By 2017, Zeng Wanui had been in the auto parts (components) industry for a full 20 years. From parts trading, to establishing a factory for manufacturing, and then to going online in 2013 to found Baturu, Zeng Wanui says he has always been doing familiar business, and the internet just makes the parts business more efficient.

Guangzhou Baturu Information Technology Co., Ltd. is an industrial internet company focused on the automotive aftermarket. Its "Baturu Auto Parts Shop" is a B2B platform providing full vehicle parts trading. After chatting with co-founder Zeng Wanui, the author felt that Baturu is an internet company with a strong disruptive spirit, achieving value reconstruction of the traditional auto parts industry through a service closed loop from parts search-price comparison-payment-delivery.

Zeng Wanui had previously been doing full vehicle parts business for passenger cars, reaching peak revenue of several hundred million. However, due to fierce market competition, further growth was very difficult, and the company hit a ceiling. So, in 2013, Zeng Wanui decided to seek a new direction, one that could scale the business larger. At that time, a friend from Beijing invited Zeng Wanui to do internet car washing, but after careful consideration, Zeng Wanui said: "I have no experience in this business, and the risks are hard to control. You come do auto parts with me; this market has plenty of opportunities." Later, this friend became Baturu's co-founder.

From its establishment in 2013 to now, Baturu has completed three rounds of financing totaling nearly 1 billion RMB, becoming the company with the highest financing amount in the automotive aftermarket supply chain sector, with growth speed significantly faster than competitors.

Core business started in 2009

To understand why Baturu has won the favor of the capital market, first understand the background of the auto parts industry.

Undoubtedly, the auto parts market is vast and complex. According to Zeng Wanui, in the traditional parts industry, manufacturers supplying parts and repair shops demanding them are connected through layers of suppliers. Upstream "first-tier" suppliers lack retail capabilities and need downstream second-tier and third-tier retailers to connect with repair shops. The lowest-tier suppliers actually serve only a few repair shops. This model does digest scattered orders, but the layered process also generates a lot of unnecessary costs.

Under this model, businesses in the parts industry generally face two types of pain points.

First, constrained by professional talent. The traditional auto parts industry is highly dependent on talent, where "talent" refers not to academic qualifications but to professional knowledge and industry experience. With millions of part models, all practitioners can only start from apprenticeship and accumulate primitively. Mastering parts knowledge for one car series basically takes three to four years. Due to reliance on human experience, once talent is trained, they often leave. Speaking to this, Zeng Wanui smiled wryly and called the top performers in the early industry "Whampoa Military Academy."

Second, buyers and sellers speak different languages. Repair shop people describe parts with literary thinking, like "interior rearview mirror, engine hood rubber strip," while parts dealers use mathematical thinking, managing parts with digital codes. However, coding systems from different automakers are incompatible. On the demand side, due to the overwhelming variety and uncertainty of parts, repair shops can hardly stock inventory. After a purchase need arises, repair shops inquire through this "literary" verbal transmission, which usually takes a long time to confirm the part model and has a high error rate.

This pain point is not new; as early as the end of 2009, Zeng Wanui tried to solve it. He gathered 10 mainstream auto brands, matched all models from the 1990s to the latest with their corresponding part codes, and built a database to assist sales management. Precisely because he started this work in 2009, Baturu naturally gained the first-mover advantage after its establishment in 2013.

Zeng Wanui told Yieou that Baturu's trading platform database can be seen as a translator, replacing the work previously done by professionals through data standardization with machines, allowing "first-tier" suppliers' quality resources to reach repair shops directly. Repair shop people don't need to be proficient in various parts; using the Baturu platform, inputting the correct VIN can accurately find the needed parts, truly enabling self-service ordering.

From transit warehouse to central warehouse

Before Yieou visited Zeng Wanui, Baturu's central warehouse had just landed. This warehouse will store full vehicle parts for passenger cars and all categories of special-shaped parts, achieving informatized and intelligent management. Regarding the central warehouse landing, Zeng Wanui excitedly said "ten-year wish finally realized" and "the central warehouse's operational launch will greatly help ambitious merchants enter the fast development track, reducing costs and increasing efficiency."

Zeng Wanui values the central warehouse so much because the shift from transit warehouse to central warehouse once again improves logistics efficiency. Baturu's model is to be a platform and service provider, solving information asymmetry, allowing "first-tier" suppliers' goods without retail capabilities to reach repair shops directly. But in the early development stage, limited by resources, Baturu had to use a transit warehouse model, where after demand arises, Baturu handles parts transit sorting. Although much faster than traditional methods, it still wasn't the most efficient.

After the Guangzhou central warehouse lands, "first-tier" suppliers will store goods directly in the central warehouse, managed uniformly by Baturu and responsible for logistics delivery, similar to JD.com model. Logistics efficiency is 7 times higher than the initial transit warehouse. Stock categories and quantities are controlled by suppliers themselves, as years of sales experience make them best know what to stock and how much. The realization of centralized parts custody fully unleashes the energy of first-tier merchants, handing over the trivial and hard-to-do-well warehousing and logistics to others, which reduces costs, greatly improves efficiency, and most importantly, allows focus on the core work in parts circulation—source integration. According to Zeng Wanui, the 200,000 square meter Guangzhou central warehouse will serve repair shops within a 700 km radius, and in the future, there will be 6 similar-scale central warehouses to serve repair shops nationwide.

In market expansion, Baturu adopts a "city partner" model, finding people with repair shop resources in various regions to become Baturu city partners. City partners are responsible for market business development, last-mile delivery, after-sales, and customer relations maintenance. Zeng Wanui says partners' duty is to deliver good after-sales experience for Baturu to earn transaction commissions. Because auto parts after-sales service is heavy, offline service is crucial.

Zeng Wanui says the company will expand nationwide in the future, but the current focus is on doing well in the South China market. Baturu chooses a steady strategy, with business currently only expanding to areas where after-sales service can reach. With the Guangzhou (South China) central warehouse put into operation and maturing, the speed and capability of expansion in other regions nationwide will greatly improve. (Yieou · Song Shaoqing)

(Original link: Exclusive Interview with Baturu CEO Zeng Wanui: Disruptive Entrepreneurship of an Auto Parts Industry Veteran)