Fresh food e-commerce in 2022: Although forced to “bad”, still have the power to attack conservatively?

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The “mercury retrograde period” of the fresh food track is extremely long

Writer/Meng Huiyuan Editor/Wen Zhizhou

Source: Zinc Scale

From the rush to enter the pre-made dishes at the beginning of the year in order to find a new way out, to the end of the year when Youxian handed over the late “huge loss” report card, the “mercury retrograde period” belonging to the fresh food track is extremely long.

Since the beginning of this year, as external capital has become more cautious and industry competition has become fiercer, the fresh food e-commerce track has frequently heard the voice of “shrinking”, and the trend of accelerated decline is obvious. Significant layoffs and cost reduction have become the common tacit understanding of the industry.

Among them, the days of Youxian, the former top platform, were the most difficult. First, it reduced its business a lot in order to “survive with a broken arm”, and then tried its best to keep its name as a “listed company”, but it was still mired in huge losses and debts. In the double shadow of dispute.

In the muddy fresh food e-commerce track, seek financing to continue “burning money”, optimize the supply chain to improve quality, seek new opportunities in the sinking market, and develop self-owned brand products to achieve dislocation competition… What is a group of players? The foundation of life?

keyword 1

Put badly

This year, “silence” has become the main theme of the fresh track

The 2022 year of fresh food e-commerce, represented by the belated financial report data of Youxian Daily, has exhausted the bitterness of the industry collectively entering the “mercury retrograde period”.

After several months of independent audits, Daily Fresh finally released on November 14 the 2021 financial report that should have been disclosed before April 30. The annual report shows that in 2021, the daily premium fresh food loss will expand to 3.85 billion yuan, and the increase in costs is the main reason for the loss enlargement. According to the financial report data, the daily premium fresh food’s total operating cost in fiscal year 2021 will be 10.812 billion yuan, a year-on-year increase of 39.08%.

It is worth mentioning that there are only 55 full-time employees left in Daily Fresh. As mentioned in the financial report, as of December 31, 2019, 2020 and December 31, 2021, Daily Fresh had a total of 1,771, 1,335 and 1,925 full-time employees. In other words, Daily Fresh has laid off more than 97% of its employees.

In addition, Daily Fresh is also deeply involved in debt disputes between employees and suppliers. According to public data, as of now, Daily Fresh has been burdened with more than 760 labor dispute lawsuits, involving a total amount of about 813 million yuan; suppliers have initiated more than 600 lawsuits against Daily Fresh and its subsidiaries.

It is reported that in July this year, Daily Youxian tried to “survive with a broken arm”, that is, it shut down its fast delivery business under the front warehouse model nationwide, and only kept the next-day delivery service, but then in Beijing and Shanghai However, in many places, the next-day delivery service has been unable to place an order-Daily Youxian said in the financial report that this move is “a series of major adjustments to the business strategy”, and also made “these The business strategy adjustment may not succeed in the end” reminder.

On October 7, Daily Fresh made another move, announcing the adjustment of its American Depositary Shares (“ADS”) to Class B ordinary shares (“ADS ratio”) from 1:3 to 1:90. After the ratio change, the closing price of Youxian’s ADSs will be higher than $1 every day from October 17 to October 28, 2022, meeting the Nasdaq compliance requirements. Although this move preserved the name of Daily Fresh as a listed company, as of the writing of Zinc Dimensions, its market value was only US$12.01 million, and there was still a risk of being below the minimum listing standard.

In fact, the struggle and difficulties of Daily Fresh in 2022 are just a microcosm of the setbacks in the overall development of fresh food e-commerce. Since the beginning of this year, as external capital has become more cautious and industry competition has become fiercer, there have been frequent voices of “shrinkage” in the fresh food e-commerce track, and substantial layoffs and cost reduction have become the common tacit understanding of the industry.

Since the craze of “competing to make prepared dishes” at the beginning of the year, and from the frequent actions of several major fresh food platforms in 2022, it is not difficult to see that everyone is eager to get out of the predicament. For example, Hema has made it clear that it will take the “road of multi-format online and offline coordinated development”; The short video cooperation has started live shopping and fast delivery.

It is a pity that these attempts to find a “second growth curve” did not cause much splash. More importantly, from the two important nodes of the major fresh food e-commerce platforms in the middle of 618 and the double 11 year-round promotion, it is different from the previous years where Dafa coupons and bloody price fights, Judging from their performance, the “silence” of the fresh food track has become a certainty.

Keyword 2

defect

Non-standardized products, it is difficult to break the “ceiling” of subdivision

Why is the fresh track so difficult? To find the answer to this question, we must start with the non-standard nature of fresh commodities.

As a commodity, in the whole production process of fresh products, the proportion of artificial design is lower than that of other categories, and the raw materials are likely to have not undergone industrial processing on the assembly line. Customer cost, high performance cost, high loss rate, low gross profit margin, less branding and other characteristics.

Chen Hudong, a special researcher at the E-Commerce Research Center of NetEase, believes that fresh food is essentially a money-burning industry. In addition, the timeliness of fresh food, the matching of the back-end supply chain, and regionality are all very high, “so this Although the industry as a whole is now highly competitive, an efficient profit model has not yet been formed, and there are many problems to be solved.”

If we look at it separately, the standardization of agricultural products in the upstream of the industry needs to achieve reverse restricted production through large-scale orders in the fresh food industry, while the downstream consumers’ individual preferences such as taste and taste require the fresh food industry to enrich their products. SKU supply is satisfied.

Based on this, the industry believes that the difficulties in the development of the fresh food e-commerce industry are mainly concentrated in the logistics infrastructure construction, brand building and customer acquisition links in the midstream, “including how to build an effective fresh food e-commerce business after abandoning the radical subsidy war.” The user growth system, how to maintain a high repurchase rate of existing users, ensure the quality of fresh products, and build brand awareness among user groups.”

Compared with independent start-ups such as Daily Fresh, which have capital and cost disadvantages, the comprehensive platform has a natural competitive advantage. For example, based on the redundant transportation capacity of the comprehensive e-commerce platform, with the scale and distribution advantages of the large platform, and the extended business lines such as superimposed offline stores, the cost of intra-city distribution can be shared.

In addition, fresh food consumption has the distinctive feature of “limited channels”, and channel stickiness will greatly increase the repurchase rate of users on the same channel. That is to say, in addition to the high construction cost of the commodity supply chain, the comprehensive platform that has already gained the trust of users can also benefit from processing food on this basis.

This explains why there are obviously swarms of bees rushing into the market, but only the fresh food entrepreneurs who take advantage of the “wind” and jump up have a lot of chicken feathers. After all, no matter whether it is a comprehensive e-commerce company or a cross-border player, even if they shrink their front line or even shut down their business, they all have their own main business support. As independent start-up companies, they can neither continue to “burn money for the market”, nor Failure to achieve “self-hematopoiesis” will naturally end up like this.

“The burning of money in the fresh food e-commerce track is more effective for large platforms with lower customer acquisition costs. For independent platforms and entrepreneurial platforms, if there are no millions of active consumers as the basis for burning money, it will be difficult to burn through the ‘critical’ point’.” In an interview with entrepreneurs, Hu Xiang, the managing partner of Dark Horse Fund, also said so.

Keyword 3

dawn

After strategic contraction, conservative offense becomes the new choice

It is undeniable that fresh products still belong to rigid consumption, and the huge market space arouses the enthusiasm of the fresh food e-commerce industry almost all the time.

According to the data released by the National Bureau of Statistics, in October, the retail sales of grain, oil, food, and beverages of enterprises above the designated size increased by 8.3% and 4.1% year-on-year respectively, and the growth rates were 8.3 and 4.1 percentage points higher than the growth rate of retail sales of enterprises above the designated size. .

In addition, the iResearch report pointed out that the fresh food e-commerce market will usher in a new round of reshuffle in the next one to two years, and the supply chain capability is the key for enterprises to break through and win. Jiang Han, a senior researcher at Pangoal Institute, also said that enriching its own brand products and differentiated products, while increasing heavy investment in the fresh food supply chain, can greatly improve product power and operational efficiency, which is undoubtedly the key to the profitability of the fresh food e-commerce track. The essential.

Therefore, although business contraction has become the consensus of the industry, there are many “conservative and offensive” moves. Judging from the development status of related platforms, in addition to continuous technology and cost investment to optimize the supply chain and improve efficiency, they are also eyeing the sinking market and segmenting the population.

Among them, Hema uses the new business Hema Outlets to make up for the gap caused by the large-scale closure of Hema Neighborhood and Hema Mini and the gradual shrinking of coverage. It is reported that Hema Outlets mainly focus on its own brand, and through the sale of half-price Hema fresh products, short-term warranty, perishable products and products with guaranteed quality but poor appearance, to realize the turnover of such temporary products and loop. Up to now, Hema Outlets has opened more than 50 stores across the country and is still expanding.

In October this year, Meituan Youbao upgraded its brand positioning to “Morrow’s Supermarket”, which will improve the “last mile” consumer experience through a network of self-pickup points covering urban and rural areas. The service model of Meituan’s preferred platform “order today and pick up the next day” has covered nearly 3,000 cities and counties across the country.

As for Dingdong grocery shopping, two new service sections have been launched this year, “Bao Ma Strictly Selected” and “Light Care Planet”. It shows that on the business side, it has also begun to meet the new needs of consumer differentiation.

At the same time, in order to solve the problem of homogeneity, fresh food players have begun to explore their own brands and specialty products, especially the “popular” prepared dishes.

To give a simple example, public data shows that in 2019, Hema’s own brand accounted for more than 10%, but according to the latest data, Hema’s own brand sales accounted for 35%; Maicai has launched its own hot pot brands such as “Tomato Oxtail Pot”, “Angelica Mutton Pot”, and “Hakka Drunken Chicken Pot”, which are very popular among consumers.

With this wave of fresh food players’ “replenishment”, with the establishment of their self-built supply chain centers in many places across the country, the continuous improvement of warehouse networks and transportation networks may enable standard formulation, production and distribution, brand promotion, etc. There is a breakthrough in the link. Of course, these will take time to give us answers.

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