Once the trip takes place, the first world war of community group buying will be over. This article is from the WeChat public account:Yibang Power (ID: iebrun) author: Chen Kai Lok , the original title:” $ 6 billion bid competition for manufacturers preferred prosperity “, the first map from: vision China < /span>
How much is community group buying worth?
Yibang Power has learned exclusively that Meituan and Pinduoduo have thrown out billions to fight for the control of prosperity. An industry insider told Yibang that Xingsheng Optimal had previously quoted 10 billion U.S. dollars, while Meituan’s final price was 6 billion U.S. dollars.
Xingsheng denied this.
Although the two parties did not agree, their valuation of the number one trump card in community group buying has gradually paid off. “Basically it is in this range. It is said that the capitalist (mainly refers to today’s capital in rumors) actually agreed, but there are disputes within Xingsheng. Lao Yue (Yue Lihua) also feels that he should make another dozen.” The aforementioned informant added.
After that, Meituan and Pinduoduo entered the prosperous base camp in Hunan and confronted them. “Wang Xing said to fight prosperity, Huang Zheng also said to fight. In the end, he spent 4 billion (USD) to buy Xingsheng.” One approached Insiders of Meituan told Yibang that as another banner-type community group buys Shihuituan’s shares further eroded by Alibaba, Xingshengyou has become the final battlefield of Internet and e-commerce giants.
In the eyes of big companies, either buy it or kill it. Once the trip took place, the first world war of community group buying came to an end.
1. “Prosperity and Prosperity Selections” impacted by major manufacturers
For independent platforms such as Xingsheng Optoelectronics and Shihui Group, the impact of giants entering the market is huge.
According to 36 krypton reports, Shihui Group’s gross profit in Wuhan stabilized at 19% before the giants entered the market, but with Meituan, Pinduoduo and Didi entering the game, “Shihui Group’s gross profit immediately dropped by 4, Five points.” In order to fight against the giants, the Shihui Group increased subsidies for some group leaders and commodities. “After the original gross profit of 20% of the biscuit subsidy, the gross profit is only 15%, but the price is still difficult to have an advantage.”
An industry executive also told Yibang that the company was making money when the major factories had not entered the market in April and May this year. But in October the company fell into a loss again. “Meituan and Pinduoduo have divided up a large amount of traffic, and we are all sad now.”
As the track leader, the pressure is coming and Prosperity Optimum bears the brunt.
An insider close to Xingsheng Optimal said that under the impact of Meituan and Pinduoduo, except for Hunan, Xingsheng Optimal’s overall GMV dropped by 30% to 40%. “Although Meituan and Pinduoduo are less prosperous in the back-end fulfillment logistics and supply chain, the front-end traffic of the two companies cannot be ignored.”
Community group buying has been regarded as an extremely important business scenario by Internet giants, and it has become a battleground for the military in the second half of 2020. A month ago, Didi CEO Cheng Wei publicly stated at an internal conference for the first time: There is no upper limit on the investment in Orange Heart Optimal, and he will do his best to win the first place in the market; Huang Zheng made a conclusion in his fifth anniversary speech , Grocery shopping will be a touchstone for Pinduoduo people; Meituan founder Wang Xing said in the company’s mid- and high-level meetings more than once, “This battle must be won.”
Media reports show that, in terms of the corresponding amount of investment, it is rumored that Duoduo Maicai’s first investment has reached 1 billion, and it is continuing to increase. In terms of manpower allocation, both Meituan and Pinduoduo have vigorously recruited personnel internally, and a considerable number of employees have even been forced to transfer to the grocery shopping business.
A Meituan employee told Yibang that most of the employees in his department were forced to transfer jobs. On the workplace social platform Maimai, employees who are certified as Pinduoduo post posts. Duoduo Maicai is expanding its team through external recruitment and internal transfer.
2. Big factory’s dilemma: 10 billion principal, zero return in 3 years
At the same time, Shihui Group and Xingsheng Optoelectronics were continuously exposed to new financing news. On November 30, Shihui Group received another $196 million in C3 round of financing, and Ali continued to lead the investment; on December 1, Xingsheng Optoelectronics was reported to be seeking a new round of financing with a quota of between 200 million and 500 million US dollars. After completion, Xingsheng Optimal’s valuation is expected to be around US$5 billion.
A person with many years of experience in the e-commerce industry told Yibang that the war on this track is a war of attrition, and there is no doubt that a lot of food is needed, but the purpose of disclosing financing at this time is also obvious, “Sell Good price”.
For Meituan and Pinduoduo, the necessary reason for the acquisition of Prosperity is that although the former controls the C-end traffic, it lacks genes in the construction of the core supply chain and logistics warehousing system, and investment in this It costs a lot.
The founder of a community group buying platform said that warehousing and distribution are the most important part of community group buying, and the capital must be invested 10 billion and be prepared for zero return in 3 years.
Community group buying is actually a compound track spanning multiple tracks, in a “death cross”. In convenience stores, community group grouping, social e-commerce, fresh food e-commerce, terminal logistics, take-out and other fields, in the past few years, not only Cainiao, Meituan and other logistics giants in the last half kilometer have been formed, but also more work. Fresh food e-commerce heroes who have lost their bones in years.
In the most invested warehousing system, Meituan, Pinduoduo and Didi have all modeled on Xingsheng Optimal to build a three-level warehouse model of “central warehouse-grid warehouse-leader”. In order to reduce losses, all three companies have adopted a franchise model. Yibang understands that most of the franchisees are not yet profitable, and some are even losing money.
Lin Li has undertaken the delivery from Duoduomai’s grid warehouse to the leader’s end in October, but the current revenue is lower than expected. He told Yibang that Duoduomai’s subsidies for grid warehouse franchisees are divided into order subsidies. And point fee subsidies. “The amount of the order subsidy is 6 cents 5 per order, and the point fee subsidy is calculated based on the number of group leaders covered. Each group leader subsidy is 3 cents 2.”
He has calculated an account, based on 10,000 orders per day, his daily income is close to 7,000 yuan, basically break-even. “It’s hard to do, you can’t make money.” He added.
A Meituan Grid Warehouse Logistics joinedShang told Yibang that Meituan’s preferred daily order is now 7,000, and the subsidy given by Meituan is 0.5 yuan for a product, but its own cost includes 500-square grid storage, including drivers and sorters. I have to post 50,000 downsides every month. It is reported that both Meituan and Duoduomei have requirements for storage space for grid warehouse franchisees.
He also told Yibang that in the past, the subsidy he could get was 0.7 yuan per order, but now Meituan has lost 2 cents per order in order to reduce costs. “I have seen whether I can rush to 10,000 orders in two months, otherwise I won’t be able to continue.” He said.
A number of franchisees interviewed by Yibang said that the current “huge pressure”.
“Taking the form of franchising is to transfer the pressure to the franchisees. Think about it if the big factories directly do logistics, the losses will be more serious. The faster you run in the race, the faster you die.” A logistics industry The people summarized this way. Another industry insider described the possible result as “The franchisee did not make money for 5 or 6 months, and finally got back the franchise fee and left.”
As the profitability of franchisees falls short of expectations, the back-end delivery experience is also directly affected.
Lin Li told Yibang that in the beginning, Duoduo had no salesperson in the local area. When encountering after-sales problems such as damaged goods and refunds, the group leader directly pushed it to the delivery driver. “Many group leaders don’t know what the situation is. When the goods arrive, they can’t find a salesperson to deal with a lot of food.”
“The franchisees and suppliers do not make money, but they have to deliver goods to you. For a long time there is no hope. They can only deduct costs, which will definitely affect the delivery experience of the C-end.” A former industry executive concluded like this .
On the complaint platform “Black Cat Complaint”, there were as many as 291 complaints about Duoduo Shopping, and complaints mostly focused on product quality, refund delays and other after-sales services.
In addition, the grocery shopping business involves a large amount of procurement, which has become a fertile ground for corruption. “Not only purchasing, but also outsourcing labor services such as sorting, there is a risk of fraud.” A former Daradish employee told Yibang.
In November 2019, the fresh food e-commerce platform Daradish was reported to have a tight capital chain, and nearly 18 million wages for more than 300 people in the Hangzhou branch were owed. Later, the media revealed that the purchasing department, which purchases as much as 90 million yuan, lacked effective supervision and personnel outsourcing was also suspected of money laundering.
Yibang learned exclusively that, or in order to reduce corruption, Pinduoduo and Meituan have transferred outsourcing work such as sorting to suppliers or franchisees. When recruiting suppliers in Hefei, Pinduoduo and Meituan clearly required suppliers to sort and process goods by themselves.
The heavy model of logistics and warehousing has led to a tripartite franchise system, but the short-term difficulty in profitability affects the passion of franchisees, which in turn leads to the delivery experience of users, and the possibility of superimposing corruption means that capital must plan for long-term failure to recover costs.
“Community group purchase assets are too heavy. The prerequisite for achieving profitability is to ensure the integration of the supply chain and back-end distribution. This is a model operation that requires highly refined management. Everything takes time, requires running-in, at least Three to five years, this is also a test for capital.” An industry executive said.
The acquisition of mature independent platforms has almost become the most tricky choice for major manufacturers. Among the independent platforms, Xingsheng has the strongest ability to control the supply chain and logistics. Prior to this, the senior executives of Xingsheng Optimal Management told Yibang that the money raised by Xingsheng financing is rarely used as subsidies, and mainly for self-operated logistics. In July 2020, Xingsheng received a joint investment of US$800 million from Tencent and Sequoia Capital. This was also the largest financing for community group buying at that time.
Another important figure selected by Prosperity is CEO Zhou Yingjie. On November 30th, a piece of her text in Moments may also reveal the mentality of the founding team of Xingsheng Optimal.
Picture: On November 30th, when soldiers were crushing Changsha, Zhou Yingjie posted a circle of friends as above
Because of this problem, there are not only the market game between vertical platforms and monopoly platforms, but also the differences in values between entrepreneurial heroes and capital giants.
3. The destiny of “Prosperity and Best”
Many people in the industry told Yibang that there are only two paths left to independent platforms in front of major companies: either they die or they are acquired by major companies. The latter is the best outcome.
“The current situation has become very delicate. Capital is very cautious about independently financing companies, so the latter will become extremely difficult to raise funds.” The industry also toldIn the case of Yibang, some major Internet companies once approached themselves to talk about acquisitions.
Whether Prosperity Optimal will be acquired, or who will be acquired, will become the key to the battle.
“At least Meituan and Pinduoduo have very clear intentions to acquire Xingsheng.” The above-mentioned industry sources revealed. At present, there are serious disagreements within Xingsheng over whether it is being sold.
The valuation of the latest round of financing Xingsheng has reached 5 billion US dollars, which is relatively close to the US$6 billion acquisition by Meituan.
“No matter who wins the Prosperity Choice, then another independent platform will become the target of competition for other Internet giants, and the wave of acquisitions cannot be avoided.” The above-mentioned person said.
About this. An industry insider close to Xingsheng believes that the acquisition of Xingsheng is expected to have results within half a year.
“The first is that it is nearing the end of the year. The company needs to make financial statements and budget for next year. Second, March to August is the off-season of the fresh consumer market. The decline in traffic is inevitable. Prosperity will bear sales. Pressure; Third, when summer arrives, the loss of fresh food will increase, and the investment in cold chain logistics will be a huge cost. These are all things to be considered for prosperity.”
“It may be the middle of next year at the latest, and there will be results,” he added.
Behind Xingsheng, independent platform companies also include Food Sharing Club, Shihui Group and Tongcheng Life. The trend of prosperity is likely to disturb the biggest whirlpool of community group buying in the past two years.
For acquisitions, some independent platforms are welcome. “I really look forward to my company can sell a good price.” A founder said bluntly.
In the e-commerce market where traffic is severely involuted, Xingsheng Optimal may be the first vertical e-commerce besieged by many giants, but obviously, this is not the last.
(The interviewees above are all pseudonyms) This article comes from WeChat official account: billion state power (ID: iebrun) , Author: Chen Kai Lok