The capital-driven development has made retail industry marches hurriedly, it's time to rethink cost-efficiency and supply chain management. Qian, whose community-based strategy attracts giants' attention, is having its strategic dividend.
QianDama (钱大妈) opens its first store in Shanghai recently. It is a community-based chain store that selling fresh meat at the very beginning in Dongguan Guanguangzhou in China in 2012. It is best recognized by “Never Sell Overnight Pork” and would give a different discount for the less fresh meat depending on time, the later the cheaper of course. Within less than 6 years, Qiandama is expanding to more than 1500 stores specializing in the fresh meat market, covering more than 500 kinds of products in five categories including fresh meat, vegetables, cooked food, aquatic products, and fruits. With almost all stores opened in the Pearl River Delta Region (珠三角), Qiandama made its decision to heading north, Shanghai as its first stop.
There are more than 1500 QianDama stores in China Pearl River Delta Region, and 90% of the stores are franchise stores. The fast-expanding is due to its B to B supply chain model, meaning QianDama is a fresh grocery platform that on one hand, it connects with suppliers, gets the channel of fresh meat and vegetables with a lower price by wholesale. On the other hand, it connects with its franchise stores by exporting QianDama’s qualitative products, operation technology, and brand management. is profit from franchise fee and the differential price by acting as intermediate to suppliers.
Except for the self-run stores, QianDama doesn’t need to pay for the rent or labor, at the same time gaining a 6% profit of every product delivered to its franchise. It’s a no-lose business, including a fixed income of franchise fee and the brand usage fee.
To further explain, Qiandama can be divided into the front end and back end. The front end is in charge of Qian’s operations with franchise stores, data analysis, investment, and marketing, etc. The back end is functioning as a service department dealing with purchasing and supply chain support.
The main income is coming from Qian’s front end, that is to say, with more franchise stores expanding, means more profit from the previous franchises under this light-assets investment.
QianDama gradually increases the scope of merchandise sales, in addition, to meet the basic needs of people with meat, vegetables, etc., but also more milk, yogurt, taro, bread, and other breakfast foods, as well as coconut green, sugar orange, etc.
The fresh grocery market can be divided into three categories. First is the online-offline grocery supermarkets that have the square footage for more than 4000 square meters such as Freshhema under Alibaba, 7 Fresh under JD.com and Super Species under Yonghui. They usually contain an SKU for at least 3000, provide an in-store dining area and offers home delivery within a range of 3 kilometers. Second is the online-only grocery stores who exhibit fresh goods online and equipped a logistic team to deliver the order from the front warehouse located nearby. Miss Fresh, and Dingdong Maicai. This mode depends heavily on its app online traffic with less than 2000 SKU. The third one is the community-based grocery store with a square footage of no more than 500 square meters and less than 500 SKU, this is where QianDama‘s main battleground lies. The competitors are Hema Caishi who opened its first store on Mar. 27 2019, Yonghui mini who made a debut on Mar. 7 2019, and Suning Xiaodian who just launched its presale function online for fresh groceries.
Early in 2016, when the first Freshhema store opened in Shanghai, it drew great attention from its competitors with the new retail model based on fresh grocery plus dining in store. JD.com (its main competitor in e-commerce) and Yonghui (a traditional supermarket backed by Tencent) rushed in immediately. The money burning game lasts for two years in order to expand stores drastically and to attract consumers. WANG Xiaosong (王笑松) the former CEO of 7 fresh, who planed to open 1000 7 Fresh stores 6 months ago, was transferred to JD parent company for the goal that he once promised far from being realized. Houyi (侯毅), CEO of FreshHema, also announced a strategic transfer to open more small scale community based fresh grocery stores in 2019.
The capital-driven development has made retail industry marches hurriedly, it might be the time to rethink about cost-efficiency and supply chain management. QianDama, whose community-based strategy attracts retail giants' attention, is having its strategic dividend.