Shulou(Shulou.com)06/01 Report--

A few days ago, Bloomberg reported that Youxian, a fresh e-commerce company, is seeking $500 million in financing every day to tide over the difficult times. This round of investors, including Goldman Sachs and Tiger Global Fund, are valued at at least $3 billion, according to people familiar with the matter. In the follow-up, Youxian plans to raise $300m-500m a day, valuing it at $4 billion.

After the release of the report, the daily excellent fresh denied that the financing was actually to tide over the difficult period. "at the end of last year, daily excellent fresh has achieved a positive operating cash flow nationwide and a good financial situation. There is no saying that 'seek financing'."

However, everything is not groundless. In fact, Youxiang Daily just completed a huge $450 million round of financing led by Tencent last September. Before the last round of financing, Youxian Daily completed as many as 7 financing records in a short period of more than 3 years. Every day Youxiang is constantly staging a new financing story for us about fresh e-commerce.

Daily frenzied financing history of Youxiang

Since its establishment in 2014, its business has expanded continuously and has been distributed in 9 categories, such as fruits, aquatic products, meat and eggs, vegetables, dairy products, beverages, grain and oil, snacks and light snacks.

Before the establishment of Youxiang Daily, Xu Zheng was investing in agriculture in Lenovo Holdings, buying and managing farms himself, and working very hard. Lenovo Holdings's strategy for agriculture is eight words, "layout at both ends, first up and then down." Xu Zheng and his partner Zeng Bin feel that in the fresh circulation link, they can do something and want to do the layout in the industrial chain. however, after scanning the fresh e-commerce of a certain scale, the analysis result is not ideal: the companies on the market either have no future today, or they have no future today, and the more they look at it, the more they feel that they have no opportunity to invest. As a result, the two of them planned to start their own business to start such a company.

At the end of 2014, Xu Zheng and his partner Zeng Bin left Lenovo Group to find people one by one. One night at the end of 2014, 16 people had a big drink at the 99 yurts in Yongtai, Beijing. Xu Zheng was a good drinker, but he still drank so much that he couldn't find his way back to his room. I'm glad I'm going to do something big. Together with 2 people who are still on business in Shenzhen, 18 Arhats have been put together, and Daily Youxian has been established.

In the month when Youxian was established, it received an angel round investment of US $5 million from GX Capital and Yuanzhu. And this also lays a financial foundation for daily excellent fresh to constantly verify the search model.

In 2015, with the vigorous development of takeout, campus loan and other businesses, campus economy has also become a key area of concern in the venture capital circle. Daily Youxian also tried to promote it on campus, but after three months of trying, it was found that the number of user groups was wrong, so it was withdrawn. "in fact, we will try a lot of things, after trying to evaluate what kind of way can achieve this effect, what kind of people meet our evaluation criteria, it is a good model, but not a good model."

"if you verify the business model, at least you can see that it can reach the main population, the main purchase methods, and it can be profitable, replicate or grow at a high speed," Xu said. "if you don't have these four criteria, look for it again." Daily excellent fresh through continuous verification to find a business model, and finally determine the full category selection, pre-warehouse distribution model.

In the summer of 2015, Daily Youxian built its first front position in Wangjing, serving a radius of three kilometers. This year, it successively received 10 million US dollars in round An investment and 200 million yuan in round B investment.

In March 2016, the daily excellent fresh APP was officially launched. In order to achieve rapid development, Daily Youxian completed the 230 million B+ round of financing led by far Wing Investment and Huachuang Capital in April 2016. In July of that year, Daily Youxian achieved large-scale profits after five consecutive quarters in the Beijing area, and so far the model has been replicated throughout the country.

With the rapid development, Daily Youxian completed round C financing of US $100m and Tiger Global and Yuansheng Capital leading investment respectively in January and March 2017, and time Capital participated in the $230 million C+ round financing of joint investment.

In July 2017, Daily Youxian launched a convenient purchase. As of November 17, the company has expanded to the core business districts of five cities, including Beijing, Shanghai and Shenzhen, and has realized code-scanning purchases through Mini Program. "We just let everyone enjoy the food anytime and anywhere, and the scene of getting home has gone smoothly," Xu said. "now that the user's second living space is in the office, we have pushed a convenient purchase in order to cut this scene."

In December of that year, Youxiang raised $200 million a day, and this time the money will be used to facilitate the purchase of unmanned shelves.

After several years of development, in the first half of 2018, the proportion of users in the fresh e-commerce industry has exceeded 50%, leading the industry for four consecutive quarters. In this year, Youxian received a new round of financing led by Goldman Sachs, Tencent and other capital, the financing amount is as high as 450 million US dollars.

So far, daily excellent fresh has completed the selection of fruits, vegetables, dairy products, snacks, wine and beverages, meat and eggs, aquatic products, cooked food, Ribai, light food, fast food, grain and oil and other categories of fresh layout, in 20 major cities across the country to establish a "city sorting center + community front warehouse" cold chain logistics system to provide users with self-operated full-category selection of fresh one-hour service.

Throughout the history of daily excellent food, behind its growth process is crazy financing. We can find that since its establishment, Youxian has completed eight rounds of financing every day. Tencent, its main investor, entered in the A round of financing in 2015, and then followed in B, C and D-round. Other investors include Goldman Sachs, Tiger Global and so on.

And the frenzied financing of Youxian Daily is releasing a miserable status quo of the industry: fresh e-commerce is a money-burning crazy field.

Fresh and bleeding e-commerce merchants

As a rising star in the e-commerce category, fresh e-commerce has been concerned by the capital market. With the continuous heating up of "fresh" in the field of e-commerce, a number of fresh e-commerce platforms continue to emerge. But the good times do not last long, many start-up fresh e-commerce enterprises spend too much money, resulting in countless deaths and injuries.

According to data released by the China Electronic Commerce Research Center in 2015, of the more than 4000 fresh e-commerce companies in the country, only 1% made a profit, 4% were flat, 88% lost money, and the remaining 7% suffered huge losses.

At the end of 2016, the research center released a "death" list of fresh e-commerce companies in 2016-2017, and 14 fresh e-commerce companies declared bankruptcy. Including: Jido fresh, vegetable butler, fresh food party, delicious Qiqi, pattern life, Zhengyuan food pie fruit and vegetable gang, back kitchen net, youth vegetable gentleman, special soil network, fruit food gang, purchasing brothers, grab fresh purchase, one table, originally convenient.

This wave of the earliest traditional fresh e-commerce has mostly come to an end because it is difficult to break even, and life is not easy for players standing in the new retail tuyere.

From the birth of Hema Xiansheng's first store in 2016 to the new retail concepts of "retail + catering" and "online + offline", Yonghui, JD.com and Meituan quickly promoted their new forms of fresh retail. But entering 2019, these fresh new retail enterprises in China are in an even more difficult situation.

At the end of May, Hema Xiansheng, which opened more than 1500 stores across the country, announced the closure of Kunshan stores. For the news of the closure, people related to the box horse responded that "if we do not see the future growth space of this store, we will choose to close it, this is a very normal decision."

Although opening and closing stores is very common for the retail industry, the closure of Hema is not as simple as traditional retail closures. This closure is not only a failure in site selection, but also a mismatch of Hema Xiansheng standard stores in the integration of the sinking market.

Box horse to the left, Yonghui to the right. In order to deal with the head-on collision of the box horse, Yonghuiyunchuang launched "Super species" and fresh convenience store "Yonghui Life" after its establishment. By the end of 2018, 73 super species and 400 Yonghui Life had opened.

Due to the continuous investment period, Yonghuiyunchuang has not made a profit so far, with a loss of 617 million yuan in the first three quarters of last year, far greater than the losses of 116 million yuan and 267 million yuan in 2016 and 2017. In order to get better financial figures, Yonghui supermarket sold a 20% stake in Yonghui Yunchuang, the main body of its super species, in December 2018, and removed the consolidated statements of Yonghui listed companies. Recently, there are media reports about the Wanda store in Wujiaochang, the first store in Shanghai.

In addition to the box horse Xiansheng and the super species, Meituan Dianping's fresh elephant and JD.com 's 7FRESH are also in the same situation.

Meituan Dianping announced plans to close the fresh elephant supermarket in low-line cities on May 23. On May 24th, Meituan closed five stores in Wuxi and Changzhou, leaving only two stores in Beijing. In response, Meituan said: "based on a review of investment returns and the allocation of resources, Xiao Xiang Shengxian is currently focused on improving the operation of two stores in Beijing, closing five stores in low-line cities." however, we will focus on improving the shopping experience and operational efficiency of the current two stores in first-tier cities. "

As for the reasons for the closure of baby elephant fresh stores, Chen Shaohui, CFO, said on an analyst conference call after Meituan Dianping announced the results that five baby elephant fresh stores in low-line cities had been closed because the return on investment was lower than expected.

Coincidentally, JD.com 's 7FRESH is also struggling. Less than two months after JD.com announced the elimination of 10 per cent of senior executives at or above the vice-president level, three of JD.com 's nine CXO resigned for personal and family reasons. In April, Wang Xiaosong, a veteran of JD.com, was transferred from his original position and is no longer in charge of 7FRESH business, while Wang Xiaosong decided that the number of stores in the next five years will reach 1000 in flag.

At the same time, it was revealed that JD.com was in contact with a traditional large supermarket to sell 7FRESH, but JD.com 's internal staff denied the news and stressed that 7FRESH was still pushing ahead with the store opening plan. What is clear, however, is that 7FRESH's store opening has slowed as a result of numerous adjustments in the fresh business and executives.

From this point of view, whether it is fresh e-commerce entrepreneurs, or Ali, JD.com, Meituan and other giants of the layout of fresh e-commerce, can not escape the fate of burning money and bleeding. So why is fresh e-commerce so hard to do?

Where is the root of the disease of fresh e-commerce?

Fresh track market volume is huge, above the tuyere, the wolves are fed around. Whether it is the emergency brake of Ma Xiansheng, the rapid expansion of Youxiang every day, or the difficulties of other fresh e-commerce companies, they all highlight many problems in the development of fresh e-commerce, and these problems are also the real reasons why fresh e-commerce companies spend a lot of money and bleed.

1. Large loss

The first is the loss of origin.

At present, there are still some problems in agricultural production in China, such as small scale and low degree of specialization, which results in different fresh varieties and quality, and then fresh loss. However, many fresh e-commerce companies ignore the loss of origin and do not set the starting point at the link of getting fresh products from the place of origin, which will increase the cost of enterprises.

The second is the loss of warehousing and transportation.

At present, there are two main ways of fresh e-commerce storage, one is to build cold chain storage, and the other is to skip storage for products with very short shelf life and deliver cold chain logistics to users from the place of origin. These two methods have a certain effect on product loss control, but the construction and operation costs are very high.

The third is the loss of distribution.

For the fresh e-commerce platform that outsources the third-party cold chain logistics, although it saves the high investment of self-built cold chain logistics, the loss of this link is the greatest. Because the enterprise's control over the third party is not high, and the third party logistics will not bear too much responsibility for the product, it will bring the problem of commodity loss.

two。 The cost of logistics preservation is high.

The standardization of cold chain logistics has always been a problem, which mainly includes lack of standardization in the upstream, difficult to define the scope of standardization, limited by technical bottlenecks, imperfect infrastructure and so on. At present, China's cold chain logistics system is not yet mature, and fresh e-commerce is a very high demand for cold chain logistics industry.

Fresh e-commerce is different from other products, it from factory to transportation, and then to the hands of consumers, it takes a certain amount of time, and this process makes fresh products difficult to keep fresh. This requires fresh e-commerce must be the whole process of cold chain logistics and distribution, this process is extremely tedious, involving freezers, freezers, ice boxes and many other temperature control links, as long as there are problems in a certain link, businesses have to bear higher costs and risks.

In addition, the cost of fresh cold chain logistics is 1-2 times higher than that of ordinary goods, and the cost of cold chain accounts for 25% and 40% of sales. Therefore, for fresh e-commerce, its entire cold chain logistics construction cost is very high, and the return cycle is relatively long, which makes most fresh e-commerce can not afford such a large cost.

3. It is difficult to standardize fresh products

The standardization of fresh products mainly includes product standardization and production standardization.

In the aspect of product standardization, fresh products are easily affected by temperature, humidity, light and other factors, and the growth environment is easy to cause differences in shape, color and taste of fresh products. These differences will lead to differences in the quality of fresh products, and then affect its pricing. Because the product is difficult to standardize, it can not reduce its cost, and when consumers do horizontal comparison, it is not easy to accumulate consumer reputation.

In the aspect of production standardization, because of the lack of advanced planting and breeding technology and production safety awareness, some farmers aggravate the problems of pesticide and fertilizer residues and pollution in fresh products. On the other hand, in the fresh product processing stage, if the processing enterprise is small and chaotic, it is easy to cause uneven product quality.

The competition in the industry is fierce, and it is still normal to burn money and grab the market.

Since 2005, China's fresh e-commerce industry has been developing for more than ten years. After the exploration period, the market start-up period and the rapid development period, the giants entered the market from 2016 to 2017, followed by a reshuffle of the industry and another exploration in 2018. In the process of development, the number of players increases, the capital is active, the amount of financing is increasing, and innovative models emerge one after another. Up to now, the preliminary competition pattern of competing for hegemony among fresh e-commerce companies has been formed, but the competition in the industry is still very fierce.

After 4 years of layout of Yonghui Yunchuang, although due to the increasing financial pressure, it was finally merged and eliminated the consolidated statements of Yonghui listed companies. However, when talking about future planning, Yonghui Yunchuang said that the super species will be targeted at the sale of high-quality fresh ingredients + catering experience, and will dig deep into the upstream supply chain.

In addition, other practitioners of fresh retail focus on community commerce.

Meituan CFO Chen Shaohui said at the company's first-quarter earnings analysis meeting on May 29th that Meituan is focused on the local retail business, especially the fresh business. After closing stores in five low-line cities, Meituan will focus on small retail stores in the community, that is, Meituan to buy vegetables, which will meet consumers' demand for grocery delivery services.

On May 30th, Wang Jing, head of JD.com 's 7FRESH business, announced for the first time that the format of 7FRESH supermarket had been upgraded to MSSM, that is, catering solution supermarket. At the same time, in the second half of this year, JD.com 7FRESH will also launch two new formats, "Seven fresh Life" and "Seven Fan".

Wang Jing said that in the near future, 7FRESH will launch two new formats, one is "Seven fresh Life", a small supermarket focusing on the community, and the other is "Seven Fan", a mixed format of food and retail that serves areas with a large office population. For the upcoming "Seven fresh Life", it will also be a combination of fresh, convenient goods and catering solutions.

On July 1st, the fifth new business type Pick'n Go launched by Box Horse landed in Shanghai, and the Pick'n Go, which featured the concept of "take and go, no need to wait in line", attracted a lot of attention as soon as it was launched. In addition, in March this year, Hou Yi, CEO of Hema Xiansheng, said that based on different cities and business circles, Hema will build four major formats, such as Hema F2, Hema Mini, Hema Market, and Hema Station.

Although the initial competition pattern of competing for hegemony among fresh e-commerce companies in China has been formed, the competition is very fierce and the market will continue to be snatched by burning money. This phenomenon can be seen from the recent financing situation of the industry.

According to the incomplete statistics of the Electronic Commerce Research Center, a total of 22 fresh e-commerce enterprises in China raised nearly 12 billion yuan in 2018. They are: hundred Orchard, Food Fan, Huahe fresh, Friendship fresh, fresh Food, Food net, fresh Century, Rainbow Planet, Tianma convenience, good fresh, No. 1 Dining Table, three Egg fresh, Song cuisine, Ten Tuan, dull radish, Tianxiangpai, Daily Fine Food, fresh Legend, Daily Amoy, Agriculture Administration, Fast Food net, Food Fair and other platforms.

Among them, Meilai, a B2B fresh food e-commerce company specializing in agricultural products, vegetables and fruits, successfully secured two financing totalling $1.05 billion, making it the biggest dark horse in the fresh e-commerce industry in 2018, with a valuation of about $7 billion after two rounds of financing. In addition, daily Youxiang, a mobile e-commerce company focusing on high-quality fresh food, maintained an average financing rate of once every six or seven months, and announced the completion of a new round of financing of $450 million on September 6, 2018, the eighth round of financing since its inception.

In addition, the top 10 fresh foods in financing in 2018 include: fresh food, hundred orchards, daily Amoy, fresh legends, Song cuisine, Ten Hui Tuan, fresh Food Fair, fresh Century and so on.

According to the 2019 Chinese fresh e-commerce industry business model and user profile analysis report, according to the Ai media report, from January to March this year, fresh e-commerce companies have raised 13 loans, raising about 390 million yuan.

According to the data, there were 13 financing projects in the first quarter of 2019, with a financing amount of about 390 million yuan; in 2018, a total of 22 financing projects with a financing amount of about 5.11 billion yuan; and in 2017, 13 financing projects with a financing amount of about 5.26 billion yuan.

From the current financing pace, compared with 2017, the number of financing in 2018 has increased, but the increase is small, the amount of financing is relatively small and generally large, indicating that the capital sector is still optimistic about the fresh e-commerce industry, and the development speed of the industry is stable. Compared with the previous two years, 13 financing projects were raised in the first quarter of 2019, with a financing amount of 390 million yuan, indicating that the fresh e-commerce industry is still relying on financing to burn money to seize the market.

There is a shortage of money in the tier one capital market, and the bleeding fresh e-commerce companies have no choice but to IPO the money.

Starting from the second half of 2018, investors have become more rational and cautious, become picky about projects, and the project implementation cycle has been extended. The difficulty of financing in the primary market has increased, the market has fallen steadily, and the number and amount of financing have been reduced.

According to the 2018 Financial Statistics report released by the people's Bank of China. Among them, there are several sets of data to focus on: at the end of December 2018, the balance of broad money (M2) was 182.67 trillion yuan, up 8.1% from the same period last year; the balance of narrow money (M1) was 55.17 trillion yuan, up 1.5% from the same period last year; and the balance of local and foreign currency loans was 141.75 trillion yuan, up 12.9% from the same period last year.

The growth of money has slowed down, and the amount of loans has reached a new high, indicating that there is less money in circulation in the market, and that the effect of central bank deleveraging and strict supervision began to bear fruit in the first half of the year, and funds in the primary capital market began to be tight.

For the fresh e-commerce industry, the pattern of competing for hegemony will continue for a long time, the competition between platforms will still be very fierce, the competition of spending money on the market will continue, and if we want to put an end to the bloodshed of fresh e-commerce, it may be a long way off in the short term. Next, it will be more and more difficult for fresh e-commerce platforms to raise money in the primary capital market.

Perhaps, in the near future, we will see fresh e-commerce companies take the road of IPO one after another in order to get money.

(official account of Liu Kuang / tr. by Phil Newell) ID:liukuang110

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