After jumping out of the money burning cycle, the profitability of fresh e-commerce still needs time to prove.
After the reshuffle in 2021, fresh e-commerce began to differentiate in 2022.
Previously, the community fresh retail platform dairadish has “fallen”, and the community group purchase platform Shihui group has also started structural adjustment. On the other hand, HEMA fresh and dingdong buy vegetables have successively announced that they will make profits in the local market of Shanghai. This is a dawn for the industry that continues to lose money. However, in other cities outside Shanghai, there is still a long way to go when we can reach the profit node.
On the evening of February 15, dingdong shopping (NYSE: DDL) released the unaudited performance report for the fourth quarter of 2021. The financial report showed that the revenue in the quarter was 5.48 billion yuan, a year-on-year increase of 72.0%. In 2021, the revenue was 20.12 billion yuan, a year-on-year increase of 77.5%; The gross profit margin is 27.7%; The net loss was about rmb1034.1 million, down from rmb1238.8 million in the same period last year.
“Shanghai is the first city that dingdong serves when buying vegetables. It is also a place where we continue to innovate and iterate and build experience for the whole country. We have found a way to make profits.” Liang Changlin, founder and CEO of dingdong shopping, said at the financial report telephone conference that it would continue to increase differentiated competition and the development of personalized products in the future.
However, in the view of industry insiders, the mode of fresh pre warehouse depends on many factors such as site layout, order volume and supply chain cost. Shanghai consumers are in a leading position in terms of consumption ability and consumption habits, and the development in other cities still needs to be cultivated.
big bones but “hard to bite”
According to the financial report, in the fourth quarter of 2021, the Gmv of dingdong shopping increased to RMB 6.004 billion, a year-on-year increase of 59.6%; The total number of orders completed in the fourth quarter of 2021 was 100.1 million yuan, a year-on-year increase of 63.1%. In the fourth quarter of 2021, in the field of prefabricated dishes with high market attention, Ding Dong revealed that Gmv had reached 900 million yuan.
The third quarterly report shows that the proportion of direct collection of raw and fresh vegetables purchased by dingdong has reached 79.1%, while in Shanghai, where it continues to cultivate deeply, this figure is as high as 85%. In December this year, Ding Dong’s shopping realized overall profit in Shanghai, and the whole Yangtze River Delta realized UE correction in that quarter. This quarter will be the best performance for Liang Changlin’s investment in infrastructure since its establishment. He said that the increase in gross profit was related to the adjustment of commodity structure. “Ding Dong’s purchase of vegetables has continuously improved the quality of goods and prices, resulting in better gross profit performance. In addition, Ding Dong’s purchase of vegetables has more private brands, reduced subsidies, overall user structure adjustment and other measures have also brought good performance.”
In fact, as a just needed industry for people’s livelihood consumption, the fresh retail industry has a trillion level market volume. IResearch consulting data show that in recent years, China’s fresh retail market has maintained steady growth. In 2020, the scale of China’s fresh retail market will exceed 5 trillion yuan. It is expected that the fresh retail market will continue to grow in the future, and the scale of China’s fresh retail market will reach 6.8 trillion yuan by 2025.
As the mainstream of fresh e-commerce, behind the turnaround of dingdong shopping is the reality of huge losses. This road is still very difficult. Chen Hudong, an e-commerce industry analyst, believes that fresh e-commerce used to be a money burning industry. In addition, the timeliness of fresh food, the matching of back-end supply chain, regionality and many other requirements are very high. Therefore, although the industry as a whole is now highly competitive, it has basically not formed an efficient profit model, and there are many problems to be solved.
Previously, Hou Yi, founder and CEO of HEMA Xiansheng, also pointed out in an exclusive interview with 21st Century Business Herald and other media reporters that at present, it is an independent individual to be responsible for its own profits and losses. The essential difference is that it hopes to adapt to market development more independently and have hematopoietic function.
head enterprise moves towards strategic transformation
With the development of fresh e-commerce industry, fresh e-commerce entrants are also increasing. According to the data of iResearch consulting, the market share of the top five enterprises in China’s fresh food market in 2020 was 49.9%, a decrease of 13.2% compared with 2018.
On the whole, under the triple pressure of share price, profit and competitors, the head fresh e-commerce began its strategic transformation. When the first mock exam city entered the second tier city in 2021, it changed the strategy of large-scale opening up, and changed it into a differentiated and refined method. From the first store in Zhengzhou, the box horse launched a new module, such as the box X18, the box garden, the box horse baking, the box horse fresh cut meat shop and so on.
“After capital comes in, it is unhealthy to compete for the market through subsidies. Supply chain reengineering, process optimization, global procurement and differentiated competition are the real skills of doing business.” Hou Yi once said about the way e-commerce subsidies burn money.
For dingdong to buy vegetables, after saying goodbye to the money burning mode, efficiency has become its pursuit goal. The increase of commodity price and the overall improvement of customer unit price will become an important part of dingdong to improve its profitability. “Customers brought by the improvement of commodity power have higher customer unit price than those brought by promotion alone,” Liang Changlin said. In order to improve profitability, users’ purchase frequency and the proportion of private brands will be further increased in the future.
It is understood that at present, dingdong shopping has more than 20 own brands, including dingdong ace dish, dingdong da man Guan, boxing shrimp, Baoluo workshop and Liangxin craftsman. By the fourth quarter of 2021, dingdong has 10 food R & D and processing plants; There are about 60 urban sorting centers and about 1400 pre bins, with an area of 500000 square meters.
For example, dingdong Guyu, a new project of dingdong shopping, has set up three product lines of self built pork, 3R food and pasta. The goal is to increase the proportion of self owned products to about 50% and build a new brand of dingdong shopping. In December 2021, Ding Dong’s own R & D and processed commodity sales accounted for 7.2%.
In the supply chain, Ding Dong buys vegetables and supplies them directly through the origin, so as to reduce the cost of enterprise quality control and reduce the intermediate links of the industry. In addition, for the regulatory issues concerned by the industry, Ding Dong believes that, unlike other Internet companies, it is an entity company that goes deep into the supply chain and enables agriculture through advanced technology, which is in line with the encouragement direction of national rural policies.
At the beginning of the 2022 new year, Internet platforms and businesses have begun to prepare for the new year’s Eve dinner, and coincidentally targeted the prefabricated vegetable track. Giants such as HEMA and meituan have entered the game one after another. Players are still exploring how to avoid homogeneous competition and find sustainable starting point and R & D value.
“In 2021, the sales of prefabricated vegetables bought by meituan increased by four times compared with that in 2020.” The person in charge of meituan’s vegetable buying and prefabrication project previously told the 21st Century Business Herald reporter that the majority of consumers are post-80s and post-90s young women who cook on weekends. Convenience is the primary reason to attract users to buy, and security and cost performance are the core factors affecting users’ purchase.
After jumping out of the money burning cycle, it still needs time to prove whether fresh e-commerce can finally jump out of the “Curse” of loss and expand regional profits to the overall situation.
