With US$256 million from Tencent & Hillhouse Capital, New Retail convenience store BianLiFeng launches food delivery service

Unlike other convenience stores, BianLiFeng chooses to build up its own logistics team for the food delivery service.

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With US$256 million from Tencent & Hillhouse Capital, New Retail convenience store BianLiFeng launches food delivery service

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On 23rd October, one of the fastest growing cashier-free convenience store BianLiFeng launched their delivery service on their WeChat mini program homepage. At present, BianLiFeng can deliver items within an average time of 30 minutes within three kilometers, and a full coverage of distribution services has been established at Beijing Chaoyang District where many of their convenience stores are located. According to the Beijing Business Daily, this project is known as “Bee Fresh” project.

Convenience store launching food delivery service is not news. Previously, 7 eleven and Family Mart have launched their delivery services on Meituan, Ele.me and JD, selling fresh food, daily necessities, small snacks, and other commodities.  However, BianLiFeng chooses to build its own delivery service, logistics team, and food delivery service.

Users can place an order online via their WeChat mini program and application with a delivery fee of 4 yuan per order. The deliverables are basically synchronized with the offline stores, covering all categories currently on sale in the store.  In addition, BianLiFeng emulates Alibaba’s cashless supermarket Hema and established fresh food delivery app MeiRiYouXian, selling fruits, vegetables, egg, meat, and seafood.

Leveraging on bigger platforms such as Meituan and Ele.me allows convenience stores to obtain more traffic swiftly, but BianLiFeng wants control over food delivery. It guides users to place orders in their own e-commerce channels and delivers with their own delivery team, creating another revenue stream.

In order to enhance their competitiveness of the food delivery business, BianLiFeng increased their proportion of fresh products, benchmarking products offered by Hema and MeiRiYouXian.

Obviously, this incurs high investment to set up a firm logistics model. Hema’s main source of capital comes from Alibaba’s continuous investment, JD’s 7 fresh has an 11-year experience in logistics. BianLiFeng has resources from Tencent and Hill House Capital of USD256 million.

However, the expansion had not been easy.

A delivery platform needs to have a large user base. Although BianLiFeng has accumulated a sizable amount of users, these users are people who have bought items from their physical stores and not users who are used to getting a delivery service.

BianLiFeng meets the urgent needs of consumers such as getting a box of tissue, and hence items are priced higher in physical stores. The cost of delivery is fixed at 4 yuan per order. BianLiFeng will have to increase their brand awareness and brand share to compete with the already established competitors.

Competing for brand share is no easy task. Moreover, BianLiFeng has to find new ways to expand their items to stay competitiveness. At present, it seems that BianLiFeng limited types of fresh products. The food delivery business is still in a beta stage.

Supply chain transformation is an industry-wide problem. Providing cold chain logistics requires higher investment and higher technology as well as research and development capabilities. BianLiFeng does not have such strength currently. One possible solution is to share cold chain logistics distribution facilities with larger platforms.

In addition, the shelf life of fresh products has much higher logistics costs than general products, which means BianLiFeng will have to set up more stores, meaning more investment costs incurred and pressure.

In recent years, with the continuous increase demand for food delivery, many people are now demanding delivery for other goods and services. BianLiFeng saw opportunities in this and is trying to transform themselves from being a convenience store to a supermarket. However, the continuous high investment will bring great operational pressure and is a challenge that needs to be addressed.