Since the end of April, the fresh e-commerce industry, which has been silent for a long time, has made waves again: on the one hand, Jingdong Seven Fresh announced in Beijing on April 20 that it would "send the whole city", which is considered to be a high-quality service launched to hedge the impact of the industry; On the other hand, Hema reinstated its membership system on April 24 while unifying the free shipping threshold across the country, which is seen as a callback to the previous drastic reforms. China's fresh e-commerce industry is "crossing the river by feeling the stones". Zhang Yi, CEO and chief analyst of iiMedia Consulting, believes that although the fulfillment cost of fresh food distribution is high, with the progress of technology and the embodiment of scale effect, these costs can be effectively reduced, and the profitability of fresh e-commerce still exists.
(The picture comes from the Internet)
There aren't many players who "send it to the whole city".
"I worked overtime until 11 o'clock at night before I remembered that the refrigerator at home was out of stock, so I ordered some vegetables and fruits, which I had delivered before I got home, which is really friendly to us overtime workers." Ms. Li, who lives in Beijing's East Sixth Ring Road, said.
This is a scene that can only be realized after Jingdong Qixian announced the delivery of the whole city. Before this, there were almost no players in the fresh e-commerce industry who could "deliver to the whole city". The well-known Sam's "Whole City Delivery" and Hema "Yunchao" often have a delivery time of two-day delivery and next-day delivery, and their delivery efficiency is more like traditional e-commerce.
With the increasing demand for instant consumption, consumers have put forward higher requirements for the speed and scope of product delivery. After the service upgrade, the online order delivery service will cover all areas within Beijing's Sixth Ring Road, and the delivery time will be upgraded from 8:00-22:00 to 8:00-00:00 to fully ensure the normal distribution of citizens' "vegetable baskets". Within Seven Fresh, "Whole City Delivery" is seen as a major upgrade in its delivery services. From an external point of view, this is a hedging move made by JD Seven Fresh to meet the competition in the industry.
In recent years, the competition in the fresh e-commerce industry has become increasingly fierce, and many offline supermarket giants have also extended their tentacles more online. According to public reports, Sam's Club will achieve sales of about 80 billion yuan in 2023, of which online sales account for 47%, which is basically the same as offline.
Although the above data has not been confirmed by Sam's, in the third and second quarters of fiscal 2024, Walmart China said: "Sam's business and e-commerce business continue to perform strongly. In the first quarter, Walmart China's e-commerce business achieved a 54% increase in net sales. It is undeniable that the contribution of online sales to Sam's performance is gradually increasing, and its importance is becoming more prominent.
As for Freshippo, which is very similar to the format of Seven Fresh, it announced more than a year ago that it would expand its distribution scope and add a "5 km and 1 hour delivery" delivery service, after the previous delivery service standard of Hema was "30 minutes within 3 km".
"Expanding your distribution is a great way to capture the market." Zhang Yi believes that fresh new retail enterprises can cover more consumers and increase potential customer groups by expanding the scope of distribution, which is a good way to increase market share and expand the service radius and consumer scope. Expanding your delivery reach is less costly than opening a new store.
However, JD.com's "city-wide delivery" has extremely high requirements for distribution capacity. Zhang Yi believes that JD Seven Fresh can achieve city-wide distribution, mainly relying on JD Logistics' strong service capabilities in the cold chain, pre-warehouse strategy and strong supply chain management. These factors work together to enable JD.com to respond quickly, shorten delivery times, and improve delivery efficiency.
Hema once again launched a membership system
The ability to deliver and fulfill contracts is undoubtedly JD.com's "unique secret", and the "old rival" Hema has once again worked the membership system.
The reporter combed and found that the membership system of Hema can be traced back to 2019. With the popularity of membership-based warehousing supermarkets such as Costco and Sam's in China, domestic fresh e-commerce has begun to accumulate strength, among which Hema launched a highly competitive paid membership service in 2019, and the annual membership fee of that year was priced at 218 yuan, which is lower than some competitors of the same type, which makes Hema the main competitor of domestic membership-based supermarkets.
The stacking of benefits such as unconditional free shipping, free fresh vegetables, stacked discounts, and exclusive discounts for members has attracted nearly 3 million paid members in just three years, accounting for 5% of all registered members. At that time, the membership fee alone generated more than 500 million yuan in annual revenue for Freshippo.
However, in 2023, after Hema postponed its listing plan, it started a relayout of its online and offline business. In October 2023, the discount reform will be officially launched, first of all, the price of more than 5,000 products in Hema Fresh offline stores will be lowered, generally by 20%, and "offline exclusive prices" will be set in stores. It is worth mentioning that some of the "exclusive prices" are even lower than the 88% discount price of the membership price, which also attracts the dissatisfaction of Hema X members.
Hou Yi, then CEO of Freshippo, explained at the Hema New Retail Supply Conference in November last year: "The operating costs of physical stores are relatively fixed, but the online traffic costs and logistics costs increase linearly in the same proportion. Hou Yi believes that the key battlefield of the new retail battle lies in physical stores, and if physical stores can ensure low price advantages, consumers will naturally choose to return to physical stores. In December, Hema confirmed the cancellation of the application and renewal of X members, triggering a large number of X members to "leave".
On April 24, Hema announced the resumption of card opening and renewal services for X Gold members and X Diamond members. It is worth mentioning that the freight threshold policy that has been criticized by consumers has also been adjusted, and the free shipping standard in Beijing, Changsha and Nanjing has been raised to 99 yuan. At the same time, in more than 20 cities, including Shenzhen and Guangzhou, the free shipping threshold has been adjusted from 39 yuan to 49 yuan.
Regarding the resumption of the membership system of Freshippo, some people believe that with the resumption of some of the previous measures, Hema is changing back to the previous Freshippo, and the middle-class group, which was regarded as a core customer at the beginning of its establishment, has been re-valued.
However, this does not conflict with the discount strategy of Hema in the past. Zhuang Shuai, founder of Bailian Consulting, said that mainstream formats such as membership stores, supermarkets, and convenience stores all have discounted goods, and there is no conflict between discounting and membership store formats. Zhuang Shuai said: "Small stores can do discounts, and large stores can only pay members with discounts. This is the result of decades of validation in the global retail industry. "The so-called small store model is actually the discount store model such as Hema Outlet and ALDI, and the big store model in Zhuang Shuai's mouth is the Sam's Club model.
(The picture comes from the Internet)
There is still room for profit in fresh e-commerce
The reporter combed and found that the business of fresh e-commerce is indeed "difficult to do", and there are not a few people who have fallen into the sand: "the first share of community retail digitalization", Daily Youxian, has opened more than 1,500 front warehouses across the country, and now it has been delisted; Yonghui Supermarket, which has launched a benchmark Hema fresh "super species", has closed 440 stores in four years, and recently removed two vice presidents. In contrast, Hema is in a period of confusion, and Qixian, who is making efforts to "send the whole city" to grab the market, is in a decent situation. Previously, some industry practitioners bluntly said to reporters: "Where is this e-commerce, it is obviously a supermarket, and it makes a small profit from retail." ”
In Zhang Yi's view, the profitability of fresh e-commerce still exists. "Although the fulfillment costs of fresh food distribution are high, especially the cold chain costs, these costs can be effectively reduced with the advancement of technology and the embodiment of economies of scale. At the same time, fresh consumers can accept relatively high prices because they have higher quality requirements."
According to the research information of the Academia Sinica, in the next five years, online shopping will maintain a rapid growth of 5%-30% in various segments of local life through the integration of online and offline, and the total scale is expected to exceed 38 trillion yuan. According to the "2024 China Fresh Industry Market Analysis Report", the market size of China's fresh industry is expected to reach 1.2 trillion yuan in 2024.
Zhang Yi believes that the competitive landscape of the fresh food industry is changing dramatically. In the past, the main reason why some fresh food platforms could not survive was that the product quality did not form competitiveness, and the reputation and persuasiveness were insufficient. In the future, there is still huge room for development in the fresh food industry, especially for people who need high-quality food for life. However, due to the particularity of the cold chain, the scope of distribution will still be limited, and it is necessary to comprehensively consider many factors such as cold chain cost, distribution cost and acceptable price for consumers.
Industry analysts said that with the increasing acceptance of consumers to buy fresh food online, as well as the continuous improvement of supply chain, cold chain logistics and other infrastructure, the market size of fresh e-commerce will continue to expand. In the future, fresh food e-commerce may optimize supply chain management and improve product quality and service quality through further technological innovation, such as the application of big data, artificial intelligence and other technologies, so as to improve consumer experience and satisfaction. This will help fresh e-commerce stand out in the fierce market competition and achieve sustainable development. (Source: Yangcheng Evening News)