Specialist
Senior Manager of East China Supply Chain for Ella Supermarket at Beijing Sankuai Online
Agenda
- Growth drivers and key profit factors of fresh food e-commerce platforms
- Comparison of fresh food e-commerce business models – strengths and weaknesses, market size estimates, user profiles and gross margins
- Dingdong Maicai’s operational metrics – average transaction value, repurchase rate, active users and costs 4) Synergies between Dingdong Maicai and Ele.me
Questions
1.
Q: In 2017, the transaction scale of the fresh food market almost reached RMB 1.8tn, RMB 141.8bn of which was contributed by fresh food e-commerce platforms with a penetration rate of 7.9%. A report predicted that the compound growth rate of the fresh food e-commerce market would reach 49% in the next three years. The penetration rate of online fresh food market is forecast to reach 21.7% in 2020. Can you comment on the accuracy of the data? What do you think is the driving force behind the growth of fresh food e-commerce?
2.
Reports said that there are more than 4,000 players in the market of fresh food e-commerce, of which 4% can achieve break-even, 88% are losing, 7% are seriously losing, and only 1% can eventually achieve profits. What kind of fresh food e-commerce platforms can be profitable? What are the key factors for profitability?
3.
The current fresh e-commerce business models include the close-to-store warehouse model represented by Dingdong Maicai and Meituan Maicai. It is a heavy asset model that includes self-built warehouses and logistics. The second is the store + community model represented by Hema. The third model is based on the platform, represented by JD Daojia and Ele.me. They do not have their own offline stores or warehouses. They have vendors settle on their platform. The fourth model is group buying based on community stickiness. What are their strengths and weaknesses respectively? Which model do you think will be more stable in terms of profitability?
4.
As you said, they may have some common customers. What is the customer persona of these platforms? What are the overlapped customers like? What about others?
5.
Besides the low price, what differentiation strategy can the platform adopt?
6.
Which companies have begun to consciously enhance brand value?
7.
It can be concluded that brand value will increase the gross profit. Public data shows that for fresh food e- commerce platforms, the gross profit rate of 20% cannot help the enterprise break even. How much does it need then?
8.
Data from Dingdong Maicai in November 2018 shows that the number of daily orders was 150,000, and the company believed that it would eventually reach around a million, with an annual turnover of RMB 20bn. Has subsidy been taken into account in this data forecast?
9.
What do you think of the management team of Dingdong Maicai?
10.
According to published data, Dingdong Maicai has more than 1,700 SKUs including fruits, fresh food, rice, flour, cooking oil and snacks among others. The sales of vegetables, meat and eggs account for more than 75% of the total. How does Dingdong Maicai decide which items to be put for sale? How does it make sure the quality of its offerings?
11.
Meicai claims that it can cap the wastage rate below 1%. What about the wastage rate of MissFresh and Dingdong Maicai?
12.
Let’s talk about average transaction value. The average transaction value on Hema is about RMB 100 compared with RMB 50 on Dingdong Maicai with a repurchase rate of 52%. At the same time, Dingdong Maicai claims it has more than 1.5 million active users and old users or those registering more than 30 days make 2.12 orders per week. Is Dingdong Maicai a competitive player given the data above?
13.
Will Dingdong Maicai continue to offer free shipping? As the average transaction value is RMB50, will it change its policy to free delivery only for purchase worth more than RMB 40?
14.
Can you evaluate how will the number of active users and repurchase rate be affected by zero subsidy? Maybe 50% of customers will go for other platforms if Dingdong Maicai stops offering subsidies?
15.
What’s the proportion of membership card holders out of the total active users of DingDong Maicai? 10%?
16.
Does Dingdong Maicai need to secure financing constantly to claim more market shares or push up order volumes with subsidies?
17.
Does Hema also rely on close-to-store warehouses?
18.
Well-established offline supermarkets such as Yonghui can also develop online fresh food platforms like Dingdong Maicai and Hema. What kind of role do these offline brands play in competition?
19.
Why does Dingdong Maicai give spring onion to customers for free? Can it really gain something from such a costly offering?
20.
How does Dingdong Maicai acquire new customers and what’s the cost for customer acquisition?
21.
Dingdong Maicai does a good job in new customer acquisition. Does it spend much more on delivery since it has its own delivery team?
22.
What synergies will be created due to the co-operation between Dingdong Maicai and Ele.me?
23.
Is there anything we haven’t covered in our discussion today, or is there anything more you’d like to share with us?
