Kr-Asia is all about actionable insights for entrepreneurs. And through this post, you’re about to find out:
1. What pain points could FMCG B2B platform address?
2. How to choose between a go-between platform and a self-run online To B business?
3. For To B business, which one should come first while the business is still in its infancy, guaranteeing the quality of services or speeding up market expansion?
Zskuaixiao.com (掌上快销), an FMCG B2B platform in China, has seen financial backing from both Longzhu Capital, a sub-organization of Meituan-Dianping, and Source Code Capital in 2017, according to information obtained by KrASIA.
China is currently home to nearly 7 million mom-and-pop stores, which combined contribute around 40% to all the consumer goods sold in China, according to data released by Kantar Retail, a consulting company involved in consultation of e-commerce, retail and shopper insights. Unable to reach all the mom-and-pop stores through a unified channel, the brand owners (suppliers) have to establish intricate, multi-tier distribution channels. Although it has eased the coverage problem, complicity and inefficiency also arose.
And that’s what the FMCG B2B platform has set out to address. With a view to establishing a more efficient supply chain, the FMCG B2B platform looks to wean the brand owners off their dependence on multi-tier distribution channels by bringing their goods directly to the deluge of mom-and-pop stores dotted around China.
Ever since its emergence in 2015, many companies in China have ventured into this business. Among them include JD’s Xintonglu (新通路) and Alibaba’s LST (零售通). The FMCG B2B platform can be further divided into two types in terms of how it is run. One is a pure go-between platform and the other is one that’s backed by actual involvement in wholesale business.
Read more: How to Build a Successful Platform Business? The VC Behind Didi Explains with Classical Examples
As opposed to a go-between platform, which is not involved in the actual process of supplying goods and executing contracts whatsoever, the latter one honors supply contracts itself and engages directly in supplying goods. What’s good about this is the platform operator gets to hold sway over the quality of supplied goods and service. Either way, the ultimate goal of the FMCG B2B platforms is to shorten the procurement cycle and marry up suppliers and buyers efficiently, thereby paring down the procurement cost for those store owners (Plus, as the platform evolves, the platform operator could add to its platform more functions including data-based selection of products and supply chain finance).
Zskuaixiao.com is an FMCG B2B platform backed by its own procurement of goods and warehouse & logistics networks. With a special focus on supplying mom-and-pop stores in medium-sized cities, Zskuaixiao.com has, as of now, established its presence in 15 cities in Guangdong and Fujian provinces, covering more than 50,000 retail stores.
Its founders ZHENG Yubin, CEO of Zskuaixiao.com, and Wang Lu, COO of Zskuaixiao.com, are both former employees at retail giant P&G, who were in charge of the distribution channels in Shanxi and north Zhejiang respectively. Having been indulged in the FMCG sector for so many years, they have developed their unique understanding of the FMCG and FMCG B2B sectors.
While announcing Zskuaixiao.com’s latest funding round, its founder Zheng Yubin sat down with KrASIA to talk about the operational mode of the platform and her own views about this sector.
FMCG B2B will be the mainstream channel
Q: As so many companies have been competing in the industry, what makes Zskuaixiao.com stands out?
A: Small stores play an important role in FMCG and retail industry. Therefore, FMCG B2B needs to cover more small stores to improve efficiency and to realize infrastructure update, which will turn the small store coverage into a battlefield.
FMCG B2B can be promoted in that it is able to provide standardized services and terms for small shops (small business), which have a high capital turnover ratio and no payment terms.
Although FMCG B2B is still in its infancy, attracting little attention, it will develop into the mainstream channel with the help of small shops.
Q: What’s the next step of being the mainstream channel?
A: Major players in the game of FMCG have clear plans on how to make investments, including contract performance, gross margin, to shopper promotion and brand building. Direct results of turning into mainstream channel will be increased investment, larger gross margin and more resources available.
Q: Why do you prefer self-run model to go-between platform?
A: It is grounded on customer needs. The self-run model can satisfy what small business requires: stable and qualified product supply with competitive price as well as fast and convenient performance guarantee.
High-quality supply and performance guarantee are the core
Q: Specifically, how to satisfy those requirements?
A: As for the product supply, the company has been trying to manage supply chain, cooperate with supreme suppliers and expand the kinds of products. And as for the performance guarantee, Zskuaixiao.com has realized self-run of local storage and delivery.
Q: What’s your strength?
A: Market share. Zskuaixiao.com has won the largest market share in most of the cities it entered. Focusing on development in medium-sized cities, we have connected business in these regions and turned us into the customers’ first choice.
Furthermore, the number of cities we entered and monthly order amount are increasing.
Q: Do you prefer to put your first priority to improve product supply and performance guarantee rather than your attraction to outlets?
A: It does not mean attraction to outlets is less important than product supply and performance guarantee. B2B has well-defined target customers, which is different from B2C. The number of outlets is limited and they will leave as soon as they feel unsatisfied, which requires us to improve product supply and performance guarantee before advancing attraction to them.