The mode of burning money ends the "rest and recuperation cycle" of fresh e-commerce

Compared with the investment boom in 2015, the fresh e-commerce industry began to decline rapidly in 2016. Since April this year, delicious Qiqi and Young Caijun have been liquidated one after another, while the industry giants Orchard, original Life, Tuotuo Industry Society, Aixianfeng and other platforms have also begun to substantially adjust their business models, and the whole industry has entered a cold winter.

Industry analysts believe that in the past, the popularity of capital has brought an irrational situation to the fresh e-commerce industry, the model of relying on low-cost subsidies to obtain the market and users has been problematic, and the business model that cannot achieve self-profit will inevitably close down. In the future, the fresh e-commerce industry will accelerate to seize the high-quality producing resources in the upper reaches of fresh food, and promote the local transformation of agricultural products into agricultural commodities, so as to achieve differential competition.

Bulk tightening of fresh e-commerce in cold winter

In April 2016, delicious Qiqi, a famous e-commerce company in Shanghai, went into bankruptcy liquidation because of a broken capital chain, which is also the first bankruptcy case of the fresh e-commerce industry this year, marking the beginning of a cold winter for the whole industry. The Beijing News reporter combed and found that while delicious Qiqi closed down, the whole industry entered a period of intensive adjustment in just a few months.

In March 2016, Lian Zhijun, CEO of Shun Feng, who has been in office for less than a year, announced his departure and joined Haier. This is the fourth time that SF has changed its coach in 4 years. It was also revealed that founder Liu Jiangfeng had withdrawn from multipoint e-commerce, which received US $100 million in financing for Angel Wheel, although its quick response was only to adjust its business model. however, industrial and commercial information shows that its registrant, Multipoint Life (China) Network Technology Co., Ltd. was listed by the industrial and commercial department in May 2016 as it could not be contacted through its registered residence or place of business.

In June 2016, the O2O platform was originally convenient to stop service, which was integrated into the original life and renamed "Express". From July, Tiantian Orchard announced the complete closure of offline stores, ending the exploration of the "front warehouse + store" business model. Du Fei, CEO of Tuotuo Industrial Association, announced his departure, and his website also successively reduced its supply categories and shut down services in areas such as Shanghai, retreating to the Beijing market and focusing on the organic market. Love Xianfeng, which focuses on O2O fresh service, has also been exposed to mass layoffs, reducing the original 1100-member team to 700people.

"relying solely on low-cost subsidies to get a large number of users and orders, which drives up valuations to quickly get the next round of financing, this is a savage way of playing in the industry, but it hits the wall one after another after the capital returns to rationality." A senior fresh e-commerce practitioner told the Beijing News that at the beginning of 2016, the capital market began not to measure companies by orders and size, but more to assess profitability such as gross profits, and to invest more cautiously. After the price war without capital support, the inability of enterprises to maintain the scale of orders led to turnover difficulties and a large number of overcapacity such as warehousing and logistics. "in particular, some second-tier echelon e-commerce companies have made offers to the industry giants one after another. Hope to spend the winter through mergers and acquisitions."

Hong Tao, dean of China Food Safety Electronic Commerce Research Institute and professor of Beijing Industrial and Commercial University, told the Beijing News that around 2015, about 7 billion yuan of venture capital poured into fresh e-commerce, and the popularity of capital also brought an irrational situation to the industry. Various companies have used low-price subsidies as a competitive model to impact sales, in order to better obtain the next round of financing, "the whole industry has appeared a huge bubble driven by capital." But it has been impossible to find a sustainable business model that can achieve self-profitability, and it is inevitable that it will go out of business. "

The transformation from scale to gross profit

In the context of the shrinking industry as a whole, various platforms have also begun to gradually adjust their models, successively stepping out of the quagmire of price subsidies and launching an impact on high unit prices and high gross profit margins, in order to achieve "self-hematopoiesis".

Wang Wei, CEO of Tiantian Orchard, said in an interview with the Beijing News that under the upsurge of capital and market, there are large-scale subsidies for e-commerce to burn money, but the subsidy is only a means rather than the ultimate goal. "many platforms regard subsidy as a goal, which is irrational, and the stickiness of users is relatively low, which is harmful to the health of the industry."

Wang Wei said that since 2016, the whole industry has gradually stopped subsidies, and capital and the market have returned to rationality, which has indeed had an impact on orders. Take the data of Tiantian Orchard as an example, its order volume is nearly 1 beat 3 less than the peak, but the overall customer unit price and profitability are on the rise. At present, the unit price of its customers has been maintained at more than 150 yuan for a long time, and its revenue is expected to reach 1.6 billion yuan in 2016, an increase of 200% over the same period last year, and the customer base is gradually completing the transformation from price to value orientation.

Yi Guo fresh CEO Jin Guanglei told the Beijing News that although the mode of burning money for users has achieved great success in a short period of time, in essence, the target user group of fresh e-commerce is always young consumers who value quality, value and brand, which means that the user group that relies on low-cost subsidies is not stable. Especially after the market returned to rational subsidy at the beginning of the year, it had a great impact on some platforms.

"Last year it was about scale, this year it was about gross profit." Jin Guanglei believes that the early industry has educated the market and cultivated consumption habits through low-cost subsidies, and the next step will be to upgrade and return to the commercial nature on this basis. "the focus of the industry at the current stage must be to focus on fresh quality and brands." through the integration of upstream and downstream resources to solve the problem of standardization, and then provide consumers with more valuable products. "

Analyze the upstream producing area and attach importance to the cultivation of brand

Hong Tao told the Beijing News that although there are periodic obstacles in the fresh e-commerce industry, the overall market space is still increasing. "it is estimated that by 2016, the online trading volume of domestic agricultural products will be 250 billion yuan, with fresh products alone accounting for 100 billion yuan. This has nearly doubled the fresh online trading volume of 54.4 billion yuan in 2015."

With the rapid growth of market space and fresh platform entering the adjustment period, the competition of the whole industry is about to enter the next stage. Hong Tao believes that at present, it has proved that the model dominated by price war is unworkable. Gome, JD.com, Tmall and other giants continue to enter, but also began to force each out of the low-level stage of price competition, towards the benign direction of optimizing product structure and cultivating brand quality.

Yang Daqing, a special researcher at the China Society of Logistics, told the Beijing News that in 2016, more and more fresh e-commerce companies began to make substantial changes to their business models. The first is to shrink the whole or multi-category fresh front, reattack the boutique or specialty categories, and seek to establish a strong relationship with subdivided consumer groups; secondly, various vertical platforms have gradually begun to enter the comprehensive platforms of Tmall and JD.com, re-promote the integration of service resources rather than self-construction, and be the brand supply chain butler and channel agent on the comprehensive fresh platform. Finally, speed up the capture of high-quality resources in the upper reaches of fresh food, and promote the transformation of agricultural products into agricultural commodities, so as to achieve differential competition.