The fresh produce & FMCG B2B supply chain platform Xianshiji.com (鲜世纪) recently announced the completion of a Series B round of nearly ¥100 million (approximately US$15.9 million). The funding round was led by IDG Capital and HJ Capital, with participation from ZhenFund, Sky Saga Capital, Century Capital and Hudai. In 2018, the company looks to branch out into more cities in east China, along with a plan to build about 10 more logistics centers in that area, said LIAO Chuan, founder of Xianshiji.com.
Founded in 2015, Xianshiji.com is a fresh produce & FMCG B2B supply chain platform targeting predominantly supermarkets in east China. With its information-based supply chain system, the company aims to vertically integrate the upstream suppliers and retailers in the existing fresh produce & FMCG value chain, offering medium and small-sized retailers efficient supply chain services.
FMCG, a segment that takes up the lion’s share in the retail space, represents a market of approximately ¥7 trillion (approximately US$1.1 trillion). According to published statistics, 2013 saw the sales revenue of convenience stores in China grow by 18.2%, the sales revenue of department stores by 9.6% and supermarkets by 7.8%. And the convenience stores and mom-and-pop stores still played a dominant role in distributing FMCG, due to the immediate consumption nature of most FMCG like snacks and drinks.
Unlike other players in fresh produce & FMCG B2B space, Xianshiji.com has never been attempted to pursue market expansion by shelling out big money ever since its inception. As far as LIAO sees it, snagging market share aggressively doesn’t give a company in the FMCG supply chain space a competitive edge, but a truly efficient supply chain does, because it delivers real benefits for medium and small sized retailers.
“Medium and small-sized retailers are easily lured away by petty benefits, so they are less likely to stay with one online platform forever. That’s why the customers built up by doling out bonuses tend to defect. That being said, refining the supply chain after the business has evolved into a certain scale would also be a lot harder and costlier than when the business is still at an early stage,” said LIAO.
According to LIAO, the warehouse & logistics system of Xianshiji.com is now fully equipped with PDAs (personal digital assistant). In this way, the company gets to manage the employees and products in its warehouse & logistics system in a systematic manner. This approach, coupled with the company’s “more pay for more work” policy, serve to boost the employees’ morale and reduce cost in the management of its warehouse & logistics system. Currently, an employee in its warehouse & logistics system can sort up to 800 products per day. The company also boasts a stock turnover of 7.2.
The company’s delivery army is a mixture of both individual truck drivers and third-party logistics companies. With all trucks registered in the company’s logistics system, the delivery trucks can be dispatched efficiently by leveraging the company’s location-based orders delivery system, logistics docking system and service review system. Additionally, the company now boasts the same-day delivery in areas with the highest demand for its products. Of all of the company’s expenditure, logistics cost currently accounts for only 3%, said LIAO.
Up till now, the company has already built 5 information-based logistics center in the cities including Shanghai, Suzhou, Ningbo and Wuxi. These logistic centers have already turned profits, with their total operational cost standing at 5.0%. The company, with 30 brands and 3000 to 4000 SKUs on its platform, now supplies to 20,000 convenience stores in Shanghai.
The company currently has about 300 employees, among which around 70 are operational and sales staff in its headquarter. Its founder LIAO had previously worked in the fresh produce e-commerce platform Benlai.com, the online fresh produce marketplace Fieldschina.com, and the e-commerce platform YHD.com, which was acquired by JD.com, as CTO, and in Nasdaq-listed DemandTec as senior manager. As you can see, LIAO has a wealth of experience and resources in the businesses, including e-commerce, fresh produce e-commerce, warehouse & logistics, website optimization and mobile innovation. The other two co-founders excel mainly in sales and in the technical part.