The wave of going out to sea has arrived, and global business opportunities are attracting more and more dreamers.
Xiaguang Club launched the "Xiaguang Going Over the Sea" series of planning, focusing on the unusual struggle stories of entrepreneurs and recording the challenges and gains they experienced in overseas markets.
This issue is the second article in this series. In this issue, we will tell the entrepreneurial experience of Chinese youth in Manila, Philippines, and building emerging brands in overseas fresh food e-commerce and agricultural product distribution.
Founding e-commerce "Yeahfresh", founder of the Philippines online fresh food e-commerce "Yeahfresh", told us: "Philippine agricultural products have not yet been effectively circulated, and the key to improvement is to improve supply chain efficiency."
Author | Guo Zhaochuan
Edited by Maji
On the evening of July 28, Mission-Richon was rumored to be "disbanded in place", and its news of "30 minutes of rapid business closing" hit the hot search, and Mission-Richon's stock price fell to the bottom.
Image source: Weibo hot search
Domestic fresh food e-commerce track has always been extremely crowded.
Since 2022, domestic fresh food e-commerce brands have successively reported rumors of layoffs, losses, and withdrawal of stores. Dingdong Maicai, Taoxianda, JD.com, Hema Fresh... Whether it is adopting forward warehouses, supermarket distribution, or the combination of store warehouses, and community group buying models, none of them are immune to the "zero sum" situation of slow profits in the fierce competition of money and subsidies.
Behind these huge fresh food e-commerce companies, most of them are well-funded Internet giants. When a "big giant" cannot escape the fate of falling down, it is even more difficult for young fresh food e-commerce players who want to enter the market.
So, when fresh food e-commerce goes overseas, can entrepreneurs see a new world that has not been cultivated yet?
forward warehouse mode, can it be possible to move to Southeast Asia?
Many industry insiders blamed the fall of MissFresh as the "forward warehouse model".
"Forward Warehouse Model" means establishing forward warehouses within 3 kilometers of the community to improve the delivery timeliness of fresh goods. Fresh food e-commerce has to bear the construction cost of forward warehouses, land price and rent, and the risk of large-scale inventory. In addition, fresh food e-commerce APPs gain traffic and market share by burning money and subsidies, and they will inevitably fall into a vicious cycle of "for losses to exchange users".
However, a Chinese entrepreneur who entered the Philippine fresh food e-commerce market told Xia Guangshe that he "makes money every time he opens a fresh food forward warehouse" in Manila.
is not working in China, so why can it benefit from small-scale experiments in the Southeast Asian country of the Philippines?
Founder of the Philippines' emerging fresh food e-commerce brand "Yeahfresh", Max, has tried to start a business in China with social e-commerce and group buying apps, but the project development is not as smooth as imagined.
While observing overseas markets, he found that there was a huge commercialization gap in the fresh food distribution market in Southeast Asia, especially the Philippines.
In the Philippines, it is difficult to find the "big vegetable market" we are familiar with. There is no wholesale market where a large number of agricultural products and fresh fruits and vegetables are gathered.
"I found that people with weak local consumption power only eat meat, and they are even a little resistant to eating vegetables and fruits." Max said. Because the local meat price is much cheaper than vegetables and fruits, this strange phenomenon is caused.
Due to the large inadequate local infrastructure construction "from farmland to market", the fresh food supply chain is inefficient. Many fruits and vegetables are not sold at high prices in the hands of farmers from the origin, but because there are too many "middlemen making the difference" links, and most high-quality fruits are used for export, the fruits and vegetables in Philippine supermarkets are very expensive.
Under such circumstances, Max believes that fresh food e-commerce delivery, which has not yet emerged on a large scale, will have great development potential.
The capital of the Philippines is composed of 17 different small cities. In less than three years, Max has 4 own fresh food forward warehouses and 1 fresh food physical supermarket in four "small urban areas" in Manila.
Max's fresh food delivery guys speed in the streets and alleys of Manila every day to deliver fresh vegetables and fruits to consumers. According to Max, Yeahfresh's average daily orders have exceeded 400 orders, and several forward warehouses have reached the load limit, and he is busy selecting and renovating the new warehouse.
Fresh food offline supermarkets. Source: Photo provided by the interviewee
"In Manila, the turnover cycle of fresh food is very fast. Our warehouse does not need to be too large, so the cost is relatively low." Max told Xia Guangshe. Moreover, compared with China, Manila's total urban area is limited, with a small regional area and a large population density. Merchants do not have to build forward warehouses in large quantities in order to shorten delivery time. Each warehouse can be "full use".
long-term experience tells him that the core of solving everything is not the forward warehouse, but the construction of the supply chain.
"The money was earned by the middlemen. There were too many intermediate links from farmland to the middle of the dining table, causing too much price difference in agricultural products. There are many places to improve." Max said, "It is very valuable after integration and maturity."
The method he adopted is to establish acquisition stations and small processing plants in the place of origin of fruits and vegetables, and then solve the supply chain problems through a logistics system composed of own trucks. From the front purchase station to the own forward warehouse, and then to the hands of consumers, there are not many links, and the quality and price of fresh fruits and vegetables can be taken into account, so the profit is still considerable.
In fact, fresh food delivery in the forward warehouse mode itself is not a "fighting beast". Whether this model can succeed often depends on the combined effect of multiple factors such as site selection, land price, fresh food cost, supply chain, marketing cost, market saturation, and business model.
young consumer groups bring high customer unit price
In the early stage of entrepreneurship, Max also misjudged the business model.
He worked in offline fresh food supermarkets for a period of time. At that time, his idea was that if the brand owns offline stores, it would make local consumers feel more at ease. But the price of commercial real estate in Manila is 2-3 times that of Shanghai, and the high rent doubles the cost. So in the process of Max building a second store, due to the high rent cost and the impact of the epidemic, the store was decisively closed after seven months of operation.
"At that time, I was overly optimistic about offline retail." Max said that after this incident, he learned the lessons of "not making rash decisions." Although the store invested more than 3 million yuan in decoration and rent alone, Max was determined to "cut off his arm."
Facts have proved that compared with physical stores and supermarkets, forward warehouses greatly reduce the display cost of goods, and building forward warehouses in the Philippines is more effective than opening physical stores.
"Manila is a very young city with a population density of 6 times that of Shanghai, and more than 70% of the population is young people under the age of 30." Max told Xia Guangshe.
Urban environment in Manila. Source: Photo provided by the interviewee
In the impression of many people in China, the Philippine market is a "remote countryside", which is actually a big misunderstanding. In fact, the local area can be said to be "half heaven and half hell": on the one hand, the gap between the rich and the poor is huge, and on the other hand, although many local people have lower income levels than domestic ones, they are willing to spend their money on food expenses.
In the Philippines, the food prices are not cheap, whether it is a restaurant or a roadside stall. A simple portion of food can even be sold at 5-10 times the price of similar foods in China. Even fruits such as mango, banana, coconut and other locally produced in the Philippines are more expensive than in China.
Due to cultural differences, local young people are not keen on saving money, but are accustomed to consumption ahead of time. The most important expenses they spend are food, fun, party opening, etc. This is also reflected in big data. 70% of the Philippines' GDP is driven by consumption, and domestic demand is very strong.
, a group of young people with very strong consumption capacity, also contributed high customer unit prices to local fresh food e-commerce. The two indicators of unit customer price and repurchase rate are crucial to the fresh food e-commerce industry and are the key to ensuring that merchants obtain sufficient profits and achieving a positive cycle. The customer groups that
Yeahfresh now targets are basically "Class A customers" mentioned by Max. Most of these customers are young people with high consumption, and the average customer price generated is relatively high, which has high requirements for fresh food quality and higher requirements for product delivery timeliness.
From the overall situation of the industry, there are actually 5-6 large chain supermarkets in the local area. Although their products are more complete, the prices are high on the one hand, and the delivery is not timely on the other hand, and these two items are the advantages of Yeahfresh.
The most important thing is that the current YeahfreshAPP download still relies on word of mouth to spread, and it does not cost money on a large scale for marketing and customer acquisition GF coupons like in China, so it also avoids the problem of excessive marketing and promotion costs.
Manila young people have strong consumption power. Source: Photo provided by the interviewee
"The best employer in Manila"
"Southeast Asia is the next economic growth pole. In the early days, many Chinese entrepreneurs have started the business of "copy from China (replicate the domestic successful model in Southeast Asia)" in Vietnam and Indonesia." What made Max very happy is that the Philippines has a relatively relaxed business environment.
In recent years, the Philippines' GDP has grown rapidly, especially e-commerce and online consumption, and is expected to become a rapid growth point in the next 5-10 years. The growth rate of the Philippines e-commerce market is the world's largest and dividends. With the layout of logistics giants such as J&T and Flash, there is huge market space and rapid growth of e-commerce dividends.
e-commerce sales growth list, Philippines ranks first, Image source: Insider Intelligence
local governments are also encouraging electronicization. In recent years, young people in the Philippines have begun to use e-wallets. Although daily transactions are still mainly cash, small-scale e-wallet recharges are already very common in the local area.
In addition, in order to take care of agricultural development and reduce food prices, the Philippine government is exempt from VAT for consumer foods such as vegetables and meat. Consumption and services other than agricultural products must be paid 12% VAT in the Philippines. Moreover, e-commerce businesses are also among the ranks of no VAT levied in the Philippines.
After a multi-faceted investigation of upstream and downstream supplier relationships and market maturity, Max is very optimistic about Manila's fresh food e-commerce market. "The population structure here is a bit like Shenzhen more than ten years ago, and the e-commerce environment is like doing Taobao in China ten years ago. If you have good fresh food and agricultural products, you are not afraid of selling them."
Max believes that doing business in Manila "as long as you do a little better than others" can you gain a lot of customers.
However, in the actual operation of overseas operations, many details need to be paid close attention to. For example, how a company manages local employees and communicates with local customers are very different from that in China. The delivery staff hired by Yeahfresh are all locals in the Philippines, and only a few employees in the management of the company are Chinese. Therefore, how to manage local employees and improve distribution and supply chain efficiency has become a problem that Max must consider.
He summarized three management experiences:
First of all, every employee must have clear job responsibilities and detailed SOP.
Because local employees are not flexible and flexible, such ambiguous instructions as "you can do it" are a taboo in the local workplace.Moreover, in their minds, there is no such position as "jobs", so as bosses, they cannot take it for granted that employees can do miscellaneous work at will.
Secondly, locals attach great importance to the boss’ respect for himself.
When going out for group dinners, Max always chooses a restaurant with long tables, and everyone can sit together without any distinction. When it comes to the ordering process, employees are asked to order their favorite dishes instead of taking in all the items.
"Many people going to sea will ignore it, and local employees care more about the way you 'be good to them'." Max said, "If you don't do a good job in respecting this, even if you add benefits, employees may not be grateful to you."
The most important principle is to pay salaries to employees on time, and if you work overtime, you must pay overtime.
Manila's salary system is to pay twice a month. Therefore, for this two-day "payday" every month, local businesses will launch preferential activities that encourage consumption, namely "Payday Promotion". As an employer, you must pay your salary on time, and it is best to pay it in the morning to facilitate employees to spend on the same day.
In addition, time-out work is a very serious matter for local employees, which is also a point that many Chinese bosses are prone to ignore. The entire Philippine society defaults to overtime work, and even if you pay overtime, it is best not to exceed 3 hours. If the employee works overtime for more than 3 hours, the overtime pay paid will be increased.
Local employees at work. Source: Photo provided by the interviewee
Upholding respect for local employees, Yeahfresh not only gained a good reputation among employees, but also won the title of "Best Employer in Manila" and recruitment has become much easier.
In addition, fresh food e-commerce goes overseas to the Philippines, and it is not possible to habitually rely on "volume".
Local decoration materials procurement and business procedures are all very long. Even if it is only to install some basic shelves, cold storages, and water and electricity in the early stage, it will take 2-3 months under the local working time. These factors need to be included in the consideration of business plans.
"Of course, business is one aspect. The purpose of opening more forward warehouses is to really reduce food prices at the supply chain end." Max said, "While convenience is convenient for consumers, it is best to increase farmers' income."
fresh food e-commerce is essentially a market-oriented operation to accelerate the efficiency of agricultural product distribution. It is important to seize the opportunity of the blank period of fresh food e-commerce in overseas markets, but the key to maintaining brand competitiveness is to truly find the pain points in the industry, realize an upward cycle, and enter an orderly development model.
