This track has the lowest e-commerce rate but is optimistic about the capital market

Reporter: Gao Yuan

Camera: Qian Xiaoxin, Yang Lipei

Fu Zhonghong is the managing partner and vice president of Dachen Caizhi. He holds a double master's degree in engineering and EMBA. He has rich experience in venture capital, listing, capital operation and enterprise management. Won the honor of "Rongzhong" and "Top 10 Consumer Investors in 2020". He is in charge of the company's large consumption and enterprise service industry, consumer fund investment business. Investment cases include: Zhongnan Media, Shangpin Home Delivery, Dingdong Grocery Shopping, etc.

A collection of ideas

Is there still a chance for unicorns in the big factory era?

I hope to find a company with three views

Traffic costs are too high The real economy has resurged in investment

This track has the lowest e-commerce rate but is optimistic about the capital market

The dispute between the two models of community group buying and pre-warehouse is still inconclusive

Fresh track is expected to be profitable for two or three years?

What is the logic of winning the battle between independent APP and big factory platform?

Is prepayment a lifesaver or a poison?

Is supply chain mutual participation in interest bundling really effective or fake?

Interview summary

Gao Yuan: Thanks to Mr. Fu for accepting an interview with CbN, your investment vision is very unique, and you have an investment principle that "we must avoid the shoals and find hidden unicorns". Now that the business of the big factory has spread to many industries, has your investment principle changed? Or are you still sticking to this investment path?

Dachen Caizhi Fu Zhonghong: Definitely still adhere to this road, unicorns will increase, last year added 70 new, the previous few years were one or twenty per year, so now more and more, not less and less, why is there a situation? Now there are fewer and fewer entrepreneurs, and the overall number of entrepreneurs is less, but the ability of entrepreneurs, the ambitions of entrepreneurs are getting bigger and bigger, and the ability is getting stronger and stronger. So they either don't do it, they want to do something bigger, the future trend is like this, there will be more and more people, so there are more opportunities. Now, with the mechanism of fair competition in the market coming out, I think that future investment opportunities will still adhere to this principle to make judgments.

First Finance Gao Yuan: Most of the targets of your past investments will become unicorns in three years, which can be said to be very efficient and have a very unique vision. Do these targets have any common features that investors can refer to?

Dachen Caizhi Fu Zhonghong: First, the track selection is still quite important, we will find some large tracks, especially new technologies and systems, for its efficiency improvement is relatively large in a track, these we will be the focus to see.

Second, find the best team in this. In the past, an entrepreneur may have done a good job with one of his own products, but now in addition to the direction that the entrepreneur is aiming at, there are many new technologies that you want to adopt, right? Therefore, the comprehensive quality requirements for entrepreneurs are getting higher and higher. His dream, not to make money, he is to change the direction of a goal, to do a relatively great thing, we hope to find this, to do things that many people did not dare to think before, this is what we value very much. The latter is to say that your landing ability, management ability, sharing mechanism, to find your own core ability, the moat will accumulate with time will become higher and higher. Unlike what some entrepreneurs have called in the past, "I can't say the words of innovation in this model, and say that others have borrowed from it", this is definitely not OK, and it must have its own differentiated advantages. This is probably something we're very concerned about. Although we have also found that many companies grow quickly and make money for a short time, like these we will not invest, we hope to find this kind of enterprise with three views that is very positive.

Gao Yuan: What is the logic behind this round of capital's resurgence of investment related to the real economy? What does it inspire investors?

Fu Zhonghong: The logic behind it is indeed that the online mobile phone screen is limited and the traffic cost is getting higher and higher. Any product or service, to attract consumers, your investment will be relatively large; there is a sense of trust among consumers, consumers see your physical store, he will have an experience, will think that the enterprise is more reliable; third, how to achieve the best business model, operational efficiency, quality control management, pure offline is the way to use the central warehouse, or the way of the front warehouse, each enterprise has a different choice. Some of these brands may open a very heavy way in the shopping mall, some are O2O models, some may be front-loading models, and some are all rear-positioned, so it is still different.

First Finance Gao Yuan: As the earliest investor in Dingdong to buy vegetables, this track actually appeared very early, and some targets have been slapped on the beach by the back wave, and it can smoothly land on the US capital market. We don't need to say more about the current situation in the US market, do you think the US capital market can make it so smoothly listed, what is the value of it?

Dachen Caizhi Fu Zhonghong: Still value its potential, the fresh track is indeed a track with the lowest e-commerce rate, but this market is huge, has not found an optimal solution, and Dingdong at the same time may also have a lot of platforms, and then in this mode there are also some companies running out, but most of them may not finally run out, indicating that there are huge challenges in the opportunity to subdivide the track.

So I think it can be listed in the US capital market, and the capital market definitely values its future, and this company should have the opportunity to run better in the track. I think that's probably the root cause.

First Finance Gao Yuan: This track has two different models, one model is the community group buying model, and the other is the front-end warehouse of this model, Dingdong is obviously the latter, its cost is relatively high, is there any of these pain points in the industry at present? Has there been a best solution to this track?

Dachen Caizhi Fu Zhonghong: The model of community group buying and pre-warehouse is a bit like the original e-commerce platform's Ali Tmall, Taobao's model and JD.com's model, compared with it is still quite similar. Because in the community group purchase, you have to rely more on the head of the group, its community store, to do it in this way; Dingdong This is basically a pure direct operation model to do, and its entire operation is the most efficient. However, from the perspective of the volume of customers in the early stage, community group buying will be faster. Dingdong this model of early investment is very large, the execution ability requirements are extremely high, because they are built by themselves, the requirements for the supply chain are extremely high, the requirements for the team are particularly high, the team should be trained to be able to invest more than the head of the community group purchase, the action is not deformed, I think the huge difference between the two models may be here, who can run out in the future, the end game or the consumer experience, depending on who will succeed in this model.

First Finance Gao Yuan: We also see that in fact, a set of data, from the perspective of customer unit price, Dingdong buying vegetables is gradually improving, but the reality is that the overall situation is still a loss. How long do you think it will be profitable in the future?

Dachen Caizhi Fu Zhonghong: It is actually not difficult to make a profit, it is now a lot of front-end warehouses are from a single point of view, it will soon be profitable, can recover the cost, the key is that the background has a city's infrastructure construction cycle, and there is a backstage personnel operation, because of its continuous development, it is from a consumer product, the faster you grow, the upfront cost input, logistics cost input, such as the small brothers of this kind of upfront investment, including the gradual climb in the number of consumers, there must be a process. The faster the growth, the more upfront losses there are.

Of course, there is another problem here, you just asked about the possibility that the unit price of SKU customers is also gradually increasing and adjusting. If you are a dingdong customer, you will find that it is gradually expanding the category, so that you have more choices, you can buy more things on it later, your customer unit price will gradually be raised, in the original from a dozen yuan to about 50 yuan, the future to improve, the profit is relatively easy.

The profitability of the whole company is related to the strategy, for example, how much territory to occupy; how fast to go; I think this may be a relatively long-term process. Just like Bezos's Amazon, the front is also a loss of more than 10 years, are large losses, a loss of billions of dollars a year, but after reaching a critical point, its profit is very large, so it will also come out of such a curve.

Gao Yuan: When will the tipping point be?

Dachen Caizhi Fu Zhonghong: It is now more than twenty cities, if you want to pave the first-tier cities, provincial capitals, get forty or fifty cities, if you first pave the provincial capital, it will reach a stage, and then deeply cultivate these cities, to achieve a balance, I think two or three years should be almost the same. If its pace is not so fast, if it is said that the future development will go to the lower-tier cities, it will have to be invested.

First Finance Gao Yuan: From the perspective of the development of the platform, in fact, there are no more than two models, one model is acquired by a large factory, the other model is its own IPO, from the perspective of Dingdong, it obviously takes the latter road, the operating cost of the large factory is relatively low, for a separate APP, it may have a relatively high operating and maintenance cost, is there a combination point between the two, or there will be an opportunity for integration at a certain time?

Dachen Caizhi Fu Zhonghong: Some of these platforms have not long surrendered, they have all taken sides, but Dingdong has not taken sides, why is this so, or the team has analyzed the subdivision track very thoroughly, because fresh food is a very bitter thing. Unlike other e-commerce, they are all standard products, this is a non-standard product is particularly serious, so the people of the big factory can not suffer, especially they are professional managers, can they have the determination to do this thing to the extreme in every detail, this is uncertain.

So there's an opportunity here, because the people in the big factories are more comfortable, and the salaries are very high, but you won't burn money forever, and the country is now antitrust, and I think it's also a good opportunity for startups like Dingdong. If antitrust is not, uncertainty will increase for such companies, and now is an era of fair competition.

If you say that to maintain their own gross profit, not rely on subsidies to fight, then it depends on whose service is done well, whose quality can be controlled, whose time response is in place, the future consumer's final APP in his mobile phone will be less and less, APP will choose the first, the second and third those may be forgotten and deleted.

First Finance Gao Yuan: Many large factories will now do membership system, such as paid monthly subscription system, there are many preferential superimposed on it, in fact, we can think of it is doing the precipitation of the capital pool. Will ding-dong this path be done? Because it is a more realistic way to be profitable.

Dachen Caizhi Fu Zhonghong: The membership system is also doing now, but there is no capital pool, for a healthy company to do capital pool is very dangerous, this model has a kind of protection for startups, anyway, customers have paid money to come, some companies will think that your service is better a little bit as if it doesn't matter. We look at some of the innovative models in Japan, including other countries, in the long run, that is, consumers can abandon me at any time, and you can choose me at any time, and this relationship is the strongest relationship. If it is through other means, such as stored value, it is a bit mandatory, but it may still be an obstacle to your internal efficiency and gradual upgrading.

From the perspective of the operator's ultimate goal, it is acceptable or understandable for him to consider it this way, because he hopes to force the mechanism and its operation to be more efficient, and then give consumers a better experience and a better price. But from the perspective of capital, it may not be very willing to see his model, because after all, the precipitation of the capital pool is the most obvious way to easily make a profit.

Fu Zhonghong: I think at least our capital, I personally feel that we still choose his model.

We went to Japan to see a lot of companies, like UNIQLO, why it can be at the forefront of the world in the apparel industry, although the scale is not the largest, but the efficiency and efficiency is the best. When it cooperates with suppliers, many companies say that I will reinvest you, participate in you, or you will participate in me, so that everyone can be tied to a very dead, interest alliance, it does not do, it will never participate, all the agreements of everyone are market-oriented agreements, so both sides have to do the best. So I think from the essence of business, you have to be inseparable from your consumers, and this is a goal of the final game. The stored value and other means you just talked about may abolish your martial arts in a short period of time, and many companies are too comfortable because of this, and they may let competitors catch up with them later.

"Investors Say" is a professional talk show focusing on stock investment and equity investment launched by First Finance. The invited guests come from professional investment companies, all of which personally manage hundreds of millions of assets, and are truly "powerful factions". The program focuses on emerging industries, macroeconomics, and investment concepts, excavates the most valuable viewpoints, and provides a strong reference for your investment decisions.

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