Impact on the first stock of digital retail SaaS, what is the gold content of multi-point Dmall?

Text|Business Data School, Author|Liu Yuqi

At the beginning of 2023, the retail industry ushered in the second big test.

According to a survey conducted by the China Chain Store and Franchise Association (CCFA) on more than 16,000 stores of 70 sample enterprises, it was concluded that the difficult moment has passed, the performance of enterprises has recovered, the transformation of the industry has deepened, and the results have begun to appear.

While the industry is beginning to improve, it is also renewing the old.

On the one hand, old players are being phased out in the ever-changing iteration of retail. In January this year, some Carrefour supermarkets were restricted from spending on shopping cards, and some shelves were vacant, Carrefour said: Carrefour's supply chain is in orderly optimization, and goods are successively replenished to ensure the shopping experience.

On the other hand, the supermarket industry has also re-emerged as the focus of just-in-time retail. In November last year, Meituan Flash Sale released the Morning Glory System, which provides local retailers with a full-process instant retail digital solution, officially claiming to have served more than 20,000 stores. During the Spring Festival, Douyin launched its self-operated shelf e-commerce "Douyin Supermarket", providing users with nine categories of goods, basically covering the commodity categories operated by supermarkets.

The digitalization-focused SaaS model ushered in a second round of development. In December 2022, Multipoint Wisdom Limited (hereinafter referred to as "Multipoint Dmall") submitted a statement on the Hong Kong Stock Exchange to be listed on the main board of the Hong Kong Stock Exchange, sprinting the first digital retail SaaS share.

After three years of cold winter, the retail industry has gradually disintegrated, but at the same time, consumer demand is also being restructured, becoming extremely fragmented and diversified, and various formats such as instant retail, home business, short video, live e-commerce, and mini programs stand out.

The transformation of the consumer side has triggered the overall challenge of supermarket retail. Peng Jianzhen, secretary general of CCFA, once said that most physical retail enterprises and brands are facing the problem of digital transformation. In the future, the digital transformation of brands will focus on three aspects: consumer data assets, B2C capability building, and new retail relationships.

At present, retail digitalization is moving from the front office to the back office, from channel marketing, payment system, membership digitalization to deep water areas such as fulfillment middle office, store management, and supply chain.

In fact, in the process of digital transformation, large supermarkets have been facing the problem of unquantifiable input and output, and the transformation investment is too high but often does not fundamentally bring efficiency improvement, and there are many large supermarkets trying to solve problems through customized products, but they also face problems such as high costs, long cycles and challenges. On the other hand, consumer habits change rapidly, and often "plans cannot keep up with the rapid change", and the brick-and-mortar retail industry needs to be flexible and adaptable.

This means that the deep water area of digitalization is no longer "formalism", which requires retailers and SaaS vendors to have professional and deep insight and understanding of the industry, and more importantly, they need to polish and verify products step by link.

The next stage, whether for large supermarkets or SaaS vendors, is a comprehensive test of digital capabilities and industry understanding.

01 Traditional ERP is left behind, SaaS is on the market

"I purchased a lot of ERP systems, but I still can't manage resources well."

An offline supermarket chain operation leader, once "spit" to business data: "Our company has purchased more than a dozen different sets of ERP systems, training is time-consuming, different employees use different systems, I have to be proficient in more than a dozen systems to master everyone's work, I really don't know whether to increase efficiency or reduce efficiency." ”

In fact, this is not a problem of a supermarket, ERP system introduced into China since the 90s, so far the form has not been much innovation, but the format of the supermarket has undergone earth-shaking changes during this period, a system can often only solve one problem, complex large supermarkets need to purchase more than a dozen sets of ERP systems for management.

The survey report of the Mobile Information Research Center shows that the idle rate of ERP system functions in traditional industries is as high as 70.4%, and the waste of investment caused by idle functions is huge, coupled with insufficient training for employees, employees cannot use them, and most functions have become decorations.

However, the high cost and time consumption of training are not the most essential problems. In the digital era, independent ERP systems often divide a whole piece of business, and over time will form data islands, resulting in more cumbersome data redundancy, high procurement and maintenance costs, and more importantly, data cannot be opened, it cannot be really used.

The person in charge of the above-mentioned supermarket said: "The cash register system is a system that directly connects consumers, but it is only responsible for the cash register scenario, and can only do daily newspapers every night to export some data about the bill, and a set of e-commerce systems are grafted on it, but without consumer data, the e-commerce system can hardly play any role." ”

This is the most essential difference between traditional ERP and retail SaaS, the function of traditional ERP is to record and transmit data, but enterprises need more data-driven business development, through data capabilities to empower and guide stores, avoid uneven store management level, optimize the process to greatly reduce labor costs, improve the operational efficiency of stores.

On the other hand, large supermarkets often mean large volume, long decision-making chain, facing ever-changing consumer habits, high maintenance costs of ERP systems, long iteration cycles, and inability to adapt to the speed of change. For example, the update of payment methods, in just a few years, online payment has evolved a variety of payment types, from WeChat, Alipay to digital yuan, each new payment method is a challenge to the transformation of ERP.

Gartner has predicted that from 2020 to 2025, cloud deployment will become the default option for enterprise software deployments. It can be seen that SaaS has become a must to replace traditional ERP.

After several years of cloud development, the entire SaaS industry has embarked on two different paths: general SaaS for business verticals and vertical SaaS for industry verticals. Taking the cash register scenario as an example, general SaaS provides cash register capabilities, which can be applied in both the retail industry and the catering industry, while vertical SaaS specifically targets the pain points of retail cash register and optimizes the overall optimization of the upper and lower chains covering business scenarios.

West China Securities mentioned in "SaaS companies ushered in the repair market" that general-purpose SaaS services are gradually maturing, and vertical SaaS that provides targeted industry solutions will become a new round of hot spots in the future. In the next 3~5 years, China's SaaS products will further develop to "vertical". Enterprise-level SaaS general-purpose vendors will increase industry-specific customization services. Emerging SaaS vendors will continue to emerge in major vertical industry segments.

In the face of a new round of big tests in the digital era, Zhang Wenzhong, founder of Multipoint Dmall, once said: the key is to achieve integration, rather than simply adding an online channel to traditional retail. Therefore, multi-point provides the retail operating system Dmall OS for traditional retail, for merchants, through nearly a thousand modules to unify online and offline members, goods, promotions and prices, inventory, store management, supply chain, to achieve the digitalization and integration of all aspects of retail, the most fundamental is the unification of the underlying information data system and artificial intelligence support system.

As early as the beginning of 2020, major Internet companies are seizing the home and store business of department stores, and are also sparing no effort to explore the digitalization of supermarkets. At the beginning of 2023, content and social e-commerce are also competing for the instant retail battlefield, but what is behind this is not only the seemingly lively consumer market, but also the ability to truly help supermarkets achieve end-to-end and comprehensive digitalization.

02 Why is retail vertical SaaS the optimal solution?

Behind the shift from general SaaS to vertical SaaS is the embodiment of retail digitalization from shallow to deep, with high requirements for digital capabilities.

At the level of data circulation, the weakness of general-purpose SaaS is no different from traditional ERP, retailers purchase SaaS from different vendors, systems still cannot be efficiently connected, data cannot be connected and circulated quickly, and the formation of data islands cannot really generate value to feed back the business.

On the other hand, retailers have encountered many problems in the traditional IT era, such as the inability to control omni-channel inventory, the inability to continuously reach customers, insufficient supply chain coordination, the absence of a unified omni-channel membership management system, and the inefficiency of new product development.

These systemic problems cannot be solved by a single module, but must be rebuilt with a holistic mindset.

Take the digital system Dmall OS built by multi-point as an example, the reason why it is named an operating system is because it is not a single point tool, but an end-to-end solution. From payment system, distribution system, store management system, to retail cloud solution based on Dmall OS, it is also the logic from point service to ecological service.

Speaking of multi-point global thinking, Liu Guihai, chief marketing officer of Multi-point Dmall, once said that from helping supermarkets open O2O home business, adding online channels, promoting member integration, investing in intelligent hardware, to store digitalization and supply chain digitalization, multi-point continuous improvement of system functions to comprehensive digitalization.

Among them, the digitalization of the supply chain is the most difficult, but also the most beneficial part of the entire digital chain. By incorporating the information of upstream and downstream suppliers into the Dmall OS system and dynamically updating it, it not only enables large supermarkets to open, transparent and improve their own supply chain procurement, but also allows brands to reduce inventory pressure by selling and purchasing.

In 2021, Zhongbai Group carried out a comprehensive digital transformation, of which the investment promotion system of Dmall OS helped the whole process of Zhongbai procurement and investment promotion business to be online, strengthen headquarters supervision, promote open and transparent zero-supply cooperation, and build an intelligent supply chain with suppliers.

In fact, the difficulty of attracting investment is only one of the difficulties in the traditional retail industry. Due to the traditional procurement and investment promotion needs to be completed offline, there are regional restrictions on suppliers, and the links are not transparent, resulting in long procurement workflows, cumbersome processes and low efficiency, and at the same time, it is difficult for supermarkets to select the most suitable commodities and suppliers, and it is difficult to respond to the needs of market changes in an instant.

Dmall OS makes the whole process of procurement business online, and a single investment project can complete a closed loop in as fast as 3 days, systematic operation, data traces, reduce manual intervention, and improve approval efficiency.

In addition to the digital transformation for the back-end of supermarkets, Multipoint Dmall was actually helping supermarkets improve the efficiency of sales earlier - polishing the integrated model of stores and warehouses. This is the profit model of omni-channel operation of retail enterprises after serving many head customers at multiple points. The store-warehouse integrated model covers and reuses the supply chain through 3 kilometers of physical retail, delineates and adjusts the service scope of stores by itself, and greatly improves distribution efficiency. When online sales account for up to 30%, supermarkets can achieve profits, proving that the model is in line with the essence of business, and consumers, supermarkets and multiple points as technical service providers have continuous demand or motivation.

"Everything to Home", which is mainly based on supermarkets and department stores, has contributed the strongest growth point for Meituan in 2022, and has also become a must-compete place for instant retail companies such as Ele.me and JD Dada, and digitalization has become a necessary first step for supermarkets and department stores that want to participate in it.

According to the "2022 China Retail Digitalization White Paper" jointly released by the China Chain Store and Franchise Association and global management consulting firm McKinsey, retail enterprises generally regard digital transformation as the strategic focus of the future and invest heavily in digital construction, 94% of retail enterprises regard digitalization as one of the three most important strategic initiatives, and 79% of retail enterprises expect digitalization to contribute at least 1/5 of the performance growth in the next three years.

In fact, this is also in line with the current trend of offline retail. In recent years, due to the environmental impact, user-side consumption habits have migrated to online significantly, and the proportion of online sales of many leading merchants has increased rapidly. Compared with the high maturity of e-commerce and instant retail, physical retailers lack digital infrastructure, and in the face of widespread user demand, enterprises need to quickly complete digital capabilities in the new blue ocean. This is also the value provided by multi-point technology service providers, helping retailers solve pain points through insight into consumer needs, just like a "digital military master", driving the entire industry forward in a new cycle.

However, the digital transformation of retailers often involves the whole body, with long cycles, cumbersome processes, and high thresholds, and general-purpose SaaS is an independent product, and due to the unification of the underlying data standards, it is inevitable that there will be system docking and adaptation problems. As a vertical SaaS, Dmall OS not only covers the entire chain of the retail industry, directly solutions the "advanced transformation ideas in the industry", but also supports "building block" flexible construction, customers can flexibly build free combination of functional modules according to business needs, adapt to market changes and respond quickly. It not only achieves plug-and-play, improves the transformation efficiency of retailers, but more importantly, allows retailers to avoid detours and greatly reduces the cost of trial and error.

Taking Guangdong 7-Eleven as an example, its 1,500 stores and 3 distribution centers, including various channel providers and franchisees, to complete the comprehensive switching of the digital system, it is a 2-3 year project, and through the multi-point Dmall OS only 6 months to complete the non-sensory switching, without affecting the normal operation of stores and warehouses.

By digitally reshaping the entire chain of the retail industry, the current multi-point focus is on helping retailers solve several core problems: user experience upgrade, operational efficiency improvement, system security assurance, and ESG responsibility, using digital means to truly help retailers reduce costs, increase efficiency, and save energy.

Starting from the pain points of retailers, gradually forming a full-chain capability matrix, such an idea has achieved initial results in commercialization. Public data shows that revenue grew rapidly from 2019 to 2022, with year-on-year revenue growth rates of 84% and 115% in 2020 and 2021. Growth in the first nine months of 2022 also exceeded 50%. This shows that after the first 5 years of model polishing period, multi-point Dmall business is rising, and the retail SaaS model has gradually run through.

At the same time, from the overall situation of customers, the market also confirms the vertical SaaS model of multi-point Dmall, and the number of customers grows rapidly, while the renewal rate remains at a high level in the industry. The data shows that as of the end of September 2022, Duodian has served about 458 customers. In 2020 and as at the end of September 2022, the net income retention rates were 165%, 208% and 132% respectively.

Renewal rates have always been a barometer for SaaS companies. This is also one of the advantages of vertical SaaS in the industry, focusing on accurate insights into a certain industry, going deep into multiple links of the industry chain, enriching value-added services and products, deepening customer dependence, and allowing customers to maintain continuous subscription.

03 With high and low, retail SaaS has set off a boom in going overseas

In 2022, the SaaS industry has encountered its "darkest moment". Not only did many leading companies continue to plummet in the US stock market, but they also began to show weak growth in the Chinese market, which has not yet grown - there are many competitors in the same track, resulting in a high degree of market fragmentation; The willingness to pay is gradually increasing, but it is still in the early stages of the market. In the face of the changing market landscape, SaaS vendors need to find new incisions in the next stage.

It is understood that Multipoint Dmall is actively deploying overseas markets. In 2020, based on the Hong Kong business, it started the road of internationalization, and has now entered the Singapore, Cambodia and Poland markets, providing digital transformation solutions for Dairy Farm and METRO Europe.

Overseas markets may have become the second growth curve that Dmall is betting on.

An investor who has been focusing on technology going overseas for many years once told Business Data, "The continuous digital transformation of enterprises is a key area for Chinese enterprises to go overseas, and technology-based B-end enterprises have many blue ocean opportunities to go overseas to the Southeast Asian market." ”

Observing the retail formats at home and abroad, it will be found that the domestic supermarket formats are not concentrated enough, mostly small and medium-sized enterprises, which have always been a format with low gross margins, and need efficient turnover of goods and funds to achieve profit precipitation. Overseas retail enterprises are generally larger in scale, higher in gross profit, and higher in payment ability and willingness, with European and American retail enterprises accounting for up to 5% of GMV, Wal-Mart and Metro accounting for about 2% of IT budget, while domestic retail companies account for less than 1%.

The difference between domestic and foreign customers makes SaaS have higher profit margins. Gao Jianbin, senior vice president of Sales Easy, once said in an interview with the media that in Southeast Asia, the price of Chinese software products is only 60%-80% of that of mature international companies such as Oracle, SAP, and Salesforce, but it still exceeds the profit margin of the domestic market.

High cost performance is also one of the advantages of China's SaaS going global. In the Southeast Asian market, multi-point Dmall has certain advantages in labor costs compared with European and American software manufacturers, and domestic advanced experience and practice can also quickly form product breakthroughs; In developed markets in Europe and the United States, business vertical SaaS is still the mainstream, and enterprises often need to purchase a variety of SaaS products. The multi-point Dmall's one-stop, end-to-end, omni-channel retail SaaS can cover the core scenarios of all businesses, and the model of charging according to the take rate according to the transaction volume not only has a lower overall cost, but also aligns with the interests of retail enterprises and realizes revenue through customer success.

The technical advantages and practice accumulated from China's complex retail formats, as well as the digital and closed-loop service system explored at multiple points, have some lighthouse customers when entering the international market. Multipoint Dmall has begun to lay the groundwork for overseas expansion by partnering with overseas corporate customers such as Dairy Farm and METRO Europe. The overseas expansion introduces additional revenue streams for the operation of Multipoint Dmall.

According to Frost & Sullivan, Multipoint Dmall is already the largest digital retail service provider in China and Asia in terms of the total amount of commodity transactions processed by the system, with a market share of 14.8% and 9% respectively by the end of 2021.

On the other hand, after the completion of the digital infrastructure of the retail industry, the multi-point OS+X ecological strategy may become the third growth curve after going overseas. With Dmall OS as the retail digital base, we continue to accumulate the best experience, feed back digital technology, superimpose more internal and external vertical applications and innovations, do deep and thick to achieve great ecological enrichment, meet the multi-faceted needs of retail enterprises, and continue to deeply bind the relationship with retail enterprises. For example, in supply chain, energy conservation and even metaverse, etc., it helps retail enterprises achieve digital business transformation through digital technology. This is also one of the imaginations of the multi-point Dmall business model.

Eight years of precipitation and polishing of products, for multi-point Dmall, has gone through the most difficult "0 to 1" first stage, is entering a period of rapid development from 1-100. Replicate the domestic market on a large scale, and empower overseas retail enterprises with China's experience through going overseas, while exerting greater imagination space for ecological strategy. As the market environment recovers, retail SaaS is also about to usher in spring.