At present, the hottest non-agricultural fresh food category in vertical e-commerce is the one. However, under the fanaticism, Tuotuo Workshop remains calm. "Scale is not the most important to us," said Du Fei, CEO of Tuotuo Workshop. "I believe that in the entire industry, we must follow healthy development. If you do not have a reasonable profit model and do not have a way to continuously make profits, what will happen in a few years? Do you need to sell it to JD.com in packages? Impossible. This era is over. We often say one thing, "Be yourself, don't follow the trend, be careful to imitate, and make money."
People in the e-commerce circle should understand that being steady and pragmatic is Du Fei’s trait. Before joining Tuotuo Workshop in July 2012, he served as the general manager of Hongchi Mall. He went on to work in research and analysis on Huicong.com and had accumulated more than ten years of experience in e-commerce trading.
Looking around, whether it is Tmall, JD.com, Vipshop or even Tuotuo Workshop, who is "stands on the wind" and who doesn't follow the trend to make a big move? Why did Tuotuo Workers do the opposite? Isn’t this meant to “defy against the will of heaven”?
Tuotuo Workshop's business status
Compared with other colleagues, Tuotuo Workshop has always been very low-key. From public information, it can be seen that Tuotuogongshe is an online supermarket under Jiucheng Group (a Nasdaq listed company) that focuses on organic and safe food.
According to Du Fei, Tuotuogongshe is more inclined toward agricultural e-commerce, which is very different from other fresh food e-commerce peers. Its main products are meat, poultry, eggs, milk and vegetables. In terms of model, it insists on delivering from farms to cold chains, and uses B2C, enterprise-level B2B, including mobile and other means to acquire users.
Its supply is provided by direct-operated farms and United Farms. In addition to Beijing Pinggu self-operated farms, there are 8 United Farms across the country. After a series of adjustments and deletion, Tuotuo Industrial Society has more than 2,600 SKUs, with daily orders ranging from 28 million to 3,000. The turnover last year was 77 million, a year-on-year growth rate of 227% from 23.5 million in 2012, achieving a small profit of about 4.6 million.
Due to its limited logistics investment, its main focus is still on the Beijing market, and next-day delivery can be achieved within the Sixth Ring Road of Beijing. The market sales in this region also account for 80% of all sales. The East China Market is the second "main battlefield" of Tuotuo Workers.
Focus on data and neglect sensitivity
A very common phenomenon in traditional industries is that in the decision-making process, business operators often rely on their years of experience to make decisions. As the helmsman of Tuotuo Workshop, Du Fei's decision-making is mainly based on data. From him to the entire team, he uses a set of IT methods, data-based control methods, and refined control methods to reduce risks.
Scientific decision-making is achieved through a set of close data analysis and calculation tools. At the same time, they formed a new agricultural planting plan. Du Fei said, "Tutuogongshe's production plan is determined with the sales team, from November last year to the full process, and then adjusted once every 3-6 months. We can control the production plan to how much to produce each day, such as how many tomatoes were sold in the historical data last year. This year, we estimate the total demand based on the growth rate, and then increase it by 15%-20% to put pressure on the sales team." These data mainly come from the historical data of backend consumers and the current daily sales data.
Not only that, they also changed their existing planting plans based on market conditions. Du Fei gave an example to the reporter, "If we find that tomato production is greater than the sales volume, then the quilts in our greenhouse cannot be opened and the sun cannot be seen, and the tomatoes can mature 3-4 days late. At this time, the marketing pace is accelerated, so we have to sell them quickly." A series of other series reduce losses by changing the temperature and humidity in the planting process.
Fine operation to build your own ecological breeding system
After the previous data work has made progress, the work progress and completion status will be judged in the form of corresponding analysis meetings every week, month and quarter during the daily operation. The analysis meeting mainly focuses on product discussions, as well as profits, losses, etc. In this way, these factors are connected, the rhythm of marketing is controlled, and whether they need to increase volume and change channels.
In terms of marketing and promotion, Tuotuo Workshop has not made large-scale investments, but has made precise investments online based on its own characteristics and market affordability. Offline marketing is carried out through farm member activities and community activities. For example, organize activities on the farm, and members can participate on weekends, similar to farmhouses, allowing them to experience and feel organic; community activities are aimed at corporate users and provide nutrition course training for their employees.
With such a complete operating system, the cost control effect is the most obvious, and the user conversion, retention and repurchase rate are quite considerable. According to Du Feina, the repurchase rate of shaving off more than 500,000 registered members of Tuotuo Workshop (non-enterprise users) is 65%, of which the remaining members’ shopping frequency is about 2.5 times per month.
The most important and challenging part of reducing costs for fresh food e-commerce is to reduce losses. According to Du Fei, "The loss mainly comes from five aspects: planting loss, storage loss, processing loss, distribution loss and unsalable loss. For a vegetable and fruit that requires free breathing, the market cycle is seven days and leafy vegetables three days."
Therefore, in order to reduce losses, Tuotuo Workshop directly introduced the inventory assessment of the retail industry into the inventory management of fresh food e-commerce. When this product is leafy vegetables, the market will take 3 days. After 1.5 days, it will immediately start to change the price and start packaging. This is an important means for them to shorten inventory management. Second, when introducing products, the loss rate must be assessed. In fact, many companies do not pay attention to this issue and start shouting when they take things off and start shouting. This is wrong.
There are new ways to save resources and reduce losses. Tuotuogongshe is trying to do a "three-dimensional project" in a joint farm in Caobeidian, Hebei. After the water system is transformed, fish ponds can be raised and crabs can be raised on the water surface. There is also a "three-dimensional circular economy" project. When the losses are relatively high, they directly use the waste to feed chickens, pigs and other animals. Pour the residue into the fermentation tank to make biogas. After use, you can feed the earthworms as leaf fertilizer.
This has gone through several cycles, one is to make a connection between the production and sales, but to make a general warning of the warehouse management. However, the organic product output of this ecological breeding system is limited, mainly providing benefits for VIP customers and their own employees, and is not market-oriented.
When Du Fei joined Tuotuo Workshop, he instilled an idea in everyone, "You regard selling products as selling credibility. We are not selling goods, but selling trust. In this way, users' overall trust and viscosity for you will be greatly improved." It is mainly reflected in two aspects.
1. Do not pursue scale and subtraction of categories
After the Chinese New Year this year, the order volume of Tuotuo Workshop has increased explosively. However, due to the incomplete renovation of its cold supply, the warehousing, refrigeration and distribution capabilities are very limited, which makes Du Fei feel frightened and cannot control the growth rhythm. He realized that the categories he made determined to adapt to the large-scale approach. The fresh food industry should be profitable, and the well-known advantage is that it has a very high viscosity and can establish a trust relationship. Therefore, in addition to the need to cooperate with the growth rhythm of market promotion, Du Fei has made a series of category adjustments after joining Tuotuogongshe, reducing the original 5000SKU to more than 2,000 now.
But it does not mean that Tuotuogongshe will perform subtraction to the end in category strategy. Du Fei said, "Tuotuogongshe will perform subtraction when logistics cannot keep up with the logistics. After this link is improved, it will consider adding in organic, safe and table-related categories in the future."
2. Be good at users and don’t blindly promote
In addition to independent B2C platforms, Tuotuo Workshop has also settled in third-party platforms such as Tmall and JD.com, and has become the leader in the fresh food category of these platforms. It is often asked to participate in promotional activities, and the results are also very good. Despite this, after doing it several times, Tuotuo Workshop took the initiative to stop it, and at the same time rejected the promotion invitation from third-party platforms many times.
Du Fei explained, "I think that our customers are not high-quality enough to do this, and the purpose of cheap things is obvious. What I want is customer repurchase and conversion, because the industry does not lack the most are high-quality customers, but the ones lack the most are high-quality products. If you consume the high-quality products, you don't have them when you need them. This is unreasonable. On the other hand, this industry must be the size of your ability, and you will eat as much as you can."
Tuotuo Workers focuses on consumer groups above the middle class. Du Fei humorously said, "We will never be a loser. The loser is "a treasure every day". We want to sell it to those who do big health care every day. Doing big health care every day is a rich man." The "middle class" in his mind is not just income, but more of an attitude of having high-quality requirements for life.
Finally, when we talked about the entire fresh food industry, when the reporter asked, "In the context of mobile Internet and O2O trends, what model is most suitable for fresh food e-commerce? At the same time, how should Tuotuo Workshop respond?" Du Fei said that he would not be keen to praise this trend, and it is difficult to say which model is the most suitable, but it is certain that everyone is not wrong, because from the starting point, no one wants to kill himself. Tuotuo Workshop in the industry will recognize its position, firm its direction, and boldly try in the mobile era.
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