Image source @ Visual China
Text | Business Data School, author | Amao, editor| Wenbin
Internet, digitalization, private domain traffic, sinking market, the transformation of traditional baking brands to survive.
In the baking industry, the names Panda No Go and Happy Cake are being talked about more and more recently.
Although these two cake brands, which are slightly traditional in the "baking" category led by the new Chinese style, even seem to be a bit unique, the successive financing news cannot ignore their momentum.
On December 20, Happiness Cake disclosed that it had completed a strategic financing of 100 million yuan, led by the old shareholder Yashang Capital, and followed by Fushan Investment and Chunjian Capital under Yunda. In September before that, another Internet baking brand Panda Bu Go also completed a 100 million yuan B round of financing exclusively invested by XVC.
Unlike many of the most popular start-up brands, this financing is already the fifth round of financing for Happiness Cake. As early as March and July 2018, Happiness Cake won two rounds of financing in succession, the B round and the B+ round of financing, with the amounts reaching 300 million yuan and 400 million yuan respectively, setting a single financing record in the baking retail industry.
Throughout 2021, after tea and small wine, the baking industry can also be called one of the protagonists of "new consumption" in the eyes of capital. According to incomplete statistics, there have been roughly 22 financing incidents in the industry since 2021.
When brands such as Hutou Bureau and Mo mo dim sum bureau occupy large business circles to create "net red stores" through novel single products, high-value stores, and national tide style packaging marketing, Internet cake brands such as "Panda Does Not Go" and "Happy Cake" are silently cultivating online user groups.
So, the cake business, which has a relatively low consumption frequency, a high unit price, and has long been taken for granted, really has the imagination of capital?
The pattern opens, liberating the service radius of the cake shop
All along, in the baking industry, especially in the subdivision of cake, almost only the local domain name is produced, and there are few national brands. The number of Hollywood is the largest in the traditional chain stores, but in recent years, in the face of business crisis, the original wheat hill, 85 degrees C and other brands are also represented by bread products.
The main reason is that cake products have higher requirements for production, preservation and transportation, and it is difficult for ordinary store brands to radiate a wider market. To build a national brand, there are two challenges that need to be solved. One is the construction and maintenance of the supply chain, and the other is standardized quality control.
Traditional cake brands mostly rely on opening up one specialty store after another to increase brand influence and service radius. However, this is always the business of "peripheral people", and rent, decoration, and labor are huge fixed investments, so every time a new store is added, these costs must be increased accordingly, making the ability to expand the business greatly reduced.
In the post-epidemic era, news of traditional cake shops losing money and closing stores abounds.
In August 2020, Marco Polo Bread, a 26-year-old brand in Shanghai's bakery industry, officially withdrew from the historical stage; in December of the same year, BEEPLUSLIFESTYLE Super Bakery, the largest bakery in Shenzhen, announced the suspension of business. In June this year, Shanghai cake chain Yizhiduo was mired in cash flow difficulties, closing more than 30 stores overnight; even Christine, the head of the "first baking stock", continued to endure the pain of losing money for up to 7 years.
Isn't selling cakes a good business? Of course not.
Looking back at the birthdays of friends and family, or romantic or grand festivals, people's cakes on the table are never absent. The demand has always been there, even with the Westernization of the younger generation's eating habits.
At present, Panda Bu go has been stationed in 24 cities such as Beijing, Guangzhou, Shenzhen and Hangzhou, with more than 20 million users and a monthly revenue of more than 70 million yuan, creating dazzling achievements in the industry. On the other side, the happiness cake has covered more than 300 cities across the country, and more than 400 distributed production centers have been established in Shenzhen, Shanghai, Beijing, Guangzhou, Macao and other cities.
Internet + baking is becoming an important way for traditional baking brands to come back to life.
Create new machines in the middle of the Red Sea
According to the data of Youzan's "2021 Baking Industry Development Trend Report", the size of China's cake market in 2020 is 97.3 billion yuan, accounting for 41% of the entire baked food market, and maintains rapid growth.
This is fertile ground for brand growth, but it is not easy to break through many brands in this area that is not new.
Generally speaking, traditional cake shops operate in two ways.
The first is "central factory + wholesale". This method solves the quality problem of product standardization, and the degree of automation is high and the scale effect is significant. However, the dependence on the distribution team and the relationship between retailers is also large, and the flexibility is low.
The second is the "chain store model". Through special logistics distribution, semi-finished products or finished products produced by the factory are sent to the urban stores for on-site processing and sales, or the pattern of the factory before the store and the factory is made on the spot. This mode has strong ability to control terminals, can provide higher quality products, and flexibly respond to customer needs. However, the operating cost is higher, the market is slow, and it is difficult to expand the influence of the brand.
In contrast, Internet baking accelerates its growth in the mode of online ordering + factory warehousing and distribution.
According to the official website, Panda did not go to the beginning of its establishment in 2018 and achieved the top three in the Huizhou market category in 4 months, the top three in the Foshan market in Guangdong in 3 months, and the top five in Panyu in Guangdong in 1 month. Happiness Cake ensures the standard production of cakes and instant distribution by establishing the mode of "central factory + satellite factory + self-built cold chain logistics". After the user places an order on the online platform, the distributed production center can achieve efficient distribution of professional cold chain within the coverage range of 2 to 5 hours.
What advantages do they have in favor of capital and the market?
Lock the scene into the market segment
Unlike our traditional impression of a bakery selling pastries and making cream cakes. New bakery brands are good at entering the market with representative products of a single subdivision category, which makes the current baking industry derive multiple segments.
Pandas don't go away is one of the representatives. It is aimed not only at cakes, but also at a more niche market that is accurate to the birthday cake, which is combined with the scene.
This positioning determines that its products are different from other brands in the underlying logic. While most similar brands focus on how the cake itself is colorful, panda's entry point is to create a more special experience for the user's birthday.
In the eyes of Yang Zhenhua, the founder of Panda No Walk, "the process of making a good cake for home delivery can only be regarded as a semi-finished product, helping everyone to complete emotional expression and atmosphere creation, which is the real essence of the need hidden in the situation of birthday parties." Therefore, we chose to provide a two-minute interactive performance service at the end of the delivery, thus achieving the integrity of the overall product. ”
This O2O+ scenario culture seems to have created a moat for brand differentiation.
E-commerce thinking reconstructs the cake business
"All business is worth doing again in the way of the Internet", is it still established today when Internet traffic peaks?
To survive in the Internet environment, we must first abide by the rules of the game of the Internet. User thinking is undoubtedly a core issue for Internet companies to consider. In the matter of Internet baking, it is not simply a superficial change of placing the cake on the online platform for sale, but its essence changes the entire cake consumption process.
In traditional cake shops, customers often can't buy cakes immediately even if they arrive at the store, and can only complete the process of selecting and booking. This process can actually be done online. Therefore, brands that use cake as the main product are more able to form a closed loop of business logic by separating from physical stores.
At the beginning of its establishment, Happiness Cake also followed the traditional chain store model. At that time, Happiness Cake also opened more than a dozen stores in Shenzhen, but in 2014, its founder Yuan Huohong made a difficult decision - to stop offline orders, use existing stores as experience stores, and fully transform into e-commerce.
This is the time to step on the key node of the O2O transformation of the traditional industry, which was unique in the baking industry that was still offline as the main channel at that time.
In the Internet era, in the face of massive choices, the user's patience is becoming more and more insufficient, and if you want to catch the user in a short period of time, you must use simple thinking to polish the ultimate product.
The Internet baking brands represented by Happiness Cake and Panda Do Not Go are the cumbersome subversion of the traditional purchase process and the blurring of brand positioning, which will make a more perfect experience for a relatively single category.
Deep ploughing private domain to leverage the target customer base
In the era when ROI is becoming more and more difficult to guarantee, the brand's "self-communication" ability almost determines whether it can become popular and how far it can go, and this feeling of fate in its own hands is undoubtedly full of temptation.
Yang Zhenhua, the founder of Panda No Go, once said in an interview with the media, "Dividends are not spending money to buy traffic, no matter how many orders you cast for live broadcasting, the brand has not been really promoted, and users are still in the hands of Internet celebrities." The real traffic dividend has only one point, that is, there is a continuous output of high-quality content, so that users can spontaneously help you spread. ”
The business logic of Panda's non-departure is doomed to be an extremely operational model. Therefore, its product processing plants and logistics distribution in various cities are all directly operated models, so as to ensure the quality of products and services. The interactive performances, magic displays, personalized surprise packaging and other services it provides naturally have the attribute of "self-propagation".
Their presence can stimulate users' desire to share and stimulate them to naturally complete the exposure of private domains. At the same time, with a series of community operations and membership systems, it has become one of the earliest brands to grow rapidly by playing with private domain traffic.
With relevant data, the private domain revenue of Panda does not go accounts for more than 60%, and the user repurchase rate exceeds 50%.
Where does the sinking road of Internet baking go
According to the "2021 China Baked Food Industry Competition Pattern and Consumer Behavior Analysis Report" released by iiMedia Research in September 2021, the size of China's baked food market is estimated to reach 260.08 billion yuan in 2021, an increase of 19.9% year-on-year, and will maintain an annual growth rate of about 10% in the future, and it is expected that the scale of China's baked food market will reach 306.99 billion yuan in 2023.
As a result, the baked goods market still has a strong attraction.
At the same time, the main consumption of China's baking market is still concentrated in first- and second-tier cities, and the next brand expansion is gradually penetrating into third- and fourth-tier cities and below.
Influenced by Western catering culture, bakery products such as bread and cakes have gradually become one of the main choices for breakfast for Chinese residents, and at the same time, consumption scenarios such as afternoon tea and business coffee breaks have been derived, and they have more and more extensive coverage at all ages. Under such a background, many Internet baking brands invariably aim their next strategic goal at the consumption upgrade of the sinking market.
For example, Yuan Huohong, chairman of Happiness Cake, who has just completed financing, said that this round of financing will be mainly used for the supply chain layout and full-chain digital construction of the "county, town and rural plan", and the listing plan will be launched in the future.
But in the face of a sinking market that is more price sensitive, can the cake business with higher unit prices and lower frequency still have a smooth sailing? Each brand also has its own considerations.
For example, in the product category, happiness cakes have achieved full coverage from birthday cakes, bread, afternoon tea, Shenzhen specialty packaging souvenirs to ready-made tea drinks. Yuan Huohong emphasized, "Cakes belong to the high-price/low-frequency category, and low-price/high-frequency categories such as bread and afternoon tea can meet diversified needs and improve user retention."
At the same time, after effectively occupying a certain market share at present, Happy Cake adjusted its development strategy in a timely manner: returning to offline + deep ploughing products, but also in order to alleviate the uncertainty of relying solely on the Internet business model, expansion and profitability, sinking and pulling new and continuous deep ploughing.
At present, among the more than 300 cities that have been opened, the coverage rate of prefecture-level cities in the third tier and above has reached more than 80%, including lhasa in Tibet, Urumqi in Xinjiang, Heilongjiang, Jiamusi and other distant areas. By 2024, Happiness Cake plans to expand to more than 80% of the counties and counties in China, covering more than 2,000 county-level cities across the country.
On the other hand, the iteration of creativity and the grasp of cost are also the problems that these brands must face to further expand the market and increase user stickiness.
With the existing service model, Panda does not walk in the sinking market may encounter more problems. For example, enhancing competitiveness with services is actually a verified route of Haidilao, but how much energy this model can continue to release in baking this fast moving consumer product is still unknown.
To break through, in the final analysis, it is necessary to return to the taste and variety of rich cakes, while continuing to increase the service content.
It is reported that Panda will continue to take the birthday scene service as the fulcrum, and gradually extend the more abundant and common scene experience such as party celebrations and parent-child interaction, aiming to create "China's first brand of party service" to further strengthen the difference of the brand, as the basis for the market.
In the cake market with low brand exclusivity, the panda that rises with the emerging concept will not go for a period of time. In the future, whether it can continue to find a balance between special services and reasonable prices in the sinking market may take more time to prove.