A large number of sites were closed and 11.4 billion was burned in three years. Will the fresh food e-commerce giant completely collapse?

In the Internet age, there is no difficult business, but making money is not that easy.

Withdraw from three cities in a row and close some city sites

Recently, “Dingdong Maicai will withdraw from the Anhui market” was on the hot search!

According to multiple media reports, Dingdong’s grocery shopping business may be abolished in many places, including Xuancheng, Chuzhou, Anhui, Zhongshan, Zhuhai and other cities in Guangdong.

Currently, the products on the Dingdong Maicai platform in some cities are sold out, users are no longer able to place orders, and some Dingdong Maicai offline stores have begun cleaning and moving items.

Announcement on the adjustment of Dingdong’s grocery shopping service

After Meituan Preferred withdrew from four northwest provinces and shut down its business in Beijing, Dingdong’s grocery shopping became the second one in the fresh food retail industry. Exit players.

So far, Dingdong Maicai has withdrawn from 8 cities including Zhuhai, Qingyuan, Zhongshan, Jiangmen, Tangshan, Langfang, Chuzhou, and Xuancheng. From a geographical point of view, they are all located in the Pearl River Delta , the Yangtze River Delta and the peripheral areas of Beijing-Tianjin-Hebei are not traditional first-tier core cities. It is not uncommon for fresh food e-commerce companies to withdraw from non-core areas in recent years. For example, Meituan Preferred has withdrawn from the four northwest provinces and the Beijing area; in early April this year, Hema Neighborhood also chose to withdraw from Beijing, Xi'an, and Chengdu , and retreated from the four cities of Wuhan.

Even though withdrawal has become the norm in the industry, for Dingdong Maicai, withdrawing from 8 cities at once is definitely not a small matter, because the list of cities that have been opened in the Dingdong Maicai APP is 1* **Only 36 cities. The urban retreat ratio, which accounts for a quarter, makes people take a breath of air.

It is worth mentioning that in March, Hema CEO Hou Yi issued an article to criticize Dingdong Maicai, saying that Dingdong Maicai "is expected to be liquidated soon... relying on investors The disorderly expansion of capital and price subsidies will not last long.

Loss of more than 11 billion yuan in three years

The landlords have no food left.

At a time when everyone is short of money, behind the closure of some city sites by Dingdong Maicai is the overall continued loss

According to public data, in June 2021, Dingdong Maicai landed on the US stock market and entered the capital market Market. Not long ago, the company released its 2021 financial report, which showed that during the reporting period, the company achieved revenue of 20.121 billion yuan and a net loss of 6.429 billion yuan. From 2019 to 2021, the company had a cumulative loss of 11.479 billion yuan.

In fact, Dingdong Maicai’s withdrawal from three cities this time can be said to have a lot to do with its front-end warehouse model.

Front-end warehouse refers to a warehouse allocation model. Configure a small warehouse close to the consumer, so as long as the user places an order, the delivery person can pick up the goods from the warehouse and deliver them to the door within 1-2 hours.

The disadvantages of this model are also obvious. Most of the front-end warehouses are self-built, which requires enterprises to invest a lot of capital to a certain extent. This has led to the decline of front-end warehouses in some second- and third-tier markets where user density is not high. It is difficult to make a profit, which is the main reason why Dingdong Maicai withdrew from second- and third-tier cities this time.

According to Dingdong Maicai’s financial report, most of the 6.4 billion in net losses in 2021. Part of the losses come from the front-end warehouses in the second and third tiers

Therefore, Dingdong has to shrink its front line. Currently, Dingdong has evacuated all three cities: Tangshan, Hebei, Chuzhou, Anhui, and Zhuhai, Guangdong, but it is obvious. , this time the shrinking front is not over, but has just begun!

The collapse of fresh food e-commerce

Fresh food e-commerce has gone from being a golden track to where it is today! Chicken Feather, Ding Dong is not the only unlucky person to buy food.

With performance losses, difficult financial reports, and stock prices plummeting, another fresh food e-commerce giant, Daily Youxian, is also facing its darkest moment. At the end of May, the share price of Daily Youxian continued to plummet by more than 11.9, and the share price was only US$0.185 per share, completely reducing it to a penny stock.

The issue price of Daily Youxian was US$13 per share, which was also its highest price in history. It broke on the opening day and then fell all the way, with a drop of more than 98%. The highest market value was US$3.2 billion, equivalent to approximately 20 billion yuan. Today, it is only US$43.56 million, less than 300 million yuan, and the market value has evaporated by more than 19.7 billion.

This means that if the stock price cannot return to above US$1 in the next 7 trading days, Daily Youxian will face delisting. The fundamental reason for the plummeting stock price is consecutive losses in performance.

From 2019 to the third quarter of 2021, the daily revenue of Youxian was 6 billion yuan, 6.1 billion yuan, and 5.547 billion yuan respectively, but the net profit was disastrous.

The latest data shows that from 2019 to 2021, Daily Youxian suffered losses of 2.909 billion yuan, 1.649 billion yuan, 3.737 billion yuan and 3.767 billion yuan respectively.

Including the loss of 2.298 billion in 2018, in four years, Daily Youxian has already lost 10.6 billion in just four years.

Previously, Daily Youxian announced that the company would be unable to submit its 2021 annual report before the final deadline of April 30, 2022, and expected a loss of 3.737 billion to 3.767 billion yuan in 2021. It has always been difficult to find a profit model, but the speed of daily Youxian financing has continued unabated.

In December 2014, Daily Youxian received US$5 million in angel round financing; in May 2015, it received another US$10 million in Series A financing. Since then, it has received financing almost every year.

As of June 2021, before listing, Youxian has had as many as 11 rounds of financing every day, with a total financing amount of nearly 14 billion yuan. After burning all 14 billion, Daily Youxian is now having difficulty paying its suppliers. This situation has been maintained for a long time.

A former supplier, Wang, said that he was owed more than 4 million yuan. “First, the payment was delayed for 10 days, then for a month, and until two months ago, the payment was completely gone. Below." As a result, a group of suppliers, including Wang, withdrew from the supply list after the Spring Festival.

Not only that, a netizen reported on the Black Cat Complaint Platform that "Daily Fresh has been in arrears with a huge payment for more than half a year." The amount involved in the complaint was 1.1 million yuan. The netizen also attached two " "Screenshot of backend settlement bill", and revealed that the South China warehouse of Daily Fresh has basically been shut down, 90% of its suppliers have stopped selling, and Daily Fresh still has no repayment plan.

Why did fresh food e-commerce fail miserably?

Whether it is vegetables, fruits, chicken, fish or duck, in addition to ordering takeout, it is an absolute necessity for almost everyone.

Why is it so difficult for fresh food e-commerce companies to make money?

In addition to price wars, there is a price war.

Old-fashioned promotion methods such as local promotion, free coupons, and subsidized promotions are still the main marketing models of fresh food e-commerce and community group buying. In order to acquire customers, seize new users, and retain old users, price wars never stop. The front-end warehouse model has become a huge gap in the profitability of fresh food e-commerce.

There are three main models of fresh food e-commerce, namely front-end warehouse, store-warehouse integration and community group buying.

Daily Youxian and Dingdong Grocery are both front-end warehouse models, Hema Xiansheng is a store-warehouse integration model, and Xingsheng Youxuan is a community group buying model.

The front-end warehouse model is that each store is a small and medium-sized warehousing and distribution center. The central warehouse of the headquarters only needs to supply the stores laid out in the urban area to cover the last mile. Purpose.

Unlike community group buying, after consumers place an order, the goods will be shipped from nearby retail stores instead of from a warehouse in the suburbs. Within 3 kilometers, door-to-door delivery is possible in 30 minutes.

Although the front-end warehouse model has low initial operating costs and fast store opening, it can quickly form a scale effect, and the delivery speed is fast, which can meet the high-paced needs of urban users. Compared with the advantages, the shortcomings of the front warehouse will be infinitely magnified.

The traffic cost is high, and the fulfillment cost is also high. The most important thing is that fresh food is different from ordinary commodities, and the loss cost is higher.

Fresh food is a special commodity with strict time requirements. If you do not choose front-end warehouses, the distribution time will not meet the requirements, and the grocery shopping time will not be timely, it is difficult for people to choose to buy groceries online.

This is almost an unsolvable problem.