Little elephant fresh food retreats quietly: the meituan is being misled by Ali?

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Text / Joan editor / cersei
Source / shenrancaijing
One of meituan’s two remaining fresh elephant stores in China, Fangzhuang in Beijing, has been closed.
On September 7, meituan’s small elephant fresh announced in the small program that Fangzhuang store would be closed from September 9. On September 17, shenran finance and economics saw on the spot that the door of Xiaoxiang fresh food Fangzhuang store was locked, the shelves in the store had been emptied, and “Xiaoxiang fresh food has been closed” on the isolation wall. When located in Fangzhuang store, Xiaoxiang fresh app shows that all products are in “replenishment”.
Xiaoxiang fresh Fangzhuang shop photography / Shenzhen finance and Economics
A store manager in the shop next door said that the elephant was out of stock at the beginning of September, and some of the shelves in the store were empty. At that time, the store assistant said, “we are clearing the inventory, we will not close the store.”.
When positioning in Fangzhuang store, Xiaoxiang fresh app shows that all products are in “replenishment”
Last year, meituan closed all fresh food stores of Xiaoxiang in cities outside Beijing, leaving only two in Beijing (Fangzhuang and Wangjing Botai). Now, the closure of Fangzhuang store means that the fresh food of Xiaoxiang is basically abandoned by meituan. Up to the time of publication, meituan has not made a response to the matter.
A former employee of Xiaoxiang fresh food told shenran finance and economics that meituan’s focus on fresh racetrack has been shifted to meituan’s shopping and meituan’s optimization. Xiaoxiang fresh food no longer invested resources in last year, and the two stores in Beijing were only used as track exploration. Originally, some of the employees in the fresh food business division of Xiaoxiang were transferred to the business of buying vegetables, and some left their jobs or started businesses.
As a so-called “fresh new species”, Xiaoxiang fresh food was opened in 2018. HEMA Xiansheng, a brand of Ali, was once a key business of meituan, and the industry paid high attention to it. But this model has not been run through by the meituan, “unit economic model can not calculate.” The former employee said.
Meituan, which has won many battles in the past ten years, has failed in its exploration of self operated fresh food stores. It may be that meituan is waiting for the opportunity to make a comeback by retaining the only Wangjing Botai store.
Will meituan be able to replicate its success in group buying and take away tracks after focusing on food buying and community group buying? What new variables will this new attempt bring to the industry?
Abandoned baby elephant
Fangzhuang store, which was closed this time, is strictly the first store of meituan baby elephant.
In May 2018, Xiaoxiang fresh food opened its first nationwide store in times life square, Fangzhuang, Beijing. Meanwhile, the store in Wangjing District in Beijing was upgraded to Xiaoxiang fresh food. Zhangyu fresh food is a fresh retail test store opened by meituan in July 2017, and Fangzhuang store paid more attention in the early stage.
Xiaoxiang fresh food is essentially a fresh retail supermarket. The biggest difference from the traditional supermarket is its strong Internet attribute. For example, users can place orders in the app and deliver the goods in the store. The dishes are not sold by the catty, but by the share. At the same time, the proportion of fresh food is very high. The on-site cooking of seafood is a major feature.
Fangzhuang shop covers an area of about 2000 square meters, of which the hall food section is about 200 square meters, which is divided into five stalls. There are baking, fruits and vegetables, daily food and other areas in the store.
The background of the birth of Xiaoxiang fresh food is that in 2018, the concept of “new retail” in China is booming, and Internet companies need to use technical means to reform traditional retail. At that time, meituan set its own goal of opening 20 stores in 2018 and 50 stores in 2019.
Of course, none of these goals has been achieved.
In fact, Xiaoxiang fresh food has opened seven stores. In July 2018, Xiaoxiang fresh food entered Wuxi. The two stores were located in Jingdong square and Maoye times square respectively. This is the first city for the elephant to settle in besides Beijing. In October 2018, Xiaoxiang fresh food entered Changzhou, and three stores were opened at the same time. Among them, the Lemmon store, with a total area of more than 5000 square meters, is the largest store of Xiaoxiang fresh food.
In just five months, Xiaoxiang has opened seven stores in three cities across the country. But that’s the end of the expansion plan.
In April 2019, meituan also closed five stores of Xiaoxiang fresh food in Wuxi and Changzhou, leaving only two in Beijing. None of the five stores survived for a year.
Mapping of Xiaoxiang fresh food stores across the country / shenran finance and Economics
Behind the closure of Xiaoxiang fresh food is the personnel adjustment of the senior management of meituan.
In 2018, when Xiaoxiang fresh food opened seven stores in one breath, Jiang Yueping, who was in charge of the new retail business of meituan fresh food, was the former senior manager of Volkswagen reviews. Meituan and Dianping entered meituan after the merger. In October 2018, Chen Liang, senior vice president of meituan, was transferred to be the head of Xiaoxiang business department, and Jiang Yueping was dismissed.
After Chen Liang took over, Xiaoxiang changed its strategy from expansion to retention. Jiang Yueping’s last appearance in public was at the opening ceremony of Xiaoxiang’s entry into Changzhou in October 2018. He became “the last public comment executive to leave meituan”. Throughout 2019, the baby elephant is shrinking.
One of the most typical details is that Xiaoxiang Shengxian once planned to enter Shanghai, which is the place for fresh food. In October 2018, Xiaoxiang Shengxian completed the “about to open” enclosure in a shopping center in Jing’an District of Shanghai, but this store has not been opened since.
Su Zhigang, a former employee of the Xiaoxiang business division, told shenran finance and economics that after Chen Liang took over, the focus of Xiaoxiang business division began to shift. On the one hand, it was to shrink the fresh supermarket business which was heavy on assets, on the other hand, it was to explore a lighter mode of fresh food model, hatching “meituan shopping”.
Meituan has been testing meituan’s buying vegetables online in Beijing and Shanghai before closing five Xiaoxiang stores in April 2019. Meanwhile, meituan has benchmarked dingdong to buy vegetables and pickled radish. Xiaoxiang fresh food is no longer the key business of meituan.
Wangjing Botai store, the only fresh elephant store of meituan, is still in normal operation. Shenran finance and economics found that all the products were labeled with “meituan buying vegetables”. Meituan riders waiting outside the shop are all playing the brand of “meituan shopping”.
Meituan, waiting to pick up the goods

In July 2020, meituan set up the “optimization business department” to buy racetracks in community groups. Meanwhile, the Xiaoxiang business division was renamed as “shopping business department”. This shows that in the first tier cities, meituan has basically given up Xiaoxiang’s offline store mode, and the closure of Fangzhuang store is sooner or later.
Meituan was taken to the pit
“Xiaoxiang’s model is too heavy. Meituan is not good at it.” Su Zhigang analysis.
The first mock exam of Ali’s box horse is the creation of this model. In July 2017, meituan sent a team of about ten people to HEMA’s Shanghai Jinqiao store before making fresh palm fish. “At that time, my colleagues went to Shanghai HEMA to stay, and when they came back, they took out the cost structure of HEMA.” Su Zhigang said.
The conclusion is that HEMA’s unit economic model is established and can make money. So the next year, Xiaoxiang appeared fresh and opened 7 stores in half a year.
After operating for a period of time, the elephant found that the loss was serious and it could not cover the cost like HEMA. Chen Shaohui, CFO of meituan, once admitted in a conference call with analysts that meituan decided to close Xiaoxiang fresh food in the third and fourth tier cities because the ROI was lower than expected.
An employee in charge of site selection of an Internet retail company told shenran finance and economics that, unlike group buying and takeout, the profit model of physical fresh retail supermarket tests site selection very much. Different cities and different locations have different cost structures.
Su Zhigang realized when he recovered that “the reason why HEMA Shanghai Golden Bridge store can be done is because it is in Shanghai and opened in Jinqiao. If it is in the suburbs of Shanghai, it will be a failure.”
One Zhihu user commented: “in fact, the consumption of Changzhou South Street can’t support the relatively large fresh food franchise stores, and it’s not clear what meituan thinks. Meituan’s settlement in Changzhou either intends to adapt to entering the third tier cities in the future, or there is something wrong with attracting investment.” The location of the elephant was Carrefour before, but it has been vacant for a long time since it can’t go on. Most of the time, the elevator doesn’t open.
Changzhou and Wuxi, two prefecture level cities in the developed areas of Southern Jiangsu Province, may not be high-quality markets for new species. “In fact, HEMA is not doing very well in the second tier areas like Suzhou and Wuxi.” An industry person familiar with the East China market said.
Xiaoxiang fresh Fangzhuang store, which was just closed by meituan, is surrounded by a large number of residential areas. There are no office buildings and playgrounds for young people. “Here are old communities. There are a lot of middle-aged and elderly people. We are used to going to the vegetable market. The flow of people in the mall is not high.” A local resident said to shenran finance and economics.
On the track of the physical fresh supermarket, meituan takes a year to try and make mistakes quickly, and then stops in time. But its rivals are expanding faster.
HEMA has been exploring new models and has not stopped opening stores. According to HEMA’s official website, in June last year, the number of HEMA’s stores nationwide was 150, and now it has increased to 232. Du Yong, a former operator of Jingdong 7fresh, started T11 fresh supermarket in 2018 after leaving Jingdong. He opened the first store last year and the second in August this year. An insider at T11 told SDF that it would open two more stores this month.
“Now it seems that HEMA has taken the baby elephant to the pit.” Su Zhigang said.
In the past, meituan always came first. Meituan is not the first one to do group buying, movie tickets, takeout and liquor tours in every track, but it can always quickly imitate its opponents, commonly known as “follow strategy”. In the past, it was almost impossible to copy the brand of “xiangtuan” in the supermarket.
Su Zhigang believes that meituan’s strength lies in the platform operation, and the offline stores with heavy assets are not meituan’s specialty. The significance of Xiaoxiang fresh food to meituan is that it can’t do it, but it can’t be absent. So when meituan found out that the mode of buying vegetables and community group buying was lighter, it made a decisive strategic adjustment. After all, resources and time are limited, so it’s important to choose what to do first.
In September this year, rabbit bought vegetables announced that it had completed a round of financing of 10 million US dollars, which was jointly led by Country Garden venture capital and Zhongwei capital, and followed by happy capital. The core team of Xiaotu to buy vegetables is from Xiaoxiang fresh food business department. CEO Hua Sheng once participated in hatching meituan’s tianwaifeixian business. Huang Yan, the co-founder, once served as the head of Xiaoxiang fresh fresh food supply chain in North China, and participated in the business of meituan buying vegetables. They started their business from meituan last year. Their first stop was in Wuxi, where Xiaoxiang Shengxian failed. They chose a lighter front-end warehouse and community convenience store model.
Meituan is in a hurry to buy vegetables
After Xiaoxiang’s withdrawal, meituan’s buying vegetables has become the focus of meituan’s business in the fresh track.
Similarly, following the strategy, meituan first bought vegetables by benchmarking Ding Dong and promoted the front-end warehouse model. Then, it imitated the radish and did the next day’s delivery.
A person in the industry said that meituan buys about 800-900 dishes a day in Beijing, and 600-700 orders per day in Shanghai and Shenzhen, with a customer price of about 30 yuan.
But this model is not easy. Front end warehouse is the earliest daily excellent fresh food, but it still does not achieve overall profit today. Later Ding Dong buys vegetables fiercely, but also has a serious loss. According to the industry insiders, Ding Dong is now losing money on every order. Even in Shanghai, Ding Dong has to lose 4-5 yuan for each order from big warehouse to front-end warehouse.
HEMA has opened 77 front-end warehouses in 2019, and now it is gradually closing down, focusing on box horse Mini. Little rabbit has changed from front-end warehouse to offline store, completely abandoning the front-end warehouse mode, because the cost is too high, the single volume can not cover the cost.
Now, with the old players continue to attack the city, and new players such as Ding Dong and rabbit buy vegetables, meituan is involved in the price war in some cities.
For example, in Shenzhen, meituan opened the city in November last year. The first batch of meituan opened nine stations, and extended the business hours to 10:00 p.m., expanding the distribution range of 2 km to 3 km. According to an entrepreneur in the fresh food industry, meituan, Park Supermarket and dingdong have been fighting a price war in Shenzhen, and it is very obvious to grab users.

Since this year, affected by the epidemic situation, community group buying, which had been popular for a short time in 2018, broke out again. The biggest change in the industry structure is that meituan has finally entered the board.
Meituan attaches great importance to community group buying. In order to promote this business, meituan set up the optimization division in July, which is in parallel with the vegetable purchasing business department, and is directly responsible by Chen Liang. Jinan opened the city in July, Wuhan and Guangzhou opened in August, and Foshan opened the city in September. Meituan launched the “thousand city plan” to expand into 20 provinces in the next three months and realize the coverage of “thousand cities” within the year.
This is a rare layout speed of meituan in the field of fresh food after the fresh elephant in 2018. In contrast, when meituan shopping was launched in March 2019, the number of service stations in Beijing and Shanghai was only expanded to 10 three months later. Today, with the rapid expansion of meituan, the community group buying industry has called out the slogan of “holding a group to resist the United States”.
According to Su Zhigang’s analysis, this is the consistent practice of meituan, that is, “throwing stones across the river”. First, let the opponent try, and then wait and see. After the opponent has run through the mode, he can quickly copy it to the whole country, and eliminate other players by relying on the advantages of price and scale.
On the other side of the closure of Xiaoxiang fresh food is the accelerated expansion of meituan’s shopping and meituan’s selection. Fall in the East, get up in the west, and continue to fight in another position, which is in line with the style of meituan. For meituan, the head-on battle at the fresh track may have just begun.
*The title is from the stills of the game of Thrones. At the request of the interviewees, Su Zhigang was not his real name. Third bridge senior consultant also contributed to this paper.
(statement: This article only represents the author’s point of view, not Sina’s position.)