Fresh food e-commerce companies seek profitability by collectively latching onto big trees
TianTianGuoYuan, the fresh food e-commerce company that created multiple sales miracles for US cherries, avocados and more, has chosen a path that gains both money and traffic. Yesterday, reports emerged that TianTianGuoYuan received an investment of tens of millions of US dollars from JD.com. A JD.com executive confirmed the investment news to a Beijing Business Today reporter. Coincidentally, e-commerce companies such as FruitDay and Meiweiqiqi also found dual backing in capital and business. In the industry's view, fresh food e-commerce companies that have yet to see the dawn of profitability still need the dual support of money and traffic, while comprehensive e-commerce platforms have also found a shortcut to rapidly ramp up their fresh food categories.
Finding a Big Tree
Vertical fresh food e-commerce companies have begun throwing themselves into the arms of platform e-commerce. A Beijing Business Today reporter learned yesterday from JD.com that JD.com has completed its investment in TianTianGuoYuan. Although the specific investment amount was not disclosed, some industry insiders said the investment is expected to be announced soon. Other reports indicate that the investment amount TianTianGuoYuan received this time is close to JD.com's previous investments in Ele.me and Daojia Meishi Hui, at tens of millions of US dollars. However, an industry insider familiar with the matter told a Beijing Business Today reporter that the investment agreement was reached as early as the beginning of this year, with an investment amount of approximately 100 million US dollars.
TianTianGuoYuan is one of the earlier-established fresh food e-commerce companies in China and has participated in well-known marketing campaigns in the fresh food e-commerce industry such as the cherry war and the lychee war. The competitors that once fought fiercely with TianTianGuoYuan have also been "absorbed" one after another - SF Best was integrated with the group's Heike Mall to sell various goods other than fresh food; two other well-known fresh food e-commerce companies in Shanghai, Meiweiqiqi and FruitDay, were successively invested in by Amazon and Feiniu.com.
According to statistics from a Beijing Business Today reporter, among currently well-known fresh food e-commerce companies, only Benlai Life and Yiguo Fresh still maintain independent development, while Tuotuo Gongshe still relies on Jiucheng Group.
Gaining Both Money and Traffic
Fresh food e-commerce companies such as TianTianGuoYuan and Tuotuo Gongshe have never lacked attention from the capital market. In the industry's view, what TianTianGuoYuan wants from JD.com is not just those tens of millions of US dollars, but also the massive traffic behind it.
Although TianTianGuoYuan itself is an e-commerce platform, a large portion of its sales actually came from Alibaba in the past. An industry insider familiar with the matter said that sales from TianTianGuoYuan's Tmall flagship store accounted for at least half of its total sales. Statistics from last year's "Double 11" day showed that TianTianGuoYuan's Taobao index exceeded the second place by 300% and the third place by 2,400%, setting an online fruit daily sales record and winning "double first place" in both the fresh food and fruit categories.
However, the aforementioned insider said that after Tmall began pushing Tmall Supermarket last year, it did not choose TianTianGuoYuan for its fresh food category, but instead chose another fresh food e-commerce company, Yiguo Fresh. In this person's view, this move dealt a huge blow to TianTianGuoYuan. It is understood that in the recent "Apple New Product Tmall Premiere" marketing campaign that gave netizens a cold sweat, the partner was precisely Yiguo Fresh.
Lu Zhenwang, CEO of Wanqing Consulting, said that as a high-investment industry, fresh food e-commerce burns money to a degree even greater than the traditional e-commerce industry. As a "high-cold" industry, the cost of acquiring user traffic is an issue that companies must consider. Analysis from the Beishang Commercial Research Institute holds that although TianTianGuoYuan also has arrangements in delivery, warehousing and other areas, relying on JD.com's business scope will rapidly open up the national market.
Moving Forward in Groups
Although TianTianGuoYuan is in the role of the investee, what JD.com seeks is by no means as simple as capital returns - strategic positioning in fresh food is already a fact. In the industry's view, fresh food e-commerce companies and comprehensive e-commerce platforms have become partners moving forward in groups.
The fresh food category is an excellent traffic-driving product for e-commerce platforms. Huang Mingduan, Chairman of RT-Mart China and Executive Director of Feiniu.com, once admitted that although fresh food e-commerce has low profitability, its traffic-driving effect is outstanding. It is understood that 90% of the categories sold by TianTianGuoYuan, founded in 2009, are imported fruits. These fruits are imported through cooperation with orchards in the places of origin, without intermediate wholesalers and retailers.
TianTianGuoYuan's recently released 2014 results show that TianTianGuoYuan's sales last year exceeded 500 million yuan, an increase of 150% compared with 2013. Among them, last year mobile orders accounted for over 70% of the total, and the number of users also exceeded 2 million. Lu Zhenwang said that fresh food e-commerce positioned toward high-quality lifestyle consumers has high consumer stickiness and can also optimize customers, which coincides with JD.com's positioning.
However, in Huang Mingduan's view, simply doing fresh food e-commerce is a very dangerous thing. Lu Zhenwang said that the enormous market space of fresh food e-commerce is already an industry consensus, but within 3-5 years fresh food e-commerce will find it hard to be profitable, as "the investment in fresh food e-commerce is too enormous."
Some industry analysts believe that cold chain logistics, which has long been regarded as the most powerful threshold, is only part of the difficulties faced in the development of fresh food e-commerce. More importantly, it is necessary to open up the entire supply chain and push upstream.