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Text | Wang Lin
Source: Tech Planet (ID: tech618)
Xu, who was born in the 1980s, is an excellent example of “other people’s children”: he won the first prize in the Mathematical Olympiad at the age of 15, and was recommended for the second year of high school. He entered the University of Science and Technology of China to study mathematics with a minor in business administration, and obtained a double degree. Started a business at the age of 33, and led the company to go public at the age of 40 with financial freedom.
However, the other side of the coin is that Daily Youxian under the governance of Xu Zheng has been losing money year after year, with a loss of nearly 10 billion in eight years, and Daily Youxian is facing a delisting warning.
The share price of Daily Youxian has continued to fall since the first day of listing, and the employee’s path to financial freedom has failed. A middle-level manager of Daily Youxian told Tech Planet that the exercise price is $10. This means that except for the first day of listing, the stock price is below the exercise price. “Originally, everyone wanted to wait until the exercise of power, but now they can’t.”
What Xu Zheng has stepped into is a complex enough industry and a big enough industry. Relying on the pioneering front warehouse model, another possibility has been found for the fresh food industry.
In Xu Zheng’s eyes, it is difficult to establish barriers in the fresh food industry, but its barriers are also high, and this enterprise can last longer. But the reality is that the profit model that continued to rely on capital blood transfusion and has not yet run through has brought Daily Youxian to the brink of danger.
In every crisis in the past, Daily Youxian could rely on capital to resolve it, but after taking all the money you can get, when the investment logic of the capital market changes, how should Daily Youxian save itself?
Crazy 3 months, 1 billion hit the market
Daily Youxian was born in 2014, when Internet dividends were overflowing. At that time, as long as China’s Internet projects grew wildly and squeezed into the first echelon, they would have a steady stream of financing to continue their lives. Expansion was their first consideration, not profit. .
Internet companies have tried many ways to provide fresh produce to urban residents, but all have failed. The pre-warehouse concept pioneered by Daily Fresh offers a possibility. This warehousing model transfers fresh goods from large warehouses to small warehouses near urban communities in advance, with the aim of delivering the goods to their homes in the fastest time possible.
In the first 5 years of Daily Youxian, it had few competitors. Until the appearance of Ding Dong shopping. Unlike Xu Zheng, who received the angel round of financing from Guangxin Capital when he “didn’t even think about the company name and LOGO”, and Tencent’s A round of financing of $10 million in 2015, the first financing of Dingdong Maicai was extremely high. difficult.
Liang Changlin, who was born in the military, sees investors every day. He has met more than 150 investment institutions in total, but he has not received any money. When it was the most difficult, Liang Changlin even mortgaged his own house at the bank. It was not until May 2018 that Liang Changlin was transferred from Gaorong Capital. Received the first Pre-A round of financing.
Afterwards, Dingdong Maicai financing went smoothly. In the second year of its launch, it completed 6 rounds of financing, and quickly won most of the community markets in Shanghai.
The biggest competitor has emerged. On May 16 of the following year, Wang Jun, CFO of Daily Fresh, revealed that he planned to invest more than 1 billion yuan to enter the Shanghai market this year, and to start comprehensive competition in Shenzhen, Wuhan and Southwest China.
An employee of Daily Youxian revealed that Daily Youxian rented a 6-storey building in Block A of Shanghai Shangpu Center as an office building. At its peak, there could be more than 500 people in East China. “At that time, the company was afraid that there would be not enough workstations.”
According to the report of “Third Eyes on Retail”, a person familiar with the matter revealed that in just two months, the daily capital consumption of Yuxian reached 800 million yuan. An employee of Daily Youxian East China told Tech Planet that the subsidy was basically used in summer, and almost 1 billion was burned in one quarter.
Users naturally like to pick up affordable products, and the daily volume of fresh food is growing at a high speed. A Daily Youxian employee who is familiar with background data revealed to Tech Planet that the order volume can reach several million orders. However, after the subsidy, the order volume returned to normal: hovering around 1 million orders a day.
An operator who joined Daily Fresh in 2018 said that initially their assessment standard was to meet the standard within -25% of gross profit.
After the subsidy war lasted for three months, it was suspended. The explanation given by a Daily Youxian middle-level executive is “no money”. According to data from Tianyancha, from September 2018 to May 2020, in the past 20 months, Daily Youxian did not receive a single financing. Compared with the speed of 1 round or even 2 rounds per year, it has indeed decreased.
An employee of Daily Fresh Shanghai said that at the end of that year, there were only more than 200 people left in the large group in East China. However, at that time, Daily Excellent Fresh’s assessment requirements for gross profit margins began to increase: the requirements changed from negative to positive.
An employee recalled to Tech Planet that the three months of 2019 were almost the most brilliant times of Daily Youxian.
huge funding gap
Daily Youxian was listed almost at the best time. It was only 4 days earlier than Dingdong Maicai to log on to Nasdaq, but it was 3 times more than Dingdong Maicai money. For a company that has not yet run through the profit model For a company, more money means longer lifespan and more fault tolerance.
But Daily Youxian does not seem to enjoy such a bonus. Because of the delay in disclosing the 2021 annual performance report, and the stock price has been below $1 for more than 70 consecutive days, it has received two warning letters from the Nasdaq-listed capital department.
In this regard, Daily Youxian responded to the media, saying that the Nasdaq notification letter has no impact on the company’s business operations. Next, the company will actively take reasonable and effective measures to regain stock price compliance requirements, and the company will speed up The progress will be disclosed in the annual report as soon as possible.
More than that. In May of this year, a news that Daily Youxian became the executor caused a shock in the industry. Daily Youxian was enforced with a target of 5.33 million yuan.
In August last year, Daily Youxian’s third-quarter financial report showed that its cash and cash equivalents were only 2.172 billion yuan, while its current liabilities were as high as 3.232 billion yuan.
A supplier of Daily Youxian told Tech Planet that the original account period of Daily Youxian was 2 months, but now it has become 105 days.
A daily excellent fresh grain and oil category supplier told Tech Planet that since the end of last year, he has not received the daily excellent fresh payment, and the total amount is 8 million yuan. Now I am afraid to supply Daily Fresh. “There was no sign before this, but I felt that the order volume was much larger than usual.”
1.6 billion was owed to suppliers, and some suppliers came to collect debts. In this regard, Daily Youxian once responded to the “Securities Daily” that the 1.652 billion yuan in arrears was “accounts payable within the account period, not due to suppliers.”
This is not the largest amount. A number of daily fresh food suppliers told Tech Planet that there are many people who owe tens of millions.
However, this did not affect the headquarters staff of Daily Youxian. Several employees of the daily excellent fresh headquarters calmly told Tech Planet that their salaries are still paid normally.
Everyday Youxian has almost got all the money it can get, including domestic VCs, international VCs, government funds, and big factories. Going public used to be its last-ditch effort. In order to raise more money, during the subscription period for IPOs, Daily Youxian, Futu Securities and Tiger Securities launched a “top-up to get extra lottery” activity, and recharge 50 yuan on the Daily Youxian APP to win 10 shares.
Capital is not the antidote
Few companies have been born with controversy like Daily Youxian.
A mid-level employee of Daily Youxian told Tech Planet that since the establishment of Daily Youxian, there have been three capital chain crises, one before Tencent came in, one at the end of 2019, and one now.
The first crisis is not difficult to understand. At that time, Daily Youxian was still a start-up company that had just been established for a year. The company was in the early stage, the business model had not yet worked out, and lack of money was the norm. Many start-up companies had only 3 months of funds on their accounts.
The second time was in 2019, and it was also the most fierce competition between Daily Youxian and Dingdong grocery shopping. Subsequently, the epidemic “saved” Daily Fresh, and it also waited for new funds.
In the eyes of many daily Youxian employees, they are not the same species as Hema Xiansheng and Duoduomai, and the unit price of Hema is higher. Daily Youxian and Duoduomai are not the same species, and the unit price of Daily Youxian is higher.
A middle-level manager of Daily Fresh told Tech Planet that in a model like ours, we need to keep looking for funds until the profitable funds can support ourselves.
The Internet has developed for 20 years, and many business models pay attention to scale effects, that is, when the scale reaches a certain critical point, profits can be achieved. The above-mentioned daily excellent fresh middle layer told Tech Planet that there is a critical point in theory, but it is difficult to achieve in practice. But capital now believes that this model is problematic and it is difficult to make profits.
A Daily Youxian employee who has left the company said that even if he finds money, it only relieves short-term anxiety. “Like a patient who has been admitted to the ICU, the ventilator can only keep you alive, can you stand up? If you look closely at the financial report of Dingdong Maicai, you will find that during the epidemic, it only improved the cash flow, But still no profit.”
Hou Yi, CEO of Hema, has expressed his views on the front warehouse model many times. In Hou Yi’s view, the pre-warehouse model is unreasonable. Unless large-scale logistics charges are used to recover logistics costs, it may be profitable, but in today’s situation, there are players who have not yet achieved profitability. .
One of the logistics costs is the cold chain. A senior player in the fresh food industry told Tech Planet as an example that, for example, the cold chain needs to be maintained at -18°, which means that drivers spend about 3 yuan in gas money for every kilometer they run, and almost no drivers are willing to do this. “Now in order to reduce logistics costs, many refrigerated trucks are -10°.”
“You need to find a special group that needs time to exchange money, but there are very few such groups in China. They could have taken out at 20 or 30 o’clock. Who would spend 40 or 50 to buy food and make it themselves? It may only be a few big ones. It’s only a million.” A senior practitioner in the fresh food industry said, “Fresh food is not an industry that can be encouraged by seedlings. You need to do a little bit of basic skills, or you can directly invest in full automation, but the cost of the latter is too high, tens of millions of dollars. Not even a factory can be opened.”
Xu Zheng said in an interview that Daily Youxian is waiting for a time point – retail is an industry with slow variables as a large factor. This slow factor is user behavior, and the arithmetic model brought by the corresponding scale will also have qualitative changes. “When the crust is moving, the movement of the surface is not important.” Xu Zheng said.
The question now is, how can Daily Excellent Fresh survive until that moment?
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