This signal makes many people believe that it is the front-loading mode that it pioneered that overwhelms the daily excellent fresh.
Has the best solution for “delivery last mile” become the last straw that crushes Daily Fresh?
The fault of the front warehouse?
The so-called front-end warehouse means that the warehouse is the store. According to data analysis and its own supply chain resources, fresh food e-commerce companies select suitable products for distribution from the main warehouse to the front-end warehouse (store). After consumers place an order, the pre-ordered goods will be delivered from the front warehouse to the designated location through the instant delivery service, which can be delivered to consumers within 30 minutes of the store within 3 kilometers.
The front warehouse is considered to be the best model to solve the last mile of fresh food e-commerce, and its convenience and efficiency have also won the favor of consumers. Before the “dissolution” of Daily Youxian, the fresh food e-commerce companies in the front-end warehouse mode included Daily Youxian, Dingdong Maicai and Meituan Maicai.
Zhongxin Finance noticed that in the first half of this year, news that Daily Youxian defaulted on the payment of suppliers.
A consumer showed Zhongxin Finance the rotten loofah he bought in a fresh e-commerce. Photo courtesy of the interviewee.
For consumers, the fresh food e-commerce companies that claim to be “30-minute delivery” not only gradually prolong the delivery time, but also have the phenomenon that fresh food is not fresh. “It used to be delivered within 30 minutes, but now it often takes 1-2 hours.” A consumer told Zhongxin Finance.
Another consumer told Zhongxin Finance that the pineapples and loofahs he ordered on a fresh food platform were hairy or rotten when they were delivered. “I feel that there are a lot of rotten vegetables now.”
Profit stumbling “the last mile”
Front-end warehouse means faster and more convenient for consumers, but it means high cost for fresh food e-commerce. With a large amount of investment in fixed assets, the profitability of fresh food e-commerce has always been a difficult problem.
According to the prospectus of Daily Youxian, from 2018 to 2020, the net losses of Daily Youxian were 2.232 billion yuan, 2.909 billion yuan and 1.649 billion yuan respectively. In the financial report for the third quarter of 2021, Daily Youxian expects a net loss of 3.737 billion-3.767 billion yuan for the whole year.
The Dingdong Maicai financial report shows that from 2019 to 2021, the net losses of Dingdong Maicai were 1.873 billion yuan, 3.177 billion yuan, and 6.429 billion yuan respectively, showing a trend of increasing year by year. Its losses for the same period only narrowed in the first quarter of 2022.
On the official website of Daily Fresh, “delivery in the fastest 30 minutes” is still a striking slogan.
Wei Jianhui, an analyst in the brand retail industry of Analysys, said that the key to the profitability of front-end warehouses is the order density and customer unit price. “The main reason is that the order density is not enough, and the superimposed sales of goods are homogenized, which makes it difficult to reduce the cost of contract performance.”
For fresh food e-commerce companies, giving users “pull new” discounts on the APP and launching offline promotions cannot make their user base stable enough. many consumerscell phoneIn China, there are multiple fresh food e-commerce apps, which makes fresh food e-commerce companies still involved in the money-burning war of low-price competition.
At the same time, the development of fresh food e-commerce to the sinking market has also encountered a “closed door”. Since May this year, Dingdong Maicai has successively closed stores in Zhongshan and Zhuhai in Guangdong, Xuancheng in Anhui, Chuzhou, Tangshan in Hebei, and Tianjin. Currently, there are only 28 cities in which it operates, about 10 cities less than during the expansion period.
“The front-end warehouse model is suitable for first-tier cities to meet the fast shopping needs of the new consumer groups born in the 1980s and 1990s; in low-tier cities, regardless of consumer types, consumption preferences, logistics infrastructure and other aspects, the front-end warehouse model is suitable. Sex is poor, and development is constrained.” Wei Jianhui said.
Is the preload wrong?
Daily Youxian, the first company that pioneered front-end warehouses, has fallen. So, is the development of front-end warehouses a dead end at the very beginning?
Wei Jianhui told Zhongxin Finance that there is nothing wrong with the pre-positioning model. “The core of pre-positioning is that companies must clarify their target groups and markets, and determine the correct development strategy. It is not a large-scale laying of more pre-positions and a large amount of marketing expenditures, which can quickly gain more market share.”
He believes that as one of the many models of fresh food e-commerce, the main customer groups served by the front warehouse are in high-tier cities, middle-to-high consumption and young groups, whose consumption preferences are fast and convenient. “Manufacturers should focus on core urban agglomerations, and continue to consolidate their moat by continuously strengthening their fresh supply chain capabilities, improving product commodity strength, realizing refined operations, and providing users with integrated service solutions.” (Zhongxin Finance)