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introduction:

high-end fruits are not selling well, and baiguoyuan was suddenly warned of performance in the first half of this year. at the mid-term performance meeting, it suddenly changed its tone and took the cost-effective route. however, recently some consumers said that the quality of the "cost-effective durian" bought from baiguoyuan was very worrying, and some consumers were heartbroken by baiguoyuan in the process of defending their rights and after-sales service.

produced by phoenix technology's "eye of the storm"

author: zhang hongwei

editor: dong yuqing

high-end fruit transporters are no longer effective

"it's such a rip-off. the durian we bought as part of a chain activity in a group looked very good in the picture, but when i went to the store to pick it up, i found a particularly bad one from a corner," said zhou zhou, a consumer from beijing who was recently stabbed in the back by baiguoyuan. "i got a membership because of the quality, but i didn't expect the fruit to be of such poor quality."

this is not an isolated case. xiao he from jiangsu also bought longan, sunshine rose and hami melon from baiguoyuan on the online platform not long ago. but after opening the package, xiao he found that the longan branches had turned white and were no longer fresh, and the sunshine rose was soft and even rotten. then she opened the hami melon and even smelled a sour smell, "it's completely inedible."

baiguoyuan has always positioned itself as a "high-end fruit carrier". since its establishment in 2001, it has paid attention to product quality and has been committed to building the top brand of fruit retail. during this period, it also launched a "no return if not tasty" service and created a unique "four degrees, one taste, one safety" fruit grading system, which attracted a large number of "middle class" people to flock to baiguoyuan.

picture｜from the internet

"expensive products have their reasons", with the blessing of high quality, baiguoyuan's operating income has entered the ranks of the "10 billion army".

as of january 2024, pagoda will have more than 6,000 stores nationwide, more than 500,000 registered users on its platform, and 178 city warehouses in 125 cities in 14 provinces across the country. at that time, yu huiyong, chairman of pagoda group, also proposed a beautiful vision that "in the next decade, the number of pagoda stores will exceed 10,000."

picture｜yu huiyong, chairman of baiguoyuan group (from the internet)

however, less than two months later, this beautiful imagination was suddenly shattered. during the 315 shopping festival this year, news broke that pagoda’s franchise stores used spoiled fruits to make expensive fruit cuts, stored overnight fruits in the refrigerator and sold them as fresh fruits the next day, and other industry chaos. many consumers even "publicly executed" pagoda on social platforms: 4 oranges for 39.4 yuan, 5 plums for 42 yuan, but they were bad...

not only did the quality begin to vary, but according to xiaohe, he contacted the baiguoyuan store on the platform and wanted a complete surveillance video to confirm whether the fruit had been spoiled from the beginning. however, the baiguoyuan store only provided incomplete surveillance footage of the packaging, and believed that xiaohe's request was "unreasonable."

a consumer in jiangsu said that he bought a box of lychees at baiguoyuan's offline store on the morning of july 7, and when he opened it at home, he found that most of the bottom layer was moldy. he contacted the store at around 5 pm that day, but still received no response by the evening, so he went to the store to try to solve the problem, but found that many inferior fruits were being sold on the spot, and he immediately complained to baiguoyuan.

figure｜screenshot of black cat complaint

after the relevant regulatory authorities intervened in the investigation, baiguoyuan finally agreed to compensate him. later, the netizen found that he had been blocked by baiguoyuan, and he also said that he was "heartbroken by baiguoyuan."

according to relevant complaint platforms, phoenix.com technology found that complaints about baiguoyuan have remained high, with a large number of complaints, but the resolution rate is less than 20%. the main complaints are about poor product quality control, rotting and spoilage, and inflated prices.

fruit quality is difficult to guarantee, is it all the franchise’s fault?

why did baiguoyuan, which plays the high-end card, encounter so many problems? the root cause is that it opened a franchise store model in pursuit of scale.

as one of the largest fruit retailers in china, as of january 2024, baiguoyuan owns 6,000 stores, of which more than 90% are franchised.

at first, pagoda found that most fruit sellers were self-employed individuals and husband-and-wife shops. these operators often purchased small quantities of goods, provided high prices, did not know how to market online, and the quality of goods was uneven. pagoda seized this group of people, providing them with supply chains and brand authorization.

however, compared to the direct sales model, franchise management is a stricter test for suppliers, especially for products such as fruits that are most important to maintain freshness, and strict quality control is also the most important point. in the case of high requirements for brand supply chain, product management and store supervision, the quality of franchisees is particularly important.

an employee of baiguoyuan said, "in the past, the quality was high because the bad ones were thrown away. now we have franchisees, and a lot of goods are bad but individual store managers are reluctant to throw them away, so the quality is definitely uneven."

in 2022, due to the sale of overnight fruit in baiguoyuan storesat the same time, there are also behaviors of selling small pineapples as large pineapples to deceive customers. baiguoyuan was named by the shanghai consumer protection committee."brands cannot blindly pursue expansion speed and neglect the management and supervision of franchise stores."

other franchisees also reported that being a franchisee of baiguoyuan also has its own difficulties.

picture｜from the internet

"we can only sell four or five kilograms of products a day, but baiguoyuan gives you 50 kilograms all at once. it's all forced stockpiling," said a dealer. "we can't handle it. it will go bad if it's left in the store."

"the average daily sales volume was 4,000 to 5,000 yuan, but we always receive orders for 10,000 yuan," said a staff member at a baiguoyuan store. "if it's your problem, why can't you sell it?"

with store problems continuing and sales not as good as before, pagoda's stock price has also continued to be sluggish. on january 16, 2023, pagoda group was listed on the hong kong stock exchange with an issue price of hk$5.6 per share. pagoda's stock price once exceeded hk$7 per share, which was also the peak of pagoda group's stock price. since then, pagoda's stock price has been falling all the way, and now it is only hk$1.53 per share, which has already broken the issue price, and the decline from the highest price has exceeded 70%.

the latest results show that bairuoyuan’s revenue in the first half of the year was 5.594 billion yuan, down 11.1% year-on-year; the company’s owners’ attributable profit was 88.5 million yuan, down 66.1% year-on-year.

can consumers pay for cost-effective businesses?

in fact, despite the high-end brand, selling fruit is still a tough business. a fresh food industry practitioner told phoenix.com technology that "the profit margins of selling vegetables and fruit have always been relatively slim."

although baiguoyuan's annual revenue has exceeded 10 billion yuan, according to the financial report, its annual profits from 2021 to 2023 were only 2.3 yuan, 3.23 yuan and 362 million yuan respectively.

moreover, the domestic fruit retail business is still very fragmented. as of march 2023, there are more than 2.82 million fruit companies nationwide, which greatly dilutes the market share of leading companies. even as the number one in the fruit retail industry, pagoda only accounts for 1%.

for chain brands, the way to see results quickly is to optimize the supply chain and flatten the downstream stores to reduce costs. similar to the snack discount stores that have recently become popular, baiguoyuan’s idea is also to reduce the intermediate links in the supply chain. especially for the fruit industry, the more links, the higher the loss.

to this end, pagoda invested heavily in building its own processing and distribution center, so that fruits can be quickly delivered to stores after direct purchase, and the loss of the entire chain can be controlled at around 5%. as the number of downstream stores continues to increase, the direct purchase and distribution costs can be shared. however, the reality is cruel. the threshold for joining has been lowered again and again, and the number of franchise stores has not increased as expected. the pain of this has to be borne by pagoda itself.

in addition, as consumption in various industries is downgrading, the public's consumption habits are gradually leaning towards "cost-effectiveness", and the high-end products that baiguoyuan focuses on do not seem to arouse the interest of consumers. at a public event in march this year, yu huiyong, the founder and chairman of baiguoyuan, said bluntly,"after operating for more than 20 years, i feel a lot of pressure in the second half of 2023."

picture｜from the internet

in addition to "internal troubles", baiguoyuan is also facing "external troubles". whether it is the fresh food e-commerce companies such as dingdong maicai and pupu supermarket that are trying their best to break the circle, or the large supermarkets such as hema and sam's club that are actively seeking change, their richer and more diverse online and offline shopping experiences have caused baiguoyuan's influence in the fruit industry to continue to decline.

for baiguoyuan, which focuses on high-end fruits and targets middle-class consumption, how to ensure that the quality is always worthy of the price and make its own high-end fruits more attractive are the prerequisites for reversing its current predicament.

at baiguoyuan's interim performance interpretation meeting in late august this year, the term "value for money" appeared many times, which seemed to indicate baiguoyuan's new business thinking.

however, the main point of price-performance ratio is not completely in line with the original target audience of baiguoyuan. zhou zhou, the aforementioned consumer, said that he had expectations for the quality and service of baiguoyuan. if the price has dropped, the quality has also dropped, why not choose other cheaper e-commerce channels? in the process of moving towards a larger market, this has always been a difficult problem facing baiguoyuan.