Zhangshangkuaixiao Raises RMB 205 Million in Series B Funding; Existing Investor Source Code Capital Continues to Double Down

源码资本·March 26, 2018·0·0

On March 26, Zhangshangkuaixiao founder and CEO Yubin Zheng announced that the company had completed a 205 million RMB Series B round in February this year, co-led by Prologis and Meituan's Longzhu Capital, with participation from Source Code Capital and Hanxin Capital.

Photo: Zhangshangkuaixiao CEO Yubin Zheng and COO Lu Wang

On March 26, Yubin Zheng, founder and CEO of Zhangshangkuaixiao, announced that the company had completed a 205 million RMB Series B round in February. The round was co-led by Prologis and Meituan's Longzhu Capital, with Source Code Capital and Hanxin Capital participating.

Founded in July 2016, Zhangshangkuaixiao is a leading FMCG B2B platform in China and the top player in South China, currently covering 15 prefecture-level cities including Guangdong and Fujian. In 2018, the company will expand into Hunan and Hubei provinces while increasing investment in manufacturer service systems to further strengthen its advantages on the supply side. 2018 revenue is projected to reach 3 billion RMB.

1. Why use the heaviest model for FMCG B2B?

Current FMCG B2B models on the market fall roughly into three categories: marketplace platforms, self-operated models, and "co-build" models that use joint ventures or recruited distribution stations. Zhangshangkuaixiao chose the "heaviest" approach — densely warehousing in tier-2 through tier-4 cities, with each sorting center covering a core radius of roughly 10-15 kilometers to ensure the best fulfillment experience.

In Zheng's view, FMCG B2B doesn't follow traffic logic. A high-quality tier-2 through tier-4 city has only about 3,000 stores, which a sales team can cover quickly. And store owners are rational, so the "core competitive factors" are "stable, superior supply" and "fast fulfillment experience." FMCG B2B represents "an opportunity to rebuild infrastructure" — upgrading an existing market.

Zheng shared his business logic: you must break through two layers of boundaries. First, you must break through the "social service level boundary" around the "core competitive factors" to create a service experience that exceeds current industry standards and truly win users. If these key capabilities are built by integrating existing wholesalers, then the wholesaler's ceiling becomes the platform's ceiling. While marketplace players also bring benefits like digitization, these value points remain somewhat "peripheral" compared to inventory control and fulfillment.

Zhangshangkuaixiao insists on keeping both inventory rights and fulfillment operations firmly in-house, continuously iterating. It looks heavy, but as store density and scale increase, fulfillment cost ratios keep dropping — thus "breaking through" current average social cost boundaries and achieving higher efficiency. The company has already reached break-even in key cities and will soon replicate this across additional cities.

Image source: Zhangshangkuaixiao

2. Combining with industrial capital to enhance value creation and accelerate growth

Zheng noted that for China's retail upgrade, three types of infrastructure will be most critical going forward:

Supply chain platforms;

Major B2C scenarios (as connectors linking factories, stores, and consumers);

Urban delivery infrastructure. This is why Zhangshangkuaixiao actively brought in two industrial capital players, Prologis and Meituan.

Zhonglang Dong, founding partner of Hidden Hill Capital (Prologis's investment arm), stated: China's urban delivery industry has tremendous potential. Prologis will accelerate the build-out and deployment of urban delivery infrastructure, which will significantly help Zhangshangkuaixiao expand rapidly and improve fulfillment efficiency and service experience for customers. Meanwhile, Zhangshangkuaixiao has gone very deep in each city it operates in, with outstanding single-point scale and very stable, rapidly growing commercial flow — this is why Prologis chose Zhangshangkuaixiao among many B2B players.

Yonghua Zhu, founding partner of Meituan Longzhu Capital, stated: As a previous investor in Zhangshangkuaixiao, we chose to double down this round. We see convenience store channels growing rapidly, while the existing distribution system leaves offline channels fragmented layer by layer, with major room for improvement in both efficiency and experience. Zhangshangkuaixiao has been using a heavy model to build a modern pathway connecting factories, stores, and consumers, clearly bringing optimization to industry efficiency and user experience, effectively empowering small stores — consistent with Meituan's approach of online-offline integration and comprehensive empowerment.

Zheng noted that as FMCG B2B channels scale up rapidly, manufacturers are accelerating their attention and investment in these channels. Q3 and Q4 of this year will be the critical inflection point when FMCG B2B transforms from a supplementary channel to a mainstream channel. Following this round, beyond continuing rapid expansion, Zhangshangkuaixiao will also invest heavily in brand service capabilities to deepen cooperation with brand owners.

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