Image source @ Visual China
Wen 丨 Whale Merchant (ID: bizwhale), author 丨 Wang Xiaoxuan, Editor 丨 Li Qingle
The fresh e-commerce track after the "nine no's" regulatory hammer has been surging undercurrents.
Then, the news of buying more vegetables to do express collection points spread, and it is said that cooperation agreements have been signed with express delivery companies such as Four Links and One Reach and Postal And Jitu, opening up the signing system, and launching high subsidies to attract collection points to settle in. This move shows that Pinduoduo will face off against rookies.
In the past two years, the epidemic has ignited "contactless distribution", ripening the former community group and stimulating market demand, while a number of former star projects still cannot avoid closing their doors. Nowadays, Internet grocery shopping has come to a new fork in the road.
"First half" big waves
The exploration of China's fresh e-commerce has not stopped, from Yiguo Fresh, Daily Orchard, to Meituan Preferred, Duoduo Buy Vegetables, Hema Fresh; Vertical Fresh B2C Predecessors and Successors, giants do not hesitate to put down their bodies to enter the Internet to buy vegetables.
According to the business data disclosed by the officials, we can regard the platform with a daily order volume of more than 20 million as the "first echelon", the "second echelon" within 10 million to 20 million, and the "third echelon" below 10 million. Obviously, meituan's preferred and more grocery shopping belongs to the "number one player".
Both were born in 2020, just a month before and after.
When meituan's preferred business unit was first established, it took Jinan as the first city, and then entered Wuhan, Guangzhou, Chengdu and other places, and focused on county-level market penetration in Jiangxi, Hubei and other places. From September to December 2020, Meituan Preferred quickly launched the "Thousand Cities Plan".
In the following month of the same year, Duoduocai was established, and the first batch of pilot cities were Wuhan and Nanchang, followed by the development of Shaanxi, Jiangxi, Henan, Hebei, Chongqing and other provinces, deep ploughing sinking market. On the basis of its own traffic and relatively perfect supply chain, the single amount exceeds the Meituan Preferred. In addition, it should not be ignored that the "fast group" hatched by Pinduoduo in March 2020 is developing obscenely.
However, during last year's New Year's Festival, Meituan Preferred actively prepared for the battle, launched a large number of low-cost products, and deployed many front-line employees to the central warehouse to participate in sorting. Therefore, at the beginning of this year, the single amount preferred by the US group achieved a counterattack on the purchase of more vegetables. Meituan Preferred's 2021 GMV target is 200 billion yuan, but as of September of that year, it has not reached 100 billion yuan, and the earnings call disclosed that the preferred business has lost 4 billion yuan.
The reason why Pinduoduo and Meituan spend efforts to enter the community group purchase is, on the one hand, because of the high-frequency just-needed attributes of the fresh category, the population and the wide range of "sinking" areas, which have a significant effect on pulling new and improving GMV; on the other hand, the second echelon that entered the game early has verified the market.
Born in 2017, Dingdong Buy Vegetables, Ten HuiTuan, which received Alibaba's investment in 2019, Xingsheng Preferred, which received JD.com investment in 2019, and Orange Heart Preferred, which was incubated by Didi, have stepped out of different business models in their early practice.
Hema is not idle, in the middle of 2021 set up the "NB Division", and accelerated the promotion of the community group purchase project "Hema Neighborhood" incubated in May of the same year, providing grocery shopping, taking direct independent stores as the mainstay, supplemented by franchise; at the peak, it opened to more than 2,000 stores and 20,000 SKUs, covering more than 10 cities.
However, the development was only half a year, and the closure of the project was announced at the end of November of the same year. The Hema Market, which was incubated in October 2020, was promoted by the newly established Alibaba Community E-commerce (MMC) Business Group the following year, and merged with "Taobao Buy Vegetables" in September and was renamed "TaoCai Cai". At the end of last year, "Tao Cai Cai" made business adjustments and closed the Guizhou regional service.
In January this year, Hou Yi released an internal email saying that Hema clearly defined the "road of multi-format online and offline coordinated development", with the goal of upgrading from the current single store profit to full profitability.
At the same time, a number of media exposed that the funds of the Ten Hui Group were stretched thin, and they had already laid off large-scale employees, and the office area was empty; suppliers and grid warehouse merchants who came to collect debts were endless. Subsequently, the ShihuiTuan was also fined 300,000 yuan by the Beijing Chaoyang District Market Supervision and Administration Bureau for violating the Anti-Unfair Competition Law.
Together with the Ten Hui Group, it became one of the "old three groups" of the prosperity and preferred, and after temporarily staying in the second line, it recently added a new category of clothing. The entrance to the women's clothing channel is placed in a prominent position on the home page of the platform, and some spring clothes are being discounted. The price of clothes is concentrated below 200 yuan, covering young users to middle-aged groups. In addition, Xingsheng Preferred has also opened up businesses such as home textile furniture, digital home appliances and cultural and educational supplies, becoming an online supermarket.
The entrepreneurial teams of the third camp, such as tongcheng life, carrots, food clubs and other community group buying veteran players, have gone bankrupt in the expansion.
Internet giants also have folds in the matter of buying vegetables. Orange Heart Preferred, which was born in June 2020, broke 7 million orders in November of the same year; Didi founder Cheng Wei once made a bold statement, "There is no subsidy ceiling on buying vegetables", but only 15 months later, on December 21, 2021, Didi removed the grocery business for "special reasons", which means that 20 billion yuan of investment is adrift.
Daily Fresh is also left behind. At the beginning of 2020, Daily Fresh was also ahead of Dingdong To buy vegetables, and it set up more than 1500 front positions in 2019, but as of the end of June 2021, the number of daily fresh front positions was only 625. Under the comprehensive factors, in the face of losses and business pressure, Daily Excellent Fresh has retreated to the third echelon.
After the last round of reshuffle, although the first two camps are mainly looking at the competition, it is not ruled out that there may still be new changes in the future.
The "second half" is king
Why? Whale traders believe it can be understood from three perspectives:
1) The implementation of new regulations accelerates the reshuffle of the industry and accelerates the change of the remaining
Community group buying and fresh e-commerce have undergone a round of reshuffle. At the end of 2020, the State Administration for Market Regulation and the Ministry of Commerce jointly held an administrative guidance meeting to regulate the order of community group buying, requiring Internet platform enterprises to strictly abide by the "nine no's" of community group buying and maintain the normal competition order in the market.
Since then, most of the brands in the third echelon have gradually faced bankruptcy, mergers and acquisitions, and serious declines in performance. Only the first and second camps and a few players in the third camp remained strong.
In March 2021, the State Administration for Market Regulation imposed administrative penalties on low-price dumping and price fraud of community group buying brands such as Meituan Preferred and Duoduoduo in accordance with the law. Among them, Duoduo was fined 1.5 million yuan for buying vegetables. Subsequently, in June of the same year, Meituan's "penny spike" goods were required to be removed from the shelves, and other platforms had to shrink subsidies.
In the face of the decline in single volume, the decrease in the income of grid warehouse operators and the crisis of trust in the platform by suppliers, what these platforms need to do is to actively change and find a rational way to survive outside the price war.
2) Transformation strengthens source supply, and mode integration optimizes sales terminals
In order to survive, all kinds of players do their best. "Meituan Grocery Shopping" has been involved in the model of store combination of home delivery as early as two years ago, and its current business mainly covers seven cities such as Shanghai, Beijing, Guangzhou and Wuhan. In the case of continuous losses, the daily excellent fresh reduced the front warehouse business, and instead tried the toB direction and embarked on the road of transforming the vegetable market, that is, the "smart vegetable farm".
As of the third quarter of 2021, Daily Excellent Fresh has signed 73 vegetable farms in 18 cities, of which 52 have already started operations; in terms of retail cloud, it has signed cooperation agreements with 11 customers, and the technical blessing has given Daily Excellent Fresh a new story. However, the role change from toc to toB also faces challenges such as large capital investment in the early stage, how to use single volume to drive revenue, and commercialization.
Looking back at toB's Meicai.com, after 8 rounds of investment, there are still problems such as capital and business reduction. Eventually, a number of the company's executives left, and in January this year, there was news of major layoffs, and even the headquarters had to be relocated. Daily Fresh may also be thinking about how to avoid "repeating the mistakes of the past".
On the contrary, Dingdong, who still deeply cultivates the front-loading warehouse model and takes the toC route, adjusted its strategic playing style in August last year, from "scale first, taking into account efficiency" to "efficiency priority, taking into account scale". Explore new ways out for families in the direction of pre-ordered private label goods.
In order to survive, the mode of integration, everyone wants to have a greater traffic base, so the daily excellent fresh and Dingdong buy vegetables actively settled in hungry, Meituan takeaway, with the help of force. They have been looking for optimal solutions in scale and profitability, optimizing the point of sale and direct procurement of the source supply chain.
3) Still anxious with your back to the platform, and make a profit in a variety of ways
Meituan Preferred has launched a more refined management, including attaching importance to the operation of the head of the private domain traffic, requiring after-sales pickup to be completed within 3 hours. In addition, in terms of internal organizational structure, according to the "LatePost" report, Meituan has entrusted the three businesses of preferred, fast donkey and grocery shopping to Chen Liang, and Guo Wanhuai assisted Chen Liang in management. At present, Meituan Preferred no longer takes growth as the assessment goal, and focuses on controlling costs and expanding commodity categories. In terms of urban strategy, Meituan Preferred has also begun to sink the market and compete for the township market outside the first- and second-tier cities.
However, in January this year, there was already a media message that Meituan preferred to make drastic layoffs. Chen Liang, head of meituan's preferred business department, also left the front line of business and focused on organizational construction and strategic research. Chen Liang's original overall management of meituan's preferred, fast donkey, and Meituan grocery shopping business will be handed over to Guo Wanhuai, vice president of Meituan.
Just when the US group adjusted its structure and accelerated the "sinking", duoduo buying vegetables in order to create more "possibilities", focusing on the station business, which used the traffic advantage of 800 million active users and tens of billions of subsidies to promote the "duo grocery express station sending and receiving service system", allowing the regiment leaders to provide a new source of income, but then exposed the qualification problem, but also let duoduo buy vegetables be supervised by the postal departments of many places. Of course, this will not hurt the chassis of the original business of buying vegetables.
Overall, community group buying can no longer continue the "burning money" game. In the case of the cold capital market, the rising price of consumer goods, and the rise of various raw materials and transportation costs. These struggling and tentative community group buying companies are all anxious about the loss of traffic, their low "hematopoietic" ability, and no core barriers.
Swim out of the new pattern of "deep water"
It is undeniable that the scale of China's nearly 5 trillion fresh market is enough to impress major Internet platforms and entrepreneurs, while the penetration rate of e-commerce is less than 5%, indicating that the "Internet to buy vegetables" has its space and still needs to continue to explore. It is worth noting that at present, with community group buying + front-end warehouse self-operation as the main path, in the case of the disappearance of traffic dividends and stricter supervision, it has fallen into the "deep water area" of the second half.
In terms of the overall industry rhythm, it has changed from the "sprint" sprint state of fighting explosive power in the past to the excessive competition of marathon "long-distance running" to fight endurance, and the innovation of the operation system and the innovation of the supply chain system around the improvement of efficiency. Therefore, in terms of result orientation, it is difficult to continue the capital burning money drive, and whether it has hematopoietic profitability will determine how far it can go and whether it can swim out of the "deep water area".
In terms of business model, the remaining players of the three camps of Internet grocery shopping will not stick to a specific way, as long as they are in the trial and error space, but will take a multi-format way to break through. However, whale merchants have always believed that the way of playing the "pure regiment leader" route in the future community group buying is difficult to sustain, on the one hand, the interest-driven loyalty of these part-time group leaders is low, and the quality and service stability of delivered products are difficult to guarantee; on the other hand, the tax standardization of live broadcast masters has released the inevitable trend of e-commerce taxation, and the leader of the group, as one of the main participants, is also difficult to avoid.
In addition, regarding the matter of Buying Vegetables on the Internet, we also mentioned in the "2022 Retail and Consumer Industry Annual Top Ten Trend Forecast" that it is an inevitable trend to return to the entity "heavy", and it is also the bottom line of the government's hope not to shake the "vegetable basket" people's livelihood project. One is that the supply chain of the place of origin will be redone and deep, and the product development will be differentiated, such as pre-ordered dishes; the other is the terminal of sales and service, which is heavily combined with the store network.
On the market trajectory, we can refer to the model of pure takeaway stores in the catering industry, and the location follows the "first-class business circle, second-rate stores", but in addition to some special categories that can have pure online gross profit space to survive, most of them cannot solve the rise in traffic costs, the delivery costs after the increase in orders, and finally close the door. The traffic dividend disappears, there is no repurchase precipitation, and it will face similar problems to completely rely on the fresh pre-warehouse model. In 2022, this phenomenon will become more and more obvious.
Therefore, our judgment on the future of the Internet to buy vegetables: fresh categories cut in, retention and repurchase pull-up, driving high-profit category transactions; platform, Meituan's regional front-end penetration capabilities, Pinduoduo's back-end supply chain depth, is the main player; vertical self-operated companies, towards the heavy asset model of the front store and the back warehouse, there are natural customer flow conversion and brand output of stores, and new requirements will be put forward for the improvement of ping efficiency and the reduction of performance costs; or the transformation of B-end fresh supply chain services, peak circuit turn.