China Food

Daily excellent fresh, towards the end?

“ 
The market value of
fell by 98%, and Youxian daily faces delisting.
 
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Author: zhaoxiaomi

Source: future consumption app (id:lslb168)

 
In 2021, on June 25, Eastern time, Youxian rang the bell on NASDAQ every day, and the issue price was $13 /ads.
Although it broke to US $10.65 at the opening, Youxian “rushed to the market” every day, holding the “first share of fresh pre position”, and was considered to have successfully “sniped” dingdong, who landed in US stocks the same week.
Then push back the time. Daily Youxian is the first batch of Unicorn enterprises in fresh e-commerce. In the past five years, the total financing amount of Youxian daily exceeded US $1.5 billion, the largest amount among companies in the same industry. Listing is a time when venture capital exits and the company enters into profitable development, and everyone is happy.
However, no one expected that the share price of Youxian has been falling all the way, not only has it never touched the issue price, but it has always been lower than $10; Even in the one and a half months since April 20, the share price was less than US $1, and the market value also fell by more than 98%. As of the press date, it was only US $72.99 million.
Due to the low share price, Daiichi Youxian received a notification letter from Nasdaq and needs to meet the minimum share price requirements again within 180 days, i.e. before November 29, 2022. This is the second notification letter received by Youxian every day within half a month. On May 19, Youxian was warned by the exchange because it failed to submit the 2021 annual report on time.
It is not only “abandoned” by the secondary market, but also gradually loses the market on the user side. According to the data of Netease big data, as of December 2021, the number of daily active users of Youxian was 5.717 million, only 40% of dingdong’s vegetables.
Relying on its own efforts to create a “fresh pre warehouse mode” of daily fresh food, it seems that it has come to an end.
The problem of daily excellent fresh food that could not be solved in 8 years was pushed to the front of the stage, and the fresh food pre warehouse. Is it a false proposition?

Capital darling pre position
In 2015, dairyfresh was born in the “front warehouse mode”. At that time, it was the first wave of fresh e-commerce. A generation of fresh e-commerce represented by B2C and o2o went bankrupt, laid off, transformed and acquired.
Compared with the generation of fresh e-commerce with poor timeliness experience, the emergence of the front warehouse mode brightened the industry at that time. The two-level storage system of “urban sorting center + community pre warehouse” is adopted. With the pre warehouse covering three kilometers, fresh food can be prepared for one hour every day.
Faster speed + lower cost + higher profit are the advantages that daily Youxian believes that the front position mode can bring.
Speed needless to say, at that time, most fresh e-commerce companies still used traditional express delivery, reaching the next day or even several days as soon as possible, which could not provide consumers with the shopping experience of instant consumption.
In terms of cost, the biggest cost of fresh logistics lies in 2C cold chain distribution, while the front warehouse mode converts the express delivery of point-to-point single distribution to B2B warehouse to warehouse cold chain distribution. In the process of warehouse to person, only simple plastic bags are used for packaging, so as to reduce the cost.
In the early days, most of the fresh e-commerce players, including the daily excellent fresh, were mainly engaged in the fruit category with high gross profit. Although the daily excellent fresh also sold vegetables, the number of SKUs was very low, which was only about 600 at the initial stage, then controlled within 2000, and did not start large-scale expansion until 2019. The number of SKUs disclosed in the prospectus was more than 4300.
Selected SKUs can help users reduce decision-making costs and reduce the consumption rate of fresh food. According to the data disclosed by Youxian daily, the consumption rate of fresh food in North China is less than 1%, while the consumption rate of traditional food market is more than 30%.
It seems that daily Youxian really iterates the mode on the basis of a generation of fresh e-commerce. In july2016, in just one year, daily Youxian announced that it had realized regional profits in Beijing, and the front warehouse immediately became a new outlet for fresh e-commerce.
Regional profits will be realized in one year, and the expansion and replication stage will be entered; And it has the first mover advantage and scale advantage; Not to mention the founder Xu Zheng, who was escorted to China University of science and technology at the age of 15. At the age of 28, he became the youngest general manager of Lenovo’s business division in China, and 33 resigned to start a business; Daily Youxian meets all the requirements of Unicorn that can achieve high rate of return in the eyes of venture capital.
Capital began to snatch the daily excellent fresh. From the angel round of Yuanjing capital and other investors, daily Youxian completed seven rounds of financing from 2014 to 2018. The investors include Tencent investment, Huachuang capital, tiger Global Fund and a series of well-known institutions at home and abroad, with a total financing amount of more than US $800million.
Now the biggest pain point faced by the front position, that is, the profit problem, seemed to be nonexistent in the mouth of Youxian daily at that time.
Xuzheng once said that whether the customer unit price can be concentrated at 80 yuan is the key to the long-term survival of the front warehouse. As for the logistics and distribution costs, the daily premium package threshold is 39 yuan, because 39 yuan is the point to break even.
Even Wang Jun, CEO of daily Youxian, told 36 krypton future consumption in July 2020 that daily Youxian had realized a profit by the end of 2019 after deducting the headquarters’ personnel costs.
But now, the situation is not so optimistic.

Pain points covered up
According to the prospectus of Youxian daily, from 2018 to 2020, the net losses of Youxian daily were 2.23 billion yuan, 2.91 billion yuan and 1.65 billion yuan respectively, with a cumulative loss of 6.77 billion yuan.
The pre warehouse mode of daily excellent fresh food will be repeated. It will be found that the pre warehouse still fails to solve the problems encountered by several generation of fresh food e-commerce.
The first is the price. Compared with the B2C or 020 model, the front end warehouse may reduce the cost, but the object of consumer price comparison is the vegetable market and supermarkets.
The second is the flow problem. Although the front warehouse mode is offline, it has no drainage effect. The new way is still to promote, subsidize and advertise, which is no different from the generation of fresh e-commerce.
Daily Youxian has explored a variety of business formats, trying to use the method of “front warehouse + to superimpose other businesses that are more profitable and easier to drain.
In 2018, Youxian launched the social e-commerce “daily online shopping” in a crowded fashion. In the initial stage, the daily online shopping was similar to the wechat business that earns membership fees, and the purchase of gift packs can be qualified for distribution. Since then, with strict supervision, the platform canceled the paid gift packs, and the data of daily online shopping also fell sharply.
Then, daily Youxian launched “daily shopping” by stepping on the tuyere of shopping e-commerce, trying to cover the national market through social fission. According to titanium media reports, the goal of the launch of the daily Amoy project is to make profits. As a result, although the daily online shopping is a platform to face the sinking market in the country, the price after the order combination is even higher than that of daily Youxian.
Not only is it an e-commerce platform, daily Youxian even tried to buy coffee and hot food in the front warehouse, but they all ended up unharmed.
The mode exploration of daily excellent fresh various styles lasted for the whole 2019. This is also the first time that daily Youxian has not obtained new financing for the whole year. At the end of the same year, Hou Yi shouted for the first time that “the front position is a false proposition.”
At the beginning of 2020, some employees of dairyfresh disclosed on their pulse that new business lines such as dairypinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpinpin.
Finally, the maturity of the market. Over the past decade, batches of fresh e-commerce companies have also rushed into this track despite difficulties. The main premise is that with the change of consumer behavior, the proportion of online fresh is bound to rise.
Wang Jun, CFO of Youxian daily, predicted in 2019 that the online penetration rate of fresh food will reach 12% in 2022, 20% in 2025, and more than 50% in leading cities.
“We can boldly think that the online share of one trillion yuan, 600billion yuan, is taken away by the front warehouse mode, and the leader of the front warehouse will take another 40% to 50% and 300billion yuan of sales. This is what daily Youxian wants to do. We hope to become the next super platform within the three kilometers of the community with 300billion yuan of sales in five to seven years.” Wang Jun said in an interview with titanium media.
According to the data of China Commercial Industry Research Institute, in 2021, the penetration rate of fresh e-commerce was 7.91%, with a growth rate of 32%, but the growth rate increased year by year. From this point of view, in 2022, the online penetration rate of fresh food will have the opportunity to reach 12% of Wang Jun’s prediction.
However, unexpectedly, the giant has joined the competition of fresh and ready to serve racetrack, and its commercial status of fresh electricity is also rising for the rest of its life, such as community group purchase. Nielsen IQ research found that the penetration rate of fresh ready to serve platforms decreased from 31% in 2020 to 23% in 2021.
Online fresh food business is indeed on the rise, but the crowded ready to match track is not necessarily a channel suitable for most consumers across the country.
At the beginning of 2020, Xu Zheng himself said in an interview with latepost later that he and the company were waiting for some structural variables to make qualitative changes in the market, model and management, so as to make the accounting of the front position model to the extreme.
In 2021, daily Youxian failed to complete the KPI of “ten times expansion and 100 billion revenue” set by itself in 2019. On the contrary, it closed its warehouse, withdrew from the city and optimized its costs.
In the prospectus of daily Youxian, “2B” business seems to be the main direction of future development. However, having experienced the failure of 2C players to turn to 2B, such as American food, easy fruit and fresh food, the 2B business of daily excellent fresh food may also be a last resort.

The end of fresh E-commerce
How to break the situation in the front position?
An ideal solution is also what Xu Zheng previously proposed: “replacing flow thinking with user thinking”. That is, compared with pull new, how to increase re purchase and thoroughly understand an old user is the key to the front warehouse mode.
But new problems arise. As a one hour front-end warehouse mode for the main fresh food category, the ideal state should be that users open this app frequently, which not only has a high purchase frequency, but also a high re purchase rate.
However, the reality is that the limited commodity categories of daily excellent fresh food can not meet the users’ one-stop purchase demand of three meals a day. Users can only purchase some categories from daily excellent fresh food and the rest from other channels.
According to Nielsen IQ research data, the average number of apps used by users of instant delivery platform is up to 2.5 (during non epidemic control period), indicating that shoppers will not be loyal to a specific app.
This is not because you don’t want to cover all fresh food categories every day, but because the gross profit of vegetables is low and the consumption is large; The gross profit of fruit is high and the frequency is high. Compared with vegetables, it seems that it can better meet the profit demand of e-commerce platforms.
Ding Dong is determined to carry out the one-stop vegetable selling business with low gross profit to the end, and change the core category of fresh e-commerce from fresh fruit to table fresh; At the same time, make the category complete and detailed. This is also one of the reasons why Ding Dong can still get out when there are absolute head players in the front warehouse mode.
But even Ding Dong, who sounds closer to “eating through old customers and achieving a certain repurchase rate”, still faces the problem of profit nodes in the distant future.
In 2021, the total loss of dingdong in buying vegetables reached 6.429 billion yuan, almost the same as the total loss of daily Youxian from 2018 to 2020. The more serious problem is that the scale effect that would appear in the ideal state has not yet appeared. In 2020, the performance fee rate of dingdong for buying vegetables was 35.6%, which increased to 36.1% in 2021 instead of decreasing.
Ding Dong’s financial report on buying vegetables shows that the bulk of the contract performance cost is the labor cost. Both the processing personnel in the front warehouse and the distribution team of resources increase almost synchronously with the business scope.
“I don’t think the front warehouse mode is the optimal solution or the ultimate mode of fresh e-commerce.” Ding Dong buys vegetables liangchanglin spoke frankly at the telephone conference after the 2021 annual report.
Today’s capital Xu Xin once described the imagination of the front end warehouse. We must superimpose the high margin commodities after the low margin commodities have obtained enough loyal users. This is also the reason why HEMA and dingdong have made great efforts to prepare vegetables, even skin care products, cosmetics and luxury goods.
The generation of fresh e-commerce ten years ago has been falsified; The second-generation fresh e-commerce represented by the front warehouse is still stuck in the quagmire of losing money; Even the three generations of fresh food e-commerce represented by community group buying continued to receive news of contraction, city withdrawal and bankruptcy this year.
Selling vegetables online is destined to be a difficult long-term business. But just as Xu Zheng said in his early years, “the retail industry is a slow variable driven industry second only to agriculture, so people tend to overestimate its one-year change and underestimate its ten-year change.”
After daily fresh food, you may want to look at the future trend of fresh e-commerce in ten years.
 
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