Box horse fresh
The | new excerpt of Business Review, written by Barbara |
Hema Fresh was eventually pushed out of the greenhouse by Ali.
Recently, it was reported that Alibaba Group is considering seeking independent financing for Hema Fresh, with a proposed valuation of $10 billion. Hema's "independence" has traces to follow, for a long time, Hema has been sitting on the cold bench because of its performance less than Ali expected, as early as June 2021, Ali upgraded its organization and launched the business responsibility system after Hema embarked on the road of self-financing.
Founded 6 years ago, Hema once blindfolded crazy expansion stores, but also tried more than ten new retail formats such as Hema X member store, Hema neighborhood, Hema small station, etc., but unfortunately Hema still did not find a clear profit direction.
Although Hou Yi said that he has explored the three feasible formats of Hema Fresh, Hema X Member Store, and Hema Neighborhood, and launched a strategy of online and offline common development, whether hema can lead Hema to turn losses into profits is still unknown.
01, out of favor Ali "abandoned son"
From "gaining favor" to "falling out of favor", Hema has experienced six years.
In 2015, Hou Yi, who had already left JD.com, saw the opportunity of fresh e-commerce, so he founded Hema Fresh and opened his first store in Shanghai in January 2016.
Also seeing this market opportunity is Ali's CEO Daniel Zhang, so the two exchanged many times and reached a consensus: in the future, there will be large unicorn companies in the field of fresh food. In March 2016, Ali participated in Hema's Series A financing for US$150 million, and since then this new retail business has become Ali's new favorite.
At the Yunqi Conference in October 2016, Ma Yun declared to the outside world: "In the next ten or twenty years, there will be no e-commerce, only new retail." In 17 years, Ma Yun and Daniel Zhang also stood for this new business by tasting Hema fresh fresh seafood, which shows how high the status of Hema in Ali was at that time.
With the wealthy Ali Group behind the back, 18 years of Hema Xiansheng on the way to open a blindfolded run, the most important thing is that on April 28, Hema has a total of 10 stores opened synchronously, and in the whole of 2018, Hema opened a total of 88 new stores, compared with 6 in 16 years, 18 in 17 years, Hema stores seem to have entered the fast lane.
The crazy speed of opening stores has also caused Ali's purchase of goods and equipment to rise sharply, and the cost in Q3 2018 reached 11.6 billion yuan, doubling year-on-year.
But Ali's huge investment in Hema has not received a considerable return, not only did not make a profit but also lost money, hou Yi said that "we think that the loss is investment, there must be investment in innovation", it is clear that at this time Ali is still full of expectations for this new project.
Ali's attitude towards Hema changed at the end of 2019, according to late reports, due to profitability and GMV growth rate delayed to meet expectations, Hema Xiansheng has been downgraded from an independent sector to a sub-business segment of the business group, Hou Yi's reporter has also changed from CEO Daniel Zhang to Dai Shan, president of the B2B business group, and in the performance appraisal of that year, Hema only got 3.25 points, ranking first from the bottom.
In addition, at The General Assembly of Alibaba's Organization Department that year, Hou Yi received the Worst Rotten Strawberry Award representing the business in front of the core management team of more than 500 people, and this award was exactly what Daniel Zhang to give to Hou Yi by name, for the simple reason that hema's progress did not meet the expectations of the group.
Hou Yi's pressure can be imagined, so in order to rush to prove the profitability of Hema, he began to frantically try various retail formats, from Hema X member store, Hema neighborhood, Hema small station to Hema vegetable market, box pony, Hema MINI and other more than ten models, almost all retail formats were tried again, but unfortunately "want to speed is not reached", Hema still can not find a profit direction, many businesses are abandoned halfway.
Peng Cheng, a co-investor in Yuzu, once commented on Hema: "Hema is a company that has not thought clearly about what it does, nor has it exercised its particularly strong ability, and then formed a corporate culture similar to the Shanghai Beach gang." ”
Tossed a large circle, Hema did not make achievements, so its status in Ali fell again and again, in June 2021, Ali announced the organizational upgrade, on the surface Hema was upgraded to an independent business group, in fact, Ali in order to fully implement the business responsibility system, which means that Hema needs to bear its own profits and losses in the future, and Hema has become Ali's "abandoned son".
In December 2021, for the business situation of Hema, Hou Yi said that "Hema must have profitability to develop independently, and it is always a shame to do business without making money." This is in stark contrast to the three indicators that He emphasized earlier that Ali pays more attention to customer growth rate, repurchase rate and retention rate.
In January this year, it was reported that Alibaba was considering seeking independent financing for Hema Fresh, with a proposed valuation of $10 billion, and Hema finally opened the "road to independence".
02, do "heavy" box horse is in a difficult situation
In the field of fresh e-commerce, Hema takes the integrated model of store warehouse, and the store not only assumes the role of the front warehouse, providing delivery services for users who place orders online, but also can be used as an offline drainage for retail supermarkets. It seems that this model kills two birds with one stone, but compared to the daily excellent fresh, Dingdong to buy vegetables in the front warehouse model, Hema's investment in the store makes it "heavy" a lot.
The area of Hema Fresh Ordinary Store is about 3,000 square meters to 5,000 square meters, and the storage of fresh food and the normal operation of the catering area require the purchase of a large number of catering equipment and freezers, coupled with the installation costs of the store decoration, suspension chain and conveyor line, the cost of opening a Hema fresh store is as high as 30 million yuan.
Even the relatively lightweight Hema mini requires an area of 500 square meters and a cost of about 2 million. The cost of a front warehouse is only in the hundreds of thousands of yuan, and does not need too large an area, like Dingdong to buy vegetables the front warehouse area is only about 300 square meters.
In addition to the heavy investment in stores, Hema's cold chain logistics network construction and multiple warehouses also make it more "heavy". According to relevant information, Hema currently has 3 cold chain warehouses in the country, 6 fresh temporary storage warehouses in the sales area, 41 sales places of normal temperature and cold chain warehouses, 16 sales of local processing centers, in addition, there are more than 550 direct supply direct sales bases in the country.
Hema 'heavy' from Ali's financial report can also be glimpsed, since Q2 2018 Box Horse Fresh first appeared in Ali's financial report, Ali's cost of purchasing goods and equipment has risen sharply, and the single-quarter operating cost has also soared directly from about 20 billion in 2017 to 50 billion, one of Ali's explanations is "the structural changes in revenue brought about by the continuous transformation to new retail business", which translates to burning money for Hema.
Relying on Ali to burn money Hema did buy a certain scale, but the core profit problem has not been effectively solved, in 2018, in the first time Hema was divided into other parts of China's retail business under Ali's core business classification, the adjusted profit margin of Ali's core commercial revenue fell directly from more than 60% to 43%.
Although Hou Yi has previously said that some mature stores in Beijing and Shanghai have been profitable, Hema still has not gotten rid of the situation of loss, according to the data calculated by e-commerce analyst Li Chengdong, in Q1 2021, Hema fresh loss is about 3 billion yuan.
At the beginning of 2022, Hou Yi released an internal email saying that Hema has clarified the "road of multi-format online and offline coordinated development", with the goal of improving from single store profit to full profit.
From the end of 21, Hema closed the Hema neighborhood stores in Guangzhou, Shenzhen and Suzhou with poor geographical locations, and it can be seen that this time Hema really tightened the belt of his pants.
According to the third eye retail report, the grade of Hema procurement hardware is declining, which has at least compressed the cost of opening a store by at least 25%. At the same time, the local push suppliers in hema neighborhood broke the news that Hema owed him 614,000 yuan in the fourth quarter of 21 years, according to his calculations, Hema owed about 20 million yuan to many suppliers across the country, and in the process of communicating with Hema, Hema always deducted the payment on the grounds of unqualified data.
Whether it is closing stores, compressing the cost of opening stores, or defaulting on payment, it proves that hema's current operating situation is not optimistic.
03, trillions of fresh e-commerce "obstacle and long"
The starting point of the fresh e-commerce industry is marked by the establishment of Yiguo Fresh in 2005, after more than ten years of development, fresh e-commerce is no longer only the traditional B2C model, but there is an O2O model represented by Taoxianda, Jingdong to home, daily excellent fresh, Dingdong buy vegetables This typical pre-warehouse model, Hema fresh, 7fresh represented by the store warehouse integration model, as well as Ten Hui Group, Meituan Preferred and many other community group buying models.
Giants scramble to lay out the fresh e-commerce track is not unreasonable, iResearch Consulting's data show that The size of China's fresh retail market will be 5.04 trillion yuan in 2020, and will reach 6.8 trillion yuan in 2025, but in 2020, China's fresh online retail accounted for only 14.6%, although compared with 8.8% in 2019, the penetration rate has been greatly improved, but there is still a large room for development, according to iResearch Consulting's forecast, the market size of fresh e-commerce in 2023 will exceed one trillion.
The market size of fresh e-commerce is indeed very attractive, but the characteristics of fresh products with low gross profit and high loss make it difficult for fresh e-commerce to make a profit, and it is even more difficult to make a profit for the front warehouse of about 60% of fresh products. According to data from the China E-commerce Research Center, there are currently more than 4,000 fresh e-commerce companies in China, only 4% breakeven, the loss accounts for 88%, 7% is a huge loss, and the final profit is only 1%.
Since 2016, there have been players forced to withdraw, in 2016, the young vegetable jun, delicious seven seven and other fresh e-commerce companies collapsed, in 2017 Xu Xian closed, 2019 Xiaoxiang fresh reduced stores, 2019 Yiguo fresh bankruptcy reorganization, orange heart preferred, ten hui group was also exposed in 2021 to large-scale contraction of the market.
According to Meituan's third quarter 2021 financial report, the operating loss of new businesses, including Meituan Preferred, reached 10.9 billion yuan, while Didi's net investment loss of 20.8 billion yuan in the third quarter of last year was largely due to the change in the fair value of Orange Preferred's investment.
Although the daily excellent fresh of the pre-warehouse model and the dingdong purchase of vegetables are listed in 2021, they still have not escaped the curse of loss, and in the third quarter of 2021, the net loss of daily excellent fresh is 970 million yuan, and from 2019 to the third quarter of 2021, daily excellent fresh has accumulated a loss of nearly 7.6 billion yuan. Dingdong's life of buying vegetables is also not good, the net loss in the fourth quarter of 2021 reached 1.096 billion yuan, and from 18 to 21 years, the cumulative loss of Dingdong to buy vegetables has exceeded 10 billion.
The collective loss of fresh e-commerce based on online operation also reflects the dilemma of Hema from the side, because the online orders of Hema stores in Beijing and Shanghai stores account for more than 75% of the total orders, and less than 25% of offline orders are difficult to maintain the operating costs of stores.
Under the pressure of profit targets, in 2022, Hema changed its strategy, no longer adhering to the route of online development as the mainstay and offline development as a supplement, but choosing online and offline common development, Hou Yi made it clear that it would take three years to expand the offline proportion from the current 30% to 50%.
After exploration, whether the three formats of Hema Fresh, Hema X Member Store, and Hema Neighborhood can achieve this goal, and whether they can lead Hema out of the quagmire of loss, it will take time to give an answer.
Resources:
The 2021 China Fresh E-commerce Industry Research Report | iResearch Consulting
The off-the-beaten box horse is fresh, where is the way? | Pie Finance
"Shelling" ding-dong, successive closures of stores, hema is anxious about what? | Radar Finance
Hema wants to make a profit, and the supplier first eats | Moose new consumption