The crazy rise and rapid expansion of fruit chains need to break through the standard bottleneck.

China's fruit chain industry has experienced many kinds of model innovation, but few successful ones. Now, the fruit chain Baiguo Orchard has received the largest investment in the fruit chain retail industry to date. Recently, Shenzhen Baiguo Garden Industrial Development Co., Ltd. completed 400 million yuan A round financing, Tiantu Capital led 350 million yuan, Guangfa Xinde and other institutions followed.

Yu Huiyong, chairman of Baiguo Orchard, said in an exclusive interview with China Business Daily that there are currently more than 1200 stores in Baiguo Orchard, and there will be a net increase of 600 chain stores next year, and the annual net increase will be no less than 1000. There is no doubt that the intervention of capital will accelerate the pace of expansion, but what made the company where it is today?

The crazy rise of fruit chains

Yu Huiyong told our reporter that the northern market compared to the south, fruit chain stores are less, and the market demand is particularly large. Beijing is the largest testing ground for domestic fruit retail model innovation, not only the rapid development of offline fruit stores, fruit e-commerce and O2O are also blooming, making Beijing a must-compete place for fruit retail brands to gain insight into industry changes and verify business models.

With regard to the problems existing in the current fruit chain store industry, relevant industry insiders said that unlike the traditional fast consumer industry, there are five forms of fruit chain stores, one is street stalls, the second is farmers' markets, the third is Stores, the fourth is supermarkets, and the fifth is fruit chains that have become popular in recent years. Due to fierce competition and lack of standards, fruit chains are facing expansion bottlenecks, mainly regional sales. At present, there are many famous fruit chain stores, such as Beijing fruit Duomei, Hangzhou fresh fruit, brother fruit industry, Changsha green leaf fruit, Jilin fruit mother-in-law and so on. In the capital market, in addition to Jiuding invested in Xianfeng, there are few other investment cases into the public eye.

Industry insiders believe that the biggest problem that regional brands face when expanding is that there is no unified standard, because the fruit in one place is different from the fruit in another, and the expansion in the local market will not be satisfied.

It is worth noting that the fruit chain Brothers Fruit Industry and Xianfeng Fruit have accelerated the expansion of the market outside Hangzhou since last year, because the Hangzhou fruit market is saturated, although the number of stores is still increasing, but the speed is slowing. in the future, the focus of the brother fruit industry is Liaoning; Xianfeng Fruit Industry had set a goal of more than 320 chain stores in 2015, and areas outside Hangzhou will become a new base for their expansion. At present, Xianfeng has opened 34 stores in Huzhou, Shaoxing, Lishui, Jinhua and Shanghai, while in the Beijing market, the largest fruit chain is Guoduomei. The entry of the hundred Orchard will compete head-on with these brands.

In this regard, Yu Huiyong said that the positioning of enterprises such as Baiguo Orchard and Guoduomei is different, and there are many differences between them. Guoduomei is mainly opened in prosperous areas and places with relatively large passenger flow, with a store area of more than 300 square meters. Baiguo Orchard is mainly set up in the community, with a store area of 40 to 50 square meters, which is mainly aimed at people in the community, and the speed of opening stores is faster.

Rapid expansion needs to break through the standard bottleneck

As for the development of the industry, Yu Huiyong believes that the lack of standards is the main bottleneck in the rapid replication development of fruit chain stores. At present, the hundred Orchard has solved this problem, however, it has taken nearly a decade.

He believes that the most difficult thing to do in a chain is to create a benign operating system that replicates quickly, and once this system is established, there is a foundation for rapid expansion. However, fruit is different from other industries, there is no standard to learn from, everything depends on groping.

At present, the hundred Orchard has its own set of enterprise standard system to ensure the quality of fruits. Fruits are divided into A, B and C3 grades, and then classified according to large, medium and small, so there are 9 standards, and there are more than a dozen specific classification methods. Every buyer should be familiar with the purchasing standards to ensure that the best fruit can be purchased. For example, a red Fuji apple has 16 grades in a hundred orchard. The highest one costs 18 yuan, while the lowest one costs only 3.9 yuan.

Yu Huiyong believes that the control of wear and tear is also an important part of standardization in the management system and one of the most important technologies in fruit retail. The control of loss involves many links in the whole industry chain, and the final loss rate has been affected from the moment of picking and postharvest treatment. There are no less than ten control nodes in the middle, and the loss control directly reflects the comprehensive management level of a fresh enterprise.

At present, the loss rate of the entire fruit industry is about 10%, and the loss rate of 100 orchards has gradually dropped from the initial 10% to less than 5%, with the goal of reducing to less than 3%. In fact, many fruit chains seem to be doing well, but their profitability is so poor that the main reason why they can't afford to close down is that the loss rate is too high.

Yu Huiyong said that in addition to standards, the lack of talent in the fruit industry is also a key factor restricting the development of the industry as a whole. It is easy to recruit people who understand IT and technology in the market, but it is very difficult to recruit someone who understands fruit.

Test the water e-commerce faces challenges

China's fruit retail has experienced many kinds of model innovation, but there are few survivors. After its launch in 2008, Baiguo Orchard tried to sell fruit through the website, but it was difficult to make money on a small scale. Later, it accurately located the consumer group by sweeping the office building, but although the coverage rate was very high, the fruit was packaged and sent to the customers of the office building. The cost is very high, and it is still difficult to make a profit. Since then, we also tried to directly connect major customers, valet gifts and other models, but have aborted one after another.

As for the e-commerce model, Yu Huiyong revealed that the cost of fruit is as high as 40 yuan per order, even if calculated according to a high gross profit of 25%, the price of 160 yuan per unit can be covered, but this exceeds the normal amount of fruit purchased by ordinary consumers.

The reporter learned that at present, in addition to selling fruits, the online fruit orchard has also increased the special sale of fresh and aquatic products, while moon cakes for Mid-Autumn Festival gifts are also sold online. People familiar with the matter said that it is actually very difficult to make a profit by relying solely on online fruit sales, and many enterprises that are purely online fruit stores are struggling, and they have no choice but to transform or increase their sales categories.

At present, although many businesses are popular in online marketing, they are lack of offline supply chain support. In the future, Baiguo Orchard will consider to connect to the platform, the other side is responsible for the flow into the store, Baiguo Orchard to provide products, supply chain support.

Yu Huiyong said that part of the funds raised this time will be used for e-commerce development, and will comprehensively upgrade the application of information technology, integrate online and offline, and compete with the current O2O. This year's strategy is to open offline platforms and fully cooperate with all excellent online operators and excellent O2O operators. At present, the hundred Orchard has cooperated with O2O platforms such as JD.com Jiejia and Xiaomi Life, and will strengthen its promotion efforts in the future.

However, industry insiders believe that although 100 orchards can take advantage of advantages such as thousands of offline chain stores in the e-commerce field, 99% of fresh e-commerce is still losing money, and it is difficult to make profits and burn a lot of money. The market training period is relatively long, and how to break this deadlock in the future still faces many challenges.