#Community #group #buying #giants #stall #Ring #Road #burning #money #burn #lot #sky
Editor’s note: This article is from the micro-channel public number “billion state power” (ID: iebrun), Author: Lin Yue, the 36 Krypton release authorized.
Original title: Meituan was caught in “infighting”, Pinduoduo sites were shut down, and community group buying giants stalled in the Fifth Ring Road
Editor Shu Wanjia
On January 12, Pinduoduo’s Duoduo Maicai officially opened in Shanghai.
On January 18, Didi’s Orange Heart preferred Ctrip’s momentum of “no upper limit on investment” “started” in Beijing.
On January 25, Meituan, a subsidiary of Meituan, entered Beijing.
Source: Yibang Research Institute
A person familiar with the matter told Ebond that Meituan Optimal is carrying out large-scale business promotion in Beijing and advertising on CCTV. The person said: “(Preferred by Meituan) This kind of concentrated exposure is low-key compared to the previous one, which has never been seen before.”
During the Spring Festival, when Didi was turned on, the car-hailing function had been compressed to a very small space, and the homepage of the software was filled with various melons, fruits, pears, and peaches recommended by Orange Heart.
In addition, the relevant person in charge of Xingsheng Optimal also revealed to Ebond Power that Xingsheng Optimal will be the first to open city in Hangzhou after the next year. “After the Spring Festival, we will go to Zhejiang immediately, so that except for Shanghai, the Yangtze River Delta (region) will basically be occupied.” For the layout of the first-tier city business, Xingsheng Optoelectronics said that it has its own rhythm, in accordance with the convention of “attack the provincial capital first”. The first stop will be Hangzhou, the “new first-tier city”.
Convenience stores in Tongzhou were opened door to door
Walking a dog can also bump into the “group leader”
Two to thirty billion in funds to Beijing, Shanghai and Guangzhou
In a community in Changying, Chaoyang District, Beijing, during the 30 minutes when Li Yuan went out to walk her dog, she would always encounter 2-3 push guys who asked her to download the grocery app. “Meituan is even more fierce. They set up a stall in the community to deliver oil, noodles and eggs.”
Community group buying was originally a way to monetize private domain traffic, but in 2020, giants have entered the game one after another, changing the nature.
After the official media’s propaganda and the “Nine No” policy, the giants did not stop, but instead moved from the second and third-tier cities to the first-tier cities. The voice of “recruiting team leader, recruiting team leader, and recruiting team leader” is endless in first-tier cities.
“Meituan, Pinduoduo, Didi, wave after wave to the gate of the community, from door to door to find us to cooperate, no matter how far away you are, what you sell in the store, clothing stores, laundry shops can do, there is no threshold, think about yourself If you don’t do it, the store’s business may be affected.” Xie Shanfeng of Ximazhuang, Tongzhou, Beijing, runs a convenience store and now simultaneously manages the community group buying business of the three giants. “It is repeating the craziness of last year.”
From setting up stalls in the community to deliver food and eggs, to frantically subsidizing the community “circle fans”, it reveals the cruel fact that giants are deploying community group buying in first-tier cities: community group buying has begun to fight bayonet.
According to data from the professional version of Tianyancha, according to incomplete statistics, there are currently nearly 200 domestic companies involved in community group buying and community fresh food-related businesses. The pain points are still there, and the profit prospects are unclear. Even so, community group buying still gets a lot of capital blessing.
A person close to Orange Heart Optimal Group told Ebond that Orange Heart Optimal Group is currently conducting a new round of financing with an amount of 4-50 billion US dollars; another media broke the news that Xingsheng Optimal Group is also “preparing for ammunition”, and it may be in the next year. Raising 3 billion US dollars, in addition to kkr, Hillhouse Capital will also enter the market.
According to the company’s “Community Group Buying Investment and Financing Data Report in 2020”, there were 19 public financing incidents of community group buying in 2020, the second highest in history, but the disclosed financing amount of community group buying in 2020 was as high as 17.17 billion yuan, a year-on-year increase 356.3%, a record high.
Source: Enterprise Chacha
Some institutions predict that the market size will exceed 100 billion yuan by 2022. Among them, giants such as Alibaba, Meituan, Pinduoduo, ByteDance, and Didi not only entered the game, but also burned the war of community group buying from low-tier cities to first-tier cities.
Duoduobu was frustrated in Xujiahui
The cart can’t enter Beijing
Dachang is in an infighting
Originally sinking into the market is the best soil for low-cost innovation.
“If you don’t have the support of giant capital, the community group-buying supply chain in first-tier cities will drag you to death.” Ma Gang, who originally wanted to open a community group-buying company in Beijing, was thankful that he had suppressed the “impulse to start a business.” He said that the first-tier cities are far away from the place of production, traffic control, flow control and other factors in big cities, the test of the supply chain is even greater.
Ma Gangqing’s worries have become a reality for Duoduo’s suppliers in Xuhui District, Shanghai. According to sources familiar with the matter, on January 15th, Duoduomai announced its suspension on the third day of opening in the Xujiahui area. The explanation given by Duoduomai was that “travel restrictions in the inner ring lead to inability to deliver in time.”
Coincidentally, in June 2020, in order to improve regional air quality, alleviate road traffic congestion, and ensure road traffic safety and smooth flow, Beijing Shijingshan, Haidian, Chaoyang, Tongzhou and other eight districts have issued “light truck restrictions.” This means that light trucks such as pickups with high energy consumption, large footprint, and relatively small capacity will be subject to stricter restrictions in most areas of Beijing.
“This just shows that the supply chain and distribution problems have not been solved well in the first-tier cities at this stage.” A community group buying analyst told Yibang Power, “except, the current community group buying costs are higher than those of vegetable vendors. Although the purchase price is lower, the operating cost is much higher than that of the vegetable vendor, especially the cost of logistics and distribution. At this stage, if it is not for capital, it will not be able to sustain it at all.”
On the one hand, community group buying mainly adopts the pre-sale model, which is the most complicated and time-consuming between the customer’s order and the manufacturer’s supply. On the other hand, most of the platform logistics distribution equipment is relatively simple, and the distribution timeliness and controllability are poor. Taken together, logistics cost has become the most uncontrollable cost factor in community group buying. According to statistics from relevant organizations, logistics and distribution costs account for approximately 9.3%-11.7% of community group buying.
Consumer habits in first-tier cities are another major challenge.
Some senior practitioners in the retail industry also directly concluded that “first-tier cities do not have the soil for the large-scale development of community group buying”. An executive from Wumart believes that the group staying in Beijing for the New Year is mainly young people, and they are also the main users of fresh food e-commerce platforms such as Hema Xiansheng and Daily Youxian. After accustomed to using the service delivered in time, it is unknown whether it can accept the service mode of self-pickup the next day. In addition, consumer groups in first-tier cities are not highly price-sensitive, and it remains to be verified whether the tactics of giants spending money on subsidies are effective.
First-tier cities have been the origins of many business models in the Internet era, and a variety of business formats have been very mature. The community group buying of giants is not only facing competition from the peers, but more likely to be cross-border attacks. In the fresh produce sector where community group buying is most dependent, merchants in first-tier cities have formed a rich and highly competitive business model.
For example, in terms of e-commerce, JD’s 7FRESH and Ali’s Hema Xiansheng have gradually gained a foothold; in terms of local life, Ele.me “holds in hand” Dingdong Maicai and Meituan Maicai will compete with each other; in the vertical field, daily excellence Fresh and Baiguoyuan have emerged as giants.
Community group buyers are sinking, and they will inevitably conflict with the front warehouse after entering the first-tier cities.
The pre-warehouse model companies focus on the high-frequency demand of users for “three meals a day”, and make a full contribution to product selection and product expansion. Through the O2O model of “order online, offline distribution, and delivery to home”, customers are promoted. Unit price and repurchase rate. At present, the first-tier cities mainly gather B2C players such as Meituan Maicai, Hema Xiansheng, Daily Youxian, and Dingdong Maicai.
Meituan bears the brunt. Meituan Shopping, which used to focus on first-tier cities, and Meituan Optimal, which focuses on sinking markets, are in good condition. However, Meituan’s move to enter first-tier cities has allowed the two grocery shopping apps to “crash head-on” both in the allocation of supply chain resources and the competition for user resources. In addition, Meituan Maicai has not yet established a 100% leading advantage in the original fresh food e-commerce market. How to avoid internal disputes and mutual strife has also raised concerns about the financial situation of Meituan.
On the other hand, the Ali department is also in the same trouble. Take Hema Xiansheng as an example. Through the new retail model of “fresh food supermarket + catering + APP e-commerce + logistics”, Hema Xiansheng is mainly distributed in first-tier and new first-tier cities led by Beishangshen, and consumer habits are relatively solidified. However, Shihui Tuan, a community group buying platform that has been acquired by Alibaba, is also entering the first-tier cities at this time, and it is obviously a tough battle waiting for them.
Dingdong Shopping is a model of “order placed on the mobile terminal + pre-warehouse distribution + instant home delivery”. Xiong Wei, vice president of Dingdong Food, said in an interview that Dingdong Food and community group buying are not in the same ecological niche. Even in the future, group buying by community will not be able to replace us in the field of fresh food. There are two main reasons given by Xiong Wei. One is that the SKU of the front warehouse is more abundant, and the other is the difference in delivery time.
Wen Zhihong, partner of Hejun Consulting and head of chain operations, said that in fact, community group buying and fresh B2C represented by pre-warehouses are essentially competitive. Although the two models are slightly different, the logic behind them is the same. On the road to rapid expansion, the two will inevitably meet hand in hand in the competitive market, competing for traffic and users.
It is worth mentioning that the pre-warehouse model is a capital-intensive investment. It is a business that emphasizes assets and operations. The lower customer unit price is not enough to cover higher logistics costs. Therefore, the pre-warehouse model is adopted for production. Fresh e-commerce companies are also troubled by profitability.
Huang Mingduan, the former CEO of Sun Art Retail, once said: “The competition for front warehouses is very fierce, and everyone is in a money-burning mode.” An industry source who did not want to be named told Ebond that the current large front warehouse companies are still in The state of huge loss.
High subsidies have not stopped
There are also low-tier people in the first-tier market
The customer acquisition cost is only 20 or 30 yuan
It is worth noting that the prosperous “Hunan Army” in the giant circle is not eager to get out of the low-line market.
Dachang casts its net across the country’s market, while Xingsheng has a deep sinking market in Hunan and Hubei, its home game. “The company’s current focus is not to develop new cities, but to do a good job in sinking the surrounding villages and towns in the existing cities.” Xingsheng Youyou insiders said that improving the supply chain and deepening the moat is a top priority.
But sticking to Chuxiang does not mean that there is no worry.
According to the late last report, in October 2020, the number of cities opened by Xingsheng and Pinduoduo was the same, close to 120, about twice that of Meituan and about 10 times that of Orange Heart; but in January 2021, Pinduoduo and Meituan There are nearly 300 Orange Heart Optimal Kaicheng, while Xingsheng has less than half. In Hubei, due to the influence of giants, Xingsheng Optimal Orders declined by more than ten percent.
The fresh food market is a place full of imagination and blood.
In 2019, supply chain analyst Duan Wei and his team found in a survey on the proportion of community commercialization in a certain tier city that about 70% of household consumption in the area was completed in physical stores around the community, including online retail penetration The rate is only 25.5%. Duan Wei believes that the primary reason for large platforms to enter first-tier cities at all costs is that they start with fresh food and gradually expand to the entire category of fast-moving consumer goods, urban services, tourism, and education.
Take Meituan Optimal Group as an example. According to the analysis of Nomura Securities Research Report, Japan’s largest brokerage firm, Meituan’s new business revenue in the fourth quarter is expected to grow 46% year-on-year, with an operating loss of 6 billion yuan, far exceeding market expectations. The reason for the continued expansion of operating losses is that the company has invested heavily in entering the community group buying market.
Judging from the response of low-tier cities, Meituan’s huge investment has indeed achieved some results. As of December 2020, Meituan has expanded to 1,500 low-tier cities. In December, the single-day order volume reached 20 million, exceeding The earliest layout for the prosperity of community group buying.
Nomura Securities believes that Meituan Optimal Group is expected to be profitable in 2024. GTV (the total transaction value of the platform) can reach 347 billion yuan, accounting for 6% of the 6 trillion Chinese community group buying market.
It is the running through of low-tier cities that gives giants such as Meituan Optimal the confidence and courage to “kill the carbine” in the first-tier cities where the e-commerce business is already very mature. In fact, when the giants enter first-tier cities, they mainly see the traffic depressions in the first-tier city communities. There is still a lot of room for growth in the online community demand represented by fresh food, and there is a lot of traffic in this space.
According to Euromonitor statistics, the scale of China’s fresh food market in 2019 reached 4.98 trillion yuan. The farmer’s market is still the main channel for residents to purchase fresh food, and fresh food e-commerce accounts for only 6.3%. Obviously, there is a lot of room for online fresh food. For the fresh food giants, even if it is not profitable to “sell vegetables” in first-tier cities, without the integrity of the first-tier cities and the greater coverage of different groups of people, it will ultimately be difficult to occupy the minds of consumers and increase user stickiness.
Ali has seen this a long time ago. On February 2, during the 2021 fiscal year Q3 earnings conference call, Zhang Yong, chairman and CEO of Alibaba Group, said frankly that he would continue to increase investment in Taobao shopping in the future.
Under the reward, there must be a brave man. After the policy, in addition to sinking, the community group buying giants that grew “anti-first-line” are launching hand-to-hand “beach-grabbing” street battles in first-tier cities in the name of “New Year’s Day”. Some observers revealed to Yibang Power that, a few days ago, fresh food e-commerce platforms such as Orange Heart Optimal, Meituan Optimal, Duoduomai, Dingdong Maicai, Daily Youxian, etc. have all adopted the method of high subsidies to fission and pull new. Set off a new round of user snatching wars.
User feedback and screenshots of the newcomer area of the Orange Heart App
Screenshot of Meituan Optimal “Invite to Make Money” campaign rules
Screenshot of subsidies for Dingdong shopping for new activities
Many people in the industry pointed out in an interview with Yibang Power that the fresh food e-commerce is breaking out of a new round of subsidy war. On the one hand, these platforms are backed by Internet giants and occupy users’ minds through subsidies. They have always been the most respected by Internet companies. On the other hand, the news that new and old players in community group purchases have received new rounds of financing has been frequently reported recently. “Not bad money” may also give these fresh food giants a new round of “pull new subsidies” battle. Less emboldened.
According to public reports, at the end of 2020, Daily Fresh received 2 billion yuan in financing from the local government of Qingdao (the largest strategic investment by fresh food e-commerce in the local area); in July 2020, Daily Fresh completed F round of USD 495 million Financing (approximately RMB 3.45 billion); According to incomplete statistics, Youxian has completed 10 rounds of financing after the angel round, totaling approximately 12 billion yuan.
According to the latest news, Dingdong Maicai is considering listing in the United States this year. The company is cooperating with consultants on listing matters. It is reported that the IPO will raise up to US$300 million. In addition, as mentioned above, Orange Heart Optimum, Xingsheng Optimal Group is also in the process of a new round of financing of more than 3 billion U.S. dollars.
“Only giants can afford to burn money and burn a future.” However, burning money can gather traffic in the short term, but fresh food e-commerce, including community group purchases and pre-warehouses, is essentially a retail business. From a point of view, the key is whether it can be done quickly and economically. Yibang Power Research Institute believes that the development prospects of the fresh food giants in the first-tier cities are still in the wait-and-see stage. However, “pre-storage and community group buying are not two options, they are a better match.”