Recently, fresh e-commerce giant Dingdong Grocery (DDL.NYSE) released its fourth quarter and annual financial report for 2023, which showed that Dingdong's annual revenue in 2023 was 19.971 billion yuan, a year-on-year decrease of 17.55%.
According to FMCG, the decline in revenue was mainly affected by two factors. First of all, the surge in demand for home delivery during the epidemic has led to a high revenue base in the same period in previous years, and this demand has fallen back with the normalization of the epidemic. Secondly, in order to improve operational efficiency, Dingdong took the initiative to shrink the front line and shut down some cities and sites, which affected the scale of revenue.
Despite this, Dingdong has achieved remarkable results in cost control. Total operating costs and expenses for the fourth quarter decreased 18.3% year-over-year, with lower cost of goods sold, general and administrative expenses, and fulfillment expenses. These cost reductions directly contribute to the company's profitability.
It is worth noting that while maintaining profitability, Dingdong has also achieved a slight increase in gross profit margin on sales. This is mainly due to measures such as optimizing the company's commodity structure, increasing product R&D and production capacity, and improving the efficiency of regional processing centers and front-line employees.
However, the data also exposed some points of controversy. For example, shutting down a site to reduce the number of front-loaded warehouses appears to have a greater impact on fulfillment costs than the increase in unit economic efficiency after scale-up. In addition, Dingdong's investment in R&D expenses has also been reduced, which may have a certain impact on its strategy to transform into a food company.
However, from the perspective of improving profits, Dingdong's transformation strategy has been successful. Through the business strategy of giving priority to efficiency and taking into account scale, the company has achieved the goal of profitability of the front position. In the fierce market competition, profitability is undoubtedly the first priority to ensure the survival and development of the company.
Looking ahead, Dingdong will continue to deepen cost control and efficiency improvement, while increasing investment in product R&D and production to meet the increasingly diverse needs of consumers. In addition, with the intensification of market competition, Dingdong also needs to continue to innovate its business model and expand new growth points to maintain its leading position in the market.