Field research and community group buying: almost no money in the short term, and new technologies have limited temporary effects

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Among the startup companies are Shihui Group and Xingsheng Optimal Group, both of which have received large financing this year.

Alibaba has invested in Shihui Group for many times, and Tencent has repeatedly increased the Xingsheng Optimal Group.

36 Krypton reported that Meituan Optimal will set GMV at 200 billion yuan in 2021, and hit an order of 50 million to 60 million per day.

Dutobuy’s goal is 150 billion GMV, and Orange Heart is selected as 100 billion.
Prosperity Optimal It's about 80 billion.
Meituan said in its fourth quarter financial report that in December 2020, Meituan's preferred order volume exceeded 20 million orders per day.

Community group buying can take off quickly, except for the vigorous promotion of work by Internet giants, the core reason is the low price.

At the same time, the mode of placing an order first and picking up the goods the next day reduces inventory costs, and the absence of a store also reduces rent costs.
An investor who pays attention to community group buying mentioned to a reporter from Caijing that the low price is based on lowering costs, and it is not a meaningless burning of money.

On April 3, a reporter from Caijing visited the upstream links of community group buying, involving suppliers, warehouses, and logistics.

We found that the community group buying model greatly increased upstream costs.

A potato needs to go through multiple links from the field to the table.

Together, they form the fresh food industry chain.
China is a populous country, fresh products are the largest category of daily consumption.

1.

Extra "middlemen"

1.
Extra "middlemen"

In the market, in addition to the wholesalers responsible for selling vegetables, there are many corresponding types of work derived from them.

For example, truck drivers and couples who pull goods from the production area, drivers in charge of short-distance transportation, and workers in fresh food processing.
Short-distance drivers and processing workers are employed by wholesalers.

It is not difficult to recruit temporary workers in the market.

In addition to casual workers, large truck drivers are also one of the main forces.
After they deliver the goods, they will not leave immediately.

Helping community group purchases to sort fresh products is a new middleman in the market.

In the beginning, the community group buying will directly purchase from the first-level wholesalers, and the wholesalers are required to pack the dishes and send them to the warehouse.
A supplier who had previously supplied Orange Heart and Meituan told the Caijing reporter that it is very uneconomical for a first-tier wholesaler to do this.

Most of the first-tier wholesalers focus on one category and put a lot of energy on direct sourcing from the origin.
The planting industry follows the climate.
In different months, the production area is different, and each plot of land must be visited in person.
After the goods are purchased, they need to be classified.
The most beautiful and complete ones belong to the first-class products, and the ones that are not beautiful enough or bumped will be classified into the second-class or inferior products.
Wholesalers sell dishes in boxes, which may exceed 20 kilograms.

The selling units of the community group buyers are 300 grams and 500 grams, and the work of sorting and packing requires manpower.
Internet companies can ask employees to go to the front line to open up a battlefield, but they cannot ask employees to go to the warehouse to pack vegetables.

It is difficult for first-tier wholesalers to devote their energy to complete this part of the work.
They need to purchase special equipment for labeling.
They also need to deliver at 11 o'clock in the evening.
After delivery, they will be counted and inspected.
"For example, he wants 100 copies.
I sent 110 copies in the past, but 20 of them did not meet the standard, and I had to go back and make up 10 copies immediately.
" The aforementioned wholesaler said, "I often have to toss until 2 o'clock in the middle of the night, and these 20 copies are even my loss.
"

He still needs to start work before 9 o'clock the next morning, "Tired, and can't make any money.
"

There is also the issue of billing period.
When wholesalers make purchases, they have to pay farmers on the spot, and farmers do not accept credit.
But Internet companies will delay payment by 2 to 3 months.
The financial pressure is concentrated on wholesalers.

Reporting damage and returning goods is also a difficult problem.
The community group buying platform stipulates that if there is a subsequent return from the user or the loss of the transportation process, the supplier shall bear it.
"We supply supermarkets, as long as the goods meet their standards, we don't have to bear subsequent losses.
"

He calculated an account, unless he can expand the category, invest in the cost of space, labor, equipment, and maintain a stable supply with the community group purchase, in order to make money, he gave up.
The withdrawal of first-tier wholesalers has given space for middlemen to develop.

The intermediaries who supply the group buying for the community will purchase the goods from the first-level wholesaler according to the order data provided by the community group, and then carry out the packing and sorting work in the nearby market, and send it to the warehouse of the community group buying at 11 o'clock in the evening.

The emergence of new middlemen seems to increase costs, but it does provide convenience for community group buying platform companies.
The emergence of this layer of middlemen has also provided new business opportunities for some of the strikers.
Packing a portion of vegetables, the labor cost is 2 cents, the price of a single portion is not high, but the total labor cost should not be underestimated, this is becoming a new option for many workers looking for work near Haijixing.
The person in charge of recruitment told the reporter of Caijing, “At most, a couple made a total of 17,700 yuan a month.
”

2.
The extra "cost"

2.
The extra "cost"

Adding a link means an increase in cost.

The labor cost of packing a dish is 2 cents, and the purchase from the wholesaler requires an increase of 2 cents, plus the cost of the venue and logistics.
.
" A staff member told a reporter from Caijing.

For example, a potato with a cost price of 2 yuan is processed and resold by a middleman, and the price becomes 3 yuan in a community group-buying warehouse.

Intermediaries are similar to secondary wholesalers.
Traditional secondary wholesalers purchase goods from primary wholesalers and deliver them directly to the market, where vendors can sell them directly after sorting.
However, after the goods are delivered to the community group purchase warehouse, the operation process has not yet ended.
After the staff conducts quality inspection and inventory, they are transferred to the small warehouse and then sent to each community point.

The popularization of Internet technology has reduced many costs in traditional businesses, but logistics costs are still fixed costs.
This is especially true for the logistics of fresh food, which is prone to loss during the logistics process, and fresh vegetables and fruits need to be kept fresh.

Previously, the new species in the fresh food field was fresh food e-commerce represented by Daily Fresh Fresh.
One of the main costs of Daily Fresh Fresh was the last mile delivery.
Compared with Internet companies doing community group purchases, the main daily fresh food business approach is to purchase directly from the first-level wholesalers, sort and pack them, and then distribute them to each front warehouse.
The main processes are mastered.
In their own hands, relatively better control costs.

For community group buying and daily fresh foods, their trading model is to turn non-standard fresh products into standard products.
In this process, in addition to labor costs, an additional part of the cost of goods will be added.

For some categories with better weight control, such as beans, small greens, etc.
, each serving can have almost the same weight, but like potatoes, it is difficult to accurately control the weight of one serving.
For the user experience, "only more," No less, this process will increase the cost by about 10%.
" The CEO of a fresh food company told a reporter from Caijing.

The user experience is the first issue that the platform needs to consider, but for suppliers, once the goods are sent and the money arrives, the work is over.
They are more concerned about the profit of each transaction.
The aforementioned wholesaler has contacted multiple community group purchases, and he found that in each warehouse, there are very few staff belonging to the Internet company, "only 1-2 people, and the others are outsourced.
" The standard of staff quality inspection is, Whether the weight meets the standard, whether the goods are rotten or bumped, and whether the packaging meets the specifications.

"But they don't care about the level of the dishes and fruits, and it may not be seen by inexperienced people.
" Experienced wholesalers can see the subtle differences in fresh produce, because this determines the final selling price, and the price difference may be Up to double.

Some suppliers will supply second-class products that are not problematic to the community group buying platform, and better first-class products will be sold to channels with higher profits.

Internet companies need new traffic and new business formats brought by fresh products, users enjoy convenience and preferential treatment, and suppliers will not let themselves lose money.
It seems that everyone "wins", but for the whole fresh food industry, more than that is needed.

3.
New technology has limited temporary effect

3.
New technology has limited temporary effect

On December 11 last year, the "People's Daily" published a comment criticizing the Internet giants engaged in community group buying: "Don't just worry about the flow of a few bundles of cabbage and a few kilograms of fruit.
The stars of technological innovation and the infinite possibilities of the future are actually even more so.
People are surging.
"

From agriculture to supply chain to terminal retail, this is a huge and long-chain market.
There is also room for technological innovation.

The biggest feature of the fresh food market is price instability.
Prices change day by day or even change day by day.
Even if agriculture has begun to mechanize, the problem of relying on the sky for food still exists.
It is difficult for farmers to predict the laws of the market.
Prices are determined by supply and demand.
When the output is high, the price cannot be sold; when the price is high, the output has not kept up.

Most fresh products cannot be stocked in advance due to their short shelf life.
When the crops are mature, they must be picked, packaged, and transported immediately.
Sometimes there are even some extreme situations.
For example, because the market price is too low, farmers and suppliers are unwilling to bear the processing and transportation costs, leaving the vegetables directly rotten in the ground.

In the past few years, new technologies have begun to affect agriculture and the corresponding supply chain links.
Some emerging technology companies are trying to empower agriculture with digital technology, for example, by optimizing planting structure and market forecasting by modeling climate, precipitation and other data.
But it is difficult to produce results, "because no one knows exactly what the output of a certain variety this year will be, and there is no way to predict it.
" A practitioner told a reporter from Caijing.

What Internet companies can do is to use big data to predict the number of orders, but community group buying does not rely on this, because users place orders in advance and purchase according to the order volume.
They will synchronize the order system to the supplier, and the order data will be updated in the system in real time.
But the problem still exists.
A supplier mentioned that although the order quantity can be seen in advance, they also have to purchase and pack in advance.

"Sometimes the system shows that there are 200 orders in the morning.
I may predict that the whole day's orders will be 300-400, but in the end it may sell 1,000 copies, and there will be insufficient goods.
Sometimes it is too much preparation.
If it is not sold, it becomes a loss.
"

In the packaging process, there has also been a shadow of automation.
In Haijixing's warehouse, some categories, such as the packaging of broccoli, can already be machined, but manual cooperation is still required.
For more categories, due to differences in appearance, they can only be done manually.

Optimizing logistics, warehousing, and distribution processes may be where digital technology can play a role.
Through the collection and analysis of process data, refined operations can be achieved and contract performance costs reduced.

At present, the competition of community group buying is still fierce, and various platforms are actively expanding the market and increasing categories.
The price subsidy will be gradually reduced, but if there is no price advantage, it will become difficult to attract new users and retain old users.

The entry of technology companies into the vegetable market is a foregone conclusion.
Today, when traffic expansion is becoming more and more difficult, the development of this market has its logic and market prospects.
It is optimistic that the prosperity of this business model may contribute to the evolution of the agricultural value chain.
power.

But the real challenges are also specific: retail prices are lower than market prices, upstream costs have increased, and community group buying businesses will hardly see the possibility of profit in the short term.

The current main battlefield of community group buying is in the second to third tier cities, and it is still sinking.
From the growth rate of orders on various platforms, it can be seen that it can indeed effectively and quickly acquire users in the sinking market.

But there is always an end to burning money.
Users who burn money in exchange for low loyalty will follow the subsidy.
Users need benefits and convenience, but benefits and convenience are usually not available at the same time.
If they can do a good job, they will be sufficiently competitive.
Internet giants have capital, technology, data, and the interaction of online and offline formats, but the basic business law is the simplest cost and price.
Since ancient times, selling vegetables has basically been a job with no threshold, but today, selling good vegetables has become a high-tech job.

Source: WeChat Official Account: Eleven People in Finance

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