Jinhuobao: A B2B E-Commerce Platform for FMCG in the New Retail Era

Abstract

In 2000s, disadvantages in the traditional proactive sales model used by China’s fast-moving consumer goods (FMCG) market have begun to appear. These disadvantages stem from the rise of both labor and logistics costs. Brand owners suffer from over-extended distribution hierarchies and the high cost and inefficiency of distribution personnel. In addition, distributors’ capital chains face significant pressure stemming from the high costs of warehousing and logistics. For retailers, insufficient supply and a limited variety of products are major issues. Launched in 2015, Jinhuobao is a business-to-business (B2B) e-commerce sales platform that specializes in serving small and midsize convenience store owners. Jinhuobao has launched a series of products to address each of the issues that the FMCG market is currently facing: (a) Jinhuotuan, a product that solves the human resource problem by using crowdsourcing and the Witkey model to help brand owners recruit part-time sales teams, thereby reducing channel costs; (b) Jinhuobao, a product that solves the goods problem by using the B2B e-commerce platform model to reduce intermediate distribution links and help terminal retailers purchase goods from more brands at more affordable prices; and (c) Jindou Cloud Warehouse, a product that solves the warehousing problem by using time-based leases, shared warehousing, and three-dimensional management to help distributors cut supply chain costs through an integrated storage and distribution system. Having accumulated a significant amount of big data and warehouse management capacity after two years of development, Jinhuobao began to target a new pain point in the FMCG market—financing difficulties faced by distributors due to their lack of credit—and ventured into the field of supply chain financial services. Jinhuobao works with new retail, a market that many big players have begun pouring into over the past two years (2015, 2016): new entrants include Internet giants such as JD.com and Alibaba. Moving forward, how can Jinhuobao work to develop better supply chain financial products? What capabilities does it still lack? How should Jinhuobao set itself apart from its competitors?

The case was developed by ZHANG Hua, QIAN Wenying, LI Shuyang of China Europe International Business School, with the helpful collaboration and support of Jinhuobao. For the sake of confidentiality, financial indicators and some key figures of Jinhuobao in this case have all been revised, and such revisions do not affect discussion about and decisions based on this case. The case was developed to provide the basis of classroom discussion rather than to illustrate effective or ineffective handling of a management situation.

This case was the Best Case Award winner of 2017 Global Contest for the Best China-Focused Cases.