Image credit: ewfresh
The four major models of fresh e-commerce in China
(SOURCE: ewfresh, 20th May 2020)
After the COVID-19 period in 2020, fresh e-commerce in China has received a high degree of attention. When it comes to fresh e-commerce, many people have concern that profit is a big problem, but still can’t stop many from rushing into the “Blue Ocean”.
Dingdong grocery shopping was re-financed with more investment and announced that it will enter the Beijing market to open stores, with the first batch of 18 open positions. During the same period, Meituan grocery shopping was also spreading in Beijing. In the area of the Shilihe subway entrance, the warehouses for daily fresh food, Dingdong grocery shopping, and Meituan grocery shopping are arranged in a row.
After the two have joined, the Beijing Fresh Food Race is dominated: the leading daily warehouse is another star company in Beijing, and the new retail “model” Hema entered the Beijing market in 2017, in addition to Suning Fresh Market and JD.com Fresh, the Beijing market ushered in a competition of at least five players.
Under the iceberg, it is a cross-regional test of the pre-position supply chain, and it is also another round of internet-style money-burning competition.
On one hand, the shadow of the e-commerce winter in 2019 has not disappeared, on the other hand, a large amount of capital has entered the field of fresh e-commerce, and the four major business models in this “song of ice and fire” have become the mainstream trend of fresh e-commerce today.
Category 1. Comprehensive e-commerce
The development of the whole category is dominated by Amazon, Taobao, Tmall, Jingdong Mall and No. 1 store. The purpose of this type of e-commerce is to do the whole category, which must involve fresh food.
The purpose of engaging in fresh food is more to increase consumption stickiness, because fresh food is difficult to make money on in the short term.
It’s model is mainly to attract various fresh food manufacturers to settle on its own platform, and the settled manufacturers are responsible for cold chain distribution, and the platform is only responsible for supervision. Fresh food distribution is a strategic loss category for them.
Category 2. Vertical e-commerce
Specializing in food online retailing, mainly including COFCO Womai.com, Yiwangjuxian, and Original Life.com, focusing on fresh products, and building or integrating a social cold chain distribution system.
This type of fresh food e-commerce focuses on quality of life, ensuring high-quality and efficient delivery of fresh food.
Because it is vertical, it focuses on fresh users. These e-commerce platforms are better at operating than integrated e-commerce platforms. After all, user focus can interact well with users through operations, and understand and meet users’ in-depth needs.
Category 3. Logistics enterprises
Take SF Express as the example. Relying on its own strong logistics advantages, they developed fresh e-commerce. The development of fresh e-commerce for such enterprises is actually paving the way for the construction of their own cold chain logistics system in the future.
Category 4. Offline supermarkets
Take Wal-Mart, Hema and Yonghui supermarkets as examples. Relying on the advantages of its own system to develop online fresh services, for this type of enterprise, online is just a promotional path. It uses the radiation range of stores to distribute, reduce costs and shorten the delivery cycle, but most of the business is still offline.
From the perspective of long-term development of fresh e-commerce, small and medium-sized players are basically eliminated, and the real giants are still steadily exploring the market. Meituan announced it would enter the Shenzhen and Beijing markets; Suning fresh market after entering the Shanghai market, has completed the layout of its three major cities of Beijing, Nanjing and Shanghai; Hema Xiansheng began to work on the Mini store.
Therefore, the market potential of fresh food is still huge. In addition to the continuous trial and error of the entire industry, the concept and demand of consumer groups have also undergone qualitative changes, and more and more families are starting to conduct online activities of buying vegetables, even the elderly are also driven and involved by their children.
Behind the model is the tide of fresh e-commerce development
With the development of intelligence and networking, the core of the consumer boom will eventually return to the online and offline sales model, that is, the integration of consumer, product, distribution, supply chain, and supply-side reforms.
The fresh food e-commerce industry will develop into a large seafood ecosystem with data, information, standardization, and supply chain coordination as the core. Using information sharing of the internet, information in the seafood industry will be interconnected to create a fresh and safe food. The shopping and consumption pattern of retrospective, reasonable price, efficient and convenient service creates a new ecological circle.
Based on the stability of the first-hand supply, the domestic distribution of the point and the cold chain network is realized, and the consumer demand of the second- and third-line cities is tapped in advance. The essence of the new industry is evolving, stable supply, efficient transportation and sales under the guarantee of the cold chain. The coverage and depth of the network has become a new feature of traditional offline trade.
Nowadays, most Chinese fresh e-commerce companies are committed to serving the end consumers, but they ignore the B-side – the vast market of vegetable markets and catering companies. Therefore, the industrial internet is a major trend, from the internalization of the enterprise and the entire industrial chain to the internet, so as to achieve the purpose of improving efficiency and optimizing resource allocation, open up the upstream and downstream seafood supply, and build a large platform for seafood sharing.
At the same time as the offline layout, the maturity of the internet e-commerce platform will promote decentralization, and it will be more convenient and faster for consumers to purchase products. The integrated development of online and offline will enable the future integration of the seafood industry and enhance the brand awareness of seafood products.
Only in this way that global seafood resources can be efficiently allocated and efficiently extended to every city in the Chinese market, realize the sharing of massive customers and market resources; the sharing of large platforms for procurement, sales, and logistics; the sharing of professional logistics, breeding, and storage resources; and the sharing of global fresh supply and demand and channel information.
Admittedly there are not many profitable fresh e-commerce companies! But there will definitely be profits in the future. After the 2020 epidemic test, whether or not to profit depends on the ability.
Nowadays, fresh food e-commerce platform is developing in this direction: the marine ecology with the core of “Internet + traditional seafood”. Provide more high-quality, more choices, more cost-effective supply for more hierarchical markets, businesses of different restaurants, and hotels. However, as time goes by and the industry further reshuffles, the threshold for e-commerce in the field of fresh food will become higher and higher.