Fresh e-commerce leads PE gold mining trillions of market costs and non-standardized bottlenecks

After absorbing the failure experience of the first batch of fresh e-commerce, at the end of 2012, marked by Chu Orange's entry into Beijing, China's fresh e-commerce market ushered in the second wave of upsurge.

Recently, the semi-finished fresh e-commerce "Young vegetable Jun" was born, which has received tens of millions of yuan A round financing from Wu Shichun, founding partner of Plum Blossom Angel and Wang Xiao, founding partner of Jiuhe Venture Capital. Since the beginning of this year, with the rapid development of fresh e-commerce, I have successively received PE/VC investment in buying net, delicious Qiqi, original life and so on. However, industry insiders pointed out that the two major bottlenecks of high distribution costs and non-standardization problems need to be broken through by fresh e-commerce companies.

Nuggets trillion yuan market

Cofco e-commerce platform I Buy announced the completion of round B financing, with an injection of US $100 million from IDG and Saifu Fund, which is the largest amount of e-commerce investment in IDG history, and also created the largest financing for domestic food e-commerce, including fresh e-commerce. It is reported that the money is led by IDG Capital, and Saifu Fund will chase after $15 million after the round An investment of $37 million in July last year.

IDG's heavy investment in my buying network undoubtedly opened a corner of the vast market for fresh e-commerce, and once again aroused widespread concern in the market for fresh e-commerce. According to statistics, the scale of China's fresh market is nearly one trillion yuan, and the current penetration rate is less than 1%. China Merchants Securities pointed out that the current scale of fresh e-commerce market is relatively small, with vertical e-commerce sales of about 1.2 billion yuan in 2013, and comprehensive and platform e-commerce fresh goods (vegetables and fruits, fish, meat, eggs) selling about 4.5 billion yuan, totaling 5.7 billion yuan. It is estimated that by 2018, comprehensive and platform e-commerce will reach 78.5 billion yuan in sales, and vertical e-commerce will reach 22.7 billion yuan in sales.

Xiong Xiaoge, partner of IDG Capital, believes that Ocado, a fresh e-commerce business in the UK, is 8 times bigger than me, but the development space in China is large, which should be 8 times that of Ocado. And I buy the first force, with the funds in place, supply chain and logistics cold chain and user scale established, will form industry barriers.

In fact, IDG is not the only PE/VC interested in online e-commerce. In the past three years, the rapid development of fresh e-commerce has attracted PE/VC to invest in it. According to Analysys think tank, the online shopping volume of fresh food in 2013 reached 5.7 billion yuan, a year-on-year growth rate of 40.7%, and a compound average growth rate of 138.5% from 2010 to 2013. According to the Taobao index, fresh search and transaction volume both increased by more than 100% over the same period last year. The fresh e-commerce industry is expected to grow by more than 100% in the next five years, with a market size of about 100 billion yuan, accounting for 15% of total fresh sales.

Before IDG invested in me, Amazon announced in Shanghai on May 16 that it would buy a stake in fresh and fresh ecommerce Shanghai delicious Qiqi Network Technology Co., Ltd for $20 million. Amazon said that in the future, delicious Qiqi will maintain independent operation and expand its business outside the Shanghai area. The purpose of investing in delicious 77 is to steadily expand the scale of the business. At the end of July, vertical fresh ecommerce originally announced that a financing had been completed in January and that the funds were in place in April.

"the accession of PE/VC will undoubtedly make fresh e-commerce usher in a period of rapid development, especially since last year, with the help of PE/VC, fresh e-commerce has embarked on another round of expansion." An industry insider said in an interview with a reporter from China Securities News.

Since its development in 2005, fresh e-commerce has experienced two waves of upsurge. Easy fruit fresh was established in 2005, which opened the first wave of fresh e-commerce boom. Since then, vegetable butler, Tuotuo Industry Society, Shunfeng have been online, with the continuous development of fresh e-commerce, supply gradually exceeds the real market demand, starting from 2012, fresh e-commerce stopped expanding. In 2013, with a series of expansion and mergers and acquisitions, including SF Optimization, the national expansion of Tuotuo Industry Society and the acquisition of vegetable butler by Haibo, fresh e-commerce has ushered in a second wave of craze, which continues to this day.

Two bottlenecks need to be broken.

Although the rapid growth and broad prospects, but have to admit that most of the domestic fresh e-commerce is still in the loss stage, and fresh e-commerce itself also has a variety of difficulties to overcome.

China Merchants Securities pointed out that the bottlenecks faced by fresh e-commerce mainly include two aspects.

First, the cost of distribution is high. From the supplier to the final consumer, fresh products mainly go through three links: trunk transportation, warehousing and residential distribution. Generally speaking, in the case of cold chain outsourcing, the cost of trunk transportation and storage of refrigerated goods is 4 to 5 times that of normal temperature goods, while the cost of residential distribution is 1.3 to 1.5 times. Fresh e-commerce companies are faced with high costs to invest in the cold chain: on the one hand, cold chain goods are higher in warehousing and logistics than normal temperature goods; on the other hand, the particularity of fresh products makes them strict in delivery time. and the special requirements of fresh product distribution make it difficult to share resources with traditional goods, resulting in insufficient order density.

The second is the non-standardization of fresh products. Non-standard products will mainly have an impact on two aspects: on the one hand, it is not convenient for unified packaging and distribution; on the other hand, it affects consumers' recognition of products, for example, when placing orders online, they see products of bright colors and the same size, but customers find that they are uneven in size and not bright in color. These two points are also quite different from traditional e-commerce, such as 3C, books and other physical products are not different from pictures, consumers are easy to accept, and the shape and size are the same, convenient for packaging and distribution.

These problems are accompanied by the development of domestic fresh e-commerce, in the first wave of domestic fresh e-commerce, because the operators of fresh e-commerce do not consider the characteristics of fresh products, they simply copy the business model of traditional e-commerce, in addition, the upstream does not infiltrate to the base, the middle does not control logistics, the end does not grasp the user group, and only rely on a website to sell goods, which finally leads to the failure of the first wave of fresh e-commerce.

After absorbing the failure experience of the first batch of fresh e-commerce, at the end of 2012, marked by Chu Orange's entry into Beijing, China's fresh e-commerce market ushered in the second wave of upsurge. The participants of this wave have absorbed the experience of the former and created their own characteristics for the improvement or innovation of supply chain, logistics and other links. At present, the more well-known e-commerce in China have controlled one or more aspects of supply chain, platform operation and warehousing logistics, so as to avoid repeating the failure tragedy of the first wave of e-commerce. Among them, JD.com, Tmall and Shun Feng have set up new industry standards for supply chain, platform operation and warehousing logistics by virtue of the flattening of the supply chain, the innovation of marketing means and the leading cold chain housing technology, respectively. The entry threshold for fresh e-commerce has been greatly raised.

"the problem of distribution cost is the biggest problem that fresh e-commerce companies are facing at present. However, with the expansion of the scale of fresh e-commerce, distribution costs are expected to gradually decline. At the same time, the problem of the last kilometer of fresh e-commerce can be solved to a certain extent by means of centralized distribution, self-delivery cabinets and community stores, and distribution costs are expected to be further reduced. " The above industry insiders told the China Securities News reporter.