Fresh-Food O2O Enterprises Face Hardship, Business Model Unviable Without Follow-Up Financing
Yicai Global
/SOURCE : Yicai
Fresh-Food O2O Enterprises Face Hardship, Business Model Unviable Without Follow-Up Financing

(Yicai Global) Aug. 11 -- Once hotly pursued by capital, the e-commerce fresh-food sector's on-line-to-off-line (O2O) enterprises collectively now face difficulties.

BEE QUICK, which specializes in such fast-moving consumer goods as fresh food and fruit, is mired in a cycle of layoffs. The O2O project under fresh food e-commerce website benlai.com is facing business adjustment. Fruit Day is said to have closed all its offline stores. E-commerce industry analyst Li Chengdong said fresh-food O2O enterprises are experiencing turbulence because business losses are huge and hard to reduce, and the financing environment is bad. Once deprived of follow-up financing, O2Os are hard-pressed to continue at a loss.

Fruit Day Vice President Mou Xijun, said candidly as he was interviewed by our Yicai Global reporter that consumers demand product freshness and prompt delivery, while China's cold-chain logistics is under-developed from front end to back. From the first kilometer to the last many problems still persist in the whole cold-chain system.

To hasten delivery, O2O firms often cooperate with local convenience stores. After logging an order, a store should ensure delivery in 30-60 minutes. Since O2O enterprises relinquish control of delivery, the stores, busy with their own business often cannot ensure prompt arrival, and cannot protect the O2O brand because finding premium products for delivery is not always possible. The biggest problem, however, is high costs. Li Chengdong said frankly that fresh-food O2O is still in the market phase of subsidizing and educating customers, which makes it hard to survive without capital infusions.

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