Burning up 14billion yuan, another unicorn is going to cool?

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The story of
daily Youxian is not only the defeat of a unicorn, but also the epitome of the whole fresh e-commerce industry.

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Wen: wangmanhua; Editor: Cao Weiyu

Source: dongsishi capital (id:dsstcapital)

It is no longer known how many times Youxian has been “closed down” every day.

Yesterday afternoon, a group of chat records about “daily Youxian announced its dissolution on the spot” spread wildly on the Internet, followed by a recording of a suspected internal online meeting. For a time, the news of “daily excellent fresh yellow” was quickly searched, and the company’s share price also fluctuated violently. On the 28th, the U.S. stock market plummeted by more than 40%.

With curiosity, I listened to the 15 minute recording from beginning to end, and found that the word “dissolution” or “bankruptcy” was not mentioned throughout the recording, but that “most employees’ work ends on July 28”. As for the specific layoff ratio, it is unknown.

Subsequently, Daiichi Youxian also responded to this matter: “under the general goal of achieving profitability, the company will adjust its business and organization. Businesses such as nexada, smart food market and retail cloud will not be affected. Due to the business adjustment, some employees leave, and the company is actively seeking all possible solutions to maximize the protection of employees’ rights and interests.”

Judging from the recording and official statement, the rumor of “bankruptcy” needs to be verified, but it can be confirmed that the jisuda business of daily Youxian relying on the front position mode has indeed been completely shut down.

As the first player of the front position mode, dairyfresh has won the favor and blessing of a group of capital by virtue of this innovative mode, with more than 20 investors and a cumulative financing amount of nearly 14 billion yuan. On June 25, 2021, Youxian daily officially launched on Nasdaq, with an IPO market value of $3.2 billion. However, listing was the peak, and then the company continued to spread rumors of business contraction, layoffs, arrears of payments to suppliers and other rumors, and the share price also fell all the way. As of the closing on July 28, Youxian had a total market value of $31.86 million, with a daily share price of only $0.135, more than 99% evaporation from the peak.

The story of daily Youxian is not only the defeat of a unicorn, but also the epitome of the whole fresh e-commerce industry. In the past few years, from dairadish, jijijixian to Tongcheng life and Shihui group, a number of fresh e-commerce providers have left the market, while the remaining players are still struggling in the mire of loss.

Burned 14 billion, buried 20 vc/pe?

The decline of daily Youxian has long been a clue.

In March this year, some suppliers revealed that Youxian was in arrears every day; In June, the company was listed as the executee by Beijing Chaoyang District People’s court for defaulting on the payment to suppliers, and the subject matter of execution was 5.3295 million yuan.

According to the previous report of Caijing eleven, Youxian daily closed its business in nine cities including Hangzhou, Qingdao and Shenzhen within three days, leaving only four cities including Beijing, Shanghai, Langfang and Tianjin, of which Langfang has only one front warehouse.

The contraction of the company’s business line is bound to be accompanied by the abolition of personnel. A person familiar with the matter revealed on pulse that as early as may this year, Youxian daily had a substantial layoff. “At that time, there were two rounds of layoffs in a month. The laid-off employees signed a compensation agreement, saying that the compensation was paid on June 30. As a result, they didn’t even give notice. More than 200 people went to the Labor Bureau for arbitration.”

According to the interface news report, up to now, there are still employees of Youxian daily whose wages in June and July have not been paid, and the social security and provident fund have also been cut off.

More employees broke the news that Youxian had asked all employees to work at home on the grounds of air governance. On July 28, it directly held an online meeting to notify all employees to dissolve in place and delete the employees’ internal communication software flybook and related accounts.

At present, in order to reduce costs and increase efficiency, layoffs by Internet companies have long been nothing new, but most companies still retain the last trace of “decency”. Such “rough painting style” as daily Youxian still makes people sigh, not to mention this is an industry leader with the aura of “the first share of fresh e-commerce”.

Founded in 2014, dairyfresh is known as the “ancestor” of the front warehouse model. As a new species in the fresh food industry, the company has been favored by capital since its inception. In December 2014, daily Youxian announced that it had obtained an angel round financing of US $5million, with the investors being Yuanjing capital and Guangxin capital. Zeng bin, the founder and President of the company, once described the process of this round of financing: “at that time, even ppt was not done in time, and the whole investment was settled in 10 days.”

In the following seven years, daily Youxian obtained nine rounds of financing at an average pace of one round a year, with a cumulative amount of nearly 14 billion yuan, and more than 20 investors.

With the support of capital, daily Youxian was listed on the list of chinese Unicorn enterprises less than three years after its establishment. In November 2019, the company’s valuation had reached 20billion yuan (about $3billion). On June 25, 2021, Youxian daily officially launched on Nasdaq, with an IPO market value of $3.2 billion. However, listing was the peak, and then the company’s share price fell endlessly. As of the close of July 28, the market value of the company was only $31.86 million, which had evaporated 99% from the peak.

According to the NASDAQ listing rules, listed companies with share prices below $1 for 30 consecutive days will receive delisting warnings. On June 2, Youxian daily received a warning notice from NASDAQ.

The founder and employees, as well as the venture capitalists behind Youxian, were injured when Youxian fell every day. Wind data shows that as of the first quarter of 2022, among the shareholders of daily best fresh, Tiger Fund still holds 77.99 million ordinary shares, with a shareholding ratio of 12.58%; Tencent, which has invested for five consecutive rounds, also holds 55.58 million ordinary shares, with a shareholding ratio of 9%.

The withdrawal of shareholders has long been an action. As early as last November, Li Zhaohui, Tencent’s investment management partner, resigned from the board of directors of dairyfresh. According to the daily Youxian prospectus, Qingdao state-owned assets originally planned to invest an additional 1billion yuan at the price of round f financing within half a year, but eventually gave up the right to subscribe. In addition, on June 1 this year, an old shareholder of the company also sold 14.73 million ordinary shares at a one-time price of 10% off the market price, cutting meat and leaving the market.

More critical is the depletion of the company’s cash flow. According to the financial report, by the end of the third quarter of 2021, the cash and cash equivalents held by Youxian daily were only 2.172 billion yuan, but its current liabilities were as high as 3.223 billion yuan.

It is worth mentioning that in the middle of this month, daily Youxian announced on its official website that it had signed a strategic investment agreement with Shanxi Donghui group, which would receive a 200million yuan equity investment from the latter. However, according to the recordings exposed this time, the investment from the “coal boss” has not yet been delivered.

Unable to get the “life-saving money”, the measure taken by Youxian daily is to overturn the business model since its inception and break its arms to survive.

Daily excellent fresh change “yesterday excellent fresh”

On July 28, daily Youxian announced on the app that it would cancel the “30 minute express” and deliver it the next day as soon as possible.

It should be noted that unlike jisuda, which relies on the front warehouse mode, the next day’s business of daily Youxian uses express delivery, mainly JD express. In other words, the company’s business adjustment is equivalent to giving up the front warehouse business completely. However, the problem is that the pre position mode is the foundation on which daily Youxian started, and it is also the reason why capital people competed to invest at the beginning. Why would they directly cut off their core business?

There is probably only one answer – profit.

Youxian Daily has been plagued by losses. According to the financial report, from 2018 to 2020, the daily losses of Youxian were 2.298 billion yuan, 3.096 billion yuan and 1.656 billion yuan respectively; In the first three quarters of 2021, the net loss was 974million yuan. According to the pre disclosed data, the net loss of the company for the whole year last year is expected to be about 3.737 billion yuan to 3.767 billion yuan.

In other words, the accumulated loss of daily Youxian in the past four years is about 10.8 billion yuan.

The low gross profit and high cost of the front warehouse model is the main reason for the loss. The so-called pre warehouse distribution is to establish a small storage center for distribution in places with more users in the radiation community through direct purchase from the origin. Generally speaking, the front warehouse is built in the area with more residents and less traffic, which can radiate the community residents three kilometers around, so as to complete the distribution service within half an hour.

The advantages of this mode are to reduce losses and improve distribution efficiency, but the disadvantages are also obvious. Front end warehouse belongs to the heavy asset mode, and each front end warehouse is equivalent to a small store. Although the platform provides home delivery service, it does not need to build the warehouse in the golden area with large passenger flow, which saves the rental cost, but from the perspective of the composition of fixed costs, whether it is warehousing, housing rent, water and electricity, consumables, it is no different from traditional stores.

According to the financial report, from 2018 to 2020 and the first three quarters of 2021, the daily performance cost of Youxian was 1.239 billion yuan, 1.833 billion yuan, 1.577 billion yuan and 1.618 billion yuan respectively, accounting for 34.94%, 30.54%, 25.72% and 28.77% of the total net income respectively. In the same period, the gross profit margin of the company was less than 20%. In other words, the company’s gross profit can’t even cover the performance cost.

On the other hand, the front warehouse mode has no traffic entry, so the platform has to attract customers through land promotion and subsidies, which virtually increases the cost of acquiring customers. Nowadays, cutting off core businesses and cutting arms to stop bleeding may be the “last fight” of Youxian daily.

Fresh e-commerce collective “dumb”, the mode of burning money subsidies is not feasible

It is not just daily Youxian that is in a dilemma.

Another front warehouse player Ding Dong has also been plagued by huge losses. The financial report shows that from 2019 to 2021, Ding Dong has accumulated a loss of 11.48 billion yuan, and another 477 million yuan in the first quarter of 2022. Not long ago, Ding Dong was also reported to have withdrawn from Xuancheng, Chuzhou, Zhuhai, Zhongshan, Tianjin and other cities.

Not long ago, HEMA fresh was also exposed to be seeking to raise funds at a valuation of about $6billion, which is far lower than the valuation of $10billion proposed at the beginning of this year.

Looking further ahead, in addition to the players in the front warehouse, another business form of fresh e-commerce – community group buying, is also a depression.

As early as July 7, 2021, Suzhou Xiancheng Technology Co., Ltd., the parent company of Tongcheng life, one of the “old three regiments”, announced that the company decided to apply for bankruptcy due to poor management.

On July 26, the Wuhan headquarters of another community group buying start-up company food club was exposed to be empty. Previously, many executives left, and the applet and official website could not be opened.

In March 2022, Shihui group was exposed that all businesses in cities across the country had been shut down, and the company officially entered the aftermath stage.

In addition, the news of shrinking business has also been coming from orange heart optimization under didi and surprise Pinpin under jd.com.

At present, there are not many players in the community group buying track, only a few are left, such as meituan preferred, duobuyai, taocai and Xingsheng preferred.

When the outside world summed up the reasons for the failure of community group buying enterprises, it also pointed to the crux of “money burning subsidies” and the difficulty of making profits.

When the market goes up and the Internet dividend has not disappeared, entrepreneurs can still get financing through innovative business models and rapidly growing scale; But now that the market is calm and investors are not rich, it seems that everything has returned to the exploration of the nature of business – whether enterprises can achieve profits.

Not long ago, an investor in my circle of friends joked: “a company that does not lose money and makes profits this year is a good company. If you cut people in half, the profits can be increased, and it is a better company.”

If the fresh e-commerce industry is judged according to this standard, it may not be a real “good company”.

Reprint authorization and media business cooperation: Amy (wechat: 13701559246);

Join the community: Cherry (wechat: 15262433826).

Burning up 14billion yuan, another unicorn is going to cool?

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