Dingdong buy vegetables, daily excellent fresh in the upstream "fight"

Editor's guide: Nowadays, fresh e-commerce advertisements can be seen everywhere, on the subway, on the bus, on the radio, each of them is competing for the quality of fresh food, the speed of delivery, and the variety of products. The author of this article uses Dingdong to buy vegetables and daily excellent fresh as an example to analyze them, hoping to help you.

The epidemic in 2020 has accelerated the concentration of the pattern of fresh e-commerce, making 2021 an important inflection point for fresh e-commerce, and this year's track announced the results of the phased competition, and who goes and who stays at a glance.

There are former unicorns, but they are nameless, while those who remain are happy and sad, some break their arms to survive, shrink and shrink, and some rush forward with the support of capital and step onto the dazzling stage of the secondary market.

Daily excellent fresh and Dingdong buy vegetables almost at the same time in June this year landed on the US stock market, adding a lot of color to fresh e-commerce, but the assessment of fresh e-commerce is far from over, daily excellent fresh, Dingdong to buy vegetables have not moved towards a stable profit period, but after the listing, the strategy of the two has been adjusted, daily excellent fresh faster, Dingdong to buy vegetables emphasizes the priority of efficiency.

Although the goals pursued by the two are different in the short and medium term, they dare not slacken the expansion and construction of the supply chain. Looking around the entire fresh e-commerce track, the head players represented by box horses and multi-points are worried about the upstream, after the epidemic, fresh e-commerce is more aware of the importance of the upstream, and for them, the upstream is also a must for them to achieve high gross profit and branding.

First, bravely compete for the upstream

Fresh e-commerce's emphasis on the supply chain is not after the epidemic, but from birth to worry, because the weakness of the fresh e-commerce model mainly has two aspects, one is the high loss rate caused by the inefficient supply chain, one is the non-standardization of fresh products leading to difficult branding, fresh e-commerce is actually a very difficult to make money business.

Today's situation is similar, look at Dingdong to buy vegetables, daily excellent fresh, revenue grows very fast, but the net profit is negative, the gross profit of taking vegetables is low, but also have to send, the end of the circulation cost is very high, money is naturally difficult to earn.

After the epidemic, the significance of the upstream to fresh e-commerce players is more special, on top of the supply, fresh e-commerce companies have to handle the processing and branding of fresh agricultural products themselves, so the more cooperative and self-built vegetable fields and production areas, the more secure they are, and the more room for innovation.

In the past two years, the upstream work done by the fresh e-commerce track has roughly three directions. First, get rid of the middlemen, comprehensively increase the proportion of direct procurement, and give yourself more gross profit. For example, the current proportion of direct procurement of fresh products mentioned in Dingdong to buy vegetables is nearly 80%, and the proportion of fresh direct procurement of daily excellent fresh is above 90%.

Second, in order to expand the category of goods, we will absorb various suppliers. Although it is called fresh e-commerce, but Dingdong buy vegetables, daily excellent fresh, hema, Jingdong to the home has never stuck to fresh agricultural products, such as pre-made dishes, new tea, healthy snacks these more popular fast-moving consumer food, gross profit is not low, each is in the layout, either their own purchase of their own, or with the head of the enterprise to do together, the richness of the category to the supermarket to match.

Third, the pursuit of differentiation, self-built origin or customized procurement from the place of origin. Last year, Dingdong spent 1.5 billion yuan to build a self-operated vegetable field, and Hema has been working with overseas suppliers for many years to develop customized products. The differentiation of production factors and models can bring differentiated products, so as to have stronger pricing power, and the customization of self-operated bases and places of origin will definitely become a common choice for fresh e-commerce in the future.

In the face of serious competition, one thing that all players are becoming more and more determined is that only by fighting upstream can they become upstream. Dingdong buy vegetables and daily excellent fresh, two star players who have been listed and successfully obtained financing, are also constantly improving their competitiveness in such an upstream infrastructure battle.

Second, Dingdong buy vegetables: efficiency is preferred

In the third quarter of the financial report, Dingdong Grocery for the first time proposed a strategic focus shift, becoming "efficiency priority, taking into account the scale". In the previous few years, due to the support of strong capital, high-speed expansion has always been the primary goal of Dingdong to buy vegetables.

From speed priority to efficiency priority, Dingdong's goal of buying vegetables is obvious, that is, to advance the profit time. In the second and third quarter earnings reports, management also mentioned the improvement of relevant profit indicators several times, releasing better profit prospects to the market.

Why accelerate the achievement of profit targets? From the perspective of cash flow, Dingdong Buy's financial report shows that as of the end of the third quarter of 2021, the total value of cash, cash equivalents and short-term investments is 6.82 billion, and the net cash inflow in Q3 is 2.05 billion.

Considering that Dingdong Buy is still in a state of loss, the net loss of Q3Non-GAAP reached 1.98 billion, and it is still in a state of widening losses. Therefore, focusing on efficiency in advance and moving closer to profitability is a precaution.

In addition, from the perspective of investment returns, Dingdong buys vegetables has been listed, and the venture capital behind them needs a more ideal position to sell when they abdicate, but the stock price trend of Dingdong buying vegetables since the listing is not optimistic, it has fallen to about 40% of the issue price, and the stock repurchase announced a few days ago is also to support the stock price and create a better exit opportunity for investors.

In the case that the competition in the fresh e-commerce track has not cooled down significantly, is there room for the efficiency priority strategy of Dingdong to buy vegetables? Let's take a look at a few key data, 2021Q3 Dingdong buy vegetable gross profit margin of 18.2%, an increase of 0.7 percentage points year-on-year, an increase of 3.6 percentage points month-on-month, there is a certain improvement, while the comprehensive expense ratio in 2021Q3 is 50.9%, 2021Q2 is 56.3%, 2020Q3 is 46.4%, down from the previous month, up year-on-year.

In the case of revenue expansion, the gross profit margin performance is better, which can make Dingdong buy vegetables have more profit flexibility in balancing efficiency and expansion, but the performance cost per unit of GMV is 0.33 yuan in 2021Q3 and 0.31 yuan in 2021Q2, and the performance cost of unit GMV has not decreased, which will also bring a lot of pressure to Dingdong to buy vegetables.

Combined with the continuous expansion trend of the scale of the front warehouse, if Dingdong buys vegetables to achieve efficiency priority and take into account the goal of scale, it is necessary to optimize the marginal efficiency of the new supply chain, otherwise even if the expansion is slowed down, it will also reduce the overall performance efficiency of Dingdong buying vegetables, which is not conducive to achieving profit targets.

Third, daily excellent freshness: speed is preferred

Different from Dingdong to buy vegetables, although Daily Excellent Fresh was established earlier and is also the inventor of the pre-warehouse, the development speed and revenue scale have been lagging behind Dingdong to buy vegetables.

However, since its listing in June, Daily Excellent Fresh has accelerated the pace of expansion to seek more opportunities for realization, mainly two promotion lines, one is to expand the supply chain cooperation ecology, improve the platform category SKU, tap new needs of users, such as keep, Mondelëz and other commodity cooperation, one is to vigorously increase the size of smart vegetable farms, with the help of SaaS solutions and private domain marketing and other ways, to improve the empowerment ability and effect of fresh suppliers, the latest data from the official disclosure items show that the business has expanded to 20 cities.

At present, the business of Daily Excellent Fresh includes three pieces: commodity sales, smart vegetable farm, and retail cloud, and it can be found that Daily Excellent Fresh is seeking the transformation of service roles, and wants to transform from a single commodity retail platform in the past to an integrated community retail service provider.

The core is to find new incremental markets to drive the continued growth of the overall business. On the one hand, the growth rate of daily excellent fresh commodity sales revenue is not high, with the year-on-year growth rates of 41.2% and 48.1% in 2021Q2 and 2021Q3, respectively, while the growth rate of Dingdong grocery shopping in the same period was 78.4% and 111.2%.

On the other hand, smart vegetable farms and retail clouds have considerable monetization prospects, and smart vegetable farms can supplement the daily excellent community supply chain ecology and strengthen their close supply chain advantages. With the continuous expansion of the daily excellent fresh smart vegetable farm and the improvement of retail cloud service capabilities, the revenue contribution of these two new businesses is expected to become higher and higher.

But the challenge of daily excellent fresh is also obvious, one is that the smart vegetable farm is an integrated, digital transformation model, the early stage needs a lot of investment, continuous expansion will bring certain pressure on cash flow, the other is the smart vegetable farm revenue model is mainly the technical service fee and transaction service fee of the stall owner, so the revenue scale still depends on the volume of commodity transactions, and may have a certain competition with the daily excellent fresh supply chain.

In the long run, there is no problem in the direction of the transformation of daily excellent fresh to fresh agricultural products supply chain technical service providers, but at this stage, the scale of this part of the service income is too small, the initial stage is obviously not ideal, and whether it can bring stable and large-scale revenue is still unknown.

Fourth, the new infrastructure of fresh food is an uphill battle

For the attitude of the supply chain, the changes in fresh e-commerce in the past decade or so are very obvious, at first it was thought to be too heavy, coupled with the terminal shopping habits are difficult to reverse, the supply chain is not valued, to the last five or six years to recognize the upstream status is a strategic existence, and constantly spend money to build warehouses, package production areas.

Nowadays, as a fresh infrastructure, the strategic value and significance of the supply chain have changed significantly, not only as a source of supply, but also as a brand factory, and can also be a new monetization opportunity.

Under the penetration of mainstream technologies such as big data, artificial intelligence, Internet of Things, and cloud computing, the traditional infrastructure of fresh food is being upgraded to new infrastructure. In the future, there are two development trends in the new fresh infrastructure, first, the integration of production and circulation facilities and information; second, the integration of data for large warehousing and small inventory.

Whether it is efficiency, scale or monetization priority, daily fresh and dingdong groceries must continue to spend a considerable proportion of funds on new infrastructure, because the new infrastructure will affect the three key indicators of fresh e-commerce in the long run.

First, gross profit margin, data and technology can reduce supply chain costs and improve gross profit space; second, distribution time, a more intelligent circulation and distribution network, can effectively reduce the time of goods from warehouse to person; third, loss rate, intelligent warehousing and circulation equipment, can be scheduled according to the type of agricultural products, distribution distance, etc., and continue to reduce the risk of loss on the way.

The new infrastructure is done well, the benefits to the downstream and terminal are quite obvious, the experience has come up, the single volume has come up, and the marketing cost and unit performance cost will also be significantly reduced, which is a million profits for fresh e-commerce.

Therefore, the final competitive point of fresh e-commerce still falls on technical capabilities, more precisely, in the application capabilities of technology and hardware, so the new infrastructure has not raised the upper limit, and dingdong to buy vegetables and daily excellent fresh people also need to pay more attention to each other's position.

#专栏作家 #

Liu Kuang, WeChat public account: liukuang110, everyone is a product manager columnist. Chairman of Hainan Sanche Network Technology Co., Ltd., founder of Buying Group Information, well-known self-media. It is the first in China to combine Zen Buddhism and Taoism to understand the Internet, and to combine traditional Chinese culture with the Internet, so as to form an Internet culture and innovative spirit with real Chinese characteristics.

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