Ding Dong buys food IPO: "hawkers" burn their bridges.

Source | Gelonghui New Shares

From the high-profile entry of giants, the market has predicted that supermarkets over 500 square meters will disappear within two years. It was not until the official media criticized "no pattern" and issued a series of norms that the market mocked the fresh giant and repeated the history of "watching him build tall buildings and watching his buildings collapse".

But in fact, although the internet "vegetable vendors" have converged and no longer "entertain guests", the "top level" of this fresh food business is still rising.

By the end of last year, Meituan You Xuan had successively entered 14 provinces, and Guangdong Province, the key layout, achieved full coverage of the whole province 14 cities; The orange heart of Didi preferably spreads outward from Chengdu, Sichuan, and has now expanded to 16 provinces. Last year, 165438+ 10 broke the record of 5 million daily orders created by established community e-commerce players and Tencent.

On the other hand, Ding Dong, led by Sequoia Capital, heard the news of seeking an IPO in the United States as early as this year. However, people familiar with the matter also said that the consideration of related matters is still at an early stage, and the details involved may change.

Fresh e-commerce business is basically equal to "burning money". At present, there are almost only two kinds of companies on the fresh e-commerce track-the companies that Internet giants bet on and the Internet giants themselves.

But among them, there was a ding-dong shopping that belonged to them. Is it a sudden emergence or a tenacious resistance?

"Survivor" Ding Dong

The predecessor of Ding Dong's grocery shopping is "Ding Dong Community APP" launched by Shanghai Yibaimi Network Technology, which was established on 20 14. Similar to the mini version of "58 City", its main functions are to release some second-hand transaction information, domestic recommendation, property fee payment, collection and express delivery, and so on.

65438+In May 2007, Ding Dong Community APP completed the business transformation from social interaction in the same city to fresh e-commerce, and Ding Dong Shopping APP was officially launched. One year later, it was financed by Gao Rong Capital Angel Round.

In the new retail war in the next two years, fresh e-commerce is mainly divided into two modes. One is a cross-border supermarket represented by Boxma Xiansheng, which not only opens offline supermarkets for customers, but also places online delivery orders. The other is the pre-warehouse mode represented by Ding Dong grocery shopping, which only supports online ordering and distribution.

The biggest problem of the front warehouse model is that in order to expand the coverage of sales and distribution, there must be more front warehouses. Therefore, the inevitable asset-oriented operation mode, with capital and depreciation topping Mount Tai, is the main reason why most participants finally lost. Perhaps it is because of lack of financial support, or it may be a conservative strategic choice. Until 19, Ding Dong only bought food in three cities in the Yangtze River Delta-Shanghang and Suzhou and Hangzhou.

However, when we set out, we didn't take a big step, which may be one of the main reasons why Ding Dong "survived".

Although it only covers three cities, in order to achieve the slogan of "29 minutes delivery", Ding Dong has set up 435 food purchasing pre-warehouses, which occupy a small area but have a much higher density than its competitors. According to Liang Changlin, CEO of Ding Dong Shopping, what Ding Dong pursues is never a large coverage area, but a large order volume and repurchase rate. Basically, the restaurant is small, but the turnover rate is high.

However, times have changed, and this strategy is no longer suitable for the current competitive environment. "Small but beautiful" is a false proposition in the same completely homogeneous track as "selling vegetables". Either expand or die, this is the only choice for self-made competitors.

Obviously, Ding Dong can't choose the former when buying food, and can only begin to expand. Last year, Ding Dong went out of the Yangtze River Delta to buy food, and successively entered Beijing, Guangzhou and Sichuan. In just 10 month, nearly 10 new cities opened in Ding Dong. At present, grocery shopping in Ding Dong covers about 25 cities, and the total number of pre-warehouses exceeds 800. From 400 pre-warehouses in 3 cities to 800 pre-warehouses in 25 cities, Ding Dong seems to have given up the pursuit of "turnover rate" under the necessity.

Burn one's bridges, IPO

After Ding Dong Shopping 20 17 was launched, in the two years after the new retail war, * * * completed seven rounds of financing from Pre A to B+. Investors include Today Capital, Sequoia Capital, Capital, Starlight Capital, CMC Capital and White.

Since July 2009, Ding Dong has not released any new financing news. 19 In the second half of the year, there were even rumors that the growth of Ding Dong's grocery shopping business was blocked and there were large-scale layoffs. However, Liang Changlin personally responded: False, there are more than 2 billion cash in Ding Dong's account.

Last May, Reuters reported that Ding Dong received a new round of financing of $300 million from Atlantic Investment Group, with a valuation of $2 billion. But soon, Liang Changlin personally responded: fake.

On the other hand, another "survivor" of the former warehouse model, Daily Youxian, received nearly $500 million in Series F financing in July of 20, which is the largest financing in the fresh e-commerce industry.

However, judging from the large-scale expansion of buying vegetables in Ding Dong in 2020, the rumor of "no money" is broken, but "where does the money come from" still makes people curious. Fresh e-commerce broke out and the media interviewed suppliers. The suppliers interviewed said that from the perspective of payment, there should be no problem in the capital chain of buying food. It can be estimated in the industry that the unit price of buying vegetables in Ding Dong is around 65 yuan, which is far lower than the average unit price 80 yuan published by Youxian Daily and Boxma Xiansheng.

Although the track of fresh e-commerce is bound to be a hero without profit in the short term, and the overall profit has not reached today, the possibility of profit in the long run is not high, which has always been the most concerned issue for the outside world to buy food. Not to mention, grocery shopping in Ding Dong entered more than 65,438+00 new cities on a large scale last year. The total amount of pre-warehouses in these new cities is similar to that in Beijing and Shanghai.

Even in Shanghai, the base camp of Ding Dong, in the past three years, although the repurchase rate has exceeded 50%, each order will lose 5 yuan on average. I'm afraid it will take longer to make a profit if it is scattered in hundreds of warehouses in more than 10 cities.

If everyone still loses money together, that's nothing. However, there is a "traitor" in fresh e-commerce. In September last year, Hou Yi, CEO of Boxma Xiansheng, announced that Boxma Xiansheng's stores in Shanghai and Beijing had achieved full profitability, and online orders in these two stores accounted for as high as 90%. What's more, the cross-border supermarket model adopted by Boxma Xiansheng is more "capitalized" than the front warehouse, and it is the most "capitalized" model in the fresh retail industry. But it began to make a profit three years after it entered Beijing and Shanghai.

At present, fresh e-commerce has come up with a new gameplay-community group purchase "online order+self-raising every other day". But in the final analysis, it is just a way to reduce the performance cost by sacrificing timeliness. Whether it is profitable or not, other Internet giants who are still fighting community group buying wars should not be in a hurry. After all, they have plenty of money owners behind them. But for Ding Dong, it is urgent to raise funds through IPO to buy grain.

Selling vegetables is a good business?

According to statistics, the per capita purchase frequency of fresh food in China is 3 times a week, which is 2.5 times higher than the global average. As a national basic consumer product, the fresh market naturally has a trillion-dollar volume and its growth is relatively stable.

In 20 19, the domestic fresh retail market was about 500 million yuan, up 5% year-on-year, and the compound annual growth rate from 20 14 to 20 19 was 4.9%. Based on this calculation, the domestic fresh retail market is expected to reach 5.4 trillion yuan in 2022.

In this 5 trillion market, until 20 18, the penetration rate of e-commerce was less than 5%. At present, about 70% users of fresh e-commerce have tried/used to buying food online before the outbreak of COVID-19, but the epidemic has undoubtedly accelerated the concentration of "online vegetable market" and further solidified and generalized user habits, so it is only a matter of time before supermarkets quit the historical stage of fresh retail.

But this track is crowded with giants and the competition is fierce. Although "anti-monopoly" at first glance gives small companies opportunities and space to rise, it is a pity that the giants will not be "suppressed", but will dig out the hidden dangers of unfair competition through the intervention of supervision and management and digest them in advance. On the one hand, it prevents some platforms from disorderly expanding into "early birds" and then being impacted by risks; On the other hand, the giants who are not poor in money are also "forced" to iterate business models in a cost-saving and relatively healthy way.

Whether the IPO is true or not, whether it is successful or not, Ding Dong is likely to maintain its current scale, slow down its expansion and focus on its business. The secondary market will not take burning money seriously in the short term, but the profit rate and growth rate are the stories that Ding Dong must tell when buying vegetables.