Text / Gao Huanhuan
Editor / Wang Fangjie
June 25 was supposed to be the first anniversary of the launch of Daily Premium, but there didn't seem to be much to celebrate.
This first stock of China's fresh e-commerce, since its listing, seems to have crossed the robbery. Its share price has fallen all the way and is now down 98% from its issue price. At the same time, due to the stock price of less than $1 for 50 consecutive trading days, on June 2, Daily U.S. received a delisting warning from NASDAQ.
At the same time, Daily Fresh is also in danger of "bleeding" for a long time. From 2018 to 2021 alone, in the four years, the cumulative loss of Daily Fresh is expected to reach 10.8 billion yuan, which is almost equivalent to the total financing scale of its calendar years. Before the IPO, the company had obtained 11 rounds of financing, of which Tencent had invested 5 rounds in a row, with a total financing scale of 11.4 billion yuan.
In the first three quarters of 2021 alone, Daily Fresh lost 3.017 billion yuan. At this time, although it has reached the middle of 2022, the outside world cannot obtain the latest annual report data of Daily Excellent Fresh, because the company's 2021 annual report is difficult to produce.
This is certainly not a good sign. This company is like a microcosm of the barbaric era of capital in previous years, as if as long as the entrepreneurship is started, the low-hanging fruit beckons. Even if the outside world has many doubts about its business model and finds it difficult to calculate the account, as long as there is a sum of money to believe in it, there will be more money to choose it.
According to the statistics of the China E-commerce Research Center, there are about 4,000 participants in the domestic fresh e-commerce field, of which only 4% of the revenue is flat, 88% is in the loss, and finally only 1% is profitable.
A venture capital institution that has not quit in the early days of investing in multiple rounds of daily excellent fresh has not yet withdrawn, and its relevant person in charge told "The Most Talk", "Although the daily excellent fresh fell miserably, but the Chinese stocks are miserable", and then, he sent a face-covering expression.
Another fund partner who had done a detailed due diligence during the Daily Fresh D round denied this large investment when he was "at the door". In addition, he also went to tell him that he had "rescued" other investment institutions that were interested in him.
He told "The Most Talking" that the feeling now is fear and joy, "Throwing it will be 'shrimp rice'." ”
In his view, a good business model should be vigilant. The current opportunities for model innovation are far weaker than technological innovation, and new gamblers always fail to see the "family destruction" of their predecessors.
The thinking that this brings to him is that the daily excellent fresh has the opportunity to admit the mistake of transformation, such as abandoning the platform idea, switching to urban distribution, etc., "but those investors who beat the drum and spread the flowers and do not think that the matter is big have been giving money, anyway, it is not their own pocket, resulting in a serious thing for the company to fail."
It is said that Xu Zheng, the founder of Daily Fresh, likes to play Depu and claims to be at a good level. He once said: "The beginners of the German poker only look at winning or losing, and the masters look at the chips." ”
It is undeniable that on the table of fresh e-commerce, there have been high chips accumulated in front of the daily excellent fresh, but today its chips are not much.
An old employee of Daily Fresh told us that he later reviewed and found that the dilemma of today's Daily Fresh was already doomed three years ago.
01
We intend to start telling the story of Daily Freshness from 2019, although this year is neither its beginning nor its end.
That year, the track of fresh e-commerce was not crowded. Community group buying was also hot later, when the "old three groups" flourished and preferred, the ten groups and tongcheng life were established for only two or three years, and the "new three groups" Meituan preferred, more to buy vegetables, and tao vegetables did not appear until a year later. And Daily Fresh was the brightest star in the entire fresh e-commerce track at that time.
But it was also in that year that it encountered its biggest competitor , Dingdong Grocery Shopping.
At the beginning of 2019, Dingdong Grocery, which was founded in 2017, began a nationwide expansion after achieving a B+ round of financing, at that time, Daily Youxian had completed the D round of financing and entered 20 cities across the country.
Like almost all Internet companies, Dingdong buy vegetables to take the expansion strategy is to burn money for the market, to the initial expansion of the Hangzhou market as an example, Dingdong to buy vegetables fancy subsidies include sending onions, full reduction, half an hour up, no starting price, no delivery fee, late to give subsidies, refund weight difference... At the same time, in order to pull new, Dingdong to buy vegetables has also successively carried out a new 108 yuan red envelope activity. We have not searched in public reports for the size of the ammunition depot prepared by Dingdong to buy vegetables for expansion, perhaps it has no upper limit.
Daily U rarely thought about pressing this opponent in the cradle, and it once put forward the slogan of "dry turning dingdong to buy vegetables in a year and a half".
In May of that year, Wang Jun, CFO of Daily Excellent Fresh, revealed that he planned to invest more than 1 billion yuan to hit the Shanghai market within the year and open a comprehensive competition in Shenzhen, Wuhan and southwest China.
The subsidy war lasted for 3 months and then was suspended. According to public reports, the explanation given by a daily excellent fresh mid-level is "no money.".
Looking back, this sentence "no money", and "no money" in the popular sense, is not a concept, but only that the daily excellent fresh in the middle of the war has decided to stop the loss in time.
The above-mentioned old employees of Daily Excellent Fresh told us that it is precisely between 2019 and 2020 that the strategy of Daily Excellent Fresh has changed, from burning money for the market to pursuing profitable growth. He believes that this change in strategy was dominated by investors, and some investors put a lot of pressure on the company at that time.
This is also a common scenario. For startups, getting along with investors is really a problem, especially when encountering stronger investors, if the founder is a little weaker, it is difficult not to be led by the nose. But Xu Zheng is definitely not such a person.
Xu Zheng became famous as a teenager and was known as a mathematical genius, entering the University of Science and Technology of China at the age of 15, becoming the youngest general manager of Lenovo China at the age of 28, and at the age of 33, he chose to resign and founded Daily Excellent Fresh. In the business world, Xu Zheng has long had a strong name, which has been recognized by the old employees of daily excellent fresh.
Therefore, if Xu Zheng insisted on the strategy of exchanging losses for the market at that time, there would inevitably be conflicts with investors. But as far as we know, this conflict did not occur, almost smoothly, and the strategic characteristics of Daily Fresh transitioned to the second stage of the Internet, that is, the pursuit of profitable growth. The above-mentioned old employee told us that in fact, there are still different voices inside, but he is not sure whether this voice can be fed back to Xu Zheng, because "he is very assertive."
In fact, none of the decisions are isolated behaviors, it is a natural way for decision makers after a long experience. But in large-scale money-burning companies, the founders behind them are either blindly optimistic or will always live in anxiety about the water level of funds. We can assure you that this second one is definitely not an experience worth savoring.
Xu had a period of time. The Daily Excellent Fresh Experience has experienced a "dark tunnel" that no investors are interested in.
In 2014, when he first started his business, because he did not attract investment for a while, Xu Zheng mortgaged many of his properties and was ready to invest all his belongings for the company. Just as the loan was about to arrive, the timely rain investors who understood their arrival came, "as if God was testing my sincerity," Xu Zheng later recalled.
That is to say, as early as 2019, Xu Zheng has experienced a period of extreme uneasiness about funds, even if daily excellent fresh has become a popular fried chicken in the entrepreneurial world, this uneasiness will still become a deep memory, perhaps a muscle memory when managing the company.
In another track head company we contacted, there was a similar situation, the company burned all the money in the initial stage, the founder saw one partner after another leaving, had to come up with his own belongings to fill the company, in the later bloodless business war, such a founder will not only want to win, but also win without losing money, but it is difficult.
Therefore, you can hear more from Wang Jun's mouth about the yearning for profitability, for example, she has expressed that the company has achieved full profitability at the end of 2019, but from the financial report disclosed after the listing, in fact, the company has not achieved.
Also at the end of 2019, in this cold quarter, Dingdong Grocery has achieved a surpass in revenue to daily excellent freshness.
02
An important indicator of profitable growth is positive UE (Unit Economic Model). As far as the fresh e-commerce industry is concerned, it can be simply understood that the cost (procurement cost + performance cost) and the selling price can be equalized. For a long time, fresh e-commerce companies to open up the market, take a variety of means, in the end is nothing more than to win the reputation of cheap consumers, and it is almost difficult to avoid the occurrence of huge losses.
According to the financial report of Daily Excellent Fresh, in 2018 and 2019, the company lost 2.2316 billion yuan and 2.9094 billion yuan respectively.
Because the high-frequency and time-efficient delivery service of the front-end warehouse model has attracted many users, the price behind it is the high performance cost, which is the key to the difficulty of profitability of the front-end warehouse model, because the transaction gross profit is difficult to cover the performance cost.
According to Dingdong's Q1 2022 quarterly financial report, Dingdong's performance expenses for buying vegetables were 1.484 billion yuan, including storage rent, manpower wages and other expenses. According to the calculation of 100 million orders performed, for every order delivered by Dingdong, the performance cost of 14.84 yuan will occur.
Some researchers pointed out that the front-end warehouse model is an asset-heavy and operation-heavy model, and the terminal delivery cost of the "last kilometer" leads to higher performance costs, and the advertising marketing and preferential subsidies for customer input also cause higher sales and marketing costs. Therefore, the front-loading model has a low gross profit margin, a higher expense rate, weak profitability, and difficulty in obtaining and converting customer traffic.
According to Hou Yi, CEO of Hema, the front-end warehouse model is not established, it is done for the VC to see, from the business model itself, the front-end position is a false proposition that it is impossible to make a profit.
According to the prospectus, the performance cost is the largest head of the daily excellent fresh operating expenses, from 2018 to 2020, the company's performance expenses were 1.2393 billion yuan, 1.833 billion yuan and 1.5769 billion yuan, and the proportion of performance expenses in total revenue once reached 34.9%, accounting for up to 59.6% of operating expenses.
Moreover, for fresh e-commerce, the cost of fulfillment is almost rigid. Therefore, the cost they can most compress is the supply chain. Because fresh is a non-standard product, so the elastic space of procurement cost is very large, good and bad fruits and vegetables, the purchase price may be several times different. The above-mentioned daily fresh old employee said that the company did work supply chain costs, but the result of this is that good suppliers do not play with themselves.
At the same time, lengthening the settlement cycle is also the main means of regulating the flow. But this will pass the pressure on to upstream suppliers. Between 2018 and 2020, the payment cycle of daily fresh food to suppliers is 40 days, 55 days and 72 days, respectively.
By this year, this cycle is likely to be stretched again, because some suppliers have not received payment for a long time. Not long ago, the supplier had pulled a banner downstairs of the Beijing headquarters of Daily Excellent Fresh to collect debts and defend its rights.
A food and beverage supplier in Beijing told "Most Talk" that from last year to now, although there was no violation of the operation, Daily Excellent Fresh has been dragging on until now, and the deposit has not been refunded, and he and two other friends have probably been owed three or four million yuan.
Despite maintaining communication with Daily U-Chan, the account period was getting longer and longer, and the supplier was very uneasy, and the company's legal counsel told him: "Or you can sue directly." ”
Then sue. At the end of April, the court held a hearing, and after consultation, the solution given by Daily Fresh was to repay the loan in three installments. According to the agreement between the two parties, the third payment should be settled by the end of January 2023.
But he didn't dare to hold out much hope, "Now the arrears can come back a little bit, a 90% discount, and it is okay to return it to me in batches." ”
The above-mentioned suppliers found in several confrontations with Daily Excellent Fresh that this company has many subsidiaries, and the company that signed the contract is Changshu, but it was seized by the court, so the payment was made by another company entity.
According to the above-mentioned suppliers, there are many suppliers who are currently lined up for daily preferential fresh repayment, and their total arrears are about 2 billion. Although this figure is not recognized by the company, it should not be too far from reality.
According to the financial report, as of September 30, 2021, the net amount of outstanding supplier arrears of Daily Fresh was 1.652 billion yuan, an increase of 34% compared with 1.088 billion yuan at the end of the third quarter of 2020.
As early as March, there were media reports that daily excellent fresh arrears of payment, suppliers cut off supply. According to the report, The supplier was sued by the supplier for the arrears of the 2020 payment, and in addition, the "financial difficulties" began to appear since the end of 2021, and the largest amount owed in the list of negotiated suppliers was close to 10 million yuan.
Recently, due to the arrears of payment to suppliers, Daily Excellent Fresh was compulsorily enforced by the Chaoyang District People's Court of Beijing Municipality for 5.32 million yuan.
Therefore, the above-mentioned suppliers told us that they turned to fresh e-commerce with shorter payment cycles and cooperated with them, such as Hema, Meituan, Dingdong to buy vegetables, etc. "Although some platforms have more things, it is good not to default on payments." ”
It is worth noting that in order to improve the financial level, Daily Premium has also adopted a cost optimization approach based on the whole, such as its significant reduction in the size of the front position. From more than 1,500 front positions in 2019 to 631 in the June 2021 prospectus, a decrease of more than half. At the same time, 20 cities have also been reduced to 16.
In addition, Daily Fresh has also carried out layoffs, and a Daily Fresh customer service staff told us that there are actually many customer service departures from the company's headquarters every day, "The flow of personnel is still quite large." ”
These measures have alleviated the loss of Daily Fresh to some extent, and in 2020, the company's loss was 1.65 billion yuan, down nearly half year-on-year.
But I am afraid that this is also a drinking and thirst quenching, whether it is for the supply side or the performance side of cost control, will reflect the consumer experience, and consumers will vote with their feet. According to NetEase BIG DATA data, as of December 2021, the number of daily active users of Excellent Fresh is 5.717 million, which is only 40% of Dingdong's grocery shopping.
03
According to the data of the "China Commercial Industry Research Institute", in 2021, the penetration rate of fresh e-commerce will be 7.91%, with a growth rate of 32%, but the growth rate will increase year by year. From this point of view, in 2022, the penetration rate of fresh online has the opportunity to reach 12% predicted by Wang Jun.
This is certainly a big business opportunity, but the opportunity is not necessarily for independent fresh e-commerce, even if they have set off early.
In 2020, just when the daily excellent fresh and Dingdong grocery shopping are in full swing, the Internet giants have joined the competition of the fresh and matching track, and most of their first models to ask for directions are community group purchases.
The above-mentioned fund partners told us that the exact name of the track where daily excellent fresh is "fresh retail", in the fresh retail track, the division of categories is not easy and changes every year, the general category can be divided into "shop, warehouse, group" these three models, that is, there are façades, warehouses, community group purchases, store warehouse groups do not use fresh retail has very little. The "shop" can be divided into three sub-categories: vegetable market, supermarket (including supermarket online), and new community store. So, in general, it's the Six Gate Sect.
The six gates are fiercely competitive, such as the store side believes that the warehouse side consumes low frequency, and should be aimed at the people who buy vegetables every day instead of the weekly people, such as the group side believes that only the use of existing infrastructure plus the organization of the head of the group is the only way out in the future. Of course, in the past few years, the various gate sects have also had a certain trend of integration.
The dispute over the route is still inconclusive, but including Ali, Didi, Pinduoduo, and Meituan, they have all begun to put chips on the table of community group buying. Coupled with the previous "old three groups", various low-price promotions, high-subsidy new means emerge in an endless stream. When the scramble for territory is at its most intense, the government has to introduce policies to stop vicious competition.
This competition is actually multi-dimensional, in addition to low-cost customer acquisition, each company has also wrestled in the supply chain and talent.
On June 23, a fresh practitioner told "The Most Talking" that ali fresh grabbing momentum has been very strong recently, "I recently met a fresh store manager, under the current situation to give 180,000 a year." The result was unexpected, and finally robbed by Ali", the fresh e-commerce practitioner said helplessly, "Ali gave 240,000 a year, which is a very ordinary kind of small store manager." He felt his three views shattered.
Also in this fierce competition, the fresh retail track has entered a state of high elimination.
The head enterprise of community group buying, Shihui Group, will close all its businesses at the end of 2021; Orange Heart Preferred will fully transform its 2B business in September 2021; Buy more vegetables intensively "shut down and turn" sites, and multiple inefficient groups are shut down or merged...
At the end of last year, Baoneng Fresh, which had been open for less than a year, closed 25 stores in Xi'an and 8 stores in Nanchong; The Mini Program in the corresponding region is no longer able to place orders. A number of Baoneng fresh employees broke the news that tens of thousands of employees across the country were repeatedly owed wages by Baoneng Group for no reason.
Also last year, the Carrot App issued a notice of suspension of operation. Fresh e-commerce, which was once surrounded by capital, still can't get rid of the spell of "burning money, losses, and high costs" at this moment.
The above-mentioned fund partners even said that whether the economic efficiency of fresh e-commerce has been verified is still doubtful, and Internet platform enterprises will generate a large number of headquarters fees every year, and in industries such as selling vegetables, only a great industry iteration can support such a huge cost scale.
However, compared with independent fresh e-commerce, Internet giants obviously have more redundancy capabilities for this business, such as the acceptance of long-term losses, or simply do not use such a business as a profit contribution unit.
In fact, there have been similar cases before. In the chicken feathers of independent brand shared bicycles, the giants have rebuilt the industry in the ruins and incorporated it into the huge ecology.
Obviously, independent fresh e-commerce companies cannot withstand long-term bleeding. According to the 2021 annual report, Dingdong Buy's net loss last year reached 6.43 billion yuan. Therefore, under the heavy loss, Dingdong buys vegetables and also considers profitable growth. It began to shrink the battle line. Recently, the homepage of Dingdong Grocery Shopping in Tangshan, Hebei, Chuzhou, Anhui and Zhuhai, Guangdong, displayed the "Announcement of Stopping Service".
In December 2021, the founder of Dingdong Buy Food announced that Dingdong Buy Food will achieve full profitability in Shanghai and hopes to be fully profitable in 36 cities by the end of 2022.
In fact, similar victories have long been achieved, and in July 2016, Daily Excellent Fresh announced that it would achieve regional profitability in Beijing. But today, it stands on the edge of a cliff.