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Yonghui’s Supermarket / Platform-to-Home business surged in sales during the Spring Festival. In January 2020, Yonghui Supermarket’s total merchandise sales exceeded 12.5 billion yuan, and both sales and number of merchandise sales showed double-digit high year-on-year growth. Compared with the first quarter of 2019, the financial report data shows that the total operating revenue of Yonghui Supermarket in the quarter was 22.236 billion yuan. If calculated based on the sales of 12.5 billion yuan, Yonghui ’s merchandise sales in January 2020 accounted for the first quarter of 2019 revenue. The proportion has exceeded 56.2%.

At first glance, it seems all good news. Is this really the case?

In retrospect, if you do n’t look at the sudden positives due to the epidemic, the overall performance of fresh food e-commerce in 2019 is not good.

According to the data of the E-commerce Research Center, the transaction scale of China’s fresh e-commerce market in 2018 reached 204.53 billion yuan, a year-on-year growth rate of 56.33%, and the CAGR in the past five years reached 74.42%. However, according to China E-Commerce Research Center data, in 2016 there were more than 4,000 fresh e-commerce companies in China, of which 4% achieved a breakeven, 88% were in a loss state, 7% were in a huge loss state, and only about 1% The company is profitable.

Take Daily Fresh as an example. As of 2019, it has been deployed in 20+ cities across the country, but it has only achieved positive cash flow in Beijing and still has not achieved large-scale profitability.

At the same time, there are many players in the industry, the competition is endless, and the subsidies are not stopped. Fresh food e-commerce relies heavily on equity financing. Taking Dingdong to buy vegetables as an example, less than 3 years have passed since its establishment, and it has accumulated up to 9 rounds of financing.

According to incomplete statistics from the E-Commerce Research Center,In 2018, a total of 22 domestic fresh e-commerce companies raised a total of nearly 12 billion yuan. However, both the amount of financing and the number of financing in 2019 plummeted, and many well-known fresh food e-commerce platforms eventually closed down and ran out due to difficulty in financing and the break in the capital chain.

(Source: Panorama Finance)

Research on the reasons, the main reasons for the continuous turmoil in the fresh food e-commerce industry in China include: the low added value of agricultural products itself and high corruption rate, lack of intuitive experience of online channels, difficulty in achieving quality and quantity distribution, and lack of cold chain logistics The high distribution costs.

Guo Sheng Securities believes that fresh food e-commerce is not a good long-term track. This is because China’s Engel coefficient, that is, the proportion of food expenditure in personal consumption is still relatively high, and it will continue to decline in the long run. In other words, in the absence of technological progress, the “relative labor cost per unit price” of fresh food e-commerce will face a long-term irreversible downward trend.

For the fresh-food e-commerce model, China ’s supermarkets are still mainly large supermarkets covering 1-3 kilometers, but Chinese households are getting smaller and smaller, and it is still appropriate to purchase 1-2 hours for 3 people to cook. What if it took 2 hours to cook for only one person? The purchasing efficiency of large supermarkets continues to decrease, and the market space will continue to shrink irreversibly.

But Guosheng Securities believes that it is not a replacement for the fresh-food e-commerce model, but a small-scale food supermarket covering 300-500 meters is widely spread, and while retaining the store-to-store model, it provides an appropriate home-based model supplement. In the pure fresh food e-commerce model, even if the demand surges in the short term due to the epidemic, the mismatch between demand and cost is still difficult to maintain for a long time.

At present, it seems that fresh food e-commerce was in a turbulent period of large-scale shuffling before the outbreak of the epidemic, but was suddenly interrupted by unexpected factors, so we can’t assert that the entire industry really “lived.” At least a series of questions that have been exposed have not been answered, and the sudden wave of market will not really solve the shortcomings of the industry.

Fresh retail, who belongs to the opportunity?

From a different perspective, Shen Wanhongyuan believes that the epidemic highlights the value of fresh food e-commerce, strengthens the long-term logic and growth trend of leading fresh food companies, and may also accelerate the clearance of tail supply and improve the industry supply and demand pattern. The logic is as follows:

The fresh food business has the characteristics of rigid demand, high frequency and wide coverage. The scale of the fresh market is nearly 5 trillion, and the e-commerce penetration rate was less than 5%. At the moment of the epidemic, residents’ willingness to purchase online has increased, and the channel reform of the fresh food industry has accelerated.

The impact of the sudden epidemic on consumer demand tests the company’s emergency capabilities, and companies with strong supply chain management capabilities can establish a modern direct fresh procurement system, addressing multiple intermediate links and logistics efficiency from the dimensions of information flow, logistics, and capital flow. Fresh e-commerce pain points with low, refined store operation and high compliance costs.

One proof is that in this epidemic, Yonghui, which has obvious offline advantages, relied on more sufficient stocking and advantages in the supply chain to cooperate with the popular home business due to the sudden decline of consumers’ outing, but instead realized the inverse. City growth.

During the Spring Festival, Yonghui ’s daily food and oil reserves are 3 times the usual supply; drinking water is 2.5 times the usual supply; people ’s livelihood meat is increased by 50% according to the daily supply; dairy products are 2-3 times the usual Supply; rice is 1-2 times the usual supply; vegetable stocks are more than 200,000, which is 3 times the usual.

On the first day of the opening of the A-share market after the Spring Festival on February 3, Yonghui Supermarket’s stock price was stable under the background of the entire market plummeting and the retail industry generally falling. Even on February 4th, the contrarian trend limit was achieved. As of February 7th, it has achieved a 5-day consecutive rise. The closing share price was 9.02 yuan per share, a record high (previously re-righting price).

Why is Yonghui able to bear the pressure well under the epidemic?

First of all, Yonghui has a large number of stores and it is easier to reach consumers. It is a convenient place for many consumers to purchase during the epidemic. As of the first three quarters of 2019, the company had a total of 825 stores and 510 MINI stores nationwide, with a total of 1,335 stores. From the perspective of store coverage, as of December 22, 2019, the company’s stores covered 496 cities in 25 provinces across the country. Both sets of data have certain advantages over competitors in the industry.