Produced by Radar Finance and | Li Yihui, ed. | Deep Sea
Fresh e-commerce battlefield smoke rises again.
On March 14, Hou Yi, CEO of Hema, fired at Dingdong to buy vegetables in the circle of friends, saying that Dingdong buying vegetables "is estimated to be about to explode... Relying on the disorderly expansion of investors' capital and price subsidies, it is not long to win the market. It was also accompanied by a video of "Hema Houyi continuously shelled Dingdong, investors and founders responded".
Radar Finance noted that the box horse that took the initiative to "shell" the opponent was fresh, and his own life was not good.
According to media reports, at the beginning of March this year, Hema closed five fresh stores at the same time, two of which are located in Nanjing, and one in Qingdao, Chengdu and Guangzhou.
As for the reason for the closure, the store's statement is "optimization and adjustment". However, in the eyes of the outside world, the profit problem may be the main reason. As early as the beginning of 2020, Hou Yi was unusual at a media communication meeting, bluntly saying that "the poor operation of the box horse can also be closed." In this year's internal letter, Hou Yi once again made it clear that Hema's goal is to improve from the current single store profit to full profitability.
In this regard, some observers have analyzed that after years of crazy exploration, the logic of Hema has changed, and it has begun to return to the essence of business, putting survival first in the first place.
Hou Yi then "shelled" Dingdong
In January 2016, Hema opened its first store in Shanghai, and fresh e-commerce entered the field of capital. At that time, some data showed that more than 15% of the entire domestic retail sales of goods were realized through the Internet, but the proportion of fresh products consumed online was less than 3%, and the difference between them made the e-commerce companies see new growth points.
Two months after the establishment of Hema, the keen Ali had an insight into the wind direction of the market and participated in Hema's Series A financing at a cost of $150 million.
Subsequently, since the end of 2017, major giants including Suning, Alibaba, JD.com, Meituan, Yonghui, etc. have entered the fresh market, increased the intensity of offline stores, and used the model of "online + offline, catering + supermarket" to explore the market.
According to the iResearch Consulting report, China's fresh e-commerce market will develop rapidly in 2020, and the scale of the fresh e-commerce industry will reach 458.49 billion yuan. With the development of fresh e-commerce and the maturity of the model, the formation of users' online shopping habits, it is expected that fresh e-commerce will continue to grow at a high speed in the future, and the scale of the fresh e-commerce industry will exceed one trillion yuan by 2023.
In fact, although the fresh e-commerce track has been ups and downs, in the first half of 2021, the field is still the hottest Internet investment track in China. Xingsheng Preferred, Shihui Group, Dingdong Buy Vegetables, etc. have successively completed hundreds of millions of dollars of large-scale financing, followed by the fresh e-commerce front warehouse Shuangxiong Daily Excellent Fresh and Dingdong Buy Vegetables, which have been successfully listed within a week.
In the second half of 2021, the painting style suddenly changed, Tongcheng life went bankrupt, the carrot went out of business, and the Dingdong buy vegetables, ten huituan, and Meicai network that were still insisting on it, have successively spread the news of layoffs.
While other players were shrinking, Hema did not stop expanding. According to some data, in December near the end of 2021, Hema sprinted all the way at the speed of "two days a family", and finally opened the 300th Hema fresh store in the country 14 days before New Year's Day in 2022.
Among them, Shanghai is the home base of Hema and has 65 stores in the area so far. In the process of Hema expanding from Shanghai to the whole country, Dingdong Buy Vegetables was also established in Shanghai, through a large effort to pull new, while continuing to open up new front-end warehouses in Shanghai and increase market coverage.
According to the data, as of December 2021, Dingdong has more than 100 front-end warehouses in Shanghai, with a total of about 1,400 in the national market.
At the same time, the founders of the two sides came and went, "fighting a war of words" between each other.
At the beginning of December last year, Hema Fresh launched the "nail price" in Shanghai, Hou Yi posted in the circle of friends that "Since the establishment of Hema, there has never been a price war, has been pursuing a value war, in the face of fierce competition in the fresh industry, Hema also has the ability to fight a price war; since it has been fought, it is a long-term war...".
In this regard, Liang Changlin, CEO of Dingdong Grocery Shopping, also responded over the air: "Business competition is normal, and the biggest dream of the second boss is to fight with the boss to the death", and attached a screenshot of the data, showing that Dingdong Buy Vegetables has ranked first in China's fresh e-commerce list.
In January this year, Hou Yi posted a screenshot of Dingdong's stock price in the circle of friends, with the text "So tragic, tens of billions of funds trapped in it, almost no leeks." It's like a Titanic crashing into a glacier, and everyone knows that the ship is about to sink, but there is nothing that can be done. The era of winning competition with price subsidies is over. ”
Recently, Hou Yi once again posted in the circle of friends, saying that Dingdong buys vegetables "it is estimated that the warehouse will soon explode... It is not long to win the market by relying on the disorderly expansion of investors' capital and price subsidies," in response to the remarks of Liang Changlin and his investors about the competition between the two.
In the video forwarded by Hou Yi, Liang Changlin told Dingdong investors, "Now there is a traffic war between enterprises, especially between startups, thinking that it is necessary to monopolize the market to make money, I think it will not happen." ”
He said that Dingdong buys vegetables does not attach great importance to competition, but believes that "harmony and difference", the biggest competition is whether it can meet the needs of users and serve consumers.
However, in the eyes of the outside world, the two sides have both differences in patterns and fierce price wars that are short-term.
In 2020, Hou Yi said that he was not optimistic about the front-end warehouse model, believing that "the front-end warehouse is difficult to overcome problems such as category width, customer unit price, gross profit margin and loss." "The path chosen by Hema Fresh is the self-operated model of store warehouse integration, through multiple sales channels of offline stores, online e-commerce and logistics distribution.
In addition, some fresh e-commerce practitioners said that Dingdong's efforts to buy vegetables are very strong, and new users' first gifts, free consumption coupons, free delivery fees and other activities have emerged in an endless stream, which has formed a strong competitive pressure on other vegetable selling platforms.
In the face of the threat of Dingdong buying vegetables, Hema once opened a 300-square-meter "Hema Small Station" in the physical store, and used the pre-warehouse model to sell affordable dishes, but gave up later.
Box horses rushed from rushing to closing the store
At the same time as Hou Yi shouted in the air, Hema began to close stores in some cities.
Ms. Zhang, an office worker in Qingdao, is a "deep" user of Hema Fresh, and the family places orders for nearly 3,000 yuan per month on Hema. But in late February, Ms. Zhang received a text message mentioning that the Hema Xiansheng Taishan Road store, where she frequents shops, will close its doors.
The store's "business adjustment announcement" said that due to the company's business optimization and upgrading adjustment, the store will close its online and offline business after the end of business on February 28, and subsequent customers can choose to purchase at the nearest store.
It is reported that in 2018, Hema Xiansheng opened the first store in Shandong in Qingdao, and 8 stores have landed in Qingdao in the past few years.
Hema Fresh responded that the Taishan Road store will stop operating from March 1, and the next step will be to introduce the Hema Fresh Olei store to Qingdao, and in the future, Hema will take root in Qingdao to continue to expand its scale and service scope.
In Ms. Zhang's view, the poor location may be the main reason for the closure of the Hema Taishan Road store, because "the store is located in the mall mainly in the hotel, the popularity is not very strong, and some hotels have recently closed."
Another customer who said he "knows this place very well" said, "This place is not the same as Taitung, and the surrounding spending power is limited." It is seen coming and going, but mainly the elderly and young people with less high incomes. ”
In addition to Qingdao, on February 28, two Hema fresh foods in Nanjing also stopped operating, namely Xinjiekou Oriental Fred Store and Jiqing Store, giving the reason that "in order to better serve consumers" and make business strategy adjustments.
At the same time, the Hema Fresh Supermarket, located near the Tianfu Great Wall Community in the South Third Ring Road of Chengdu, also hung up the news of store closure, and there are also stores in Guangzhou.
Five stores in 4 cities were closed, just over two months after Hema officially announced the opening of the 300th store. This reminds the outside world of the strategic direction of Hema Xiansheng's internal letter at the beginning of 2022, such as "temporarily 'tightening the belt' of Hema" and "paying more attention to improving the quality of development rather than paying more attention to scale" in the future.
According to Times Finance, people close to Hema Xiansheng revealed that Hema closed some stores with serious losses in order to alleviate revenue pressure, or to prepare for the final round of financing and even listing.
In January this year, Hema was exposed to the news that it may operate "independently". According to people familiar with the matter, Alibaba Group is considering seeking independent financing for Hema Xiansheng, which is proposed to be valued at $10 billion and may be launched in February. Although Alibaba said it would not comment on this, many people in the industry believe that hema is "independent" is only a matter of time.
However, even after independence, the road of financing listing is not easy. In June last year, the daily excellent fresh and Dingdong groceries that went to the United States to go public have not escaped the fate of "listing is the peak".
Analysts pointed out that such market performance may hit the confidence of potential investors in Hema. Allegedly, some internal employees who hold hema fresh options are "waiting for internal options to buy back, or listing as soon as possible." ”
In addition to closing stores, Hema launched many dazzling attempts, most of which ended in failure. These business forms, in addition to Hema fresh, there are dozens of Hema X members, Hema Mini stores, Hema markets, Hema neighborhoods and so on.
The above-mentioned "Hema Small Station", under the judgment of Hou Yi's "pre-position is a false proposition, it is impossible to make a profit", was stopped in 2020, and more than 70 small stations gradually withdrew from the market and upgraded to Hema Mini store. Compared with Hema Fresh Shop, the latter is smaller in size and the distribution range is shortened to 1.5 kilometers.
However, this Kind of Mini store, which Hou Yi calls the "ultimate model of fresh e-commerce", will only open 14 by the end of 2020, which is far from the goal of opening 100 stores in a year.
Known as hema's ninth new format, Hema Neighborhood, which replicates the community group buying model, is mainly delivered the next day or picked up, and was officially launched on July 17 last year. By the end of last year, it was exposed that large-scale store closures were exposed, and it was only 4 months from the launch to the closure of the store. Some Kunshan netizens posted that the Hema neighborhood at the door was closed for a month.
Nowadays, while closing Hema Fresh, Hema has launched a new format of fresh Ole stores, mainly engaged in temporary food, positioning low prices and saving money. In October 2021, Hema opened its first fresh Ole store in Pudong Mall, Pudong New Area, Shanghai, with an area of only 480 square meters. Since then, Hema Fresh Oleai stores in Hangzhou, Beijing, Chengdu, Wuhan and other places have opened successively.
Hou Yi once explained to the media that the purpose of opening a fresh Ole shop is to help Hema reduce the loss of stores and processing centers.
It is understood that "daily fresh" goods have always been the killer skill of Hema fresh to attract consumers, but if the temporary goods are thrown away, it will bring huge losses, so the Oleai store has played the role of selling "daily fresh" goods that have been eliminated by Hema fresh.
In this regard, industry insiders said that in the past, the box horse, which mainly focused on the high-end market, has entered the adjustment period from a wild run, and has put down the "arrogant" attitude and begun to lay out the sinking market.
How far is the mode running?
After years of development, fresh e-commerce has been difficult to find a profit breakthrough due to the high cost of performance.
At the Q4 earnings report in February this year, Liang Changlin announced that the company has found a way and a path to profitability. The Shanghai region achieved overall profitability, "striving to achieve full profitability in the Yangtze River Delta region by the end of Q2, and Q4 is close to profitability in the country." ”
According to the data, Dingdong Buy Food's 2021 Q4 revenue was 5.48 billion yuan, an increase of 72% year-on-year, and the net loss was 1.096 billion yuan, narrowing from 1.246 billion yuan in the same period last year.
Liang Changlin's confidence seems to come from two data, last year's Q4 Dingdong grocery gross profit margin was 27.7%, a record high; the performance expense rate is declining, Q4 is only 32%, a record low. One drop and one liter, let Liang Changlin see the hope of profitability.
Hou Yi also began to chase profits. In an internal letter released at the beginning of this year, Hou Yi said that Hema has clarified the "road of multi-format online and offline coordinated development", with the goal of increasing the profitability of a single store from the current to a full profit.
How to achieve full profitability? According to Hou Yi's plan, it will take three years to adjust the Hema store, incorporate the location selection and other factors in the layout of the physical store, expand the proportion offline from the current 30% to 50%, and attach importance to the drainage sales role of offline stores, rather than just for the fulfillment of online orders and delivery services.
However, the fresh track is a heavy asset track, and the cost of the supply chain cannot be ignored.
It is reported that Hema has established a cold chain logistics network in the country at present, with 3 cold chain warehouses in the place of origin, 6 fresh temporary storage warehouses in the sales area, 41 sales areas of normal temperature and cold chain warehouses, and 16 sales of local processing centers. The construction and operation and maintenance investment of these supply chain strategies are not a small expense.
In addition, despite the use of a variety of new retail technologies, the operating costs of Hema's offline stores are not lower than those of traditional supermarkets. Coupled with the fact that the pain points of fresh food are highly time-sensitive and easy to wear and tear, the cost is further pushed up.
At the end of 2021, Hema transformed from a business group to an independent company in the positioning of Alibaba Group, and it needs to bear its own profits and losses.
Industry insiders believe that from Ali's darling to self-reliant portal, the Hema model will usher in market tests.
Note: This article is the original of Radar Finance (ID: leidacj). Unauthorized reproduction is prohibited.