How long will fresh e-commerce "fall below $1"?

Ignition Dimension (ID: chaintruth) original

Produced by Burning Finance

Author 丨 Xie Zhongxiu

Editor 丨Rao Xiafei

The bad news of fresh e-commerce continues.

On March 17, it was reported that Dingdong Buy Vegetables (DDL.US) was interviewed by the Haidian District Market Supervision Bureau on March 16 and launched a case investigation due to problems such as passing off dead fish as live fish, unauthorized "flipping" of visas, and daily disinfection. Affected by this, on the evening of the 17th, Dingdong bought vegetables and U.S. stocks fell by more than 20% before the market.

On the same day, it was reported that daily excellent fresh (MF.US) was pulled by suppliers to collect debts in banners. Burning Finance saw on the pulse platform that some people said on March 16 that "yesterday (March 15) there were still suppliers hanging banners in arrears", and some people replied, "Today (March 16) also has, in Wangjing this side of the trouble." ”

On March 17, Burning Finance went to the daily youxian headquarters (Block A1, Vanke Times Center, No. 9 Wangjing Street, Chaoyang District, Beijing), and there was nothing unusual on the street in front of the headquarters building, occasionally security personnel walked by, and several people chatted at the entrance of the daily youxian headquarters. It was lunchtime, and there were delivery workers with takeaways, and the employees of the daily excellent fresh company were coming out to get takeaways.

Photo/ In front of the daily fresh headquarters

Source/Burning Finance Photo

However, Burning Finance confirmed from the surrounding stores that there was indeed a matter of rights protection. "Both days. They were pulling banners upstairs, and yesterday someone was carrying a loudspeaker up the Daily Fresh Company building. "It seems to be because of an economic dispute." A store employee said. Another merchant said, "It has happened several times recently, as if it is because of money, but not many people come." ”

Previously, Hema closed five stores in a row, and Dingdong bought vegetables was also exposed to layoffs and salary cuts. At the same time, some consumers said that fresh e-commerce platforms such as Dingdong Grocery Shopping and Daily Excellent Fresh have recently been obviously "out of stock" and "untimely delivery". From the once hot track, to today's problems, "rout" has become the keyword of the industry, what happened to fresh e-commerce?

At the beginning of the outbreak, along with the outbreak of demand, fresh e-commerce once became a star industry. On June 27 and 29, 2021, Daily Fresh and Dingdong Grocery shopping landed on the NASDAQ and NYSE respectively. Daily Excellent Fresh also won the title of "Fresh E-commerce First Stock" because of the bell ringing time two days earlier.

But now the fresh e-commerce scenery is no longer, half a year later, the daily fresh stock price has fallen from 13 US dollars / share at the time of issuance, to the current 1.60 US dollars / share, the total market value is only 377 million US dollars; Dingdong buy vegetables has also fallen from the issue price of 23.5 US dollars / share to 3.74 US dollars / share, the total market value of 883 million US dollars, only a little more than a tenth of the listing.

The current situation of fresh e-commerce obviously makes it difficult for investors to hope for it. In the shareholder forum of the "Daily Excellent Fresh" stock of the Oriental Wealth Network, some people still have to say helplessly from time to time, "Falling below one (US) yuan is just around the corner." More netizens ridiculed it as "daily worry." ”

"Commodity supply and performance capacity are the problems that have always existed in the front warehouse, and the loss will be larger in the two links, and it is also the two major links with higher costs of fresh food enterprises." Zeng Ying, an analyst in the retail industry of the Analysys brand, told Burning Finance, "Although the different business models of fresh e-commerce have now run out of their own representative enterprises, such as daily excellent fresh food and Dingdong grocery shopping in the front warehouse, fresh food in the cabinet mode, more food in the community group purchase, self-operated box horses and so on." But overall, fresh e-commerce is currently in a state of loss and has not achieved large-scale profits. ”

"Fancy survival" has become the key word in the fresh e-commerce industry. "Fresh e-commerce companies are still expanding their corporate systems, including online and offline collaboration, business models and business diversification." Zeng Ying said, but they are still in the "livelihood" stage, and various platforms are trying to try profitable channels.

In order to survive, Dingdong bought vegetables in an attempt to reduce costs by laying off employees, reducing salaries, and reducing the speed of expansion, and Hema closed five stores in a row and opened hema Olei, Hema neighborhood and other stores to expand the sinking market. As for the geometry of the road ahead, it will take time to give an answer.

Out of stock, unable to deliver, delinquent payment

Fresh e-commerce storms continue

Since the end of last year and the beginning of this year, there have been more "bad reviews" about fresh e-commerce.

"Since the end of last year, I have often encountered problems shopping for food in Dingdong." A consumer in Chengdu told Burning Finance for a long time, "Once because of a system problem, the delivery timed out by an hour. On another New Year's Day, it seems that the station manager has a problem with the allocation, and there are several delivery staff at the station, which time out for more than two hours. Later, I spent more than an hour shopping for food delivery in Dingdong. "And the price is also expensive," Dingdong buys vegetables at a price that is also generally much more expensive (than Park Pu buys vegetables), 30-50% (expensive). ”

Dabai in Beijing, the "base camp" of daily excellent fresh, also told Burning Finance that it has recently shifted from daily excellent fresh and Dingdong to Meituan to buy vegetables. The first thing that impressed Dabai was the delivery fee, "At that time, the Meituan group bought a vegetable 19 yuan free delivery fee, in addition, I bought a member, there are freight coupons, even if less than 19 yuan can also deduct freight." Although the amount of free delivery fee has now been increased to 29 yuan, it is still cheaper than daily fresh food. ”

Secondly, there is also a gap in the price and quality of goods on various fresh e-commerce apps. "The prices of the dishes on the daily fresh food are almost twice as high as that of the US group. And the daily fresh meat is frozen. Dabai said.

Like Jiujiu, Dabai also suffered from delivery problems, "In February this year, when there was a strong wind in Beijing, I bought vegetables at daily excellent fresh food, and no one delivered it for two hours after placing an order. Later, I gave up the daily excellent fresh re-called Meituan to buy vegetables, and it was delivered in 40 minutes. ”

Zhou Zhou, another user in Beijing, said, "This year, daily excellent fresh is often out of stock. Opened at four o'clock in the afternoon two days ago, there are only a few leafy greens left. Before I wanted to buy garbage bags, I also found that there was only one, and the others were delivered the next day. ”

Photo/Daily Fresh Out of Stock page

Source/Zhou Zhou provided

Ai Ke in Shanghai, the "base camp" of buying vegetables in Dingdong, also told Burning Finance, "Recently affected by the epidemic, it is very difficult for Shanghai to buy vegetables. Whether it is Hema, Dingdong to buy vegetables or other APPS can 'grab' the delivery brother. If you are lucky, the delivery time will be longer, and if you are unlucky, it will directly show that the delivery brother is full. But before the epidemic, the supply of dingdong to buy vegetables seemed to be a bit of a problem, and there were fewer types of dishes that could be bought. ”

Behind the problems of "out of stock" and "delivery can't keep up" are the supply chain and distribution problems of fresh e-commerce platforms. In terms of supply chain, the problem of daily excellent freshness is obvious, and it has even been exposed that it is in arrears with suppliers.

Burning Finance saw in the Oriental Wealth Network that as early as November 2021, some netizens said in the shareholder forum of "Daily Excellent Fresh" stock, "Arrears of supplier loans!" By February 2022, the netizen still left a message saying, "Arrears to suppliers for more than 4 months." And in March 2022, he said, "It seems that it has been more than 5 months now." However, as of press time, the netizen has not yet replied to Burning Finance.

On March 11, Times Financial reported that a supplier, Wang Wen, said that since December 2021, the payment of daily excellent fresh has been abnormal. "First the payment was delayed for 10 days, then it was a month, until two months ago, the payment was completely gone." And there is not only one case of the problem, "there are many peers around who have encountered the same problem, which is already a common phenomenon." ”

At the same time, Burning Finance also saw on the enterprise check APP that the recent daily excellent fresh has also been accused of being accused of arrears in payment. The plaintiff, Beijing Larsen Agricultural Development Co., Ltd., said that from the cooperation in 2019 to February 2020, Larsen Agriculture has supplied more than 2 million yuan of various fruits to Daily Excellent Fresh, of which the payment for the goods in 2019 has been fully settled, and the payment for the goods in 2020 has not been paid on time.

But the site side doesn't seem to be aware of this. When asking a daily fresh delivery person why the recent shortage of stocks was serious, one delivery man only said, "Recently, the order volume is small, so the replenishment is not so timely." The webmaster of a station in Beijing's Chaoyang District said, "I don't know about this matter. ”

On March 17, Burning Finance tried to verify with Daily Excellent Fresh to find out whether there was any arrears in the payment of suppliers and the current solution. However, as of press time, no response has been received.

Another issue is the delivery aspect. Burning Finance noted that the reason for the lack of distribution has little to do with the number of sites. Because the coverage of each fresh e-commerce platform site is not much different. Burning Finance positioning searched for "daily excellent fresh", "Dingdong buy food" and "Meituan buy food" respectively, and all saw about 10 sites in the page range. After searching, Dabai also found that "there are even more daily excellent fresh spots near my home." ”

The number of delivery workers or a more immediate reason. Several daily excellent fresh, Dingdong grocery shopping, and Meituan grocery shopping stations near Burning Finance and Economics were introduced separately, and there are currently 11, 10 or so delivery workers at the site, and more than 20. From the perspective of quantity, meituan buys vegetables with more delivery staff than other fresh e-commerce platforms, and the speed of assigning delivery workers after placing an order is also faster.

The unavoidable problem of profitability

The root cause of everything is most likely a matter of money.

Fresh e-commerce is an imaginative track. "High frequency", "just demand", "people take food as the sky" are the support of this market. According to the data of the "Electric Digital Treasure" of the Network Economic Society, in 2021, the transaction scale of fresh e-commerce reached 465.81 billion yuan, an increase of 27.92% year-on-year. iResearch expects China's fresh retail market to increase to 6.8 trillion yuan by 2025.

But it is such a track with its own halo, and the platforms are deeply involved in the problem of profitability.

According to the data, Daily Excellent Fresh was founded in 2014, starting from Beijing, and as of March 31, 2021, 631 front-end warehouses have been established in 16 cities across the country. Dingdong Grocery Shopping started in Shanghai in 2017 and as of March 31, 2021, it covers 29 cities across the country and has 950 front-end warehouses.

Although it has been in the field of fresh e-commerce for 8 years and 5 years, Daily Fresh and Dingdong are still losing money.

On February 15, Dingdong Grocery disclosed its 2021 Q4 financial report. According to the data, in the fourth quarter of 2021, Dingdong food buyer achieved revenue of 5.48 billion yuan, an increase of 72.0% year-on-year, and the annual revenue of 2021 was 20.12 billion yuan, an increase of 77.5% year-on-year. At the same time, in December 2021, the Shanghai region achieved overall profitability. Liang Changlin, founder and CEO of Dingdong, said, "The fourth quarter is our best quarter since our inception. ”

But the losses continued. According to the financial report data, in the fourth quarter of 2021, Dingdong bought a net loss of 1.096 billion yuan. According to the disclosed statistics, from 2018 to 2021, the cumulative loss of Dingdong to buy vegetables has reached more than 11.5 billion yuan.

The same is true of Daily Fresh, according to the 2021 Q3 financial report of Daily Fresh, in the third quarter of 2021, the net loss of Daily Excellent Fresh was 974 million yuan. From Q3 of 2019 to 2021, Daily Fresh has accumulated losses of nearly 7.6 billion yuan.

Starting in 2016, Hema, which is backed by Ali, is still worried about the problem of profitability. Similarly, Meituan's 2021 Q3 financial report data shows that new business (including Meituan Preferred, Meituan Grocery Shopping, Meituan Flash Sale, etc.) and other revenues were 13.723 billion yuan, with a loss of 10.906 billion yuan, a loss of 437.5% year-on-year.

The cash flow of the fresh e-commerce platform is even more worrying. According to the Q4 2021 financial report data of Dingdong Grocery Shopping, as of December 31, 2021, the company's cash and cash equivalents and short-term investments were 5.23 billion yuan, of which the cash part was 660 million yuan. For Dingdong to buy vegetables that burn more than 1 billion yuan in a quarter, the situation is not optimistic.

The 2021 Q3 financial report data also shows that as of September 30, 2021, the total amount of cash and cash equivalents, restricted cash and short-term investments held by Daily Fresh was RMB2.48 billion, of which the cash part was RMB670 million. For the same single season need to spend nearly 1 billion yuan of daily excellent fresh, it is also not optimistic.

Wang Wen told Times Finance that she is currently owed more than 4 million yuan. According to its disclosure, in the list of suppliers who are still queuing up for negotiation, the largest amount of arrears is close to 10 million yuan. According to the cash flow situation of daily freshness, there may indeed be difficulties in payment.

Photo: A site in Chaoyang District, Beijing

One is heavy assets, high investment, the other is uncertain consumers, fresh e-commerce profitability is not surprising. "The front-loading model requires a lot of investment in supply, warehousing and performance capacity, which is a heavy asset. Judging from the financial reports of the two listed companies, although the revenue is growing, the loss is also expanding, so the overall performance is still not good. Zeng Ying said.

The freshness of the heavy input is well known. According to the financial report of Dingdong Buy Vegetables, in Q4 2021, the sales cost of Dingdong Food Purchase increased by 46.4% year-on-year, and the fulfillment cost increased by 47.3% year-on-year. The industry also often mentions that since Hema appeared in Ali's financial report from Q2 of 2018 (natural year, non-Ali financial year), Q2, Q3 and Q4 in 2018 have maintained Ali's purchase of goods and equipment costs of around 10 billion yuan for three consecutive quarters.

However, on the consumer side, fresh e-commerce, which mainly targets young people's grocery shopping business, is difficult to grasp the hearts of young people. "I rarely buy vegetables, usually order takeout to eat." A consumer told Burning Finance that after being hollowed out by "996", most young people just want to lie down and relax, and it is better not to ask for trouble for groceries and cooking.

Moreover, there are many fresh e-commerce platforms, the products provided are similar, and naturally everyone is the same, "On the consumer side, fresh e-commerce companies have high customer acquisition costs, but the homogenization of provided goods is serious, and the loyalty of users is relatively low, so it also requires higher investment." Zeng Ying pointed out.

A number of consumers also told Burning Finance that they will not deliberately choose to place orders on a certain platform, generally "following the fate", or comparing prices, "which side of the price is appropriate." ”

Dingdong Buy Food's 2021 Q4 financial report data also shows that in order to acquire new customers, its sales and marketing expenses increased by 38.3% year-on-year.

In order to acquire users, money can only continue to "burn". As for how much money can be "burned" and where the money comes from, it will be left to tomorrow to think about.

Platform melee, fancy survival

Profitability has been difficult, but there are more platform scuffles, which increases the pressure.

The timeline combed by the Prospective Industry Research Institute shows that as early as 2005, the mainland fresh e-commerce market began to develop, when Yiguo Fresh was established and opened the first wave of fresh e-commerce. Since then, the vegetable housekeeper, Tuotuo Gong Society, and SF Preferred have been launched. Since then, with the continuous development of fresh e-commerce, the supply has gradually exceeded the real demand of the market, so the industry has stopped expanding. And in 2016 there was a low tide period.

Until 2019, with the sudden outbreak of the epidemic, the fresh category as a daily necessity ushered in a big outbreak of the online market, and the fresh e-commerce that was originally on the verge of collapse also ushered in a "rebirth". According to the statistics of forward-looking industry research, the number of active fresh e-commerce in China reached 47.461 million in the first quarter of 2021, an increase of 65.7% over the same period.

Photo/ Dingdong buy vegetable field push flyer

At present, fresh e-commerce has formed a market with many "players". According to the classification of "Dianshubao" of the network economic and social society, the current Players of China's fresh e-commerce industry chain include traditional fresh e-commerce such as Tmall Fresh, Jingdong Fresh, Original Life, etc.; O2O platforms including JD.com, Meituan Flash Sale, etc.; as well as the front-end warehouse model including Daily Excellent Fresh and Meituan Buying; and the "Arrival at Home" model represented by Hema Fresh; the community group purchase model including Xingsheng Preferred and Duoduo Buying; and the B-end fresh e-commerce such as Meicai.com and the cycle purchase mode including Wumart and METRO.

As the number of "players" increases, the competition naturally becomes more intense. In the front warehouse mode, the US group buys vegetables and grabs the beach obviously. In Beijing and Shanghai, consumers who have switched to the embrace of Meituan to buy vegetables are not in the minority. For example, Dabai switched from daily excellent fresh and Dingdong to Meituan to buy vegetables, and Dabai also told Burning Finance, "Almost all of my friends around me use Meituan to buy vegetables. In Shanghai, users also pointed out, "There are more hema and Meituan." ”

A daily fresh webmaster told Burning Finance that the orders of daily fresh food were divided into a large part by other platforms, "In the past, our site may have two or three thousand orders a day during the peak period, but now there are only six or seven hundred orders a day." ”

Meituan also gave more generous treatment to recruit delivery staff. "Now the income of a part-time delivery worker is 7 yuan." A part-time delivery worker who buys vegetables in Meituan told Burning Finance, "If you are full-time, it is divided into cascades." 0-800 singles, 5 yuan per single; 801-1200 singles, 6 yuan per single; 1201-1700 singles, 7 yuan per single; more than 1701 7.5 yuan per single. ”

The income of the delivery man who buys vegetables in Dingdong is, "the full-time basic salary is 3,000 yuan, plus 3 yuan per delivery fee." Part-time is 5 yuan / single. According to the recruitment website, the income of the daily excellent fresh delivery staff is 5 yuan / single, and a daily excellent fresh delivery man told Burning Finance, "Daily excellent fresh only full-time, no part-time." ”

In order to survive, the "players" can only use a hundred solutions. For example, Dingdong buys vegetables to lay off employees, reduce wages, and shrink the scale. In December 2021, the news of dingdong buying vegetable layoffs came out, and some employees said that dingdong buying vegetables has started a major layoff, purchasing 50%, algorithm 30%, operating 30%, and recruiting 10-20%. In this regard, Dingdong Grocery has responded that individual changes are normal organizational resource adjustments of small-scale companies.

In terms of salary cuts, a Dingdong grocery delivery man said that since its listing in June 2021, it has been cut three times. A delivery man confirmed to Burning Finance that the reward method was recently changed from the previous performance and full attendance to a certain amount of rewards, "In the past, the rewards for performance, full attendance, and praise per month could be about 1,000 yuan." But now it has been changed to 200 yuan for each 1950 singles, 400 yuan for 2080 orders, and 600 rewards for 2210 orders. ”

"It can be said that 200 yuan can not be obtained." "1950 orders a month requires 75 orders a day. But now the site has more than 500 orders a day, and there are fifty or sixty orders on everyone's head. I don't want to do it anymore. ”

Dingdong buying vegetables has also begun to control the scale. The data shows that in Q4 2021, the number of pre-warehouses for Dingdong groceries increased by only 25, compared with 139, 147 and 239 in Q1, Q2 and Q3 in 2021, the growth was almost stagnant.

Another typical platform box horse began to sink. From October 2021, Hema began to try "Hema Aolei" stores in Shanghai, Beijing, Chengdu, Xi'an and other places, positioning Hema quality discount stores. So far, Hema has tried nearly ten retail formats such as Hema Fresh, Hema Mini, Hema X Member Store, Hema Neighborhood, etc., and the idea is getting closer and closer to the downward and smaller formats.

Hou Yi, vice president of Alibaba and founder and CEO of Hema Fresh, also said that the latest layout of Hema is Hema Fresh, Hema X membership store, and the "troika" of Hema neighborhood.

Daily Fresh has opened the mode of "selling, selling and selling". Recently, Daily Fresh announced the signing of a share subscription agreement with investment firm Yorkville Advisors, where Yorkville will subscribe for a total of $300 million worth of Daily Fresh stock over the next 3 years. Xu Zheng, CEO of Daily Excellent Fresh, said that the signing of this agreement will bring additional financial support for the company's strategic implementation and business promotion.

The market is brutal, and there are only two paths to choose from, survival or death. If you do not use all kinds of solutions to get out of the profit dilemma, the only thing that meets the fresh e-commerce will be the rout. It's just that these fancy measures can solve the problem of the profitability of fresh e-commerce, and fresh e-commerce is not a false proposition, and whether profit is "mirror flower water moon is unattainable", just wait for survival and then answer.

Resources:

"Fresh e-commerce rout, listed giants are chased by suppliers for tens of millions of debts", source: Times Finance;

"2020 China Fresh E-commerce Industry Market Analysis: Users, Market Size Steadily Growing Investment and Financing Market Rational Development", source: Prospective Industry Research Institute.

*The caption image is from Visual China.

*Zhou Zhou, Jiu Jiu, Dabai, Ai Ke, and Tong Dong are pseudonyms in the text.