Exploring What Sets Yonghui Shenghuo and Suning Xiaodian’s Business Models Apart
Both have expanded in the same way, putting emphasis on offline branches and expanding in tier-one cities, and using the profits from this to lower prices through increasing scale. Yonghui and Suning are essentially the same in this approach, but their differences lie in efficiencies and capabilities. According to the specialist, Yonghui is better at building supply chains and brand image, whereas Suning places more emphasis on its online operations and benefits from strategic brand positioning and more diversified operational strategies.
Another difference lies in who their customers are. For Yonghui, “the battlefield of Yonghui is more concentrated and narrower”. They target families living in communities, and that is where most of their stores are. Suning has three types of stores. Like Yonghui, it has community-focused stores. However, it also targets business areas and other places where there are high concentrations of people, for instance hospitals, schools and factories. Moreover, Suning “adjusts commodity structures and management strategies for each type of stores accordingly to better satisfy customers’ needs”.
The former partner also explained that each business has different goals. While Yonghui “is simply earning the profits generated by price differences”, Suning was primarily intended to achieve publicity and strengthen overall brand value. Suning’s stores are part of a larger brand, for instance Suning.com, which is a retailer, and Suning Appliance. By opening stores around the country, Suning “can promote itself while earning profits to balance the cost, instead of buying an expensive ads spot in a community”.
To access all the human insights from Third Bridge’s Interview on Community Convenience Stores in China, click below to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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