The author | blackcurrant
Edited by | Zhao
In the middle of February 2022, Dingdong Grocery finally handed over a seemingly good answer sheet.
From the perspective of financial reports alone, Q4 2021 can be called the "sweet period" since the establishment of Dingdong Shopping. In the fourth quarter, revenue and GMV doubled year-on-year, the loss ratio narrowed, and the base camp in Shanghai even began to achieve full profitability.
Of course, an unavoidable topic is that Dingdong buys vegetables is still losing money, and the relatively "excellent" financial report in this period can only show that Dingdong buying vegetables in the strategic transformation period is slowly repairing the huge holes left in the early stage.
As the head brand of the fresh e-commerce industry, in order to share the market, it is inevitable to experience a "investment for growth" burning period in the early stage. Judging from the financial report of 2021Q4, the strategic contraction did play a role in preventing further widening of losses.
Another problem was revealed: continued cash flow.
As of the end of December 2021, the company's cash and cash equivalents and short-term investments were 5.23 billion yuan, of which the cash part was only 660 million yuan, a total decrease of about 1.6 billion yuan from the previous month. For Dingdong to burn more than 1 billion yuan in a quarter, the situation is not optimistic.
Mixed earnings reports
In the 2021Q4 financial report, Dingdong Buy Vegetables finally stopped the decline in losses.
In the fourth quarter, the net loss was 1.096 billion yuan, compared with 1.246 billion yuan in Q4 2020, a decrease of 12% year-on-year. Compared with 2.011 billion yuan in Q3 2021, it decreased by 45% month-on-month.
In addition, other relevant core data also has surprises. In Q4 2021, Dingdong's revenue from buying vegetables was 5.484 billion yuan, an increase of 72% year-on-year, and the gross profit margin also increased by 9.5% month-on-month to 27.7%. GMV reached 6.004 billion yuan, an increase of 12.6% year-on-year, of which the prefabricated vegetables business performed strongly, contributing nearly 17% of the business share.
It is worth mentioning that Dingdong Buy Food announced in its financial report that its base shanghai region has achieved overall profitability in December 2021, and the Yangtze River Delta region has also achieved UE (unit economic model) correction in the fourth quarter.
Data source: Dingdong buy vegetables financial report Unit: 100 million yuan Odd and even pie mapping
Liang Changlin, founder and CEO of Dingdong Grocery Shopping, said: "The fourth quarter is the best quarter since the establishment of Dingdong Grocery Shopping, and the revenue has achieved rapid growth."
Of course, in this financial report with many highlights, there are also hidden worries about the future development of Dingdong shopping.
The most intuitive point is that although the loss is narrowing, a cruel fact is that Dingdong grocery shopping with a quarterly loss of 1 billion yuan is still very challenging to achieve a turnaround in the short term, and it is also at risk of slowing down.
The revenue of 5.484 billion yuan in the fourth quarter seems to continue to maintain a high level, but at the same time, this is also the first time since Q1 2019 that Dingdong Buy has recorded negative quarterly revenue growth, with a quarter-on-quarter decline of 11%. Reducing revenue in exchange for narrowing losses is obviously not a long-term approach.
On the other hand, looking at the annual loss data of Dingdong grocery shopping in 2021, it is also shocking.
The data shows that in the whole year of 2021, the total loss of Dingdong to buy vegetables reached 6.429 billion yuan, excluding the best performing four quarters, the cumulative loss in the first three quarters was 5.333 billion yuan. This means an average quarterly loss of 1.78 billion yuan.
In the three years from 2019 to 2021, the net loss of Dingdong Grocery Was 1.873 billion yuan, 3.177 billion yuan and 6.429 billion yuan, respectively. The total accumulated loss reached nearly 11.5 billion yuan.
And the continuous losses are accompanied by increasing cash flow pressures. According to the 2021 Q4 financial report, as of the end of 2021, the company's cash and cash equivalents and short-term investments were 5.23 billion yuan, of which the cash part was only 663 million yuan. The total amount is less than the total annual loss of Dingdong Grocery Shopping.
Compared with Q3 2021, the total amount decreased by 1.6 billion yuan from the previous quarter. The cash component has also plummeted from $3.098 billion to $663 million today, a drop of 78.6 percent.
Specifically, whether it is business activities or financing activities, tight cash flow makes it difficult for Dingdong to buy vegetables.
According to the data, the net cash from operating activities of Dingdong Grocery Shopping in Q4 2021 was -1.763 billion yuan, compared with -922 million yuan in the same period last year; the net cash from financing activities was 414 million yuan, compared with 787 million yuan in the same period last year.
At the same time, Dingdong Also carried 2.06 billion yuan of accounts payable and 3.1 billion yuan of short-term borrowings. Whether it is the continuous decline in cash flow or the high debt, it is not good news for Dingdong to buy vegetables that need to survive in the fresh e-commerce industry with continuous high investment.
In fact, the pressure on cash flow has long plagued the leader of this fresh e-commerce track for a long time. According to the data of Tianyancha, in addition to the IPO round and the angel round, Dingdong Buy Food has carried out a total of 9 rounds of financing in three years.
Of course, compared with the total annual loss of nearly 11.5 billion yuan, the amount of financing is somewhat "not enough to make ends meet".
In the secondary market, Dingdong has not shown strong fundraising ability, and when the company successfully landed on the New York Stock Exchange last June, it only raised a net amount of $85 million at an issue price of $23.50.
In the past 2021, the liquidity level of Dingdong grocery shopping has continued to decline. According to statistics, in the fourth quarter of the year, cash and cash equivalents and short-term investments were 5.615 billion yuan, 7.286 billion yuan, 6.817 billion yuan and 5.231 billion yuan, respectively. Among them, the month-on-month decline in Q4 2021 was 23.3%, the highest in the year.
In the latest quarterly financial report, Dingdong buys vegetables is still plagued by cash flow pressure.
Burning money for quantity is difficult to work
In August 2021, Dingdong Grocery officially adjusted its strategic planning, starting from "scale first, taking into account efficiency" to "efficiency priority, taking into account scale".
In the subsequent Q3 2021 financial report, Dingdong's cash and cash equivalents and short-term investments in food were 7.286 billion yuan, which became the last "affluence" period of Dingdong food purchase.
Since its launch in May 2017, Dingdong has invested almost crazy money in exchange for a simple and rough revenue growth rate. In the three years from 2018 to 2020, the total GMV of Dingdong Grocery Shopping has climbed from 740 million yuan to 13 billion yuan, with a compound growth rate of 319.2%. At the same time, the company's pre-position model has also paid a huge price.
According to the data released by Dingdong Grocery in 2020, the company's sales cost accounted for 62.8%, and the delivery cost accounted for 27.9% of the company's total cost. Among them, the high cost of building a warehouse, water and electricity, labor costs and other factors in the front warehouse have squeezed out the limited profit space of Dingdong to buy vegetables.
Previously, Liang Changlin, the founder of Dingdong Buy Vegetables, had revealed that the profit conditions for a single front position were very harsh. The average daily turnover needs to exceed 65,000 to avoid losses.
Perhaps realizing that burning money is not a long-term solution, Dingdong Grocery has a strategic shift described at the beginning of this chapter. Or, in a sense, Dingdong grocery shopping is "yielding" to tight cash flow.
According to its latest financial report, Dingdong Buy currently has about 60 urban sorting centers and about 1400 front-end warehouses. Compared with only 25 new pre-positions in the third quarter, the service revenue generated was less than 70 million yuan. In the entire three quarters, Dingdong Bought Vegetables and only launched a new city.
Moreover, strategic subtraction has also caused a certain blow to Dingdong, which is still in the rising period. In 2021Q4, the company recorded a negative quarterly revenue growth for the first time, with the main source of revenue product revenue of 5.41 billion yuan, down 11.6% month-on-month.
The lower rate of innovation also slowed down the revenue growth of Dingdong buying members, from 57.4% in the third quarter to 3.6% in the fourth quarter.
In the case of worrying cash flow, can Dingdong buy vegetables replicate the Shanghai model?
In fact, at least from the perspective of the brand, the first profitable achievement in the Shanghai area does indeed make Liang Changlin have greater ambitions for the future of Dingdong grocery shopping. On the latest quarterly earnings call, the fresh e-commerce giant's founder plans to be fully profitable in 36 cities by the end of 2022.
Of course, it is not the same way of burning money for input in the past. At the end of 2021, Dingdong only had $663 million in cash and cash equivalents left for grocery shopping, while the net cash outflow from operating activities in the same quarter was as high as $1.762 billion.
In the short term, the case of profitability in Shanghai cannot be directly copied to the other 35 cities in Dingdong's layout.
Image source: iResearch
According to statistics, the average unit price of Dingdong to buy vegetables in Shanghai is more than 66 yuan, the gross profit margin of each order is more than 28%, the cost rate of processing and trunk transportation in the sorting center is 6%, and the cost rate of the front warehouse is 15%.
Compared with the overall unit price of 60 yuan, 27.7% gross profit margin, 1.786 billion yuan of performance cost and 32% performance expense rate of Dingdong, Shanghai's data is significantly better than that of the whole country.
In addition, Shanghai, as a super-first-tier city, has a large order density, the fixed costs of the sorting center and the front warehouse are diluted, and the product variety is more abundant. These are the direct reasons why Dingdong Grocery Shopping can have higher unit prices and lower fulfillment cost rates in Shanghai.
However, this logic is far less beautiful than imagined if it were to be realized in 35 other cities. In Q4 2021, dingdong's performance costs of nearly 1.8 billion yuan accounted for 32.6% of the total revenue. In shanghai, the base camp, the proportion is 21%.
In the sinking market and even in the new first-tier cities, consumers will obviously be more sensitive to the power of goods stacked with "high prices".
Through visits, Jioupai found that in the ole supermarket located in the domestic boutique supermarket, the price of a "flaxseed pig" product was 33.8 yuan, while the exact same product was sold for 37.8 yuan in the Dingdong Grocery Buy APP.
Among the self-owned brands represented by the prefabricated vegetable track, Dingdong has more space to use the high unit price to achieve gross profit improvement.
It is worth mentioning that in Beijing, Shenzhen and other areas similar to the Shanghai market, Dingdong's GMV data for buying vegetables has lagged behind other competitors. There is still a long way to go before the profit threshold of 1,000 daily orders in Liang Changlin's heart.
Coming to the sinking market, consumers are more likely to show the rejection of price changes, and the vision of high customer unit prices and low performance costs is still theoretical.
More than half of the first quarter of 2022 has passed, and it is only four months before the end of the 2022Q2 formulated by Dingdong Grocery to achieve full profitability in the Yangtze River Delta region.
In the future, in the other 35 cities, can Dingdong buy vegetables with tight funds still impress the young people who have completed the "consumption upgrade" in their eyes?
Obviously, there is not much space and time left for this fresh e-commerce giant.
Write at the end
"Cash reserves are enough to support the day we make a profit", in the face of repeated questions about cash flow problems from the outside world, founder Liang Changlin repeatedly stressed in the latest quarterly earnings call.
According to the data, Dingdong buys vegetables currently has cash reserves of 5.2 billion yuan, and it is reported that the bank credit granted and is being approved is also 900 million yuan.
For Dingdong Grocery, which is in a period of strategic transformation, its strategic focus is shrinking from the whole country to the Yangtze River Delta region. At the same time, it is also losing a large number of price-sensitive low-price consumer groups, in an attempt to increase the repurchase rate for "high-value people".
It is worth mentioning that in the 2021 Q4 financial report, the key data around the "number of trading users" has not been released.
Therefore, is such a strategic transformation that seems to be a hero's broken wrist in line with the development law of the fresh e-commerce track, and can it impress the market and investors?
From the most "good" quarterly earnings report released by Dingdong Grocery, we have not been able to see the clues.
Resources:
1. "Adjust the strategic playing style, can dingdong buy vegetables Shanghai profit model be copied?" |Read the financial report" titanium media APP;
2. "The annual loss exceeded 6.4 billion, Dingdong bought vegetables in depth, and it was difficult to raise funds and cash was tight" Wildfire Finance;
3. "Don't be "deceived" by Dingdong's financial report: it is still far from the profit path of Running Through" Pole Business.