Under the storm of layoffs, dingdong shopping for vegetables is difficult to find "antidote"

Image source @ Visual China

Text | itlaoyou-com, written by | Zhou Yuhao, and edited by | Han Zhipeng

For the front warehouse system, this winter in 2022 is unusually cold.

A few days ago, some suspected former employees of Dingdong buying vegetables revealed on the pulse that since the end of last year, Dingdong launched a "big layoff", and the core department laid off up to 50% of the staff, forcing the employees of the front warehouse service station to take a break.

A Dingdong employee in Guangzhou told Dige Network that there is indeed a "card person effect" in the front warehouse, the original one person is responsible for one post, and now two people are responsible for three posts, one person rests, improving human efficiency; a Dingdong vegetable warehouse manager in Yangzhou also told Dige Network that the direct recruitment of employees was all laid off.

In this regard, Dingdong said that individual post changes are the normal organizational resource adjustment of the company, and will be reasonably adjusted according to the work situation of the site, especially the willingness and work intensity of employees.

Holes are easy to come and go.

Since its listing in June last year, Dingdong's market value has soared, once reaching a peak of $6 billion, but now, before the haze of layoff rumors has dissipated, Dingdong's market value has fallen to only $1.048 billion.

Seawater and flames, and behind this is due to dingdong and daily excellent fresh, the continuous loss of the two front-end warehouse "supernova", and the operational efficiency that is difficult to improve under the large-scale layout.

How did Dingdong buy vegetables come to this point? Is there a future for the front position?

Cost Reduction and Efficiency Enhancement "Anxiety"

After the listing, the pace of Dingdong buying vegetables has slowed down significantly.

In the third quarter of 2021, Dingdong Buy food was only stationed in 1 new city, and no new city has been opened so far, while from June 2020 to June 2021, Dingdong Buy Food opened 29 new operating cities, with an average of 2.4 new cities per month.

But on the other hand, the number of front-end warehouses of Dingdong to buy vegetables has been increasing, adding 239 front-end warehouses in the third quarter of last year, a total of 1375, and Liang Changlin, the founder of Dingdong Buy, said on the quarterly earnings conference call: Our strategic focus is "efficiency first, appropriate consideration of scale".

It is worth noting that in the second quarter of last year, Liang Changlin also said that through regional expansion, Dingdong will have a very large room for growth.

Between one piece and one relaxation, Dingdong's "efficiency priority" road is not easy to walk.

By increasing the number of pre-warehouse sites, Dingdong Food hopes to increase the daily order volume and coverage rate of existing cities, and optimizes the operation and service efficiency for key cities, including the spin-off and fission of mature "old warehouses".

For example, after the average daily order volume of a "mature warehouse" reaches 1500-2000 orders, Dingdong Buy Will split it into 2-3 new warehouses to increase coverage and tap incremental customer groups on the basis of diverting the original single volume.

The ideal is very full, the reality is very bone.

After the independent operation of the new warehouse, the primary problem faced by the new warehouse is that the costs such as operation and performance costs continue to rise, and the single volume is slowly climbing, until the coverage and performance time reach a certain threshold, and the overall operating profit can continue to improve.

However, the internal and external environment is in dynamic change, competitors such as daily excellent fresh and Meituan food continue to attack, and Dingdong's own "open source throttling" goal after listing is also very critical, to reduce unnecessary waste of resources.

Therefore, since October last year, Dingdong Grocery has begun to lay off the front-line personnel in the front-end warehouse, starting with outsourced employees, and the positions involve distributors and sorters.

The first thing that comes with the sub-warehouse is the increase in costs, and for Dingdong to buy vegetables that strive to improve efficiency, "cost reduction" is an inevitable action, and it is necessary to start from all aspects, including layoffs.

Improving efficiency is a big project.

Not only is it difficult to divide the warehouse, in the operating cities of Dingdong to buy vegetables, the first-tier cities account for about 50%, and the rest are second-tier, third-tier and below cities; in the sinking market, how is the performance of the front-end warehouse system?

According to the dige network, Langfang, a third-tier city where Meituan buys vegetables, accounted for less than 1% of the total sales of Meituan's groceries in September last year; as of now, Meituan has accumulated 7 cities, and most of them are first-tier cities.

Another player, Daily Excellent Fresh, shut down the business of Nantong, Langfang, Taiyuan and other low-tier cities in 2020, and the number of front-end warehouses will be reduced by more than half.

It is not difficult to understand that the demand for front-end warehouses in first-tier cities is far stronger than that in second- and third-tier cities, especially the immediate demand for 30 minutes to home; the demand in the sinking market is extremely saturated, and users are more willing to buy fresh products offline.

For example, in terms of operation, regular actions such as promotion and sending membership cards can be continuously improved after increasing the sales cost of the platform, which is also the core issue that needs to be considered by Dingdong grocery shopping that is slowing down.

It's hard to close.

In the third quarter of last year, Liang Changlin said that Dingdong grocery shopping has rapidly improved efficiency, "We will further reduce the net loss in the fourth quarter." ”

But how?

The year is hard

The threshold that Dingdong can't cross to buy vegetables lies in how to develop sustainably after scale.

Scale means that the cost of the ship is rising, Liang Changlin once said that the construction cost of the warehouse, water and electricity costs, the warehouse sorters, safety personnel, quality control personnel, the cost of delivery to the home, and the return and replacement of goods, etc., "all costs account for the proportion of sales revenue, to be controlled to about 15%. ”

In contrast, "the cost of the community stores that are now better operated is 15% to 20% of the revenue." ”

However, in the process of large-scale operation, the various expenses can not be less than one child," especially the performance cost; in the third quarter of last year, the performance cost of Dingdong to buy vegetables reached 2.308 billion yuan, accounting for nearly 30% of the total operating cost in the same period.

In the first three quarters of 2019, 2020 and 2021, the net loss of Dingdong Grocery Shopping was 1.873 billion yuan, 3.177 billion yuan and 5.333 billion yuan, respectively.

Past experience is that the Internet scale effect will reduce the marginal cost of the platform, but in the field of front-end warehouses, the large-scale platform will face greater supply chain costs and a high loss rate of fresh goods, which will eventually lead to continuous losses for the platform.

For Dingdong to buy vegetables, the "antidote" is not easy to find.

In the supply chain link, Dingdong has been deepening the direct procurement of fresh produce, and the proportion of fresh direct procurement is as high as 79.1%; at the same time, Dingdong has also vigorously developed its own brand.

Taking Dingdong "Kuaishou Cuisine" as an example, in addition to investing in research and development costs, the platform has professionals to carry out relevant screening inspections in all aspects from direct procurement to pre-warehouse allocation and acceptance to ensure its commodity strength.

By the end of the third quarter of 2021, Dingdong's own brands accounted for 5.8%.

The direct procurement of origin and the power of its own brands have led to a steady increase in the cost performance of Dingdong to buy vegetables, but the market environment has been changing; in the supply chain, Dingdong and Players such as Meituan and Hema have not yet fully opened the gap, but have been robbed of their advantages in scale competition.

According to the Dige network, in September this year, in Shanghai, the sales of Meituan to buy vegetables exceeded the daily excellent freshness; while in Beijing and Shenzhen, the sales data of Meituan to buy vegetables in September even surpassed Dingdong to buy vegetables.

Previously, Hema launched the "nail price" in Shanghai, and Hou Yi also said that "in the face of fierce competition in multiple formats in the fresh food industry, Hema also has the ability to price war"; another pre-warehouse player, Pu Pu Supermarket, has also been rumored to have financing and will continue to open up new cities.

Embattled.

Looking back two years ago, after the outbreak of the new crown epidemic, Dingdong bought vegetables to stand on the cusp, and the capital side flocked to it; but today, capital is gradually calming down, the offensive of community group buying is still unabated, and Dingdong buying vegetables stands in front of a new threshold.

Under the rapid changes in the internal and external environment, to support the scale operation of more than 30 cities across the country, every step of the "elephant" of Dingdong to buy vegetables will be extremely difficult, especially in this year when rumors of layoffs have been broken.

JefferiesGroup showed in a report that as dingdong buys food unit economic model improves, dingdong buy food will break even in 2024 and achieve positive net profit margins in 2025.

But for Dingdong groceries that held less than 7 billion yuan of "cash + cash equivalents + short-term investment" in the third quarter of last year, this will be a huge challenge.

Before the scale and efficiency are not balanced, the loss problem cannot be simply solved by cutting off employees and reducing costs, and the pain points of the industry with uneconomical scale will also exist for a long time.

More importantly, there will not be much time left for Dingdong to buy vegetables to change.