This article is from WeChat public account:Jingxu Ventures (ID: matrixpartnerschina) author: Jingwei Zhou Xiao, head diagram from the visual China

A commodity is produced from the factory and finally delivered to the consumer, during which it undergoes lengthy distribution andCirculation – including factories, distributors, wholesalers, retail terminals and e-commerce – has thus shaped our commodity supply chain today. The supply chain allows us to enjoy the goods and services we need in a timely manner, and has spawned a huge but fragmented market of nearly 10 trillion yuan.

Because of the population base, one consensus is that China is a vast market. Benefiting from the population base, China’s supply chain supply has not been scarce for a long time. When there is a large traffic dividend in the market, no one will pay attention to efficiency and cost, and high-speed growth is enough to smooth the waste of costs. But in recent years, we have found that there have been some subtle changes in the market.

The supply chain sector is one of the many circuits we have laid out in recent years, and we have found this area to be very hot this year. Today’s article summarizes and sorts out some of our phased thinking – why is the investment opportunity in the supply chain now? What are the opportunities in the supply chain? What are the specific types of investment opportunities in the large supply chain? I hope to be inspired by the entrepreneurs who are involved in this.

1 What is a supply chain? What are the opportunities in the supply chain?

The supply chain is built around the core enterprise, starting with the supporting parts, making intermediate products and final products. Finally, the sales network sends the products to the consumers, and the suppliers, manufacturers, distributors and end users are connected. An overall functional network chain structure.

There are two key information points, one is “core enterprise” and the other is “network chain structure”. Different from what we have traditionally understood to do a certain part of the information to match B2B, there are two important requirements for “enterprise”:

● Must be in the “core” position of delivery;

● Must have the ability to make this “chain structure” more efficient.

So the concept of B2B, industry Internet or very hot S2B may not accurately summarize the enterprise characteristics of this field, because neither “information matching”, “internet” or “platform” can fully represent this field. The core competencies required. The opportunity of supply chain enterprises is the inevitable result of specialized division of labor. After the circulation chain becomes longer, the collaboration among enterprises becomes more and more complicated, which is an inevitable requirement for cost reduction and efficiency increase.

Let’s take a look at the opportunities in this area. The following picture shows PwC’s release of the top 15 companies in China and the US market value in the middle of this year:

As can be seen from the above figure, first of all, the top 15 companies in China are mainly financial and energy companies, with the exception of Ali and Tencent. There are many companies in the United States that have formed excellent supply chain systems in the industry, such as Amazon, Wal-Mart, and Procter & Gamble. If we enlarge this list to 100, we will find this difference more obvious.

The following picture is an industry summary of Jingwei. This picture will start from the hot investment field in the venture capital industry in 2017, and the “category will be from low to high, and the channel structure will be from back to front”. By making an axis, we will find that many investment hotspots have fallen on the terminal and traffic side in recent years, and the supply chain is still a large blue ocean that has not been concerned by mainstream investment.

China is a market with a population four times that of the United States. China should have a world-class supply chain company.

2 Why are investment opportunities in the supply chain field now?

In general, there are two ways for companies to create profit:

● Open source means selling more, also called creating demand;

● Throttling means saving more, also called improving efficiency.

When there is a large traffic dividend in the market, no one will pay attention to throttling. On the one hand, high-speed growth is enough to smooth the waste of costs.On the one hand, “reducing pigs to fattening and killing” is the business creed that we passed down from our ancestors. Therefore, when we talk about improving efficiency before 2017, few people will find the value, but the situation has undergone some subtle changes since 2018.

The above image shows two trends:

The first trend: Since 2018, the MAU data of the integrated e-commerce industry has been very limited, which corresponds to the well-known Chinese smartphone shipments no longer rising. The average value of DAU in the e-commerce industry has changed, which means that the mobile traffic market has entered a zero-sum market, and the user growth dividend has touched the ceiling.

This is also the reason why live sales and private domain traffic have been frequently mentioned this year – open source is getting harder and harder, and centralized channels are getting more and more expensive. When open source becomes more and more difficult, how to improve the efficiency of the entire supply chain to achieve “cost reduction and efficiency”, naturally become a topic of concern to many companies, life-critical topics.

The second trend, decentralized traffic, more and more product offerings.

On the sales side, we are increasingly discovering that our friends have entered the ranks of Weishang. The WeChat small program has matured and completed the last step of WeChat e-commerce, and it has become an e-commerce transaction in WeChat. Fission acquisition of the infrastructure. So we saw the development of various e-commerce forms based on the WeChat ecosystem in the past few years, such as micro-business, squad, etc.It is also seen that the distribution of traffic within the WeChat system is becoming more and more fragmented.

On the product side, users also have new demand changes. What I like this year after 90/00 may be completely different from what I liked last year. Therefore, we will see that the brand has also entered a fast “revolving door”. On the one hand, many new brands have emerged, but at the same time, one third of the brands may disappear within four years.

The three ends of production, supply and sales are constantly separating, and the production and sales sides are becoming more and more dispersed. We have got the following trend chart. In the “supply” link, essentially all traders or dealers are engaged in indiscriminate labor, that is, buying, pressing, and selling to the next level of traders or terminals. From this level, no difference means standard, but standard means scale, and scale means opportunity for tens of billions of dollars.

What are the specific types of entrepreneurial opportunities in the 3 major supply chain areas?

Supply chain companies should have the potential for rapid scale expansion. Here are four examples:

● Supply chain platform companies that use capital as an entry point to improve overall chain turnover efficiency;

● A company that can coordinate the entire supply chain and then structurally change the terminal cost profit model;

● A company that can provide a supply chain operation capability that is scarce;

● A new terminal form that is spawned under the new supply chain structure.

Supply chain platform companies that use capital as an entry point to improve overall chain turnover efficiency: