Ding Dong buy food seems to be taking a similar road with Jingdong and Amazon: endure losses, desperately do heavy. However, before Jingdong and Amazon achieve profitability, the road is always full of doubts. Ding Dong Buy food founder Liang Changlin believes that in the second half of the Internet, "do heavy" is difficult and correct, "only heavy not broken".
Fresh electricity supplier when profit?
This "century of torture", Ding Dong Buy food (NYSE: DDL) has disassembled a clear answer.
They were profitable in Shanghai in December; Strive to achieve full profitability in the Yangtze River Delta region in Q2 2022; Strive to achieve national profitability in Q4.
In the Q4 earnings call held on February 15, Liang Changlin, founder and CEO of Ding Dong Buy Food, said confidently: The company has found a profitable way and path.
From the financial report, in Q4 2021, Ding Dong Bought Food experienced the best quarter of operational efficiency since its establishment.
In the quarter, Ding Dong Maicai GMV reached 6.04 billion yuan, an increase of 59.6%; Revenue reached 5.48 billion yuan, an increase of 72.0%. Throughout 2021, the company's revenue was 20.12 billion yuan, a year-on-year increase of 77.5%.
With the rapid growth of transaction and revenue scale, Ding Dong Maicai's operating efficiency has been greatly improved: the gross margin of Q4 was 27.7%, a record high; The compliance rate is declining, with Q4 at 32%, a record low.
Q4, Ding Dong is still losing money, but the losses are narrowing. Under Non-Gaap, Ding Dong's quarterly loss narrowed to less than 13%.
These changes are due to the strategic transformation of Ding Dong Mai in the third quarter of last year: from the pursuit of "scale first" to "efficiency first, taking into account scale".
The transformation effect of Q4 makes Ding Dong management believe that the company can make profits by following this strategy.
So, Ding Dong buy food in the "efficiency priority, taking into account the scale" strategy, how to do? How to realize the profit from Shanghai area to the national profit? The Internet industry is unpredictable, Ding Dong buy food by what to beat the second half of the Internet?
From scale first to efficiency first
For a long time, electricity suppliers, including fresh electricity suppliers, are taking a similar development path: first to trade losses for scale, and then seek profits; The bigger you get, the more losses you probably have before you become profitable.
From Jingdong, Amazon, Pinduoduo, to Ding Dong buy food, without exception.
The goal of Ding Dong buying food is not "small and beautiful", but to be an infrastructure company, serving the general public and hundreds of millions of consumers.
Before the IPO bell rang in June 2021, Liang Changlin told the media, "Profit is not the current primary pursuit of Ding Dong Buy food, the next step, the company will further expand, the pursuit of greater scale."
In the face of ups and downs and the accumulation of uncertainty in 2021, preserving strength has become a more pragmatic choice for e-commerce companies. Dingdong bought Food in Q3 took the initiative to adjust the strategic focus, from scale priority to "efficiency priority, taking into account scale" transformation.
In Q4, the year-on-year growth rate of GMV and revenue of Ding Dong Maicai was 59.60% and 72% respectively; In Q3, the year-on-year growth rate of these two items was 107.70% and 111.00% respectively.
It can be seen that they are deliberately controlling the growth rate of scale, but the priority of profit is increased, and the loss is constantly reduced by improving efficiency.
Shanghai is the place where Ding Dong buy vegetables started, the headquarters is located, and it has also become the "experimental field" for them to explore profits. Ding Dong was profitable in Shanghai in December.
The management of Ding Dong Shopping revealed in the telephone conference after the Q4 financial report that the average unit price of customers in Shanghai exceeded 66 yuan, the gross profit rate of each single was more than 28%, the cost rate of processing and trunk transportation in the sorting center was 6%, the cost rate of pre-warehouse fulfillment was 15%, and the headquarters and marketing expenses accounted for 7%.
According to the financial report, in Q4, the total order volume of Ding Dong buy vegetables is 100 million, GMV is 6.04 billion yuan, according to this calculation, Ding Dong's average customer unit price is about 60 yuan. The average unit price in Shanghai is more than 66 yuan, which is significantly higher than the overall level in the country.
At the same time, the performance cost of Ding Dong Shopping Q4 was 1.786 billion yuan, and the performance cost ratio was 32%. In Shanghai, Ding Dong's front-loading rate is even lower, at 15%.
Why can Shanghai make profits first?
Ding Dong bought vegetables out of a number of reasons, including: the Shanghai area user re-purchase rate is higher, the order density is large, the sorting center and the pre-warehouse fixed costs are diluted, so the performance cost has dropped significantly. At the same time, Ding Dong Maicai's new products are usually tested first in Shanghai, which helps to increase the price of customers in Shanghai.
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wang@kongjiangauto.com