The quality of Baiguoyuan’s fresh produce is determined by the supply chain rather than traffic flow.

About Baiguoyuan

Baiguoyuan has now entered more than 80 cities and opened more than 4,000 stores. It is currently an integrated development of online and offline, and e-commerce accounts for the whole Around 25. What I want to share today is based on the development of Pagoda over the years, thinking about how we should do fresh food.

You may see that Pagoda is more of a terminal retail store and a retail network. But in fact, Pagoda has been planning upstream and towards the entire base since 2003. Pagoda’s entire industrial chain layout starts from the guidance of standardized planting technology. We have introduced planting technology from Japan, Europe and other places. Including support in research and development of fertilizers, seeds, etc. We believe that truly good fruits are not selected, they must be grown.

At that time, we not only introduced fruit planting technology, but also introduced other supporting technologies for the fruit industry and vegetable industry. However, in the early days, it was more applied to fruits, and later on, we also made some achievements in vegetables and other categories. space. Then to the financial system, trading system, warehousing, logistics, marketing, sales and the entire data, Pagoda is now building a whole industry chain ecosystem. Baiguoyuan now has a technology R&D team of five to six hundred people, which supports the technology R&D of the entire system. Maybe this is not enough for standard Internet companies, but for a retail company, we hope to gradually break the boundaries between online and offline. Because future competition is no longer just competition between retail companies. Recently, Internet giants have also entered the field of fresh food. People who have been engaged in offline fresh food retailing in the past will work together to delve into this industry. In the future, they may have to compete and integrate with these Internet companies.

Why do Internet giants favor fresh food?

First, fresh food is an entrance that is in high demand and is definitely an entry-level opportunity. On the Internet, high frequency is often compared with low frequency, so fresh food must be the most frequent category. However, in the past, due to various reasons such as the supply chain, the development of fresh food e-commerce has not found a very good model. Whether it is B2C in the past, O2O later, or the continuous development of these models including front-end warehouses, community group buying, etc., in fact, the Internet is constantly exploring how to do fresh food. If fresh food, a high-frequency and urgently needed entrance, finds a model that can grow explosively, it may bring about some big changes to the entire retail landscape. So everyone would think that this entrance cannot be lost.

Second, the black swan of the epidemic has accelerated the penetration of the entire fresh food e-commerce industry. Judging from the penetration data, the entire process of industry evolution has been accelerated. Because of such an acceleration, some changes that would have taken 3 to 5 years to occur in the past are happening more quickly this year.

Third, whether these Internet platforms or retail platforms, they seem to have found a model of asset-light traffic thinking. The Internet is about traffic thinking, while retail must be about retail thinking. This is a completely different way of thinking. The recent development of community group buying and so on (not necessarily saying that this future is completely established) is a relatively asset-light model. Asset-light refers to opening stores offline. For example, in a city like Shanghai, if we open 700 stores, we need to open them one by one. However, with the community group buying model, opening one warehouse completes the asset-heavy process. It is a layout, and the rest relies more on online development, so it is relatively light. This relatively asset-light model is very suitable for the Internet, which is why the giants are now moving into it. I think this is not necessarily a bad thing. Let a hundred flowers bloom and everyone go explore together, which shows that the whole community’s fresh food consumption is still very active, which also brings better vitality to the market.

Three Characteristics of Community Fresh Food

From a macro perspective, we believe that the entire community fresh food industry, or the fresh food industry, has three characteristics, that is, it is broad enough and deep enough. , long enough. This may be different from the past when we made industrial products as standard products.

Wide enough: It means that China is too big and needs to be done in a grid manner. Fresh food must be produced offline or O2O, rather than through the traditional Internet method. Because fresh food must not be covered by a network, it must be filled in a grid, not even based on the city, but on the community dimension. Pagoda may have absolute market share and advantages in one community, but the pattern in the next community is different. Therefore, it is a process of gradual grid competition and grid filling. Its dimensions and particles are very small.

It is deep enough, from first-tier cities to fifth-tier rural areas, the depth is very large. Everyone knows that like Xingsheng Youxuan, many community group buying has reached the village level. Moreover, cities at each level and consumers at each level may have different needs and preferences.

The third is that it is long enough. Fresh food starts from the place of production and ends in the hands of consumers. For standard industrial products, the entire chain is very long. We often talk about a process called "from branch to tongue". In fact, regardless of any fresh food company, there is actually no difference from the branches to the tongue. There is actually no difference between the entire logistics link and the fulfillment link. Even if it is shipped directly from the place of production to the consumer, it still has to go through every link. The entire logistics process cannot be omitted. It sends an express from the place of origin, and the express arrives at the regional warehouse, then to its distribution center, to the city station, to the service station, and then to the hands of the consumer. In the logistics link, it benchmarks against other retail companies that do not ship directly from the place of origin. , in fact, it does not save any link. So no matter what mode is used for this chain, it is long enough.

It is broad enough that in different regions and even different communities, it is a kind of pattern war. Deep enough, the Chinese people’s eating and consumption culture is diverse and clearly stratified, and they need to constantly adapt and adjust according to regional characteristics. It has been long enough, and the professionalism of fresh food is high. It also took Pagoda 20 years to make the fruit category relatively professional. It is so difficult to produce a fruit, and there are so many categories of fresh food. Each category If we want to really do well and be professional, we must take time to cultivate it.

Based on the above three characteristics, we believe that community fresh food is definitely a long-term business. This is not a quick battle, but a protracted battle. It is not an industry that can quickly form a monopoly entrance in the short term.

Competition for non-standard products is in the first mile

Community consumption is divided into standard products and non-standard products. We concluded that the competition of standard products is in the last mile. The competition of standard products has relatively high requirements for channels. In the last mile, you can better penetrate into every terminal and make it more convenient for consumers to see You, buy you. But the real battle is upstream, in the first kilometer.

Consumers of standard products experience price, while customers of non-standard products experience more value than pure price.

Standard products test capital capabilities and scale capabilities, but non-standard products must test professional genes.

So we conclude that the final focus of this community fresh food battle must be highly professional differentiation, and whether we can truly differentiate ourselves from others in the fresh food category. There is no value in simply spending money on standard products. Spending money on fresh food and community consumption can only make users sensitive to price, but loyalty to channels and value It is difficult to cultivate understanding, and in the end it may become whoever is cheaper buys it. Fresh food ultimately depends on freshness, quality and differentiation. It’s not that standard products cannot be differentiated. From product selection to the development of private brands, standard products can also be differentiated. In the future, we believe that competition in community fresh food consumption must make breakthroughs in the differentiation of fresh food and standard products, so that it is possible to truly gain the loyalty of consumers.

Customer pain points of fresh food consumption

The first one is good and cheap. We believe that this is the eternal demand of consumers, no matter which consumer class they are in, middle or low Whether it is the high-end consumer group or the mid-to-high-end consumer group, everyone is pursuing the cost-effectiveness of good and cheap products. This remains unchanged.

If we talk about how fast and economical fresh food consumption is, we think it is probably a false proposition first of all. When customers buy a fresh product, they don’t need to search for a keyword like Taobao, and there are tens of thousands of items. Record and choose, what customers want is that what I buy through this channel is reliable and of high quality; so fast, we think there is a consumption scenario, and what customers pursue is a service experience, but it is not for community fresh food consumption. core needs. In the end, it must be good and economical. Good and cheap are the eternal and fundamental needs of consumers.

The second pain point is whether it is a truly trustworthy consumption channel. The core of fresh products is that the stability of quality and performance cannot be guaranteed. Instead of buying something good today, it may be bad tomorrow, and it may be good again the day after tomorrow. In this way, consumer trust cannot be established.

Therefore, we believe that there is still a lot of room for us to explore in terms of good, cheap and truly reliable channels.

Advantages and models of Baiguoyuan’s high-quality fresh produce

What are some possible advantages of Baiguoyuan? It may not be unique, but there are some things we have accumulated, such as upstream cultivation, supply chain system, our store network and members, including our entire fresh product standards. These points are the result of Pagoda's 20 years of hard work What we have accumulated in the fruit industry, we hope to copy it to fresh products to a certain extent. Of course, the most important thing is the trust of our 60 million members and 5 million community users in the Pagoda brand and quality, and their pursuit of quality and cost-effectiveness. This is our core.

At present, we can roughly divide these three types of models. Everyone has their own logic, and there is no right or wrong. The first type is a store-warehouse integrated store, such as Hema, Baiguoyuan, etc., whether it is a small community store or a large store. The second is the front-load warehouse model. Front-load warehouse models like JD.com, Meituan, etc. provide timely delivery services. Then the third one is next-day delivery, which is a typical next-day delivery model similar to community group buying. The service points pursued by these three models are still different.

As for the front-end warehouse, its core advantage is service. It can be obtained in 30 minutes. It is a very good service for users with such needs. The store and warehouse are integrated. When you go to Hema or Pagoda stores, you will have a better experience during the shopping process and product selection process, including online and continuous service capabilities. The offline display and layout are just like the pastoral feel of Pagoda, which gives you a different feeling. So for next-day delivery, what it pursues is more efficiency. Under the next-day delivery model, its supply chain is basically a sales-based purchase model, which is pre-sale. Therefore, its logistics and many aspects are efficient. Space optimized.

We also chose next-day delivery for Pagoda, which means booking online and picking up the goods the next day. The reason why we choose this model is mainly to combine our own characteristics. We combine our nearly 5,000 stores with our warehousing and logistics system. Relatively speaking, we chose this model as the lowest-cost way. Only by choosing the lowest cost method can I provide customers with truly good and cheap products and services.

At the same time, there is also a very important point. Pagoda used to be a fruit store, but today the value of the store is completely different.

It turns out that the core role of a store is to cover users in the surrounding communities about 1 kilometer away. According to our research, Pagoda is located in a core city, and its penetration rate into surrounding communities is about 15 to 20% on average. In the past two or three years, we have launched an online timely fruit delivery service based on Pagoda stores, which has expanded the entire service boundary from the original 1 km or 1.5 kilometers to 3 kilometers or even further.

Through such services, we have increased the overall penetration rate in the surrounding area. Now at Big Fresh Food, we hope to develop next-day delivery services for all fresh food categories within 2 kilometers of the store through the entire fresh food category. This is the transformation of the current offline store functions.

Therefore, our own definition of Pagoda is a model of "specializing offline and expanding online".

The fruit category is the category with the highest relative square footage efficiency, and its professionalism requirements are also relatively high, so I chose fruit as the core category offline. At the same time, I have expanded all categories online except fruits. My store is my pick-up point and my logistics fulfillment center. Through this model, I will build the overall model of Pagoda's high-quality fresh produce.

For small physical stores, like a Baiguoyuan store, which is 40 to 50 square meters, the area is very limited, and the requirements for square footage are very high. The display of each shelf and the selection of each product are very important. There are very high requirements for floor efficiency and product efficiency. Based on such a requirement, we have to choose which categories are suitable for offline and which categories are suitable for online. Through such integrated online and offline collaboration, we will build our entire fresh food business.

Making quality: Four Nos, Three Highs and One Persistence

We put forward a concept of product development, including the development of fresh food, standard products, and private label products, "Four Nos, Three Nos." "Persistence in the first grade of high school",

The four no's: don't do it until you get to the source, don't do it if you don't have an expert, don't do it if you don't have experts, don't do it if you don't move yourself. Since we are positioned as the core consumer group with Pagoda’s 60 million members, we must ensure and pursue quality.

Three highs: high quality, high nutrition and high safety.

Persistence means insisting on high cost performance. This is definitely not a high cost performance achieved through subsidies. In the long run, the operating efficiency must be high enough and the cost low enough to bring higher cost performance to customers. Therefore, the concept and mission of fresh food we put forward is called "leading a healthy and sustainable lifestyle". We hope to open up the entire upstream chain through high-quality products and truly lead such a lifestyle.

We will adhere to the core of quality. We believe that the future of community fresh food will not be on the traffic side, but on the supply chain side. We hope that through brands and channels like Pagoda, good products can be sold easily, so that consumers can better buy high-quality products. We hope to achieve this through our efforts!

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