Click to read the original article for details Source: Shenran (ID: shenrancaijing) Author: Zou Shuai Qian Dama, an offline chain community fresh food brand born in Guangdong, started from a small meat stall in a Dongguan farmers' market, has crazily financed and expanded, and has repeatedly been rumored to be about to IPO. Qian Dama's expansion code is because it has an "elderly fan circle." This year's Qixi Festival, a Beijing Qian Dama store released a short video. An auntie who won the first prize of a full refund smiled shyly, and following the guidance of the staff beside her, faced the camera and adjusted her posture. The auntie who won the second prize also happily cooperated with the staff to take photos and sent them to the group, even bringing a group of grandchildren to take a group photo. Qian Dama, as its name suggests, is the world of the elderly. Li Yuan, a regular customer of Qian Dama in Dongguan, reminded Shenran: Be careful not to be outcompeted by grandparents when buying vegetables. In the internet business, the breakthrough may be in young people, but in traditional businesses like community fresh food, it is easier to fully understand the elderly. The elderly believe in what they see and touch, value service and cost-effectiveness, and have plenty of time to immerse themselves in various promotional activities. They love queuing and lively atmospheres. In the fiercely competitive fresh food track, Qian Dama's cleverness lies in returning to offline and returning to the places most familiar to the elderly. It is not an exaggeration to say that the elderly pushed Qian Dama towards the capital world. Currently, Qian Dama has completed 5 rounds of financing, with the D round raising as much as 1 billion yuan. In July this year, media reported that Qian Dama was about to complete a pre-IPO round of financing, expected to raise 2 billion yuan, with a post-investment valuation of about 25 billion yuan. However, on the road of rapid advancement, Qian Dama also faces doubts. Some franchisees complain that under Qian Dama's franchise system, franchisees do not make money, and Qian Dama's signature "no overnight meat" tiered discount model also makes some consumers feel that they cannot really get a bargain. With competitors surrounding, whether Qian Dama can break through remains to be seen. Fresh food stores target the elderly In the fresh food field, the elderly are a difficult group to conquer because they "know too much." They visit several stalls to buy a vegetable, calculate prices precisely, and compare rises and falls from the day before and the day before that. The most famous "grabbing eggs" scene is a true portrayal of the elderly comparing prices and loving queues. Many netizens say that when buying vegetables, they encounter enthusiastic grandparents who will deeply analyze whether this carrot is worth buying, where it was dug from, whether it is in season, and when it is cheaper to buy. Qian Dama's slogan is "no overnight meat," claiming that all its products are sold out the same day. This selling point hits the mark. From 2013 to 2019, Qian Dama has fully penetrated the Guangdong market, and in recent years has been extending a "hand of friendship" to the elderly nationwide. In 2019, Qian Dama entered Shanghai, Wuhan, Changsha, Sichuan and Chongqing, and at the end of 2020 began to enter the northern market, with the first two stores in Beijing both located in Tongzhou District. Currently, Qian Dama's stores in Beijing are all outside the Third Ring Road, with the most in Tongzhou. Shenran noticed that Qian Dama is approaching the center of Beijing, with the first store inside the Third Ring Road being laid out. Facing the elderly with years of experience, Qian Dama's approach is: to please. To please the elderly, the first priority is to make a fuss about service. E-commerce is convenient, but it weakens human-to-human communication. As a physical store, Qian Dama can enhance the loyalty of elderly users by aggressively attacking service. Li Yuan also confirmed that even during peak customer flow, Qian Dama staff will respond to the requests of elderly people who find it inconvenient to pluck hair due to presbyopia, lifting a whole piece of pig skin and using a lighter to singe the pig hair. Some Beijing Qian Dama stores have also integrated the use of elderly care and disability cards. Staff promote it in community groups, and many elderly people respond, saying they will try the card recently. When Shenran visited the store, a grandmother was explaining to the staff about home delivery matters. The staff was busy, and the grandmother repeatedly praised them. But some netizens feel that the staff is too enthusiastic, making them uncomfortable. Secondly, tiered discounts. The elderly compare prices and are also interested in promotions. Qian Dama's feature is time-based discounts: starting at 7 PM, 10% off the whole store, decreasing by 10% every half hour, until 11:30 PM when everything is given away for free. (Photo of Qian Dama discount period / Shenran) Shenran visited a Beijing Qian Dama store around 7 PM during the first discount period. There were only a few customers in the store, and one staff member was busy. "20% off!" At 7:30, the staff shouted loudly, and at the same time, many customers poured into the store, basically all elderly. They skillfully tore off plastic bags, rushed to the discount area, and focused on picking goods. After 7:30, a long line formed at the checkout. This is not even the peak. The staff told Shenran: "It's not time yet. At 8:30 when it's 40% off, that's when there are the most people." Qian Dama can be described as "blocking both ends." Generally, vegetable markets have a morning market, and by noon there is not much stock left. The evening market not only has less stock but also is not fresh. In contrast, Qian Dama's morning peak is for freshness, and the evening peak is for cheapness, locking in both morning and evening crowds. An auntie who often visits a Beijing Qian Dama store quietly shared her experience with Shenran: "It's not that discounted without discounts; you still have to come in the evening." Another trick is to solidify fans online. Locking in the elderly with offline physical stores is not enough; you also need to maintain a presence online. Online services can have more imagination. Each Qian Dama store has several WeChat community groups. When the store first opens, the staff's WeChat is posted on flyers, and staff also guide customers to join the groups. Most people in the groups are elderly customers with avatars of flowers, landscapes, selfies, or tourist photos. When operators promote promotional information, they send red envelopes. The amount is very small, each person gets only a few cents, but the elderly who love lively atmospheres will rush in to grab them as soon as they are sent. In addition, operators also publish traditional, practical, and easy-to-understand information in the groups, such as Disciple Rules, recipes, cooking methods, test reports, weather forecasts, etc. From time to time, elderly people come out to like them. Qian Dama has opened an online mall, which can deliver to home or allow scheduled self-pickup. E-commerce has more categories; stores only sell fresh fruits and vegetables, while e-commerce covers all daily necessities. A salesperson at a fresh food supermarket told Shenran that fresh food supermarkets sell special-priced goods, especially pork, as a means to attract traffic. Customers come to the store and also buy some high-margin goods, balancing the profits. Qian Dama's stores only sell fresh fruits and vegetables, which are low-margin goods. E-commerce, including self-pickup, is a supplement and balance for it. Offline stores doing e-commerce also brings another possibility. Qian Dama plays happily with the elderly offline, but online it is not only the elderly participating. Middle-aged and young people living with the elderly, and young people living alone, are also drawn into this business. Qian Dama's self-pickup service is online reservation, with pickup at the store at 2 PM the next day. Many Qian Dama users mention letting "the elderly at home" pick up the goods. Young people order, the elderly pick up. The elderly user is an entry point, and Qian Dama smoothly cuts into the entire family's consumption scenario. Time-based discounts: real savings or a trick? Qian Dama's biggest gimmick is time-based discounts. However, decreasing 10% every half hour seems exciting and like selling at a loss for publicity, but there is also a trick to it. The discount rules that play word games are actually not that preferential. "Did you give me a discount?" An elderly man bought some peaches and expressed doubt to the staff at checkout. He said that the peaches bought at 7 PM were more expensive after the discount than during the day. He pointed to the price tag in the store and said to Shenran, "The daytime price of these peaches is 3.18 yuan per jin. When the discount starts at 7 PM, all goods return to the original price, and the discount is based on the original price." He took out the receipt, which showed the original price of the peaches was 3.9 yuan. The customer left angrily, and the staff explained: "He came when it was 10% off. Wait until it's 40% or 50% off, and then see whether it's cheaper during the day or at night." Shenran noticed that the discount poster in the store did not indicate that the discount was based on the original price. Before the customer checked out, he was not informed that the price had returned to the original. Only after carefully checking the receipt did he discover the hidden rule. The attractive time-based discount includes two parts: returning to the original price and tiered discounts. But Qian Dama stores sometimes only emphasize the latter, which can easily mislead customers. Discounted goods also do not mean customers can definitely buy them. Taking the store Shenran visited as an example, after 7 PM, about 3 of the 5 shelves were cleared. So, as the discount increases, the goods decrease, and the goods actually sold at low prices are extremely few. As a Beijing staff member told Shenran, they never even wait for the free giveaway; the goods are snapped up. "We basically close around 10:30." (Source / Pexels) The time-based discount model also has bugs in practice. Li Yuan told Shenran that in Dongguan stores, elderly people often take goods in advance and wait in the store for the next discount period to check out. "Staff allow customers to wait half an hour before checking out, but not too long. However, some elderly people insist on waiting, and the staff can't do anything about them." A consumer in Shenzhen, Guangdong, admitted to Shenran that the elderly in her family had similar operations, but the situation made her very dissatisfied. "Once, the elderly person picked a whole chicken. It was a few minutes before the 40% discount at 8:30, so they waited a bit. When they went to check out at 8:30, the staff said it was not for sale," she said angrily. "There were others waiting too, and the staff treated customers differently." During peak hours, staff have no time to care how long customers have occupied goods, nor can they use a stopwatch to calculate precisely, so disputes and friction are likely. Furthermore, the goods during discount periods are relatively cheap, but the quality is not as good as during the day. Taking meat as an example, merchants generally box the remaining meat after the morning peak and put it in the refrigerated cabinet to prevent spoilage, but there is also a hidden corner. Li Yuan introduced that when the store first opens in the morning, Qian Dama's pork is sold in bulk, hung or displayed, making it easy to choose. After the hot sales period passes, the remaining meat is boxed and put in the cold cabinet. In the afternoon and evening, what you buy is boxed meat. Li Yuan said that to prevent spoilage, boxing and refrigeration is fine, but the box is not transparent. She has bought meat that looks lean several times, but the fat is hidden underneath. A netizen in Zhuhai also encountered a similar situation. He said the boxed pork chop he bought was a whole piece of fascia, with only one side having a thin layer like lean meat. "The packaging is sneaky; the lean side faces outward, neatly stacked into a square." Some netizens joked that Qian Dama doesn't sell overnight meat, but successfully made me eat overnight meat. This is also a hidden problem of the crazy discounts at night. Few people eat the specially priced meat that night; they freeze it in the fridge, which is also a disguised way of eating overnight meat. Franchisees don't make money? Hidden worries behind rapid expansion Qian Dama's store count saw rapid growth after 2017. At that time, Qicheng Capital, a private equity growth fund led by JD.com, entered, and Qian Dama opened 700 stores in one year. In that year, Qian Dama also received two rounds of financing. (Qian Dama financing history Source / Tianyancha) After 2020, Qian Dama's store growth rate welcomed a second peak. This was also the period when Qian Dama expanded its territory and rushed north. (Compiled from public information Chart / Shenran) Qian Dama's expansion relies on franchising, which looks prosperous, but do franchisees make money? In the early days, Qian Dama was individually operated. In 2014, it opened the franchise model and officially embarked on the road of expansion. In July last year, Qian Dama had more than 2,000 stores nationwide, and in February this year, it soared to 3,000, with more than 95% being franchise stores. Not long ago, a netizen named "Silly Third Sister" revealed on Douyin that she claimed to have sold her house and franchised two Qian Dama stores in Changsha. From initial investment to losses, she lost more than 1 million yuan in a year and was also cut off by the company. Silly Third Sister said the company told her that the first three months would be loss-making because they needed to attract traffic by selling at cost, and only after reaching a certain customer flow could they raise prices. However, when she asked the company why she had not seen profits, the company did not provide positive guidance. According to media reports, Qian Dama's response to this matter was that Silly Third Sister was fined for illegally selling overnight meat, and cutting off supply was a punishment. Silly Third Sister's explanation was that she was preparing to discard the overnight stored goods when the company discovered it and fined her 20,000 yuan. Silly Third Sister said that the store's customer flow was a false prosperity. Franchisees actually cannot make money. They can only purchase goods from the company, and the company's vegetable prices are higher than market prices. This matter caused a stir, and now Silly Third Sister's account on Douyin cannot be found. According to the franchise fee table provided on Qian Dama's official website, a 40-square-meter store requires nearly 240,000 yuan in opening costs, including construction, as well as basic equipment such as freezers, air conditioners, and televisions. Some detailed fee items, such as approval, public relations fees, wall building and door installation, and new equipment, are not included in the 240,000 yuan. In addition, there is a fixed franchise fee of 70,000 yuan. According to a recruitment notice for a Beijing Qian Dama store obtained by Shenran, the store manager's salary is 7,000-12,000 yuan per month, staff salary is 4,000-6,000 yuan per month, and meat cutter's salary is 5,000-9,000 yuan per month. If, as Silly Third Sister said, the store has 6 employees, including one store manager and one meat cutter, and the rest are staff, then a rough estimate is that a Qian Dama store spends at least 30,000 yuan per month on employees. For a 40-square-meter small store, the visible fees alone are more than 300,000 yuan, not to mention hidden fees. Official information shows that Qian Dama stores are mostly located near communities, with a regional protection distance of only 250 meters, which is not even enough to leave the community. But such a short distance limit is very beneficial for Qian Dama's store expansion and market share improvement. Qian Dama's investor, Hegu Capital, once compared this model to a "honeycomb tactic," showing that it is also favored by capital. Qian Dama store franchise fees Source / Qian Dama official website C-end consumers do not care whether franchisees make money; they only care about vegetable prices. For the elderly, hearing about discounts and rushing to them, spending time queuing, and creating momentum for Qian Dama, this is indeed a good move by Qian Dama. The rumor of Qian Dama's upcoming IPO will fly for a while. However, returning to the C-end, for Qian Dama, doing community business and elderly business, a more transparent and sincere attitude should never be abandoned. PS: From September 23 to 25, 2021, the 2021 (4th) China FMCG Conference hosted by New Distribution will open in Shanghai. Some of the heavy guests confirmed so far are: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, global expert partner of Bain & Company and former vice president of marketing for Coca-Cola China; 4. Chen Xiaodong, senior vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, vice president of Junlebao Dairy Group; 8. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operations Center; .... A grand event for FMCG people, you must be there! Are you "watching" me?