereby revitalizing online and offline business and creating an O2O closed loop. Besides Zhongshang Huimin, other companies like E-commerce Interconnect and Zhanghe Tianxia have all entered the supply chain system of small and medium convenience stores in recent years. Their models generally involve supply chain integration, establishing logistics distribution systems, providing information services, and offering precise marketing online. Of course, the convenience store market is also a red ocean. Whether Zhongshang Huimin's supply chain + community O2O convenience chain system can rewrite China's retail landscape remains to be seen. However, its current scale and size make it difficult to find a comparable opponent in the industry. But what the future holds will depend on whether Zhongshang Huimin's model can withstand the baptism of competitors and the test of the market. -END- The best learning platform for FMCG distributors in China Focusing on providing professional, practical, and applicable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation | [Long press QR code to follow]