Yijiupi, a Chinese fast-moving consumer goods (FMCG) business-to-business (B2B) company, has announced the merger of Zhangshangkuaixiao, a smaller industry competitor, accelerating the steps towards an industrial integration in the fragmented market.
The company has also closed a Series D+ round with an undisclosed amount of money from its existing investors. Yijiupi was also mentioned in an EqualOcean’s Industry Internet report (download here). In the consumer industry, Didi Dache’s merger with Kuaidi and Meituan’s merger with Dianping came after years of fierce competition. And now, we are expecting a giant among business startups to emerge.
Backed by Tencent and Meituan Dianping, Yijiupi established its brand by starting from alcohol in 2014 and soon expanded its product portfolio to full categories in FMCG. While penetrating to 800,000 stores in China as of 2019, the company achieved a gross merchandise volume (GMV) of CNY 20 billion (USD 2.8 billion) last year.
Zhangshangkuaixiao, founded two years later, has been scaling fast in China’s Southeastern region and maintains a dominant market position there.
Selling to 100,000 stores in Guangdong and Fujian, the company has built its deep relationship in the local markets leveraging its efficient order delivery system and excellent quality services. Under the terms of the merger agreement, Yijiupi will hold 100 percent of Zhangshangkuaixiao’s shares. According to the co-founder and COO of Yijiupi, Chen Shengqiang, the core team of Zhangshangkuaixiao will join Yijiupi. The next step of Yijiupi will be exploring new business partnerships in terms of beverages, a category with the highest consumption frequency in FMCG.
The Southeastern region is the center of China’s FMCG industry. For a company expanding to the whole country like Yijiupi, it is a fair and smart approach to acquire a ‘local king’ rather than burning tons of cash to vie for market shares. Besides, in the world of B2B, understanding the specific industry and know-how in building channels from nothing are on the edge of business, which needs experience input more than investment.
This deal, from EqualOcean’s perspective, can be pushed forward by the institutional investors of the two companies – namely Meituan Dianping and Source Code Capital. As Cao Yi, the founding partner of the Capital, commented, “Yijiupi has grown to an absolute leader in the FMCG B2B industry with a healthy balance sheet, from it we have seen non-stop potential for business integration.”