Dingdong Shopping Breakthrough: When fresh food e-commerce meets community group buying, will it be hit by dimensionality reduction?

The market mentions community group buying again, and the pre-warehouse model that Ding Dong is proud of suddenly disappears.

Recently, according to 36 krypton reports, this year's group buying giants in various communities have set a high goal of doubling their performance: Meituan Optimal will lock the annual GMV at 200 billion, and will impact the order volume of 50-60 million per day; buy a lot of food in 2021 The GMV target of the company is 150 billion; the orange heart is preferably 100 billion, and the prosperity is preferably about 80 billion.

Why did the big factories spare no effort to compete for it?

Why did the big factories spare no effort to compete for it?

This is a battle for the sinking market.

Fresh food e-commerce is beginning to become saturated in first- and second-tier cities, and this fire is destined to burn to third- and fourth-tier cities.
However, the pre-warehouse model represented by Dingdong Shopping has a higher unit price, which cannot meet the price-sensitive users in third- and fourth-tier cities, while the community group buying model is online booking + next-day delivery + site pick-up mode, which is lighter More flexible.
However, this trend is not good news for Dingdong Shopping, which is sinking and expanding in the market.

On April 6, Dingdong Maicai announced the completion of a $700 million Series D financing.

This round of financing was jointly led by DST Global and Coatue.
Old shareholders Tiger Global Management, General Atlantic, CMC Capital, Today Capital, Sequoia Capital, Ocean Link and Hony Capital, etc.

The giant ends and the game is over.
But Dingdong grocery shopping is an "alternative".

"Those who win fresh food win the world", the fresh food e-commerce field has gone through many rounds of elimination, and the survivors have more or less cast the shadow of Internet giants, such as: Daily Fresh is a Tencent department, Hema Fresh is a Alibaba, Meituan has invested heavily in creating Meituan Maicai, Pinduoduo launched "Duoducai", JD.

com's 7FRESH, Suning's Su Xiansheng, etc.
And Dingdong grocery shopping is a group of its own, and has not yet "stand in line.

Before this financing, Dingdong Maicai had not made public financing for more than a year.

During this period of high-pressure competition, it not only faced daily high-quality fresh food and community group buying, but also dealt with traditional industry disruptors such as Yonghui.
Wait, B2B fresh food e-commerce such as Meicai.

Xingyu pre-warehouse + digital operation

Xingyu pre-warehouse + digital operation

Dingdong Maicai was established in 2014, but the APP was only officially launched in 2017.

This node is the best and worst time.

The ultimate thinking that traditional retail stores cannot have both freshness and convenience has long existed.

Fresh food e-commerce is not a new species that has only appeared in recent years.
In 2005, "Yiguo.
com" opened the prelude to the history of fresh food e-commerce.
In 2013, Tmall and JD.

According to the "Fresh Food E-commerce Development Trend Report" released by the Shanghai Business Information Center, from 2012 to 2016, the size of the fresh food e-commerce market soared from 4 billion yuan to 95 billion yuan.

In 2017, the transaction scale of China's fresh food e-commerce market was approximately 139.
13 billion yuan, breaking through 100 billion yuan for the first time, a year-on-year increase of 59.

Obviously, 2017 is a critical year for the development of the industry.

On the one hand, the current market situation with hot track and unlimited potential provides unlimited possibilities for Dingdong to buy food; on the other hand, the mighty race of horse racing is for a fledgling For emerging companies, this is undoubtedly aggravating survival anxiety.

According to public information, Dingdong Maicai was launched in May 2017, focusing on the pre-warehouse fresh food e-commerce model.
The front warehouse means: each store is a small and medium-sized warehouse and distribution center, and the headquarters warehouse only needs to supply the store.
After the consumer places the order, the goods are shipped from nearby retail stores to ensure that the grocery shopping service achieves the "last mile".
Based on this model, Dingdong Shopping can also achieve "fast" delivery.
It has launched the "fastest delivery in 29 minutes" and "free delivery over 28 yuan" services.
With relatively reasonable labor costs and resource input, it can cater to the needs of users in first- and second-tier cities for fast food delivery to a greater extent.

Compared with the traditional fresh food e-commerce model, the front warehouse has obvious advantages in site selection flexibility and scale effect.
The forerunner of this model is Daily Fresh Food, which pioneered the logistics model of "city sorting center + front warehouse".
In the beginning, Daily Youxian proposed a "2-hour door-to-door" service for fresh products, gradually shortening the delivery time to one hour.
From the perspective of delivery time, the fastest delivery time promised by Dingdong Maicai is shorter, which may mean that the location and quantity of front-end warehouses have more stringent requirements for operational efficiency.

Obviously, this is a business with a heavy model.
In order to get the model up and running quickly, the choice of the entry point for the target market is very important.
The early sight of a good input-output ratio will make the capital community feel at ease and continue to be optimistic.
After all, some market games about horse racing are inseparable from the early-stage burning of money.

Starting from Shanghai, Dingdong Maicai began model verification.
On the one hand, Shanghai, as a first-tier city, has a large concentration of consumers, leading consumption levels and concepts, and a fast-paced life.
The demand for fast food delivery on the Internet is very worth exploring.
On the other hand, although Hema and others have already entered Shanghai by then, there is still a blank market for the pre-warehouse model in Shanghai.
It is worth mentioning that Daily Youxian was founded in Beijing, and it only announced in 2019 that it had reached a strategic cooperation with Tencent in Shanghai and launched the "Smart Fresh 100 Billion Plan", which is considered to be a sign event of its full force to the east.

Waiting for the opportunity, quickly occupied the pit, Dingdong Shopping quickly took root in Shanghai.
Moreover, it is worth noting that from the perspective of users, considering the large demand for live fish and live shrimp in the "Yangtze River Delta" and "Jiangsu, Zhejiang and Shanghai", the first category of its operations includes live fresh.
These categories are difficult for traditional fresh food e-commerce companies to win because they cannot guarantee the freshness of the products, but relying on the pre-warehouse model, Dingdong Shopping can avoid this problem.
Satisfying user preferences is also one of the reasons for its rapid penetration.

However, even though the Shanghai market has high acceptance and paying ability, how to convince consumers in a short period of time and gather a lot of traffic? The logic behind it is "technical activity".

The essence of the pre-storage model is that it needs to be digitized; the digitization of fresh product inventory is realized through electronic tags; a reasonable inventory level is given through the accurate prediction of the back-end big data; the user’s preference is figured out through big data analysis, accurate recommendation, and improved Purchasing rate; real-time digital management is carried out through the publicity of key data such as "performance on time rate" and "early delivery order".

According to the "Securities Daily" report, the relevant person in charge of the company once revealed that "traditional vegetable farms have a loss rate of more than 30%, and high-level supermarkets have a commodity loss rate of more than 10%.
The slow-moving loss of Dingdong Maicai is only 1%, this is based on artificial intelligence-based forecasting systems, on the other hand, it can also make intelligent recommendations based on user preferences and warehousing data.
Through the sales forecast intelligent algorithm system, the overall forecast accuracy of Dingdong grocery orders reaches more than 90%.
The overall forecast accuracy rate of high-efficiency single products reaches 95%, which greatly improves operational efficiency and reduces process losses.
"

Yu Le, chief strategy officer and co-founder of Dingdong Maicai, once publicly disclosed that the revenue of the Dingdong Maicai app reached more than 1 million yuan in the month it went live.

This dark horse was quickly spotted by capital.
In 2018, the fresh food e-commerce industry was reshuffled.
At the time when capital began to get cold, Dingdong Foods suddenly emerged, and it won five rounds of financing in a year.
So far, "grassroots" Dingdong Foods has begun to enter the first-line field of fresh food e-commerce, competing with Internet giants for the market.

"Double-edged sword" front warehouse

"Double-edged sword" front warehouse

Fastdata pole data shows that in 2020, the fresh food e-commerce transaction volume in the first half of 2020 reached 182.
12 billion yuan, an increase of 137.
6% year-on-year, which has exceeded the entire year of 2019.
Catalyzed and accelerated by the epidemic, the faster the industry develops, the greater the pressure on Dingdong to buy food, because it means more intense competition.

After the industry reshuffle, the market has further matured, and the model has been verified, Internet giants have entered the game in the past two years.
In addition to Ali, Tencent, JD.
com, Meituan, Didi, and Pinduoduo have all ended up participating in the battle.
In addition, traditional retail companies I have been eyeing this field all the time, and there is a constant influx of fresh blood, which also ushered in the second peak of financing.
According to data from Aiqizha, in 2019, 4,093 fresh food e-commerce-related companies were newly registered, a year-on-year increase of 17.
4%; in the first August of 2020, the number of registrations reached 3,512, a year-on-year increase of 34.
5%.

Relying only on the Yangtze River Delta has been unable to keep Dingdong's grocery shopping a foothold, and "going out" is inevitable.
In 2019, Dingdong Maicai went south and north to test the water in Shenzhen, Beijing and other markets, and launched a large-scale market expansion strategy.
According to the latest data disclosed by Dingdong Maicai, at present, Dingdong Maicai's services have covered 29 cities including Shanghai, Beijing, Shenzhen, Guangzhou, Hangzhou, and the number of front-end warehouses is nearly 1,000.

Some people in the industry believe that Dingdong’s strategy of buying food to go global is very risky, because it faces a question: whether its break-even ability is sufficient to support expansion.

In July last year, Wang Jun, CFO of Daily Youxian, stated in an interview with "Retail Boss Internal Reference" that Daily Youxian had achieved full profitability at the end of 2019.

Liang Changlin, the founder of Dingdong Maicai, once said that in an ideal state, each front-end warehouse has been operating for more than one year, daily orders reach about 1,000 orders, and the average customer unit price exceeds 65 yuan.
Each order can get more than the cost of fulfillment.
3% of operating profit can be profitable.
In December last year, Xiong Wei, vice president of Dingdong Shopping, once publicly stated that the average customer unit price of Dingdong Shopping was around 70 yuan.
However, whether it has been profitable or not, it has not yet given an exact answer.

What is certain is that fresh food e-commerce is still in the deployment phase, and the main battlefield is the first-tier cities, and the initial investment, equipment construction, logistics supply chain management costs, technology development and marketing expenses are not small expenses.
Compared with the natural traffic advantages of Internet giants, does Dingdong Maicai need to spend more resources on traffic acquisition?

In addition, in 2019, Dingdong Maicai only had two rounds of financing with an unknown amount.
From July of that year to the recent D round of financing, which is the most frenetic stage of market competition, Dingdong Maicai did not raise funds.
.
Under this circumstance, the continuous expansion strategy makes people worry about whether its capital chain is enough to bear.

In fact, Dingdong Shopping is also trying to control costs from all aspects.

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