The failure of SF Best is not an isolated case, offering a glimpse into the starting point and endgame of logistics companies venturing into new retail. Since the concept of new retail was introduced, various enterprises have begun attempts. As a leading logistics company, SF Express is no exception. Recently, media reported that SF Best, dubbed the 'project that cannot fail,' is closing stores on a large scale nationwide. Despite backing from SF Express, a large base of high-net-worth users, and an efficient logistics network, SF Best still cannot escape mass closures, prompting more industry practitioners to question whether logistics companies can successfully cross over into offline retail. SF Best Closes Stores on a Large Scale Recently, multiple media outlets reported that SF Best, a community fresh food supermarket under SF Express, has begun closing many stores nationwide, mainly in Shanghai, Wuhan, Qingdao, Chengdu, Xi'an, etc. Currently, all stores in Shanghai have been closed, while stores in other cities are mostly in discount promotion or clearance status. A SF Best store in Chengdu Taking SF Best in Chengdu as an example, products in over 20 stores have mostly begun price reductions and promotions, triggering a large-scale buying spree by some local industry practitioners. "Because most of SF Best's products are imported with high value, especially imported red wine and wine, SF's clearance sale offers 200 yuan off for every 100 yuan spent, which is quite tempting. Moreover, there are frozen foods that usually cost hundreds of yuan, which I couldn't bear to buy, but now they are only tens of yuan, which is very affordable. " A wine and beverage distributor who participated in the buying spree told New Distribution. After personally visiting several SF Best stores in Beijing, New Distribution found that this closure wave did not affect the Beijing area. "Stores in other parts of the country are closed, only Beijing and Guangzhou stores are still operating," the store manager of a Beijing SF Best store told New Distribution. When asked about the reasons for closures in other markets, the store manager responded that it was due to "strategic development changes at the company headquarters." By observing some superficial factors at several SF Best stores in Beijing, we might glimpse part of the reason for the closures. A SF Best store in Beijing When New Distribution visited several SF Best stores in Beijing, it was during the evening rush hour, and these stores are mostly located near mature communities. Logically, this should be the peak time for store reception, but SF Best stores appeared somewhat deserted, with occasional parents picking up children from school entering to buy snacks. In contrast, a Quanshi convenience store and Shouhang supermarket, less than 100 meters away, presented a completely different scene. In terms of products, due to the emphasis on "global cuisine, direct sourcing from origins," the prices are slightly higher than similar products in ordinary fresh food stores. "It's more cost-effective with membership coupons," the staff's response confirmed this. In terms of fulfillment, although SF Best has an online mall, the policy of free delivery for orders over 99 yuan has become an obstacle for many users to place orders online. SF Express and Its Logistics Peers' New Retail Attempts Although we cannot label the still-developing SF Best as a failure, from the current development landscape of the retail industry, it is difficult for SF Best to have a significant chance of turning around, even though SF's leader Wang Wei had high expectations from the start. It is rumored that before the official launch of the SF Best project, Wang Wei flew from Shenzhen to Beijing to hold a meeting with senior executives and emphasized repeatedly that "SF Best is a project that cannot fail." After the concept of new retail was introduced, Wang Wei also stated multiple times that "New retail is the combination of online and offline sales channels. Merchants will have higher requirements for customer perception and timeliness. SF Technology, with its massive ground network, industry-leading aviation resources, and over 2,000 R&D personnel, is building a one-stop service for national brands, including online e-commerce distribution and offline supply chain services." This shows his determination to do retail. Clearly, with the existing logistics and technology foundation, SF Express will not give up the big cake of retail. In fact, the SF Best project is not SF's first attempt at retail; SF's exploration of retail dates back to 10 years ago. In 2009, during the Dragon Boat Festival, couriers from SF's Jiaxing district took the opportunity to promote and sell over 1 million Wufangzhai zongzi, an unexpected sales achievement that gave SF confidence in building an e-commerce platform. In 2010, SF officially launched its e-commerce platform "SF E-Business Circle," mainly selling food, and also started its payment platform "SF Pay," which eventually fizzled out. In 2012, SF adjusted its business direction, positioning cold chain technology as its core competitiveness, and SF Best was officially launched. On May 18, 2014, SF launched "Heike" network service community stores, offering four main services: product pre-order, offline experience for online shopping, convenience services, and self-pickup of express parcels, attempting to solve the "last mile logistics problem" and seize community entry points. In 2015, most "Heike" stores were closed, and those not closed were renamed "SF Home." Meanwhile, to prepare for listing, SF Holdings officially divested the SF Commercial segment responsible for online and offline retail business. In September 2016, convenience stores became popular, and SF renamed its offline stores "SF Home" to "SF Best," positioning them as "express + convenience store." Now SF Best is no longer about offline experience and online ordering but physical retail, with categories expanded to fresh food and cross-border imported goods. On November 20, 2017, SF launched the unmanned shelf brand "Feng E Zu Shi," becoming the first logistics company to participate in unmanned shelves after JD Daojia Go, E-Dian Bianli, and Hema Fresh. It is no exaggeration to say that the express delivery industry has a retail dream, and currently, logistics companies venturing into retail are not limited to SF Express. YTO Express opened a physical supermarket "MUM'S SELECTION" in July 2017, offering not only fresh products like meat, fruits, and eggs but also a relatively complete range of FMCG daily necessities. ZTO Express entered the unmanned shelf field in February last year, becoming the second express company after SF to deploy unmanned shelves. Best Group launched the B2B platform Best Dianjia and began vigorously developing Best Neighbor through investment and acquisition of "WOWO Convenience Store." China Post opened the B2B2C e-commerce platform "You Le Gou"... Logistics Companies' Retail Waterloo Returning to the starting point of the SF Best incident, let's first think: Why do logistics companies represented by SF Express flock to retail? 1. Expand business lines and seek new revenue growth engines The development of e-commerce has promoted the development of China's logistics and express delivery industry. To some extent, without e-commerce, there would be no current state of China's logistics and express industry. Of course, the reverse is also true. The interdependent relationship has made China's express industry heavily reliant on e-commerce. As online traffic and customer acquisition costs rise, the growth of the e-commerce industry has slowed, and the express industry cannot escape this fate. High dependence on e-commerce has become a major factor limiting the development of the express industry. Data source: Internet Public data shows that the growth rate of China's express business began to slow in 2013, and the growth rate of related operating revenue also began to decline significantly. At the same time, new industry participants (such as JD Express) continue to emerge, and currently, there are over 8,000 express companies in China, further piercing the price bottom line of the domestic express industry. Data source: Internet As of now, the average price of domestic express delivery has dropped from 28.5 yuan in 2007 to 12.7 yuan, and the gross margin has fallen from 30% in 2007 to less than 5% now. Coupled with significant increases in personnel and management costs, it is imperative for logistics and express companies to find new revenue growth points. In this industry context, it is natural for express companies that have been serving e-commerce to do e-commerce through their own logistics systems. At the same time, the parcels generated by e-commerce can not only feed back into the basic express business and expand economies of scale but also help reduce dependence on centralized e-commerce platforms like Taobao and JD.com. 2. New retail is hot, and what it kills is not retail but traditional express delivery After the concept of new retail was introduced, new retail formats such as Hema Fresh and Super Species emerged one after another. Although product structures and business models vary, they all choose to use offline stores or front warehouses for fulfillment, solving the "to-home" problem of the last mile through self-built delivery teams or crowdsourced urban distribution logistics. Including community group buying that emerged in the second half of last year, which initiates product pre-sales through community leaders, and after successful group buying, delivers the next day or allows self-pickup at the store, essentially solving the last-mile delivery problem. At the same time, the sharing economy has risen. The gradual rise of platforms such as intra-city logistics, food delivery, and flash delivery has begun to erode the traditional express business boundaries. The direct consequence is that the product fulfillment cycle is getting shorter, and "instant gratification" has become a major consideration for more consumers in online shopping; terminal logistics will gradually move towards a shared crowdsourcing model, and traditional express business will gradually decline. From this perspective, express companies venturing into retail is not an optional choice but a mandatory option in the multiple-choice question. Taking the effect as the cause, through the SF Best case, let's look at why logistics companies represented by SF Express frequently encounter retail Waterloo? 1. Using logistics thinking to do retail For SF Express, which started with high-end logistics services, its focus from the beginning was on cost and efficiency, and its positioning was entirely high-end. SF Best's product structure is mainly imported seafood, imported snacks, and beverages, with 80% of products being foreign brands. However, retail, especially e-commerce retail, requires more consideration from perspectives such as customer flow, consumer behavior, sales strategies, product quality control, and supply chain. In addition, the high-end positioning determines that SF Best can only locate stores near high-end residential areas, with high rents, but this does not bring high customer flow to SF Best stores, becoming an important factor hindering store profitability. 2. Impatience and lack of professional retail talent Internet companies doing offline retail often rush for success, mistakenly believing that the scale effect online will apply equally to offline retail. Undoubtedly, SF made the same mistake. In 2014, SF officially launched "Heike" stores and quickly opened over 2,000 stores nationwide in less than half a year. SF Best also planned to reach 4,500 offline stores in 2018 and break 10,000 stores within 2-3 years, which is strikingly similar to the "explosion" incidents in the domestic convenience store sector last year. You can't get fat in one bite; remember that "convenience store king" Meiyijia took nearly 20 years to reach 16,000 stores. The rapid development of "Heike" exposed insufficient profitability, ultimately leading to its inability to develop independently and being merged into SF Best. Rapid development led to a severe shortage of professional talent in service, which is also an important reason hindering SF Best store profitability. 3. Lack of necessary promotional actions and insufficient brand awareness Undoubtedly, SF has absolute influence in the logistics field, but its brand effect has not extended to the terminal retail sector. Especially for mid-to-high-end community fresh food retail brands, only by establishing deep brand awareness among high-net-worth users can they influence the user behavior and consumption habits of this consumer group. Clearly, SF Best currently lacks this awareness and has not taken actions at the promotional level to change consumer behavior, which also means that to make a breakthrough, it still has a long and difficult road ahead. Yang Daqing, a special researcher at the China Logistics Association, commented on the SF model: "SF seems to pursue building a self-contained ecosystem, constructing moats for business, finance, e-commerce, etc., while losing many cooperation opportunities with Tmall... But if the river is not wide enough and the riverbed is not deep enough, it cannot be called a moat, but only a 'moat ditch' that is easily crossed. " Now it seems that if logistics companies represented by SF want to cross over into the retail field, make breakthroughs, and ultimately build their own moats, they still have a long way to go. New Retail Expert Wang Jun's Comment From Heike to SF Best, from e-commerce model to offline physical stores, and then to unmanned shelves Feng E Zu Shi. From e-commerce to new retail, SF, with its strong logistics system and high-quality user touchpoints, has invested real money and time but still cannot succeed. It is definitely not simply explained by "lack of genes." Now, what SF's new retail faces is simple: whether to persist. If the strategic level is the only answer, then firmly believing in success will lead to success. Now is the best time for review, organization, and restart. The so-called "no break, no establishment"! First, have reverence for non-main industries. Retail has always been hard work, let alone fresh food and imported categories, which have always been the most brutal battlefield. But retail is also the most traditional industry, with many excellent experiences to learn from. Alibaba and Tencent are both focusing on 2B business this year, and for Tencent, it is even challenging unfamiliar territory. When a successful company wants to innovate in a new field, the most suitable method is internal entrepreneurship and horse racing. And establish the strongest industry expert advisory team. The earliest Heike experience stores were incomprehensible to anyone; consumers dared not enter, and if they did, they were confused. Blind self-confidence; offline stores are not played this way. And the offline model must be tested successfully in samples before full replication. Innovation is fine, but the essence of retail must be mastered. Why not go to Xuchang, a third-tier city, visit a store called Pang Dong Lai, and casually chat with a few locals on the street about their views on Pang Dong Lai? Perhaps you will find some new answers. Second, mobilize advantageous resources within the enterprise, on one hand reusing costs, on the other hand adding new functional nodes. This must be one of SF's core competitiveness.
- Can each contact between 200,000 couriers and users bring additional value without making users反感?
- With hundreds of thousands of parcels daily, each parcel is stored and unpacked by users for at least 3 minutes. During these 3 minutes, can users be activated to scan codes for interaction and conversion?
- As for express self-pickup points, their store attributes are not strongly linked to shopping in consumer perception, but as front warehouses, matching community group buying for self-pickup is a natural and smooth path. Third, create marketing super symbols. SF's brand is strong but solidified in the high-quality express field. In the fiercely competitive new retail field, SF needs strong innovative marketing to influence consumer minds. SF Best = what? Consumers' impression is still from the early "lychee air transport" era. Today's "SF Best" has become industry news about store closures. New marketing is the key to breaking the deadlock for SF's new retail now! Above all, solving how hundreds of millions of ordinary users view SF and SF Best is the most critical. Okay, I'm a bit thirsty; I'm going to buy some group-bought fruit on the mini-program. I still have a 30-yuan coupon to use, and it's said it can be delivered to home in 30 minutes. What do you think about this? Welcome to leave a message in the comment section below You can also scan the QR code below Add WeChat to join the group for discussion Looking forward to sparking new ideas with you -END-