Wu Xiangdong Proposed the New Target of Trillion Size

On June 13, “Liquor Alliance” initiated by Wu Xiangdong, Chairman of VATS Group and founder of Jindong Capital, came to Changchun, and attracted more than 400 liquor dealers whose sales were over RMB 10 million from Jilin and Liaoning. 443 of the dealers, or 98% of the total participants, chose to sign in.

“Liquor Alliance” held its first “Internet + Seminar” on January 10th this year and planned to hold more than 20 seminars across the country, expecting to attract 5,000 allies to sign in. So far, fourteen events of “Chinese Liquor Alliance” have been held successfully in the country and attracted 5,000 allies in total. Based on the estimate of the current signed allies, more than 7,000 allies will be involved after the national tour ends, a result far beyond the expectation.

Wu Xiangdong was very excited about getting ahead of the expected target. In Changchun, he threw a bombshell that shocked the industry: in about five years, the sales of the alliance will be over RMB one trillion, ranking among leading E-commerce platforms of trillion size.

Now the total sales of thousands of allies top RMB one hundred billion. To achieve the one trillion target, the business of allies will be improved significantly and the returns brought by the alliance will be amazing. The dealers who attended the seminar are surely happy to see that happen, but they also have doubt: Will the prospects really be as good as Wu Xiangdong has envisioned?

Step I: B2B business scale topping RMB 400 billion

When the alliance starts operation, it will have more than 7,000 members whose liquor wholesale business size is about RMB 200 to 300 billion. For this business, Wu Xiangdong’s plan is to help the allies with online sales of most of their business by relying on the B2B platform of the alliance. Meanwhile, by making use of the alliance and its B2B platform, the allies will see their business grow substantially. So, in the next five years, the B2B business scale of the alliance is expected to top RMB 400 billion.

Step II: building O2O platform, with more than 10 million terminal outlets

In addition to online B2B business, the alliance will also open up O2O business leading to the retail end.

According to Wu Xiangdong’s plan, the O2O platform of the alliance should, first of all, serve sales terminals such as restaurants. Now they are important clients of the alliance; in the future, these restaurants can place orders online and receive products off line through the O2O platform of the alliance. China has a prosperous catering industry, with millions of outlets, including more than 2 million privately run ones. It will be a complex work to offer O2O services to this great number of outlets, but it is impossible by relying on the power of the alliance.

Then, the O2O platform of the alliance will offer services to other types of sales terminals to push the number of sales terminals more than 10 million.

Step III: integrating FMCG into B2B and O2O platforms, with a business scale of RMB 600 to 800 billion

Building B2B platform and O2O platform in the liquor industry is the basic business of “Liquor Alliance”. Based on this solid foundation, “Liquor Alliance” will march fast into FMCG.

In Wu Xiangdong’s view, liquor is an important segment of FMCG and the liquor industry has a high threshold to enter. Once Liquor Alliance can integrate the most powerful liquor manufacturers across the country, it will establish its core strengths in the field of FMCG and then expand rapidly to other fields.

“There are some FMCG dealers among the existing franchisees. In the future, allies can recommend quality high-quality large agencies and large manufacturers of non-liquor FMCG to push the business scale of the platforms to reach the trillion size quickly.” According to Wu Xiangdong’s plan, the wholesale business size of FMCG of the alliance will reach RMB 600-800 billion in five years.

With more than RMB 400 billion of liquor sales, plus RMB 600-800 billion of FMCG sales, the scale of the alliance will jump to more than RMB one trillion.

As the alliance expands, not only the allies join together to promote it, but also the upgraded consumption in China will offer its support. With the upgrading of consumption, the business scale of the alliance will grow rapidly. As it gathers the forces of elite dealers and gives full play to the advantages of B2B and O2O platforms, the alliance is fully equipped to take up a share of more than RMB one trillion.