Source Code Capital Portfolio Company Zhangshang Fucai Announces Strategic Investment from Red Star Macalline, with Source Code Capital Leading Angel Round

源码资本·October 18, 2019·0·0

Zhangshang Fucai is gradually replacing the traditional offline distribution model represented by "building materials markets."

On October 18, Zhangshang Fucai, a B2B platform for construction finishing materials, received a strategic investment from Red Star Macalline. Source Code Capital had previously invested in Zhangshang Fucai's angel round, Series A, and Series A+ rounds.

Zhangshang Fucai is a B2B online platform for construction finishing materials. Upstream, it connects with brand suppliers and leverages its channel strength to secure favorable pricing, while also consolidating highly fragmented quality factories and revitalizing their excess capacity through empowerment. Downstream, it provides quality foremen and renovation companies with cost-effective, reliable one-stop online procurement services. In between, it uses internet and AI technologies to empower product selection, procurement, logistics, warehousing, and sales, building an intelligent, efficient, and standardized service system for the finishing materials supply chain. Through this model, Zhangshang Fucai is gradually replacing traditional offline distribution channels represented by "building materials markets."

Since its launch in September 2017, Zhangshang Fucai has focused on serving the upper-tier "quality foremen" in the industry and building strong stickiness with them. In the first half of 2019, Zhangshang Fucai covered 28% of home renovation construction sites in Beijing; and this September, it entered the Chengdu market. The finishing materials industry, as a highly traditional sector, has long been characterized by a large market with small players. The company has achieved high market share in Beijing within just two years.

Xue Chengkun, founder and CEO of Zhangshang Fucai, believes that: the deep integration of internet and industry has effectively improved the inefficient links in the original sector. Zhangshang Fucai continues to provide digital innovation and transformation for procurement, logistics, and sales, aiming to establish a highly intelligent, efficient, and standardized operational service system, thereby reducing operating costs and improving delivery quality and efficiency for both upstream and downstream partners. For example: in sales, machine learning is used to identify potential customer groups, improving sales efficiency by 3x compared to traditional industry practices; in delivery, intelligent dispatch algorithms reduce delivery costs by 25%; in procurement, building a complete database and forecasting future sales volume guides purchasing and improves inventory turnover.

Xue Chengkun, Founder & CEO of Zhangshang Fucai

Regarding this strategic investment and the company's future development, Xue Chengkun revealed:

As a leading listed company in China's furniture and building materials sector, Red Star Macalline's strategic investment in Zhangshang Fucai represents full recognition of the team's strategy and achievements over the past two years. Following this strategic investment, the company will cooperate comprehensively and deeply with Red Star Macalline nationwide in terms of downstream users and upstream supply chain, achieving mutual benefit.
As the location of its headquarters, the Beijing market will continue to be deeply cultivated. Building on its current 28% share of home renovation construction sites, the company will leverage its strong industry reputation to further increase market share; and using Beijing as a hub, it will continue to export talent and standardized playbooks for national expansion.
With three consecutive funding rounds in the past year, Zhangshang Fucai has accumulated ample ammunition and has secured an advantageous position in the finishing materials e-commerce industry. Regarding replication in new cities, it launched in the Chengdu market in September and has achieved strong growth; it will accelerate the pace of city replication going forward.

Regarding this investment, Zhang Zhizhong, General Manager of Capital Operations Center at Red Star Macalline Holdings, stated: Against the backdrop of slowing growth in new home transactions and reduced development density, the building materials industry will undergo structural changes. Centralized, integrated supply chain solutions will gradually replace fragmented, inefficient traditional distribution models. Starting from the finishing materials niche, Zhangshang Fucai has captured this market segment and has enormous room for expansion in the integration and informatization of home renovation supply chains going forward. At the same time, the Zhangshang Fucai team possesses very strong capabilities in insight, learning, and data application. With deepening industry understanding, through strong data-driven and refined operations, it has achieved higher sales, fulfillment, and management efficiency than peers, better reducing costs and increasing efficiency for foremen and renovation companies. It is an exceptional team in the broad home furnishing sector. We believe that quality teams and data-driven operational management are the most important factors for innovation in the broad home furnishing sector. In the future, Red Star and Zhangshang Fucai will cooperate nationwide, empowering each other and jointly exploring a new ecosystem for integrated, informatized home renovation supply chains.