Yipin Fresh has not developed its own unique development strategy; instead, it frequently chases trends for short-term gains, failing to turn fresh food into a trend but rather running after trends.
Recently, news about Yipin Fresh store closures and bankruptcy has frequently surfaced. Searching the keyword "Yipin Fresh" on Douyin reveals entries like "Why did Yipin Fresh close all its stores overnight?" Many bloggers with IP addresses in Anhui have posted videos about the overnight closure of all 22 Yipin Fresh stores in Bengbu, Anhui, leaving hundreds of employees unemployed. The videos show employees in uniforms gathered in the stores, with bloggers claiming, "Yipin Fresh in Bengbu closed overnight, employees lost their jobs overnight, facing unreasonable store transfers and forced resignations, even being coerced and deceived into signing resignation reports." Some netizens commented, "All Yipin Fresh stores in our area have closed, and prepaid card balances are not refunded. Items purchased on the mini-program are not shipped, and customer service calls go unanswered! Are they running away with the money?" Source: Douyin Of course, there are dissenting voices in the comments, saying that the closures are just a transformation into wholesale departments, and only in some regions and some stores. Such claims are easily refuted by facts: if Yipin Fresh's home base in Anhui is facing such a "major defeat," how could other cities fare better? Indeed, Yipin Fresh stores in Shanghai, Nanjing, and other cities have also been reported to close. Source: Douyin This brand, once hailed as "Pinduoduo in the fresh food sector," had over a thousand stores nationwide at its peak and was even rumored to be preparing for an IPO in 2021. Now it is suspected of running away with money. From a business model perspective, the shift from the once-hot fresh food track to the currently popular discount and wholesale formats reveals its wavering positioning and blind tactics. What exactly happened behind the turmoil of Yipin Fresh, which doesn't do business but only chases "trends"?
Crazy "Additions" to Find a Way Out Blindly Following Trends and Constantly Transforming The downward trend of Yipin Fresh has been evident for some time. First, the significant decline in store count and scale growth. Yipin Fresh was founded in Hefei in 2013 and expanded to 13 cities nationwide over 10 years. From 2017 to 2021, although the number of stores kept growing, the growth rate declined year by year. Source: Chuangtou Plus Overall, the number of stores peaked in 2021 (1,800 stores), after which growth turned negative, entering a contraction and transformation period. Public data shows that by May 2022, the number of stores had dropped to 1,500, and with the recent large-scale closures, the number is likely even lower. In terms of focus, Yipin Fresh also contracted in 2022, concentrating its operations mainly in three provincial capitals—Hefei, Wuhan, and Fuzhou—to save operating costs. Second, continuous transformation and adjustment of business formats. When a brand's profit model is established and stable, it tends to do subtraction during the growth phase, and vice versa. Yipin Fresh's multiple transformations were disordered "additions," like a headless fly trapped in a glass bottle, revealing anxiety and helplessness about the new situation. It was in 2022, when store numbers were declining, that Yipin Fresh launched its fourth-generation stores, changing its slogan from "Good life, not expensive" to "Living vegetables." From the store decoration and product categories, the fourth-generation stores targeted young consumers. Fresh products were reorganized from category-based displays to scenario-based (barbecue, late-night snacks, dinner, etc.), and 20% of products were internet-famous items. Yipin Fresh bet on "consumption upgrading" to please young people, but its hopes were dashed again. The reduction in stores and scale eroded Yipin Fresh's proud price advantage, and the outdated "consumption upgrading" not only failed to help Yipin "survive" better but accelerated its "death." Source: Internet With the narrowing of business, cost control on labor led to insufficient staffing for the large-store model promoted in the fourth-generation upgrade, with nearly 400 square meters per store but far from adequate personnel. This resulted in seemingly exquisite and high-end stores with chaotic management that did not match the positioning. Before the new format had been operating smoothly for a year, Yipin Fresh transformed again, converting some Hefei stores into "Yipin Wholesale Departments" , changing the slogan from "Living vegetables" to "Wholesale even for one item." This transformation greatly weakened the fresh food category, even dropping the word "fresh" from the name. Source: Internet The previous transformation rode the wave of consumption upgrading, and this time it aimed at the all-category discount store trend. Whatever is trendy, it does that business. Blindly following trends, Yipin, which started with fresh food, even abandoned "fresh food." It is clear that Yipin Fresh has not formed its own unique development strategy; instead, behind the frequent chasing of trends for short-term gains, the ambition to raise funds and "cut leeks" (exploit investors) is gradually emerging.
Rapid Cooling of the Track Yipin Loses Favor with Capital Looking at Yipin Fresh's transformations and strategic contractions over the past two years, on the one hand, they are the result of blindly following trends and copying everything; on the other hand, they indicate that Yipin is under tremendous operational pressure, especially profitability issues, leading to consecutive store closures and the weakening of its fresh food positioning. This is closely related to the overall cooling of the fresh food track. From 2018 to 2020, Yipin Fresh was a darling of capital, with most of its financing obtained during those three years, but in the past two years, there has been no capital support. Source: Tianyancha To date, Yipin Fresh has received a total of five rounds of financing. From the A round of 240 million yuan in 2018, to the B round of 2 billion yuan in 2019, to the C round of 2.5 billion yuan and strategic financing in 2020, the most recent financing was in 2021, jointly invested by Longzhu Capital and Tencent, with the amount undisclosed. Compared to previous financing, the latest round may not have been large enough, as Yipin Fresh rarely disclosed the amount. Without a proven profit model, Yipin Fresh has been relying on capital "blood transfusions" to survive. This also means that once the capital chain breaks, it could easily become the second "Miss Fresh." When we focus on the years of rapid expansion, we might find the reasons for its rise and fall. Yipin Fresh initially was no different from other fresh food platforms, with its early differentiation competitiveness reflected in "low prices." At that time, Yipin Fresh's product prices were about 20% lower than supermarkets, earning it the nickname "Pinduoduo in the fresh food sector," which was its biggest advantage for early breakout. Source: Internet After 2018, backed by multiple rounds of financing, Yipin Fresh began to expand and fully implemented the store partner model in 2019. This unique operating model accelerated Yipin Fresh's expansion but also planted landmines for later development. In fact, this partner model has deep roots with Yonghui, as Yipin Fresh's founder, Jiang Jianfei, once served as a senior executive at Yonghui. It can be said that Jiang Jianfei "copied" this homework from Yonghui Superstores. Yipin Fresh founder Jiang Jianfei Source: Internet The store partner model means that even employees without investment can become partners of a Yipin store, sharing dividends monthly according to investment ratio. According to Yipin Fresh employees, at that time, about 60% of a store's capital was provided by headquarters, 40% by the store manager, and lower-level section heads invested tens of thousands of yuan, with profits distributed according to equity ratios. This model was remarkably efficient during expansion because employees who shared dividends as partners paid more attention to reducing fresh food loss and costs, fully mobilizing their initiative. According to public data, taking a Yipin Fresh store as an example, after implementing the partnership system, the fresh food loss rate dropped from 2% to 0.5%, a significant effect. After cost control, the increase in profit returns further stimulated partners' enthusiasm and attracted more employees to become partners. This system indeed facilitated Yipin Fresh's early large-scale expansion, and the model was not only applied to store operations but also gradually extended to the supply chain. Source: Essence Securities Research Report It is understood that Yipin Fresh signed partner agreements with multiple agricultural product procurement bases, implementing a new model of risk-sharing and profit-sharing. The principle is similar to store partners: when revenue and performance grow, the model can stimulate the enthusiasm of all parties and effectively control fresh food loss and procurement prices, achieving a win-win situation. But Yipin Fresh ignored the gap between its own platform positioning and Yonghui's massive scale, blindly copying whatever was useful. After all, this model is based on revenue growth, profit sharing for partners, and quick return on investment. Once revenue declines and scale contracts, the model becomes like a car without a handbrake, losing control and sliding rapidly. When store performance and profitability fail to meet expectations, costs invested are wasted, and partners who do not enjoy stable returns find that it is not as good as working for a salary, so the incentive model fails. Furthermore, the shrinking store scale has weakened Yipin Fresh's bargaining power, losing its price advantage and facing strong competitors, leading to declining store traffic and a vicious cycle. 2021 became a watershed for Yipin Fresh. A former partner said that after 2021, Yipin Fresh gradually increased its requirements for profitability, and various policies and adjustments followed. "Later, dividends became fewer and fewer, even none. So more and more people left, store managers changed frequently, and the team's cohesion was lost. Naturally, everything began to decline."
IPO Likely to Be a Bubble Food Safety Issues Are Not "Fresh" 2021 was not only the turning point for Yipin Fresh's performance but also the node where its capital momentum "turned from prosperity to decline." Within three months after receiving strategic financing from Longzhu and Tencent in July of that year, Yipin Fresh's equity structure underwent major changes. Source: Tianyancha As the domestic operating entity of Yipin Fresh, Chongqing Yipin Hong Technology Co., Ltd.'s equity is wholly controlled by YI PIN HONG LIMITED, registered in Hong Kong, and all 11 previous shareholders withdrew from the parent company. This transfer of equity to an overseas company to build a VIE structure is a common method for domestic companies to list overseas, indicating that Yipin Fresh was already preparing for an overseas listing in 2021. However, Yipin Fresh has never publicly responded to the IPO rumors. Nearly two years have passed since this equity change, and with the recent store closures, it is highly unlikely that Yipin Fresh will go public in the short term. **The business battlefield is smokeless but extremely cruel. The "fresh food + community group buying" track, pushed to the capital trend during the pandemic, has left only a few surviving players after the waves. ** For example, Tongcheng Life went bankrupt in July 2021, Orange Heart优选 withdrew in September of the same year, and Miss Fresh dissolved and fled in 2022, all becoming bubbles after the track's dividends dissipated. In addition, the grocery businesses under internet giants are growing rapidly within their ecosystems, and strong competitors in the community fresh food sector, such as Qian大妈 and Mingkanghui, as well as Costco and Sam's Club, which are popular among young people, are all vying for a share of the fresh food pie. Although fresh food has high frequency and rigid demand, it remains a difficult business due to high loss costs and fulfillment fees. At this stage, whether it is big companies that can burn money or small players, the focus is on profitability. After all, when the tide of capital recedes, profitability is the key to determining whether they are swimming naked. As Yipin Fresh founder Jiang Jianfei said: "Profit is the prerequisite for expansion; capital can only be a booster." Without a verified profit model and lacking capital support, the shrinking scale of Yipin Fresh is now verifying his words, and the decline is inevitable. Perhaps an IPO could temporarily mask the truth of its weak development, but distant water cannot quench immediate thirst; the current adverse conditions fundamentally make it difficult to support a successful listing. What's worse, Yipin Fresh's various trial-and-error transformations are only cutting off its own retreat. Weakening its low-price advantage and diluting its fresh food attributes are like cutting off the few remaining advantages. The problem is that if the profit model of the main business cannot work, where will Yipin Fresh find a second growth curve after cutting off its advantages? When the biggest trend of the fresh food track passed, Yipin Fresh lost its mainstay and could not settle down to do business properly, leading to multiple food safety incidents and public opinion storms. In May of this year, the Anhui Provincial Market Supervision Administration issued a notice disclosing that the leeks sold at Yipin Fresh's Anliang City Plaza store in Hefei, Anhui, contained cadmium (measured as Cd) levels that did not meet national food safety standards. Such food safety issues are common at Yipin Fresh. In June 2022, a Shanghai store was found to be selling loach with enrofloxacin drug residues exceeding standards by 6 times; in January of the same year, the Ningguo Road store was exposed for selling bream with veterinary drug residues exceeding food safety standards, resulting in a fine of 20,000 yuan. Source: Shanghai Market Regulation Official Weibo If even the most basic food safety cannot be guaranteed, how dare it use "fresh" as its brand sign? With internal and external troubles, the "IPO" is more like a castle in the air. The primary task for Yipin Fresh now is to find a way to "survive."