Fresh food e-commerce enters refined operations: how SF Best chooses its path

Opening the platform to third parties may be an inevitable step in e-commerce development, especially for most fresh food e-commerce players.

For SF Best, this is also an “inevitable” step. At present, SF Best's platform planning is still in intensive preparation, and SF Best President Cui Xiaoqi said in an interview with a Wugu.com reporter that opening the third-party platform may be realized next year.

Unlike the registration system of e-commerce platforms such as JD.com and Yihaodian, SF Best will adopt an invitation system, that is, inviting brands and products that meet SF Best's conditions to join, with the aim of providing higher-quality products.

Cui Xiaoqi also admitted that adopting an invitation system is meant to select the best from the best. For fresh food e-commerce, Cui Xiaoqi's thinking is very clear. He has emphasized on different occasions that the core competitiveness of fresh food e-commerce is cold-chain and quality control capability. In fact, it is not difficult to see its strengths in these two areas from SF Best's operations.

Full cold-chain advantage

SF Best promises externally that fresh products will be delivered within no more than 48 hours, and ambient-temperature products within no more than 72 hours.

Of course, SF Best's confidence lies in SF Express's logistics advantage. At present, SF Best's products are delivered by SF, and ambient-temperature products have already achieved nationwide coverage. As long as SF can reach the place, SF Best's ambient-temperature products can arrive there.

Undoubtedly, for fresh products, the cold chain is even more of a top priority. The reason SF Best's fresh products can reach consumers quickly relies on the advantage of SF's cold chain.

As early as 2013, SF's cold-chain logistics had already covered 11 cities in China, and it has now expanded to 48 cities. In these areas, “full cold-chain delivery” is implemented for fresh products, that is, after the products leave the warehouse area, the sorting and packaging operation sites have temperature-control conditions, they are loaded into temperature-controlled boxes for transport, and couriers put the products into insulated bags for door-to-door delivery. The temperature-control equipment used includes refrigerated boxes, freezer boxes, ice packs, dry ice, insulated bags, and so on.

A person in the industry revealed that when SF entered fresh food e-commerce at that time, it was precisely to use this to build SF's cold-chain system. Now it seems that SF's intention has basically been achieved, and the cold-chain logistics team that was built has long since been handed over to SF Express, and SF's cold chain is now also open to the outside.

And with “full cold-chain delivery” all handled by one company, SF's cold chain can be regarded as unique.

In Cui Xiaoqi's eyes, no matter what kind of e-commerce is done, in summary it is supply chain management: procurement of front-end products, warehousing and distribution in the middle, and sales at the end. For fresh food e-commerce, supply chain management is more difficult, related to product characteristics. For example, quality control during procurement is more difficult than for others. In addition, the food industry is small and scattered.

“So from early-stage control, to the middle-stage warehousing, logistics, and freshness-preservation stage, and then to the final user experience, fresh products are somewhat more difficult than other categories.” Cui Xiaoqi said.

In fact, cold-chain delivery has also become a relatively high-tech task. First, there are requirements for temperature, transport distance, and time, especially temperature control. If the temperature rises, microorganisms in food will increase, and the food can easily spoil. Second, there are requirements for sanitary conditions. If the transport conditions for fresh and perishable products are not clean, they can also easily deteriorate.

At present, SF Best mainly rents ready-made warehouses and carries out cold-chain renovation on that basis. SF Best currently has 3 warehouses in Beijing, Jiaxing, and Guangzhou. Each warehouse has 5 temperature-control zones, including an ambient-temperature zone of 0°C-30°C, a refrigerated zone of 0°C-8°C, a refrigerated zone of 8°C-10°C, a frozen zone of -18°C, and a constant-temperature and constant-humidity zone of 15°C-18°C, and is equipped with -60°C freezers.

In addition to the advantage of the cold chain, SF Best also has unique advantages in quality control management.

Strengthening quality control

A consumer of SF Best once said, in terms of the experience of products and services, if you are not overly picky, I believe you will feel it is pretty good, right?

Of course, an ordinary consumer cannot represent more meaning. But from SF's ways and methods of quality control, it is not difficult to see some merits of SF Best.

Cui Xiaoqi said that fresh products are non-standardized, so procurement, warehousing, and logistics especially require refinement. SF Best has a dedicated procurement and sales department, and all have a series of strict specifications.

Of course, standardized products are easier to judge, but for example fruits and so on are different in every batch and are relatively difficult to judge.

“Fresh food practitioners are first required to be ‘agricultural experts’; they need to know whether the product is good or not. Warehousing staff, when doing quality inspection, also need to look at feel, size, and so on, and need to ‘observe, listen, question, and feel the pulse.’ This kind of refined management and standardized management is a relatively complex process, so warehousing is also working on a standardized management manual.” Cui Xiaoqi said.

At SF Best, there is a department called the Food Quality and Safety Department, responsible for full-process quality monitoring from food procurement to sales. In the early stage, it reviews enterprise qualifications and also invites third-party testing institutions to conduct testing. More importantly, manual quality inspection is required when goods enter the warehouse, requiring every batch of goods to have a quality inspection report.

“Most of SF Best's vegetables are organic vegetables or selected vegetables. The partners are all large vegetable bases.” Cui Xiaoqi also disclosed a figure: SF Best's vegetable loss rate is controlled at about 1%, which in the eyes of traditional supermarkets is very difficult to achieve.

SF Best can achieve this, first, because the sources of SF Best's vegetables are all local, with relatively short distances; second, vegetable buyers estimate sales very accurately, and what is brought in the same day is sold the same day. Third, freshness preservation is better than that of supermarkets because the vegetables are always kept in cold storage.

These are all areas where SF Best exercises strict control in quality management.

With rapid cold-chain logistics and strict quality control, the next issue SF Best may face is profitability. Opening the platform to third parties is undoubtedly an option.

Building an open platform

Cui Xiaoqi said that the open platform adopts an invitation system, and product selection will be very strict, selecting the best from the best. Inviting good partners to join is different from a registration system and involves customer experience.

“Running an open platform imposes requirements on product quality and customer experience, and cannot affect the image of the SF Best platform.” Cui Xiaoqi said, “It is not that after issuing a registration number, nothing is managed anymore. Strict control in the early stage is to prevent quality problems. Doing food especially requires extreme caution.”

Cui Xiaoqi believes that SF Best covers the full category of food. Although everyone calls it fresh food e-commerce, SF Best actually also has eight categories that are not fresh food.

Somewhat different from other open platforms, SF Best's logistics is completely handled by itself. The enterprises on these open platforms must all use SF's delivery, and customer service for third-party enterprises is also handled by SF itself. “In fact, the purpose is very simple: to enhance the customer's shopping experience and guarantee SF Best customers' interests and demands.” Cui Xiaoqi said.

Although it adopts an invitation system, for enterprises that proactively approach the SF Best platform, SF Best will also provide an opportunity and an outlet. “The premise is that the enterprises and brands joining must meet a series of SF Best review standards. Moreover, when many merchants in the same category want to join, it is also necessary to balance whether there will be too many of the same type. In addition to qualifications, on-site inspections are also required to see whether they match the qualifications. Likewise, there will also be an issue of defining responsibility.” Cui Xiaoqi said.

When mentioning SF Best's business situation, Cui Xiaoqi said that SF Best's sales reached 400 million yuan in 2013, and this year's growth is expected to exceed 200%.

At present, SF Best's funds still rely on SF for support. Although SF has not set clear profitability assessment requirements for SF Best, it is not difficult to feel that the burden on Cui Xiaoqi is not light, and more crucially, it is the pressure he puts on himself.

Cui Xiaoqi also admitted that at this stage it is still too early to talk about profitability, “but the growth rate in recent years is still quite considerable.”