This newspaper (chinatimesnet.CN) reporter Yu Yujin reports from Beijing.
From December 2021, Dongfang Selection started the road of live broadcasting, to June 2022, with Dong Yuhui's "bilingual live broadcast", it became a new force in live broadcasting, and then expanded its account to develop its own products, but in more than two years, Dongfang Selection has been unwilling to only do live e-commerce, and its tentacles have begun to extend to instant retail.
Recently, there was news that Oriental Selection will test the waters. The reporter of "China Times" learned from the customer service of Oriental Selection that Oriental Selection is currently conducting grayscale tests on some commodities in some areas of the hourly delivery business, and if the consumer's order is within the scope of the test, Oriental Selection will have a special person to call to understand the needs of consumers and ensure that consumers' orders can be delivered smoothly.
Zhang Yi, chief analyst of iiMedia Consulting, analyzed to reporters that Dongfang Selection has become the head in the field of live broadcast e-commerce, but as a listed company, it is still weak compared to e-commerce giants, so it has to test the waters, but in this competition, it is still unknown whether it can break out of the encirclement, but it is foreseeable that the development of the business is bound to eat up profits, and with the changes in the economic environment, whether the capital will accompany Dongfang Selection for a long time to grow is another matter.
Test the water for hours
Recently, in response to the market news of Oriental Selection to test the water "Hour Delivery", Oriental Selection customer service told reporters that the gray scale test of some goods in some areas is currently being carried out on the hour delivery business, and if the consumer's order is within the test range, Oriental Selection will have a special person to call to understand the needs of consumers to ensure that consumers' orders can be delivered smoothly. In the hourly delivery business, Dongfang Selection promises not to charge any additional fees for goods, and consumers can receive the desired goods on the same day without leaving home. "We are also constantly optimizing the business. The customer service also said.
According to the reporter's understanding, the current business coverage of Oriental Selection Hourly Delivery is some areas of Hongkou District and Xuhui District of Shanghai, as well as some areas of Shilihe in Beijing, and other areas are not covered for the time being; The covered products are the popular grilled sausages and white shrimp selected by the East.
On specific issues such as the current business test progress, the reporter interviewed Dongfang Selection, and the relevant person said, "There is no other news disclosed to the outside world for the time being." ”
For Oriental Selection to enter the instant retail, Zhang Yi told reporters that Oriental Selection is an inevitable choice. He explained that first, hourly delivery or instant delivery is the core competitiveness of the future development of e-commerce platforms, and Dongfang Selection needs to tell stories to capital and also needs capital support; The second is that Dongfang Selection started with agricultural products, and has been selling prefabricated dishes recently, and one of the national standard submissions for prefabricated dishes circulated in January this year is "prohibiting the addition of preservatives", which also means that prefabricated dishes have stronger requirements for delivery time, forcing Dongfang Selection to consider immediate delivery; Third, from the perspective of consumers, there is a demand for instant delivery, and Dongfang Selection will develop e-commerce business in many aspects, and will not rely on other channels.
Zhuang Shuai, the founder of Bailian Consulting, analyzed to the reporter of "China Times" that the main category of Oriental Selection is agricultural products, and the requirements for timeliness of this category exist. In addition, Dongfang Selection has a wide range of user groups and brand awareness, which can expand more user groups to promote the business of Hourda.
Old and new giants fight
For Oriental Selection of a single company, if the foundation of instant retail is still thin, it is too early, and the giants have already killed all sides in the field of instant retail.
JD.com has been in the field of instant retail for many years. And in September 2023, JD's instant retail business, JD Daojia, announced its new three-year plan.
Li Changming, general manager of JD Daojia, said at that time that JD Daojia started from the cooperation with offline KA stores, but with the increasing number of merchant stores and the online transformation of small stores and retail stores, JD Daojia should optimize and upgrade its platform strategy and continue to iterate on product capabilities. "We expect the number of stores to continue to grow in the future, and we expect the number of cooperative stores to exceed 1.5 million within three years. Li Changming also said.
Another veteran player, Meituan, also renamed the self-operated Meituan Maicai to "Little Elephant Supermarket" in December 2023, aiming at a full-category retail platform, and earlier in September, Meituan Flash Sale announced that it would launch 7 major measures to help brands and retailers continue to evolve, and it is expected that by 2026, Meituan Flash Sale will have 30,000 stores with daily sales of more than 10,000 stores and 100 brands of 1 billion yuan. When Ali splits its organizational structure in 2023, it will package Ele.me and AutoNavi to form a local life group.
In addition to the old forces, new players such as Douyin and Kuaishou have also entered the game. Among them, Douyin in December 2023.
upgraded the weight of its e-commerce hourly delivery business, and opened an independent entrance for "hourly delivery" under the ** channel.
At present, instant retail is divided into self-operated mode and open platform model in terms of model, and is divided into self-distribution and third-party distribution in terms of distribution, which derives four types of instant delivery companies, such as self-operated model + self-delivery, such as Freshippo, Dingdong Grocery Shopping, etc.; Open platform model + self-delivery, such as JD Daojia, Meituan, etc.; Open platform model + third-party distribution, such as Yonghui supermarket, etc.; Open platform model + self-delivery, such as Douyin, etc.
And which model can make the giants develop for a long time and build stronger barriers? Zhang Yi believes that the key point of instant delivery is to meet consumer demands, consider what products consumers will buy and choose instant delivery, such as vegetables, medicines, etc., based on this, major platforms on the basis of the original business to consider whether it is suitable to participate in the battlefield of instant retail; Consumers choose instant delivery mainly because the delivery team is extremely important, and logistics team building requires a lot of money, and it also has strong management ability for grassroots delivery staff. Zhang Yi also believes that instant delivery is also a high-threshold business, and it is not suitable for every giant company.
New players add pressure
On the occasion of announcing the entry into the hour, Dongfang Selection, which is often on the cusp after becoming popular, is experiencing the turmoil of adding shrimp medicine to its own product Ecuadorian white shrimp, and the products of this test time also include the white shrimp in the turmoil.
The development of the business of Hourda is bound to add more pressure to Dongfang Selection. On the one hand, compared with other self-operated platforms, there are still fewer product categories in Dongfang Selection Mall. According to the interim report of Oriental Selection for the 2024 fiscal year, as of November 30, 2023, the number of its self-operated products exceeded 264, and the revenue brought by self-operated products was about 1.9 billion yuan, and the proportion of self-operated products in total revenue was about 6798%。
Yu Minhong, who personally served as the CEO of Dongfang Selection after the incident, said at the financial report that his request for the team is to reach 400 self-operated products by the end of 2024.
On the other hand, according to the reporter's understanding, the logistics chosen by Dongfang Selection's hourly delivery business is SF Express or JD.com. And JD.com itself is also an old force in instant retail.
On the one hand, if an external distribution team is used, it will inevitably increase the cost of each order, and its sales data will also be mastered by a third party. Second, the cost of self-built distribution teams is higher, and they also have to face the management ability of delivery personnel.
In fact, with the development of the business, the profits of Dongfang Selection have also declined sharply. From June 1 to November 30, 2023, its total revenue was 279.5 billion yuan, a year-on-year increase of 344%；Net profit 24.9 billion yuan, down 57 percent year-on-year4%。Adjusted EBITDA is 59.5 billion yuan, down 133%。
Factors affecting the decline in profits, in addition to the adjustment of the salaries of all anchors in Dongfang Selection after the "small composition incident", which led to an increase in ** option expenses (reflected in employee costs), business development also led to an increase in costs.
Dongfang Selection explained that because of the substantial growth of the company's business, the inventory cost and transportation cost of self-operated products have increased. In addition, in order to expand the scale of self-operated product selection, recruit more employees for the live broadcast business, invest more sales and marketing expenses, and develop and launch the "Oriental Selection APP", which has also caused a significant increase in costs.
Zhang Yi believes that it is foreseeable that the development of the business will inevitably eat up profits, and with the change of the economic environment, whether the capital will accompany Dongfang Selection for a long time to grow is another matter.
Editor-in-charge: Huang Xingli Editor-in-chief: Han Feng.