Image source @Visual China
When various special sales compete for users at low prices, a startup company took a different approach and played tricks on the food shelf life, and obtained Alibaba's financing "success" along the way.
Haoshiqi was established in 2012 and is a brand food special sale platform. Public information shows that Haoshiqi has received third rounds of financing from Alibaba. In July 2018, the company received 110 million yuan in Alibaba's strategic financing.
The initial customer acquisition channel of Haoshiqi was APP, and since then it has become a typical case in Alipay mini-programs. When the mini program track was in high popularity, Lei Yong, CEO of Haoshiqi, once entered the WeChat and Alipay mini programs. After carrying out "horse racing" operations in the two mini program ecosystems, Lei Yong finally chose Alipay.
" Pinduoduo is a social e-commerce company that is rapidly rising, and Tencent also supports such representative companies. At this time, start-ups have lost their first-mover advantage when they go in," Lei Yong told Titanium Media.
This is a company that works hard on the shelf life of food. The characteristic of a good food period is that the price of the commodity is not fixed, but follows the principle of "the closer to the shelf life, the cheaper it is."
When food can be sold within the shelf life, why should study the shelf life? What benefits can design a business model based on the shelf life bring?
According to Lei Yong, CEO of Haoshiqi, when food enters the circulation channel, traditional supermarkets such as Carrefour and Yonghui Supermarket, and e-commerce channels such as JD.com and Tmall will only accept food that is 1/3 of the time before the shelf life. The period before the shelf life is the allowable period of this industry. This means that if the shelf life of the food is 12 months, it will be difficult for food with 8 months left before the shelf life to enter these channels.
. For brand manufacturers, these foods that are after 1/3 of the shelf life will face backlog and may even become the " negative assets " of the company.
On the other hand, products that have entered the above channels can be put on the shelf life as long as they are expiring products. Even if they are expiring products, consumers can only see the specific date when they consume. During the good food period, the shelf life, as a key indicator, is strongly related to the commodity price, which also helps consumers make decisions in advance based on the shelf life.
Good food products mainly come from large food manufacturers and importers. The latter attaches great importance to planned and rapid clearance. The advantage of this model is that on the one hand, it helps brand manufacturers dump backlogs of inventory and reduces waste; it also allows consumers to buy branded food within the shelf life at a lower price.
Of course, there are certain problems with this batch of fast sales during the good food period. For example, consumers are likely to face out of stock when they want to buy their favorite products. "Batch fast sales are different from conventional sales. It is necessary to ensure that clearance products are sold out quickly in batches. If you miss this batch, consumers may have to wait for the next batch." Lei Yong added.
In order to achieve the model of "the closer the date, the cheaper it is", Haoshiqi has established a dynamic pricing system for , closely linking the shelf life and price.
"The good food period will first tell consumers how many months the shelf life will be. Products with a shelf life of more than 6 months will be 60% off for Tmall and JD.com, and only 30% off for 3 months. To ensure the quality of the food, food will be removed from the shelf life only 1 month away. This is not the same as selling only expiration products." Lei Yong explained to Titanium Media.
The food price during the good food period is strongly related to the shelf life, and consumers can clearly see the shelf life (screenshot from Alipay mini program)
Because the price and shelf life are strongly related, the general "first-in-first-out" principle cannot be adopted in the logic of shipment, but must strictly follow the date of the day for validity management. This puts higher requirements on good food during logistics.
Currently, all logistics in Haoshiqi adopts third-party cooperation methods. The cooperative logistics party should design a brand new management system according to the Good Food Period model and manage the validity period according to the independent SKU. Compared to the first-in-first-out method, personalized logistics management will inevitably increase sorting costs and management costs.
has to bear higher logistics costs and also sell specials to give lower prices. What is the logic of cheapness? How can you make a profit during the good food period?
is obviously not a good plan to burn money for growth through huge subsidies. When the capital market has gradually returned to rationality in the cold winter, investors will prefer companies with mature profit models even if they are willing to spend money on growth.
For conventional e-commerce, there are two logics for cheapness: is to subsidize users by burning money, and the other is to have strong bargaining power. The plan adopted by Haoshishi is to quickly clear the backlog of inventory for food brands. It seems that the manufacturer is losing money, but in fact it is to avoid the product becoming a negative asset and the granules are not collected. Lei Yong added to Titanium Media:
"Generally speaking, it will be more profitable for brand manufacturers to supply large platforms, but it is a loss here. But from another perspective, Haoshi Period can help manufacturers accelerate turnover and avoid products that have not been sold until they have yet to be sold. Because food cannot be thrown away casually, they have to pay for it to deal with it. Therefore, from the perspective of clearing and loss reduction, compared with losses, manufacturers obtain net profit."
Haoshi Period's profit comes from commission fee per order. Suppliers price according to the validity pricing rules of the Good Food Period, such as 60% off for more than 6 months, 50% off for 5 months, 40% off for 4 months, etc. The good food period will be extracted by 5% of the share based on the final sold price.
"We just want to give profits to consumers and quickly clear the positions for suppliers. Although the profit is very low, we can survive by doing a large scale," said Lei Yong. Because we have abandoned the path of spending money on advertising for growth, although the profits in the current Good Food Period are low, they can basically break even.
However, while the setting of "the closer to the shelf life is, the cheaper it is", it also bears higher operating costs. Surrounded by Pinduoduo Vipshop, how much incentive can this setting bring to consumers? (This article was first published on Titanium Media, author/Lu Yi, editor/Cai Pengcheng)
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