Source Code Capital portfolio company Zhangshang Fucai announces completion of Series B funding round, Source Code Capital led angel round

源码资本·November 5, 2021·0·1

"The Building Materials Market of the New Era"

Zhangshang Fucai, a one-stop supply chain platform for home improvement finishing materials, announced the completion of its Series B round, led by Easyhome, a leading home furnishing and building materials company. Following this round, the company will accelerate city expansion, launch its own brand development, and broaden its product categories. Source Code Capital led the company's angel and Pre-A rounds.

Zhangshang Fucai operates a one-stop supply chain platform for finishing materials. On the upstream side, it connects with branded suppliers, leverages centralized purchasing to secure price advantages, consolidates highly fragmented factories, and implements quality control through screening to activate their excess capacity. On the downstream side, it provides high-quality foremen and renovation companies with cost-effective, reliable one-stop online procurement services for finishing materials. In between, it employs big data, AI, and other technologies to empower product selection, procurement, logistics, warehousing, and sales — building an intelligent, efficient, and standardized service system for the finishing materials industry. Through this model, Zhangshang Fucai is gradually replacing traditional offline building materials distribution represented by building materials markets.

Founded in September 2017, Zhangshang Fucai has cumulatively launched operations in more than 20 cities nationwide, with monthly sales exceeding 100 million yuan. After three years of exploration, the company has developed a standardized playbook that enables scalable city replication. In 2021, it opened in 16 new cities, achieving nearly 5x year-over-year sales growth.

Founder & CEO Chengkun Xue believes that the structural shifts in renovation demand in recent years are powerfully driving the vigorous development of one-stop supply chain platforms for home improvement finishing materials — this is a historic opportunity. For comparison, during the past two decades of rapid urbanization, building materials markets were the most efficient solution for building materials distribution. But as second-hand homes have become the main source of renovation demand, building materials markets have become inefficient. Essentially, the front-warehouse model of building materials markets was better suited to the new home development phase when renovations were concentrated, while the central warehouse plus online customer acquisition model is the efficient solution for building materials distribution in the future era of second-hand home renovations. One-stop supply chain platforms for home improvement finishing materials will inevitably become "the building materials markets of the new era."

Zhangshang Fucai's founding team represents a classic profile of serial internet entrepreneurs. Founder & CEO Chengkun Xue was a co-founder of PPzuche, where he successfully built China's largest car-sharing rental company. A graduate of Tsinghua University's Department of Computer Science, he places heavy emphasis on technology's role in transforming and improving industry efficiency. He has established a highly intelligent, efficient, and standardized operations and service system that improves delivery quality and efficiency for both upstream and downstream partners, reducing fulfillment costs by nearly 10 percentage points. For example: in sales, through remote online customer acquisition combined with AI-driven lead mining, sales team productivity has improved 3x compared to industry averages — entering Shanghai, the company converted 70% of the city's foremen into registered users within just four months. In delivery, through self-developed dispatch and batch-ordering algorithms tailored to the building materials industry, delivery costs have been reduced by 25%. In procurement, through big data-driven product selection and sales forecasting, inventory turnover speed has been increased to 10x that of building materials markets.

Regarding the company's future development, Xue stated:

The company will continue replicating its standardized playbook nationwide, aiming for coverage in 100 cities within the next two years and continuing to build channel value. New shareholder Easyhome, as a well-known brand in the home furnishing and building materials sector with operations in more than 400 cities and a strong reputation among users, will provide significant support for the company's city expansion.
As a super-channel for finishing materials distribution, the company will focus on developing its own branded products. The upstream finishing materials supply chain already includes successful listed companies such as BNBM, Oriental Yuhong, and Weixing New Materials. Based on its powerful channel distribution capabilities, Zhangshang Fucai has the potential to build influential own brands. Its "Bibao" own-brand product series already accounts for a significant share of sales.
Looking further ahead, in cities where the company has deep roots, 50-70% of local foremen and renovation companies are its trading customers. Based on this transactional trust relationship, the company will attempt to break beyond the single finishing materials supply chain to comprehensively empower these foremen and renovation companies in areas such as main materials, design, and customer acquisition — becoming a one-stop supply chain platform behind renovation foremen and renovation companies. Achieving this, the company will become China's "Home Depot."