Ding Dong Buys Vegetables To Raise $700 Million Against The Trend: Is Fresh E-Commerce A Giant'S Game?

In the battle for the first share of fresh e-commerce, Ding Dong has a new move to buy vegetables.

On April 6, 21st century economic reporter learned from the fresh e-commerce dingdong that the company had completed the d-round financing of $700 million. This round of financing is jointly led by dstglobal and coatue, and the old shareholders tiger global management, general Atlantic, CMC capital, today capital, Sequoia Capital, ocean link and Hony investment continue to increase their weights.

In addition, dingdong has attracted new shareholders including ASPEX management, 3W fund, mass ave global, aplus partners and Gaohu capital. The company's relevant personnel disclosed that this round of financing funds will be used for new area expansion, supply chain investment and team building.

It is worth noting that industry sources said that dingdong shopping, multi-point dmall, meicai.com and other platforms are already preparing for IPO. Although there is no exact process, for fresh e-commerce, capital reserve is undoubtedly a key variable for success or failure. After the large amount of financing has been completed in the past six months, the fresh e-commerce industry has begun to centralize from the decentralized pattern.

Dingdong has completed nine rounds of financing, covering 29 cities including Shanghai and Beijing. IC photo

Capital competition

According to qixinbao data, dingdong has completed nine rounds of financing. The service scope has covered 29 cities such as Shanghai, Beijing, Shenzhen, Guangzhou and Hangzhou, and the number of front-end warehouses is nearly 1000. Its daily order volume has exceeded 900000, and its monthly revenue has exceeded 1.5 billion yuan.

But on the other hand, fresh e-commerce is still in the layout period. Due to the characteristics of high loss, seasonality and regionality, it is difficult for fresh e-commerce to make profits. In the early stage of scale effect, the profit of fresh e-commerce is not enough to cover the hard costs of cold chain, storage and transportation.

According to the assumption of Liang Changlin, founder of dingdong shopping, under ideal conditions, each front-end warehouse operates for more than one year, with daily orders reaching about 1000, and the average customer unit price exceeds 65 yuan. Each order can obtain more than 3% of the operating profit after deducting the cost of fulfillment, and then the profit can be realized.

Zhu danpeng, an analyst of China's food industry, said in an interview with the 21st century economic report that after the epidemic, the increase in the rigidity and demand of the whole consumer side forced the industrial layout to accelerate, while the fresh e-commerce was destined to be a heavy asset industry.

The concentrated influx of capital, also expressed the optimistic about the track. At present, after years of scuffle, most of the surviving fresh e-commerce platforms have undergone large-scale financing and blood transfusion. In 2018 alone, dingdong has completed five rounds of financing in nearly seven months.

However, capital can not be blood transfusion every day. When the product side can not make profits quickly, listing financing is undoubtedly one of the channels in the future. In Zhu danpeng's view, fresh e-commerce must make profits through product profit and capital market, in order to get a healthy and orderly development. "Enterprises can use the empowerment and leverage of the capital market to revitalize its overall capital through listing."

Fresh e-commerce related personage disclosed to the 21st century economic report reporter that on the one hand, Ding Dong uses big data and intelligent prediction to allocate goods in advance according to the sales situation and festivals; on the other hand, according to the consumption ability of users and the unsalable situation of front-end warehouses, it adopts intelligent recommendation for thousands of users and discount promotion of unsalable goods on the app, so as to reduce the loss rate This control is less than 1%. At the same time, fresh e-commerce is also trying to purchase directly from the origin and cooperate with well-known suppliers to further reduce costs.

For the fresh e-commerce platform, in the rapid development period of the industry promoted by the epidemic situation, landing in the capital market is also the best time. According to Fastdata, the transaction volume of fresh e-commerce in the first half of 2020 will reach 182.12 billion yuan, with a year-on-year increase of 137.6%, which has exceeded that of the whole year of 2019.

It can be predicted that with the listing plan of the head players on the agenda, this is not only the second spring of fresh e-commerce platform, but also the beginning of another scuffle.

Competition centralization

In the hot market, new players continue to enter the industry. Qixinbao data shows that at present, there are 16000 fresh e-commerce related enterprises in China. In 2019, 4093 new registration enterprises were registered, with a year-on-year increase of 17.4%; in the first eight months of 2020, the number of registered enterprises reached 3512, with a year-on-year increase of 34.5%. It is also in 2020, Internet giants crowd into the circuit of fresh e-commerce.

Alibaba, meituan, Didi, pinduoduo, Jingdong and other giants have entered the war one after another. Didi's "orange heart optimization" was launched in June 2020, meituan launched meituan optimization in July, and pinduoduo launched "buy more vegetables" online in August Such as Alibaba and other mature Internet platform players with a huge user scale and data capabilities, once again stirred the storm of the market.

At the same time, Internet giants are also using the "10 billion subsidy" way, so that online shopping slowly into the daily life of thousands of households. Although at present, among the various modes on the fresh track, both the front end warehouse mode and the community group buying mode are in an unknown state, it is certain that the market competition will be further centralized.

"All fresh e-commerce must be a game played by giants. The Internet model must be burning money. It's just that when the scale effect, brand effect and fan effect come out, it will turn a loss into a profit. " Zhu danpeng explained that the giant's game, so its concentration must be very high. The following competition in the supply chain, capital, distribution, service, customer stickiness and other aspects, will gradually appear the competitive situation of different enterprises.

It is worth mentioning that the Internet giants regard fresh e-commerce as the next growth story, saying "no investment" one after another. On September 21, 2020, the State Council issued the "opinions on accelerating the development of new consumption with new formats and new models", which also clearly put forward: we should strengthen the organic integration of online and offline consumption, increase the support for new consumption, and accelerate the promotion of "fresh e-commerce + cold chain home distribution" business of agricultural products.

In the future, Internet giants will pay more attention to fresh e-commerce, while native players will continue to explore the feasibility of front-end warehouse mode in the competition, and the fresh e-commerce track will also be pushed to a new climax.

From the perspective of capital planning after the new financing, Ding Dong's purchase of vegetables is indeed an industrial expansion, accumulating large-scale capital reserves and increasing investment in supply chain construction. As a matter of fact, due to the first mover advantages in opening positions and financing time, many enterprises have begun to further extend their tentacles to the upstream of the industry. For example, we will cooperate with Qingdao government in 2020 to establish a city level industrial development base and a fresh food supply chain center covering the whole country.

"This year, we are still running horse enclosure, the industry brand has not been solidified, who is the boss, is still not clear." Zhu danpeng expects that the industry pattern of fresh e-commerce will take shape next year.