A few days ago, Dingdong (Cayman) Limited formally submitted a prospectus to the US SEC, planning to be listed on the New York Stock Exchange under the symbol "DDL".

2020 is a year of explosive growth of fresh e-commerce. Driven by epidemic, policy, capital and other factors, China's fresh e-commerce market is developing rapidly.

At the same time, the fresh e-commerce industry has also ushered in a recovery in financing. Dingdong (Cayman) Limited has completed a total of US $1.03 billion in D-round financing in the past two months, behind which Yunji Inc has more than 20 VC/PE, including Softbank Corp., Sequoia Capital, Today Capital, Tiger Global Management and Guling Investment and other luxury investment lineup.

Compared with other standardized goods, fresh products are highly competitive. Yunji Inc, a big player in the industry, what is Dingdong (Cayman) Limited's advantage compared to other players?

In the past, the real-time retail track focused on the family shopping scene.

From the successful transformation of community life services, focusing on the family shopping business.Dingdong (Cayman) Limited, formerly known as Ding Dong District, later transformed family shopping business.

"Dingdong (Cayman) Limited" APP was officially launched in May 2017. by the first quarter of 2021, Dingdong (Cayman) Limited had established more than 950 front positions in 29 cities across the country and operated 40 regional processing centers in 14 cities. Dingdong (Cayman) Limited through the origin direct mining → regional processing center → front warehouse distribution to provide users with high-quality, multi-category fresh consumption experience.

Dingdong (Cayman) Limited has set the industry standard of "29-minute delivery home" since its inception in 2017. the company has built up positions before ploughing, developed four years of rapid expansion, and ranked first in the Yangtze River Delta region in 2020.

The management team has rich experience, focusing on the construction of product development and performance team.The ownership structure of the company is clear, and the shareholding ratio of all directors and senior executives is 31.6%.

Liang Changlin, founder and CEO of Dingdong (Cayman) Limited, independently developed the world's first video clipping and merging software (EasyVideoJoiner&Splitter). Before founding Dingdong (Cayman) Limited, he founded the mother-to-child online platform Yaya Network and Mom help App in 2003, and has a deep understanding and practical experience of China's new retail industry.

Yu Le, the company's chief strategy officer, was the general legal adviser of Shanghai Yaya Information Technology Co., Ltd. Jiang Xu, the company's chief technology officer, was in charge of the technology development of Tmall International & Tmall overseas and B2B financial technology in BABA. He holds a master's degree in computer science from Shanghai Jiaotong University and has rich experience in e-commerce related technology. Yang Ping, the company's chief supply chain officer, once served as JD.com 's vice president and has a deep understanding of the supply chain. In addition, the founder of the company, Liang Changlin, has served for many years, and there are also many ex-servicemen among the staff. the whole management team continues the army style, has strong combat effectiveness, and can fight tough battles on the fresh track.

As of March 2021, the total number of employees has reached 3098, of which 1320 are product developers, accounting for 43% of the total employees. The company is now in the expansion period, the capital demand is still large, the pre-warehouse network layout, supply chain system improvement, product development and so on all need continuous investment. According to the company's prospectus, 50 per cent of the funds raised by Dingdong (Cayman) Limited's IPO will be used to increase the penetration of its existing market and open up more new markets. In addition, 30 per cent will be used to enhance Dingdong (Cayman) Limited's purchasing capacity upstream and about 10 per cent will be used to enhance its technology and supply chain systems.

The pre-positional business starts the national expansion, and the user recognition continues to improve.

The whole country expands rapidly, and many cities realize and maintain it every month.GMVMore than 100 million yuan. According to the company's first entry into Shanghai in May 2017, it has achieved and maintained a monthly GMV of over 100 million yuan in five cities.

From 2018 to 2020, Dingdong (Cayman) Limited's GMV increased from 742 million yuan to 13.032 billion yuan at a compound annual growth rate of 319.2%. This growth rate is the highest among the top five real-time e-commerce companies in China, and is much higher than the industry's average compound growth rate of 114.6% over the same period, according to data from Zhenshi Consulting.

Has a large number of active users2020The total annual order volume is close to 200 million.According to the company's prospectus, Dingdong (Cayman) Limited's total order volume was 198.5 million in 2020 and 69.7 million in the first quarter of 2021, showing an overall upward trend. In terms of user size, the company had an average of 6.9 million monthly transaction users in the first quarter of 2021, compared with 3.6 million in the same period last year.

User recognition continues to improve, and members contribute.GMVThe proportion is large.According to the first quarter of 2021, 22% of the company's monthly trading users were member users (about 1.52 million), GMV contributed 47.0%, and member users contributed an average of 6.7 orders per month. From 2019 to 2020, the average monthly consumption of member users was 407 yuan and 478 yuan respectively, greatly exceeding the average of all transaction users.

In-depth layout of the upper reaches of the supply chain, the development of own brand products.Dingdong (Cayman) Limited offers a wide range of commodities through upstream direct mining. According to the company's prospectus, the number of Dingdong (Cayman) Limited SKU has increased from more than 5700 in the first quarter of 2020 to more than 12500 in the first quarter of 2021; in the first quarter of 2021, the company has more than 1600 upstream suppliers. The company began to launch its own-brand products in July 2020 and has established several private brands to reduce costs by signing exclusive distribution agreements with specific suppliers.

The development of private brand products has achieved initial results.GMVThe contribution has more room for improvement.According to the company's prospectus, the company's own-brand products accounted for 3.3% of the GMV in the first quarter of 2021, and the GMV of own-brand products in Shanghai accounted for 8.1% of the total GMV in Shanghai.

High revenue, accelerated growth of performance costs, increased losses, and abundant cash reserves

Business income is growing rapidly, and the growth rate has slowed down after the epidemic.According to the company's prospectus, Dingdong (Cayman) Limited's operating income increased from 3.88 billion yuan in 2019 to 11.34 billion yuan in 2020, an increase of 192.2 percent over the same period last year and 46.0 percent in the first quarter of 2021.

The growth of performance expenses accelerated, the net profit loss expanded, and the loss rate narrowed.In 2020 and the first quarter of 2021, the company's operating costs increased by 183.2% and 61.4% respectively compared with the same period last year, and performance fees increased by 61.4% and 76.4% respectively. Dingdong (Cayman) Limited's loss expanded from 1.873 billion yuan in 2019 to 3.177 billion yuan in 2020, and the loss rate narrowed from 48% to 28%. The company is in a period of market development and will continue to increase investment in the short term.

Operating cash flow continues to flow out and cash reserves are abundant to support future expansion.From 2019 to 2020 and the first quarter of 2021, the company's cash reserves are 939 million yuan, 1.376 billion yuan and 4.409 billion yuan respectively. IPO fund-raising helps to consolidate the company's cash reserves and lays a solid foundation for consolidating market position, improving market penetration and opening up new markets.

Breaking through on a large scale and continuously ploughing the supply chain is the key to building a long-term moat.

From the point of view of the business model, players in the front position are easy to fall into homogeneous competition. Dingdong (Cayman) Limited breaks through with scale, promotes customer reputation with fine operation, cultivates customer stickiness, and focuses on supply chain construction. From the upstream, the establishment of processing center warehouse, the establishment of transport network, strict quality control, the development of own brands and other aspects of simultaneous efforts, based on the underlying logic of retail to gradually establish a long-term moat.

In the future, the company has more room for expansion, and the profit model is expected to be improved through economies of scale and the development of profit products (own brand products, prefabricated vegetables, finished vegetables, etc.). Supply chain management and cost control are the key to the competition.