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Life And Death Situation Of Fresh E-Commerce: There Are Different Modes, Giants Enter The Market Strongly, And The Profit Problem Remains To Be Solved

2021/4/10 13:06:00 0

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Last year, the explosive growth of fresh e-commerce racetrack catalyzed by the epidemic situation continues to gain favor from the capital side this year. On April 6, Ding Dong bought vegetables and announced that it had recently completed $700 million in round D financing. Just a week ago, on March 31, the group announced the completion of a $750 million round of D financing. In February, Xingsheng preferred announced the completion of a $3 billion round of financing.

Behind the craze for capital is the 100 billion level market with rapid growth. According to the iResearch consulting report, the market transaction scale of China's fresh e-commerce industry will reach 279.62 billion yuan in 2019, an increase of 36.7% over the previous year. In 2020, affected by the epidemic situation, consumers' demand for fresh food will grow rapidly, and the transaction scale of fresh e-commerce market will be significantly improved. It is estimated that the transaction scale of fresh e-commerce market will exceed 800 billion yuan by 2023.

In this 100 billion level market, not only top enterprises such as dingdong buying vegetables, shihuituan, Xingsheng optimization, etc. have bravely taken the lead. At the same time, pinduoduo, meituan, didi and other giants have successively joined the war last year. When giants attract users with the help of resource advantages and subsidies, what kind of barriers do start-ups face? What is the future development pattern of fresh e-commerce track?

The 21st century innovation capital research institute decodes the financing status, market competition pattern of start-up companies in the field of fresh e-commerce in the past year, as well as the competition barriers created by the head enterprises in the process of competition with the giants, through the statistical analysis of the data of the third-party institutions and the interviews with the frontline practitioners and investors of the fresh e-commerce track, the future development trend of the fresh e-commerce industry will be improved Line analysis.

Interpretation of investment and financing data: several head enterprises complete several rounds of financing within one year

According to the third-party data statistics, the 21st century innovation capital research institute found that from April 2020 to April 2021, there were about 90 financing events in the fresh e-commerce field, including 73 fresh e-commerce enterprises at the C-end, and representative enterprises such as the ten gathering group, Xingsheng optimization, dingdong shopping and daily excellent fresh food. There are 17 supply chain enterprises involved in the upstream of fresh e-commerce, such as Lotte food, Guoquan Shihui and fresh life cold chain.

The heat of the market is reflected in the fact that many leading enterprises have completed several rounds of financing in the past year. For example, in the one-year period from April 2020 to the present, the group has completed four rounds of financing, with a total financing amount of more than 1.1 billion US dollars. The newly introduced investors include DST global, CDH investment, GGV Jiyuan capital, CICC capital, time capital, etc.

Xingsheng also completed four rounds of financing, with a total financing amount of 4.6 billion US dollars. The newly introduced investors include Sequoia Capital, Jingdong group, Temasek, Dehong capital, Chunhua capital, etc. Each day, Youxian completed two rounds of strategic investment, with a total financing amount of about US $700 million. The newly introduced investors include Qingdao Guoxin, sunshine venture capital, Qingdao municipal government guidance fund, etc.

After the B + + + round of investment in July 2019, Ding Dong did not conduct new financing for a year. Until April this year, Ding Dong announced that it had completed the d-round financing of US $700 million, and introduced DST global, coatue, ASPEX management, 3W fund, etc. A large number of foreign venture capital, together with rumors of going to the United States at the beginning of the year, make people speculate that this may be the last round of financing before its listing.

At the same time, the multi-point and Yonghui colorful food products hatched by traditional supermarket giants such as Wumart and Yonghui are also favored by the capital side, and they receive investment support from IDG capital, Sequoia Capital and other institutions.

For fresh e-commerce enterprises, the upstream supply chain is very important, and the capital side also maintains enthusiasm for fresh food supply chain enterprises. For example, the food supply chain service providers Lehe food and Guoquan Shihui have completed round C and round D financing in the past year, and the investors include Zhongding capital and Tiantu investment. Fresh life cold chain, a provider of cold chain logistics solutions, obtained a round of investment from Longhu capital and CICC capital.

From the perspective of institutions, we find that in the year from April 2020 to April 2021, Sequoia Capital and Tencent investment are the largest investors in the field of fresh e-commerce. Sequoia Capital not only invested in the current hot Ding Dong to buy vegetables, prosperity and optimization, but also invested in Yonghui supermarket launched Yonghui colorful food. At the same time, it has also invested and supported dahidi, an Internet enterprise focusing on importing fresh ingredients, and market kurly, a Korean fresh food e-commerce platform. Tencent investment has also injected capital to support such fresh e-commerce enterprises as Xingsheng optimization, daily excellent fresh, multi-point, Yonghui colorful food and Yipin fresh.

Competition of business model: prepositional warehouse, community group purchase, platform home and store to home mode have their own advantages

In this 100 billion level market, fresh e-commerce enterprises are various. In terms of classification, there are mainly four business models adopted by enterprises: front end warehouse, community group purchase, platform home and store to home mode. Through analysis, we find that these four models have typical representative enterprises and corresponding levels of consumer groups. Each mode has obvious advantages and disadvantages, and there are overlaps and complements among different modes.

First of all, fresh e-commerce platforms such as daily Youxian, dingdong shopping and meituan shopping all adopt the "front warehouse" mode. This mode greatly improves the efficiency of distribution, so that fresh goods can be delivered within 1-3 km of the surrounding area for 1-3 hours or even half an hour. For the middle-class groups in the first and second tier cities who are usually busy with their work, the front position mode enables them to obtain a better consumption experience.

However, the disadvantage of the front-end warehouse mode is that it is a heavy asset and operation mode. The cost of distribution from large warehouse to front warehouse and the last kilometer is high, and the multi-level transportation of fresh goods is easy to form losses. In addition, the front end warehouse model generally has no offline stores and lacks offline flow entrance, which requires large amount of online subsidies to attract new customers. In the case of high cost and users need subsidies, it is difficult for fresh e-commerce platform with front-end warehouse mode to achieve profit.

Second, the fresh e-commerce platforms, such as Xingsheng Youxuan and shihuituan, adopt the mode of community group operation. This mode is characterized by "pre-sale, next day delivery and self collection", forming a closed-loop flow of online sales and offline self collection. The general process is as follows: first, the group leader promotes group buying goods in the wechat group, and the users in the group place an order before a specific time point (usually 11:00 that night), and at the same time choose the pick-up point. After the platform collects the orders, it will process, sort, load and transport the goods. Usually, the goods will be delivered to the pick-up point (usually the store head's store) before 12:00 the next day, and then the user will pick up the goods by himself.

For the sinking market users who pursue cost performance and rely on acquaintances, the mode of community group building is attractive. The advantage of this mode is that the pre-sale mode is adopted to sell and purchase, which reduces the loss of fresh stock. The mode of self collection also reduces the cost of distribution. For the head of the platform, the community group buying mode takes less capital and physical space of the store. At the same time, it brings about offline flow of people. Users are likely to have incidental purchase behavior and bring extra income to the owners. Therefore, the platform can better control costs and subsidies, and has a more healthy financial model.

However, the disadvantage is that this mode has a high dependence on the team leader, but the team leader does not form a strong binding relationship with the platform, resulting in a high mobility of the head. At the same time, for users, the timeliness and convenience of distribution of the community group mode is not as good as the front warehouse mode.

The third is relatively light asset operation platform home mode, the main players include Jingdong home, meituan, hungry, etc. In this mode, the platform and the merchant reach a cooperation. After the user places an order on the platform, the distributor picks up the goods from the nearby merchants to complete the distribution, and the platform extracts a certain proportion of commission to realize profit.

This mode is more suitable for the large platform of gathering traffic rather than the start-up company. Its advantage is that the initial investment cost is lower than the front-end warehouse mode, and it is easier to control the cost and realize profit. However, the disadvantage is that the gross profit margin of the platform home mode fresh e-commerce will be relatively low, and the platform is not easy to carry out quality control on the products of the settled businesses. At the same time, for physical businesses, physical stores need to gather people to form consumption. After cooperating with the platform, the flow of people in the store is diverted, which reduces the frequency of users' consumption.

The fourth is the "to store + home" mode represented by HEMA, that is, users can not only consume in the store, but also buy goods online, which is delivered by the platform. The advantage of this mode is that it can provide users with online and offline integrated services, and the consumption experience is better, but the commodity price is also relatively high. Therefore, it is more suitable for the high-end user groups in the first tier cities who pursue commodity quality and brand and are less price sensitive. The disadvantage of this mode is that for the platform, it is also a heavy asset and operation mode. It needs better cost control and loyal user training to achieve profitability.

Giant entry: start up companies enhance product selection ability, supply chain ability and build competitive barriers

Among the above four business models, the community group buying model has been particularly hot in the past year. Not only are there ten star group, prosperity and other start-up companies develop rapidly, but also attract the giants to join the board.

In 2020, meituan, pinduoduo, didi and other Internet giants have launched meituan optimization, Duoduo shopping and orange heart optimization to enter the community group buying market. In March this year, Ali also announced the establishment of MMC business group, focusing on community group buying business, called "zero Small Wa preferred", integrating the community group buying business of retail link and HEMA market.

What unique advantages do giants have in community group buying business? According to the Northeast Securities report, meituan has rich experience in selecting "high frequency and low frequency" business, quickly gathers team leader's resources through the local promotion mode, completes the user pool sedimentation at the end of the supply chain in advance, and promotes the construction of warehouse and distribution, with outstanding ecological synergy effect.

The flow rate of the main station of buying more vegetables coincides with the core target groups of community group buying, which has unique advantages of user transformation and diversion. The rich social data accumulated in the main station will help the group buying business accurately match the needs of users and greatly reduce the inventory and loss of goods. At the same time, "rich supply of agricultural products + heavy investment in warehousing and logistics infrastructure construction" will bring new development increment to buy more vegetables.

Experts from third bridge think that for Didi's orange heart optimization, it may be the focus of this year to be a fresh food shop in the community, and develop into a model similar to that of aunt Qian. For Alibaba, it has both HEMA business and invested in the Ten Star Group. Now it has set up a separate business unit, which belongs to the trend of walking with multiple legs.

On the one hand, the giants have seized a certain amount of resources and market share, affecting the original plan of opening a city, such as the prosperity and optimization, the Ten Star Group and so on. On the other hand, the rich giants started a subsidy war to attract new companies, which also delayed the profit plans of start-ups. Facing the pressure brought by the challenge of giants, how to build the competition barrier? We find that the key is to control the supply chain and to select different products.

Fresh goods are easy to be consumed in transportation, distribution and other links. Only by controlling the supply chain and reducing the loss rate can we control the cost. This is not only conducive to providing users with more cost-effective products, but also conducive to the platform itself to achieve profitability. Taking Shihui group as an example, it disclosed in the D round of financing that the financing funds are mainly used to build the supply chain infrastructure of the sinking market and strengthen the centralized purchasing ability of fresh commodities at the source.

In terms of specific practices, it is understood that for fruits that can be preserved for a relatively long time, such as oranges and apples, Shihui group has reached a direct supply relationship with the source area. When the fruit is mature, it is loaded directly, and the optimal route is calculated through the logistics system, and the distribution is carried out in large regions of the country. There is no middleman link in this centralized purchase, which can reduce the cost and loss rate, and ensure the freshness and taste of the fruit. For leek, celery, Chinese cabbage and other high loss rate goods, the group adopts the mode of cooperation with the vegetable bases around the city to form intensive large-scale orders, which not only guarantees the product quality but also keeps high product cost performance.

When consumers face similar community group buying app, in addition to cost performance, differentiated selection is also the key to attract users. In terms of product selection, Shengsheng's preferred method is: firstly, through the investigation of local supermarkets and community stores, select the items suitable for local people's living habits. At the same time, we should take into account the seasonality, brand and online popularity of products, so as to attract more users. On the other hand, it is said that there are buyers going deep into the production source areas to explore high-quality and cost-effective products to meet the diversified needs of users.

Trend prediction: after the epidemic, users' habits gradually formed and multiple models developed together

Based on the above studies, we believe that there are three trends in the fresh e-commerce industry in the future.

First of all, the epidemic situation catalyzed the rapid development of fresh e-commerce industry. After the epidemic, users' habits continued and the industry growth momentum continued. The sudden outbreak of the epidemic last year has made the contactless fresh e-commerce show its advantages, gradually reaching thousands of households. In the post epidemic era, in the wave of "lazy economy", a large number of users have formed the habit of online purchase of fresh goods, and the frequency of use is also increasing. Fresh e-commerce will become a powerful supplement to traditional offline fresh food stores and traditional e-commerce, and the industry growth momentum will continue.

Second, a variety of models will develop together to meet the needs of consumers at different levels. At present, the fresh e-commerce industry has a variety of business development model to meet the needs of different levels of consumers. For example, for the white-collar workers in the first and second tier cities, they pursue timeliness and convenience, and tend to buy vegetables by dingdong and meituan in front of the warehouse. For the users in the sinking market, they are more cost-effective, and there is more room for development in the community group buying mode of ten gathering groups and flourishing optimization. We expect that the industry will still be in the state of coexistence of multiple modes, and there will be no one dominant situation.

Third, the head of the enterprise gradually listed, industry reshuffle intensified. At present, there have been reports of plans to go to the U.S. market, such as Ding Dong's purchase of vegetables and daily excellent fresh food. The brand effect and financial support brought by the listing will help enterprises improve their competitiveness. Combined with the influx of pinduoduo, meituan and other giants, and the entry of Yonghui, Wumart and other traditional supermarkets, it can be predicted that the competition in the fresh e-commerce industry will be upgraded again, and the industry reshuffle will be intensified.

In addition, it is worth noting that even if the head enterprises plan to go public, no fresh e-commerce enterprises are fully profitable. On the one hand, in the face of giants, fresh e-commerce enterprises continue to burn money for user-side subsidies. On the other hand, due to the particularity of fresh products, the cost of cold chain, storage and transportation remains high. Enterprises need to constantly optimize the supply chain and seek a balance between cost and benefit. Who can take the lead to form business scale effect and achieve positive profit, who will stand out in the war situation.

(this paper is the fourth of a series of research results of the 21st century innovation capital research institute's "consumer services for investment and financing research in 21 industries")

 

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