Shulou(Shulou.com)06/02 Report--

Looking back in recent years, the development of fresh e-commerce industry can be said to have ups and downs, so far has not formed a good industry ecology. In 2019, a number of fresh e-commerce platforms broke the news of downsizing, and some platforms were forced to close their doors because they continued to "burn money".

Unexpectedly, at a time when the whole industry was at a low ebb, the outbreak of the new coronavirus in early 2020 reignited the whole industry, and the massive demand generated by "people's homes" made some platforms "desperate". For example, the Wuhan fresh e-commerce enterprise "Ji Hexian", which entered a stagnant state due to financing failure in December last year, was "reborn" during this period.

Therefore, in such a market environment, many people place new hopes on fresh e-commerce. Some people even think that the spring of fresh e-commerce has come, others think that fresh e-commerce will benefit the most from this epidemic, and some even think that it will stimulate the development of the whole e-commerce industry and the Internet industry again.

But the fact is that the scale of fresh e-commerce is so small that even if it soars dozens of times during the epidemic, it is difficult to really become the locomotive driving the development of the entire e-commerce industry.

The business of fresh e-commerce has always been difficult.

In the industry, 2012 is regarded as the first year of the development of fresh e-commerce, in fact, the birth of fresh e-commerce can be traced back to 2005. In that year, Yiguo Network was established, and it was the earliest attempt of B2C fresh e-commerce in China. Then, in 2008, Tuotuo Industrial Co-operative with self-built farms and he Le Kang, which specializes in organic food, emerged, but these enterprises are preliminary tests of the fresh e-commerce industry, and the market is relatively small.

With the development of the domestic e-commerce industry and the change of people's online consumption concept, fresh e-commerce is considered to be the last blue sea in the e-commerce category. Under the influx of a large amount of capital, a large number of fresh e-commerce enterprises appeared between 2009 and 2012.

After 2012, with the strong boost of capital, the fresh industry has entered a rising channel, with more than 4000 independent fresh e-commerce platforms in China at the most. However, with the in-depth development of the industry and the emergence of the disadvantages of vertical e-commerce, the development of fresh e-commerce is also in a dilemma.

On the one hand, compared with other categories, fresh e-commerce is expensive to operate and needs to use cold chain throughout the process. On the other hand, most of the fresh products in China are not industrially produced, and consumers' choices are difficult to adjust.

According to data released by the China Agricultural fresh ecommerce Development Forum, only 1 per cent of the country's more than 4000 fresh ecommerce companies are profitable, 4 per cent flat, 88 per cent at a loss and the remaining 7 per cent at a huge loss.

Therefore, in order to make a living, some enterprises or platforms that developed well at first either chose to accept blood transfusions from "giants" in other fields, or to carry out other businesses to save themselves. In terms of the development of fresh e-commerce, its business is indeed difficult to do.

According to the "death list" of fresh e-commerce in 2016-2017 released by the China E-Commerce Research Center, 14 fresh e-commerce enterprises have declared bankruptcy. These include: food butler, fresh food fair, delicious Qiqi, pattern life, Zhengyuan food school, fruit and vegetable gang, Xu Xian.com and other well-known platforms.

In the past 2019, the fresh e-commerce industry has experienced a turn of "reshuffle". In October 2019, Zhangzhou-based Mini fresh issued a statement saying that it had suspended operations due to poor management and long-term losses; in November, the dull radish capital chain known as the "fresh e-commerce dark horse platform" was broken and more than 1000 stores closed overnight; in December, Yi Guo Shengxian, the ancestor of Chinese fresh e-commerce, was listed by the court as the executor for defaulting on more than 14 million debts.

In addition, according to the latest data released by the China Business Industry Research Institute, the transaction size of China's fresh e-commerce industry in 2019 is about 322.5 billion yuan, with a significant decline in growth rate and a downward trend year by year.

It can be seen that after so many years, fresh electricity business has not settled down, the development of the industry is still volatile, without a clear prospect, the whole industry is more like a "chicken rib".

Was pushed into the tuyere again by the epidemic.

In the face of the menacing novel coronavirus epidemic at the beginning of the year, staying at home has become the most effective measure for epidemic prevention, while the traditional vegetable market has become a place where people have to avoid. Under such circumstances, people transfer their daily needs such as shopping and shopping directly online.

Among the many areas on the front, fresh e-commerce has become the most directly affected and concerned area in this epidemic.

Data show that during the Spring Festival this year, the average number of daily active users of fresh APP increased by 107.17% compared with the same period last year, including 108.46% during the seven-day holiday and 108.55% during the home office period.

Compared with the Spring Festival in 2019, the average number of daily active users of JD.com coming home and Ding Dong shopping increased by 247.84% and 213.50%, respectively. In terms of the increase in the number of new users, Duodian and Ding Dong reached 298.29% and 291.42%, respectively.

In addition, according to data provided by Dada Group, during the Spring Festival epidemic prevention period, JD.com 's platform-wide sales increased by 470% compared with the same period last year; from New Year's Eve to the sixth day of the Lunar New year, vegetable sales increased by 510% compared with the same period last year. Fruit grew by more than 300%, eggs by 770%, dairy products by 370%, and sales of frozen foods such as dumplings and wontons increased by 790%.

According to the data provided by JD.com, fresh sales increased by 215% over the same period last year, and nearly 15000 tons of fresh products were sold nationwide.

Other fresh e-commerce platforms have also handed over good answers. The average daily order volume of Meituan's grocery shopping in Beijing is 2 to 3 times that of before the festival, and shows a continuous upward trend; the daily excellent fresh New Year's Eve's actual transaction volume increased by 321% over the same period last year, when the total sales in the seven days of the Spring Festival were expected to exceed 40 million pieces.

In addition to the head platform, some other practitioners in the industrial chain have also seized the opportunity to enter the fresh e-commerce industry. For example, Meicai, which used to focus on the fresh industry chain, also saw an explosive growth in individual users after the outbreak. According to the data provided by Meicai, the number of daily downloads of American cuisine ranked in the top five in ios and Android app stores. From Feb. 1 to Feb. 7, the number of household / individual registrations at the mall increased by 400%, and the number of users placing orders increased by 500%.

At the same time, the capital market has also given positive feedback. As a leading listed company in the field of fresh e-commerce, the share price of Yonghui supermarket has been soaring recently.

However, what is different from moving towards the "tuyere" two years ago is that the "tuyere" of fresh e-commerce is completely passive and sudden, and even takes some enterprises by surprise and does not know how to deal with it.

This can be seen from the birth of "shared employees" under the tuyere, but the main reason for the emergence of "shared employees" is still due to labor shortage.

But manpower shortage is not the primary problem for fresh e-commerce companies. The more serious problem is how to achieve no shortage and maintain supply. In fact, since the outbreak, many platforms in many cities have been out of stock to varying degrees.

The short board of the supply chain is prominent.

The problem of supply chain has always been the core issue of the fresh industry.

At present, most of the fresh e-commerce companies in the industry are supplied by third-party suppliers, which is not obvious when the supply of materials is sufficient in the past, but at present, when the third-party suppliers themselves are plagued by insufficient supply, there is a lot of uncertainty that fresh e-commerce companies want to get as many goods as possible.

Unfortunately, very few enterprises really do a good job in the construction of the supply chain. Although some of the fresh track giants intend to make efforts, but the supply chain is a long-term project. At least for now, the overall situation of the industry is not optimistic.

This can be seen from the cold chain logistics system, which is the core of the supply chain. Cold chain logistics is a systematic project to ensure the quality and performance of frozen goods in the prescribed low temperature environment before production, storage, transportation and sale to consumption. The rate of cold chain directly determines the dredging degree of the whole supply chain.

According to the data of the cold chain committee of the China Federation of things, the cold chain rate of agricultural products in China is only 45%, compared with about 95% in developed countries.

It can be seen that there is still a huge room for improvement in the construction of cold chain logistics in our country. In view of this, some people in the industry have said bluntly that there are almost no domestic enterprises that can make the whole system of the cold chain, and many companies can only do one of the chains.

Therefore, how to complete the supply chain system including cold chain as much as possible will be a difficult problem that the whole fresh track enterprise must face.

Just when the supply chain problem becomes more important, there are some attempts in this aspect in the market. Some enterprises that ploughed deeply into the B end and the supply chain tried to go to the front of the stage and began to face the C side directly.

American cuisine is one of the representatives. As a company that has long been positioned as a service restaurant, American cuisine has said its outstanding advantage lies in the supply chain. Under the influence of the epidemic, the whole catering business came to a standstill, and American cuisine had to face C-side and launch self-rescue.

However, in terms of the results of the transformation, the results are remarkable. According to data, American cuisine APP ranked fourth in Apple App Store downloads on Feb. 8; from February 1 to 7, the number of C-end user registrations for American cuisine increased by 400%, and the number of users placing orders increased by 500%.

This undoubtedly shows the importance of supply chain construction.

Under the influence of the epidemic, the "dividend" for fresh e-commerce companies will eventually come to an end. When users return offline and online is no longer their first choice, if online fresh e-commerce companies fail to optimize their supply chain for more favorable or high-quality products, even if they have acquired cheap "new customers", the user will eventually leave.

It's still the head player's business.

In the past 2019, according to incomplete statistics, more than 20 fresh e-commerce companies closed down.

At the end of October 2019, Mini fresh, a two-year-old fruit member platform, announced that its operation would be suspended due to poor management and long-term losses; at the end of November, the community fresh e-commerce platform "Miaoliang" announced store closure and bankruptcy liquidation.

To be sure, when these fresh e-commerce companies that have closed down due to poor management or other reasons are eliminated, industry resources will be further concentrated to the head players.

According to the Analysis report on the Development of China Mobile Internet Industry in the fourth quarter of 2019 released by Mobile big data monitoring platform Trustdata, the growth rates of daily excellent fresh and box horse Xiansheng have reached 43.9% and 17.3% respectively, of which the number of users of daily excellent fresh has continued to grow in 2019, with MAU reaching 11.52 million in December, another record high in the number of monthly active users.

Of course, under the influence of this epidemic, almost all fresh e-commerce platforms have harvested a large number of new users and potential users. But for the fresh e-commerce platform, it did not make much money, more to do is to "lose money and make a cry" business.

Although the epidemic has given rise to a large number of orders on the platform, under the regulation and control of the government, the relevant prices of many fresh e-commerce platforms have not risen significantly, but the cost prices and transportation costs have increased to varying degrees. Even the best-selling vegetables are vegetables with low gross margins. This means that the fresh e-commerce platform has not benefited much.

In addition, compared with the traditional sales channels, the biggest advantage of e-commerce is its fast response supply chain, which is difficult to meet the requirements of fresh agricultural products. There are many participants in this industry chain, from vegetable farmers, processors to suppliers at all levels, even just one additional link will mean higher costs and greater risks.

Fast turnover and low inventory should not only shorten the distance between producing areas and customers, but also ensure the quality and freshness of fresh food, which is the golden survival rule of fresh e-commerce. However, compared with traditional merchant supermarkets, e-commerce platforms have less contact with local farms. At present, more e-commerce platforms are operating some timely and seasonal products, but do not produce a stable supply of goods, which means that the cost will be higher.

At present, the proportion of domestic agricultural products circulating through cold chain is on the low side. In Europe and the United States and other developed countries, the cold chain circulation rate of meat and poultry has reached 100%, and the cold chain circulation rate of vegetables and fruits is also more than 95%, while most domestic fresh agricultural products are still circulated at room temperature, and the cold chain logistics infrastructure capacity is seriously insufficient. The proportion of refrigerated thermal insulation vehicles in freight vehicles is low, and the cold chain logistics technology of agricultural products is seriously lagging behind.

Fresh and fresh e-commerce has been difficult to solve the problem of perishability of fruits and vegetables in transportation, and consumers want to choose fresh food themselves, this contradiction can hardly be changed. The influx of a large number of new users in this epidemic is not unaware of the existence of fresh e-commerce, but because the epidemic makes these users no longer care about food, price and delivery speed, and can satisfy these new users as long as they can complete the simplest purchase.

When the epidemic is over, catering businesses reopen and supermarkets resume normal operations, it is still doubtful whether these new users are willing to continue to use APP, a fresh e-commerce business. What's more, before and after the epidemic, many offline supermarkets and vegetable markets have begun to realize the online value, and many supermarkets and even convenience stores have begun to carry out door-to-door delivery activities through Mini Program, WeChat groups and other modes. At the same time, strengthen the user management of surrounding consumers.

Data show that daily vegetable sales at Wumart supermarket have tripled during the Spring Festival, with a total of 700 tons. Yonghui's vegetable stocks are also three times higher than usual, and Da Yun Fat's commodity procurement materials have also increased by 4-5 times compared with the same period last year.

Extrapolating from the current situation, there will certainly be a new reshuffle in the industry after the end of the epidemic, and it is still the 1% giant that will be able to grow during the epidemic.

After a brief period of glory, spring did not really come.

Previously, many people have linked SARS in 2003 with the rise of domestic e-commerce, believing that under the promotion of this epidemic, the domestic fresh e-commerce industry will also take the opportunity to rise to the right track. However, it is not known that the real outbreak of China's e-commerce industry is not directly related to SARS in that year.

During SARS in 2003, Alibaba still focused on B2B business, while Taobao, the largest e-commerce platform in China, was established at the end of SARS; JD.com, the second son of domestic integrated e-commerce, was not officially established until 2004. At that time, the only truly mature e-commerce model in China was Dangdang's "book model" and eBay, which was invested and acquired by overseas giant eBay.

But now the difference and influence of these four e-commerce platforms, it is difficult to see that there is a direct relationship between SARS and the rise of e-commerce in China. Therefore, the argument that the spring of fresh e-commerce has come under the influence of the epidemic is not enough. On the contrary, the epidemic brings only short-term "fast food" development to fresh e-commerce, the real spring is far from coming, and the whole industry is still in an exploratory stage, and a very mature model has not yet emerged.

At present, the epidemic is not over, and fresh e-commerce companies not only do not feel the warmth of the "spring" sunshine, but also have to deal with the dilemma brought about by short-term increments.

According to Qimai data, APP such as Ding Dong Buy vegetables and Daily excellent Food began to decline in the free list of App Store since Feb. 16, 2020, and the ranking is now lower than that of New Year's Day before 2020.

Not only that, the decline in the quality of goods on some platforms and the increase in prices have also made many users lose their favor of buying food online. Although commodity prices are not controlled by platforms / merchants, it is impossible for merchants to maintain the original price of goods on a large scale because of the rising labor costs, logistics and transportation prices and purchase prices affected by the epidemic.

However, whether it is the active price increase of the platform or the passive price increase, consumers will put their dissatisfaction with the price increase on the platform. If the quality of the goods provided by the platform is not good, it is more likely to be memorized by consumers.

Therefore, the poor quality of goods and rising prices will certainly reduce consumers' overall sense of experience of online shopping. Now, with the easing of the epidemic, the resumption of work has gradually begun, and offline vegetable markets, shopping malls, supermarkets and so on have also gradually opened. This means that the traffic that was suddenly transferred to fresh e-commerce will begin to return offline again, and the business of fresh e-commerce will be taken away again.

Summary

In terms of gross profit, the gross profit of the fresh e-commerce industry is not low, and even the gross profit of some goods can reach about 50% at the source procurement stage. However, the low unit density and the inability to form scale effect is an important factor hindering the development of fresh e-commerce. This can be seen from the first closure of the box horse store in May last year.

Data show that the market penetration rate of Chinese fresh e-commerce in 2018 is only 3%. Most users have no habit of buying fresh online at all, and user education still needs to be improved.

The emergence of the epidemic at the beginning of this year just made up for this defect in the industry, which is not only free of charge, but also covered by the whole country. This makes many fresh e-commerce companies or platforms greatly lower customer costs, and in the face of explosive growth in demand, the major players seem to have a place.

However, the epidemic will eventually come to an end, and the increment brought by it can only be temporary and temporary, and it is not a specific medicine for treating losses in the industry. So when the epidemic recedes, fresh e-commerce companies will eventually compete with each other for fine operational capabilities, as well as a comprehensive layout in the supply chain, warehousing, real-time distribution, and even traffic.

In any case, some attributes of fresh e-commerce have determined its characteristics of high investment and slow return, so it is impossible to "make fast money" in this industry. Those who can survive this stage will probably be like the competition in areas such as takeout, group buying and taxi-hailing in recent years, and there are only a handful of "survivors".

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

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