Wen | Zhu Xiaopei
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In a conference room on the 7th floor of Beijing's Han's Square, Zheng Feng, president of Qixian, and the company's business leader were discussing fiercely for the New Year Festival.
In order to meet the shopping needs of users in the New Year, from the selection of goods, supply chain, and then to the adjustment of product marketing, after the Mid-Autumn Festival, they have discussed seven rounds.
"So far, the whole market has exceeded expectations." Zheng Feng said to Business and Life. The New Year Festival has been carried out for more than 20 days, and many gift boxes of seven fresh New Year goods, including cherries and strawberries, have been warmly welcomed by users.
Outside the conference room, the tense and busy figure of the employees revealed that the company was in a state of acceleration. And Zheng Feng and other leaders of the team often work overtime because of the offline store. "The time chain for opening a store decision is quite heavy, but the location is sometimes not equal to the time, so as long as there is a project, whether it is a break time, a weekday, or an evening, we will make a decision as soon as possible to give our partners a quick and accurate answer." Zheng Feng said.
The state of seven fresh acceleration seems to form a strong contrast with the offline retail format.
In the past year, the closure of stores and the stop loss is a portrayal of the offline retail format. Just in the last month of 2021, Walmart closed its first store in China, Shenzhen Honghu Walmart. Due to poor operating conditions, Carrefour closed 14 stores in Chinese mainland in the first two months of 2021.
The impact of the epidemic and the impact of new retail formats have made the once dazzling offline retail giants gradually lose their former style. But it's not that people don't need offline stores, it's just that the needs of users have changed.
As Chen Liping, a professor at the Capital University of Economics and Business, said, user change is the engine, and external competition is the accelerator. When traditional supermarkets fall into a vicious circle due to the decline in customer collection capacity and the decline in passenger flow, new business opportunities are also flashing.
As a result, we see that Jingdong Qixian is going up against the current, accelerating the opening of stores in many regions such as Beijing-Tianjin-Hebei and the Greater Bay Area. In the Greater Bay Area alone, 8 new stores have been opened in the past year. Nationwide, stores that have been operating for more than 1 year have achieved six consecutive increases.
The rapid pace of opening stores and the continuous high GMV have revealed the ambition of Qixian. According to Zheng Feng, the long-term goal of Qixian in the next 5-7 years is to rank among the first camp in China's chain retail industry. And 2022 will be the year of the fierce attack of qixian.
Zheng Feng, president of JD.com Qixian
"In 2022, we set ourselves three win-win battles. The first is called the service experience upgrade war, the second is called the quality mental attack war, and the third is called the mode innovation breakthrough war. Zheng Feng compared these three wars to the "Battle of Tashan" in the Liaoshen Campaign, which laid the foundation for victory and defeat, and they would bring explosive energy to Qixian.
Squat in order to run faster
It has been a full four years since the opening of the first Qixian supermarket on the first floor of Beijing's Yizhuang National Square in December 2017.
In the past four years, the fresh market in the mainland has developed rapidly, and the format has been iterated at a high speed. Hema expanded and contracted and expanded, Dingdong bought vegetables, and Daily Excellent Fresh lost money year after year but successfully went public. Only Qixian looks quiet, and only more than 20 stores have been opened before 2021.
Seemingly silent, the exploration of business has never stopped.
Zheng Feng said in reviewing the development of Qixian in the past few years that although due to the epidemic and the delivery of real estate developers' properties, some planned stores have not been opened in 2020. However, JD.com has never doubted the track of Qixian.
"Today, the fresh track is in the process of development and change, and the key is to find what kind of breakthrough point can make us go faster, while taking every step more solidly." Zheng Feng said that in 2021, the Seven Fresh team spent a lot of time rearranging the team, supply chain and strategy.
As the strategy gradually becomes clearer, the pace of opening stores in Qixian is also accelerating. "The layout is very solid, the supply chain and the team are stable, and it is enough to support us to run, and it can be very fast." To use a simple analogy, if you want to run, you have to squat down when you start running, and I think the last two years have been squatting. Zheng Feng said.
The data shows that from April 2021, the performance of Qixian began to show leapfrog growth, in the Greater Bay Area, GMV in 2021 increased by 95% year-on-year, and the highest single month increased by 120%. The national business also exceeded expectations, among which in April, the total merchandise transaction volume of Qixian Supermarket increased by more than 36% year-on-year, and in August, the year-on-year increase increased by more than 85%, and the stores that operated for more than one year achieved six consecutive increases. Stores that have been open for more than three years have all achieved profitability, and a number of stores between two and three years are close to profitability.
The strong growth momentum also shows that Qixian has run through the profit model of omni-channel retail.
Efficiency, efficiency, efficiency
From supermarket chains to online e-commerce to the outbreak of new formats, the development of retail formats in the mainland has gone through many iterations today. Regardless of how the format changes, retailers are pursuing the same goal: greater efficiency.
In order to reduce costs and increase efficiency, traditional supermarkets have turned to warehousing and membership stores with fewer SKUs and higher repurchase rates. A few days ago, Walmart's newly opened Chengdu Jinniu Dongzikou store has greatly streamlined the SKU and only provided the most popular large items in the category.
Streamlining SKUs can reduce costs and improve efficiency. However, the trend of people wanting richer, fresher goods will not change. To this end, the strategy of Seven Fresh is to make the category wide and the SKU refined.
"In terms of business categories, we have done a lot of new thinking." Zheng Feng said. Considering that a large number of shopping users are housewives, they not only have to take care of the family's catering, but also the needs of mother and baby, personal care, cleaning and other scenes, Qixian also cooperates with Jingdong's own brand Kyo Tokyo Manufacturing to meet the needs of users to the greatest extent with a limited area and limited SKU.
"We hope to control the product efficiency, with the help of professional category management, procurement and marketing team, through continuous adjustment, what is left behind must be the goods that consumers need and have repurchase value." Zheng Feng said.
Today's retail is competing around efficiency and showing its core competitiveness. In the past year, Qixian has also done a lot of useful exploration in improving retail efficiency. For example, the bad experience rate has been optimized by 43% compared with 2022, and the APP out-of-stock rate has also been significantly improved.
More importantly, as an omni-channel supermarket born under Jingdong's powerful Internet gene, Qixian has always been on the road to innovation, and relies on innovation to greatly improve operational efficiency.
As an omni-channel supermarket, the speed at which goods are delivered to customers' homes depends on the efficiency of store picking. In the past few years, the common method in the industry has been to pick goods in stores, collect goods through hanging chains to the back yard, and then distribute them to various distribution boxes.
In the case of the rapid growth of GMV in stores, Qixian found that the suspension chain could not meet the rapid growth of store orders, so the innovation made store warehouse integration. Through the algorithm of big data, as well as the study and summary of past customer purchase behavior, and through technological innovation, the picker can achieve 60%-70% of the order volume on a 30-meter long channel. More than a month of testing shows that after such new improvements and innovations, a user can complete the picking within five minutes after placing an order online, which is a great improvement for the efficiency of the industry.
"Today's process is that there is an invisible market hand that is constantly pushing everyone to improve efficiency. If you lose money for a long time, and you lose money due to poor efficiency, you will naturally be eliminated. Zheng Feng said. But he believes that as long as he insists on polishing the supply chain, improving operational efficiency, and doing a good job of the store-to-home double experience to meet the needs of users, he will form his own advantages. And the user's repurchase, the frequency of shopping, and the width of the purchase also show that Qixian is moving in the right direction.
Deep ploughing supply chain
One day in the summer of 2021, Zheng Feng was supporting a store to help customers peel a day's Thai golden pillow A fruit durian. Every time I open it, when there is a lot of meat, the customer can't help but applaud. Zheng Feng felt that the decision to make Thailand's golden pillow A fruit durian was correct. Perhaps from the unit price, B fruit looks cheaper than A fruit, but A fruit has more meat, in fact, it is more cost-effective.
There is one customer who has impressed him to this day. When Zheng Feng opened the durian shell, the other party immediately picked up a piece and put it in his mouth, and then embarrassedly said to him: I have already paid for it, this delicious taste, people can't wait to try.
Zheng Feng said that at that moment he felt that good goods brought satisfaction and happiness to everyone.
A user experience survey shows that users' common perception of seven fresh is fresh, rich in variety, and landmark internet celebrity products. And all this is due to the deep cultivation and control of the supply chain by Seven Fresh.
As a self-operated retail company, JD.com itself has a strong supply chain. In the construction process of the past supply chain, Qixian also vigorously reused the foundation of the Jingdong supply chain. After formulating the Development Strategy of the Greater Bay Area in 2021, a second commodity center was decisively established in Shenzhen. Taking into account the difference in user needs between the north and the south, Qixian quickly established its own supply chain of short-term insurance products. Including meat, vegetables, some fruits with a very short shelf life and fresh seafood, are the focus of the construction of the Seven Fresh Supply Chain.
"We have increased the direct procurement of local specialty agricultural products, some are seven fresh direct picking, some are Jingdong direct procurement, we through the construction of the front-end supply chain, we can let the citizens of Beijing or Guangzhou, Shenzhen they can stay at home, eat the freshest products with geographical indications from all over the country." Zheng Feng said.
According to the latest "2021 China Fresh Supply Chain Market Development Research Report" released by iResearch, the entire Chinese fresh supply chain has many links, long chains and large losses. In contrast, Qixian's self-built supply chain has reduced intermediate links and greatly improved efficiency.
In addition, Qixian has also done a lot of exploration in products. For example, for meals and baking products, the launch of the "Seven Fresh Food Research Room", the R & D team, there are Michelin three-star chefs, there are also national special chefs, their purpose is only one, independent research and development of products with seven fresh differentiation.
At present, Qixian already has nearly 200 private label goods, and it is expected that this number will continue to double by 2022. Some of these private label goods have shown their vitality. For example, a sour soup fish hot pot base from Guizhou flavor, because it sold very well, has gone out of the seven fresh and sold on the Jingdong APP. Seeing that Qixian's own brand is so popular, the Qixian team opened a flagship store of Qixian's own brand in Jingdong Mall to promote explosive products to the national market. In order to cater to young people's pursuit of weight loss and fitness, Qixian also launched a nutritional matching lunch box to control calorie intake, "control card meal".
The data shows that Qixian self-developed food has become the dominant business of Qixian, and the sales volume of Qixian baking will increase by 70% in 2021, of which the GMV growth in the Greater Bay Area will exceed 170%. The weekly repurchase rate of Qixian's exclusive specialty control card meal has reached 44%.
"These explorations are all in the hope that we can form our own differentiated competitiveness in terms of commodity capabilities." Zheng Feng said that in the future, private brands will adhere to the principles of differentiation, specialization, value and high cost performance to develop.
When it comes to competitiveness, we have to say about food safety, after unremitting efforts, in 2021, Qixian has won two very important market recognitions in a row - the certification of FSSC22000 and the 10th China Food Health Seven Star Award. These two certifications also confirm from the side that Qixian has a very complete and mature quality control system.
Laid out for the future
The development of the mobile Internet, superimposed on the impact of the epidemic, consumer habits began to change. In the matter of fresh food, in just a few years, it has spawned a number of fresh new retail formats such as seven fresh, hema, multi-order mall, daily excellent fresh, Dingdong shopping for vegetables.
However, no matter how consumer habits change, offline physical retail always has a rationality. Data show that centralized e-commerce will not be able to break through 20% by 2025, while offline member stores, supermarkets and some convenience stores will account for 50-55%.
Offline supermarkets are still a presence with strong vitality. The new retail format represented by Qixian has the advantages of offline and online omni-channel, and is better than the traditional supermarket in terms of efficiency.
"We have repeatedly emphasized the integration of online and offline. We hope that the goods that users buy online and offline, the perceived services, and the penetration of our overall service concept can truly be seamless. Zheng Feng believes that with the formal advancement of the new strategy, in the next 5-7 years, Qixian will enter the first camp of China's chain retail industry and become a trustworthy omni-channel retail leader.
Next, Qixian will focus on the layout of Beijing-Tianjin-Hebei and the Greater Bay Area. With Qixian Supermarket as the main force and Qixian Life as the satellite store, it cooperates with Dada Group to achieve the fastest 30-minute delivery within three kilometers to meet the various life shopping needs of consumers.
In terms of site selection strategy, the consumption capacity of surrounding customers and well-known shopping malls is taken as an important reference to improve the accuracy of store location. Among them, in the Greater Bay Area, we will focus on Shenzhen and Guangzhou, and in 2022, we plan to expand 12 more stores, with a year-on-year growth rate of 150%, and enter the top three of local omni-channel retail in terms of market share within three years, and strive to become the first all-channel retail in the Greater Bay Area within 5 years. The speed of opening stores in the Beijing-Tianjin-Hebei region will be more radical than that of the Greater Bay Area, "as long as the site selection conditions are met, there is no upper limit on the number of stores opened in 2022." ”
At present, Qixian has reached cooperation with the top 50 commercial real estate developers in China, such as Poly, Longhu, Vanke, and COFCO Joy City. This way of strong alliance with real estate properties has also laid an important foundation for Qixian's store opening strategy.
Data show that the scale of the mainland fresh retail market has exceeded 5 trillion yuan. According to incomplete statistics from Tianyancha data, there are currently nearly 2600 fresh e-commerce brands in the mainland. In 2021 alone, there were more than 50 financings on the track, and the competition is not fierce.
But Zheng Feng is not afraid of market competition. He firmly believes that only companies that value efficiency and can innovate are competitive. "In the field of retail, there must be no lack of innovation, because innovation is laid out for the future. The market has given Qixian the opportunity to run at high speed, and what we do is to lay out for the future and win more users. ”
At present, the new retail formats are blooming, but we can see that some companies are fast and slow in the market layout, sometimes expanding sharply, and sometimes drastically cutting, and it seems that the confidence is not firm. In contrast, Qixian, in the past 4 years since its establishment, has gone from slow to fast, and once it finds its own model, it begins to move forward quickly.
If this is not enough to prove the ambition and strength of JD.com Qixian, the author thinks that there is no supermarket that can prove it.