Shulou(Shulou.com)11/24 Report--

In 2015, Hou Yi and Zhang Yong, two Shanghainese, discussed an online and offline integrated supermarket in a coffee shop in Shanghai. It is said that the two men decided in less than five minutes that it would be a good business in China.

Seven years later, the box horse, which praises the refined life of the middle class, and its wavering founder Hou Yi, are still overcoming a huge bottleneck: how the box horse with Internet genes can become more outstanding and enter a broader market at the same time, "serving China's 1 billion consumers."

"the box horse crosses the river with the stone, and the Chinese retail touches the box horse across the river." this widely circulated saying in the retail industry confirms the path of the box horse: a forerunner in the industry who dares to experiment, at the same time, he inevitably changes direction repeatedly.

On October 31, 2022, the box horse put forward the latest plan of "going up, going down, and going out".

Box horse, which way are you going?

The social platform of online celebrity box and horse started its history of online popularity very early.

A 2017 photo is still circulating today: Jack Ma is holding a king crab in front of the seafood pond, looking happy surrounded by the crowd. When the competition only appeared in the financial news and advertising stories, it has left a deep first impression: clean seafood area, fresh seafood.

The @ box horse on Weibo takes the cute route and will do something that looks a little stupid from time to time, such as renaming the official account to @ box horse, and then quickly discovering that the original name is occupied, so easily and impressively, so that the nickname of # box horse can not be changed back # last hot search.

Netizens are happy to make fun of this less serious image, calling the IP image of the box horse based on the hippopotamus as "butt face". The box horse official quite likes this stem, also wants to dance in the fashionable IP circle dance, then developed the butt face blind box periphery, and really applied for many "butt face" trademarks, unfortunately did not approve it in the end.

On social media, the discussion of box horses has been very hot. In the Little Red Book, it is very popular to recommend and pull grass in the box horse. # box horse must buy # has nearly 40 million page views. In the Douban "snack pull and step group" with 260,000 members, the box horse also showed a bright performance. DT Finance once found that in nearly 10,000 posts, Hema's products beat a large number of new and old brands, ranking first in the Amway plate and fourth in the lightning protection plate, and like to mention the "most existential brand" award.

Box horses not only catch up with changes in people's eating habits, but also find hot spots in the market through data, and even create new habits. For example, box horses cater to and even cultivate young people's preference for sweets and snacks.

We looked at 2562 little red book notes with "Box Horse must buy" in the title and found that the box horse in the online celebrity product is very much like a dessert shop or snack shop. The top 3 recommended times are raw milk mung bean Shuang, sweetheart Strawberry Ice Cream, and handmade papier Steamed Pork Dumplings.

The popularity of these commodities embodies the public's yearning for a refined life.

On top of that, Hema has always tried to describe a middle-class lifestyle, or a new way of life infiltrated by the Internet. This may be an embryonic form of the concept of "new retail" put forward by Jack Ma in 2016.

A typical box horse fresh restaurant will have large vats of live lobster and king crabs, a stand for fresh seafood or kebabs, and products that may be developed by big data, while the meat, vegetables, eggs and milk on the shelves are fresh that day, and consumers no longer need to look at the date. at the same time, bags of food are transported on the hanging chain above people's heads and will be sent to the purchaser's home.

The official account "Micro Story" describes how Haijun, the current manager of the first store (Shanghai Jinqiao Store), has observed that many people's lifestyle has changed in the six years since its inception: elderly consumers in nearby communities have become adept at opening App to place orders, young people like to come to the store to buy ingredients after work, and many families come to the Hema aquaculture area on weekends to "open meat."

"only Hema has" to expand the influence of its own brand is its long-term goal.

According to the above statistics of DT Finance, among the 15 small red book box horse online celebrity products, 14 come from the private brand of box horse.

In terms of capital, the own-brand model can save the cost of multi-level distribution and even enter a virtuous circle of "no middleman to earn the difference"-the advantage is that consumers can buy cheaper things, while retailers can earn more. Once the product is popular in the market, retailers generally get higher bargaining power and negotiate lower prices with larger orders.

Wal-Mart is the most skilled player in the private brand area. It launched its first private brand in 1991 and the familiar Huiyi in 1993. At present, it has 40 private brands worldwide and the number of private brand products exceeds 190000.

Like Wal-Mart, private-brand goods can be priced 10% less than other brands and earn more profits, saving consumers money and making enough money for themselves. Specifically, these private brands account for 30% of Wal-Mart's sales, but contribute more than 50% of profits.

The current box horse is not cheap enough, it is trying to practice another kind of own brand logic-so that consumers can only buy a product in the box horse. For a new brand, this is a way to make yourself stand out from the vast number of mature competitors.

A former employee of Box Horse once told China Business magazine that "only Box Horse has" is a slogan spoken by the merchandise purchasing and selling team every day. In March 2020, Hou Yi, CEO of Box Horse, mentioned that the goal of his own brand is, "50% of the goods cannot be bought outside. It is a product that can really lead the quality and fashion from the point of view of consumers and is developed exclusively."

Compared to the Wal-Mart model, the box horse is more likely to work towards Sam and Costco member stores, hooking people up with exclusive products.

According to the latest data released in October 2022, the private brand of box horse accounts for about 35% of sales, which is basically the same as Sam, while doubling from 17% at the end of 2021. Private brands cover almost all food categories: from eggs, milk, meat and vegetables to cooked food, noodles and semi-finished products.

However, to be exclusive, but also to lead fashion, the cost is not low.

First Caijing magazine reported a case: Wuhan Jinhuiquan Food and Beverage Co., Ltd., a large enterprise that produces concentrated sour plum paste and concentrated fruit juice, also worked as a contract manufacturer for NetEase Yanxuan before coming into contact with the box horse.

Jin Huiquan made a comparison between the two companies: NetEase strictly asked to upgrade the original products of the contract factory at a moderate price, while the box horse put forward a lot of needs that "no one else on the market mentioned": removing color, reducing sweetness, removing cold chain environment, heating drinking in winter, and so on. A sour plum soup took 4 months from the proposal to the market.

In order to pursue differentiation, Hema has greatly increased the proportion of product research and development, which adds a lot of costs. For example, in order to make a more fresh version of "Lao Gan Ma," the box horse found a kind of chili in Rwanda, which needs to be roughed in Africa according to local policy before it can be transported to China for finishing processing, so it has gone through a total of seven or eight rounds of programmes. to be shipped back to China.

In order to let people taste the aroma of rice, box horses are packed in two small sizes: 2.5 jin and rice bricks, and canned rice without washing is introduced for lazy people. Another example is the cold soaked sauce launched in 2020, which at first made it difficult for producers to understand who would pay for this semi-finished sauce, but in the end, this product, which can be made into a string of cold pans by putting cooked ingredients, is very popular.

Hema's position is that commodity power is the greatest competitiveness of retail, and retailers can "discover" demand for consumers. "you can't pull every user to do the most in-depth demand analysis, but you can provide more choices." let users complete their own demand mining in the struggle. "

However, the goods marked by boxed horses are novel, unique, high-quality and glamorous, and may not be cheap.

We compared the box horse with Sam's 10 identical or similar own-brand goods (box horse & MM) and found that in terms of unit price, box horse is more expensive than Sam.

The question is: how many consumers will pay?

In the 2022 White Paper on China's own Brands, Box Horse ranks first in brand recognition. However, the attractiveness of private brands is still very small. According to the New era Securities Research report, the overall development of private brands in China lags behind, and the market share of private brands can reach 30%, 40% in developed countries and only 1%, 2% in China.

For box horses, this means both opportunities and great challenges.

Profit predicament in 2022, two major events in the fresh electricity business: the "first share of fresh e-commerce" hastily announced the end of the curtain call; the always extravagant box horse also decided to tighten its belt and "enter the stage of hard work".

Once upon a time, the box horse was in no hurry to make money. Even in 2019, when Hou Yi was asked in an interview, "what does Ali think of the loss?" he said, "We never use the word" loss ". We think it's an investment. You have to invest in innovation, but you can't do it without investment."

And Ali is also willing to spend money for this experimental field of his own retail industry. In the seven years since its establishment, Box Horse has successively launched more than a dozen commercial formats, such as Box Horse F2, which focuses on white-collar catering, Box Horse small Station with Front position Mode, Pick'n Go with convenience store catering model, and Box Horse X member Store with member store model, but now most of them are abandoned. Analyst Li Chengdong estimates that in 2021Q1, the loss of Box Horse is about 3 billion yuan, while Youxian's daily loss is 610 million yuan over the same period.

Compared with the online celebrity images that are still glamorous in the young consumer market, the box horses that appear in media reports have become less beautiful this year.

In July, Hou Yi stepped down as chairman, general manager and legal representative of the box horse; in the same month, Reuters said that the valuation of the box horse had shrunk to $6 billion from $10 billion at the beginning of the year; in October, the neighborhood of the box horse, which Hou Yi regarded as "the most important strategy for the next decade" in May last year, announced its withdrawal from Hangzhou and Nanjing, leaving only the Shanghai base camp.

Profitability is becoming more and more urgent. At the end of 2021, when Ali implemented the management responsibility system, the box horse began to be responsible for its own profits and losses, and the problem of making money was imminent.

From the perspective of public information, it is not difficult to make a profit in a single store. Ningbo Hema made a sustained profit for six months in the first half of 2021, with a net profit of 6.9712 million yuan. Against the backdrop of increased demand for home, Hema's revenue has also maintained growth. Alibaba's financial report for the first quarter of fiscal 2023 shows that the volume of commodity transactions in the first quarter of Hema has increased by more than 30% compared with the same period last year.

But it's still a long way from making a full profit. In his internal letter in January 2022, Hou Yi set the goal of increasing profits from individual stores to full profits by 2022. 'it 's always a shame not to make money,'he said.

The positioning of losses has changed from "innovation investment" to "shame", and the box horse can no longer lose money.

How do you earn it?

In a live broadcast in June this year, Hou Yi analyzed that at present, there are two huge blue ocean markets in the domestic supermarket industry: one is "going up" for middle and high-end consumers, and the other is "going down" to achieve the ultimate performance-to-price ratio.

The layout of the box horse coincides with it: the box horse Xiansheng and the box horse X member store "go up", the box horse neighborhood and the box horse Aolai "go down". On October 31, Box Horse further clarified at the supplier conference and put forward the latest plan of "going up, going down, and going outward", that is, Box Ma Aolai and its neighbors "go down", which aims to restructure the supply chain, drive commodity prices to half of the hypermarket; Box Ma Xiansheng + Box Ma Yunchao, Box Horse X members "go up", focusing on quality upgrading and differentiation; "outward" refers to the import of overseas goods.

From the various experiments earlier to the more specific upper and lower markets now, this process can be said to be from experimenting with various concepts to returning to the essential problems of traditional retailing, such as supply chain, commodity quality, performance-to-price ratio, and so on. In shape, it is also closer to traditional retail.

But the difficulty of the box horse is that it is difficult to afford the high cost by relying solely on the fresh with low profit. Strictly speaking, fresh e-commerce has yet to win. At present, there are more than 4000 fresh e-commerce companies in China, only 1% of them are profitable, only 4% of them break even, and 88% of them have taken on huge losses.

In essence, supermarkets can make a profit by relying on scale. Freshness plays a more important role in drainage, while other high-margin products are the bigger source of profits. The ideal scenario for retailers is to be attracted to freshness as a rigid demand and buy something else.

The sinking myth looks like a thankless fresh e-commerce business, why is everyone rushing to do it?

According to iResearch, the scale of fresh food in China reached 5.04 trillion in 2021, while online accounted for only 14.6%. By comparison, clothing and catering were only about 4 trillion yuan in size. For the Internet, it is a huge market to be explored.

And the sinking market is a blue sea. On September 20, 2022, Hema announced the completion of a new round of organizational structure upgrading and the establishment of three major business departments. Among them, the CEO of the NB division of the box horse is also held by Hou Yi, which is considered to be a sign that the box horse pays more attention to sinking the market.

But the sinking market has always been a mystery to the box horse:

Among the various formats launched by Box Horse, the ones facing the sinking market are Box Horse mini, Box Horse neighborhood and Box Horse Aolai. Every year, Box Horse mainly pushes new business type facing the sinking market, but it has never been able to get through:

In 2020, Hou Yi called Hema mini the perfect business model to cover the suburbs of Beijing and Shanghai. The box horse mini is similar to the scaled-down version of the box horse Xiansheng, making up the leak where the latter cannot cover it.

In 2021, Hou Yi described the neighborhood of Hema as "a new flower blooming in a giant" to the media "later LatePost". After the neighborhood needs to be booked by consumers, it will be picked up at the self-owned store the next day. Compared with the traditional community group purchase, its advantage is "the precipitation of complete supply chain procurement, commodity research and development, logistics and other systems". However, the following year, the Hema neighborhood completely retreated from many cities, leaving only the Shanghai base camp.

In 2022, the discount store box Maolai gradually rolled out, and in the year since the opening of the first one, more than 40 stores have been opened across the country, not only discounting temporary and depleted products, but also increasing the low-cost goods of their own brands. Box Horse plans to deploy one Ole for every 5-6 box horse fresh restaurants in an attempt to capture the "super blue ocean market in the next decade".

According to the latest plan announced at the end of October, Box Maolai is even more aggressive: because it "sees a large stock of users in the market, it is still in the entire downmarket", the Olai store is regarded as the most important strategic project, and plans to open 100 discount stores in Shanghai by the end of 2022-compared with only a dozen at present.

Of course, the box horse is not unaware of the plight of sinking the market. Hou Yi once admitted that box horses could not compete with local companies in the deep ploughing of the local market because they had a deeper supply chain. The only opportunity for Hema comes from the upgrading of the entire brand and supply chain, which is the current trend of consumer upgrading.

That sounds reasonable. The problem, however, is that the advantages of box horses-- quality upgrading, product differentiation, and its unique marketing methods-- don't appeal to everyone.

For example, many Chinese people like to eat fresh food and want to buy fresh slaughtered meat, while the meat provided by box horses is frozen. However, the price of box horses is still on the high side, especially people are particularly sensitive to the price of fresh products, and they need more reasons to spend more money on similar products. These are the common problems faced by fresh e-commerce companies.

Fresh e-commerce is still faced with young people with medium-to-high spending power. According to the public materials of Alibaba Investor Day in 2018, there were five main categories of consumers at that time, with struggling couples aged 29-33 accounting for the first (35%), followed by affluent white-collar workers (25%) and young people (20%).

The sinking market is still difficult to get through, and many colleagues of the box horse, such as Ding Dong and daily excellent food, have not been able to do so. According to Analysys analysis, in 2020, more than 70% of fresh e-commerce consumers came from first-tier and new first-tier cities, of which 40.9% came from first-tier cities and 28.9% from new first-tier cities.

Even offline discount stores under the banner of performance-to-price ratio, it is still very difficult for consumers not to open pinduoduo or Taobao, not to use community group purchases that are also advertised as low prices, not to go to the local vegetable market that they are used to, or not to enter the convenience store downstairs in the community, or to choose other online shopping methods.

In other words, Box Horse still has a long way to go to achieve its mission of serving China's 1 billion consumers.

This article comes from the official account of Wechat: DT Finance (ID:DTcaijing), text: Zhong Wantong, Editor: Tang Yiqin, data: Zheng Xiaohui, Dong Daoli, Visualization: Qi Tongyi, Operation: Su Hongrui, producer: Tang Yiqin

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