69novels Chapter 154 Behind-the-Scenes Investors Help Ele.me Soar
Chapter 154 Behind-the-Scenes Investors Help Ele.me Soar
Chapter 154 Behind-the-Scenes Investors Help Ele.me Soar to Success (7k)
Geng Zhi has been busy with Momo and has already declined Zhang Xuhao's invitation to have chicken hot pot twice.
Since their last meeting at the Summer Palace in Beijing, Geng Zhi had never seen Zhang Xuhao again. Apart from a brief report from Li Dongping after the New Year, he hadn't seriously followed Ele.me's development for a long time.
As a shareholder behind Ele.me, and one who has high hopes for Ele.me, this is inappropriate.
What if the butterfly effect really causes the mice to go astray?
Thinking this way, Geng Zhi arrived at the office door of the neighboring Ele.me company 10 minutes early, without waiting for Zhang Xuhao to invite him.
Geng Zhi leaned in and peeked inside, discovering that Ele.me's office staff had grown to more than 20 people.
If you include those who do on-the-ground promotions, there might be even more?
"Junior Brother Geng!" Zhang Qinghua looked up and saw Geng Zhi peeking out, so he quickly reached out and waved to him.
Geng Zhi smiled and waved to Zhang Qinghua, but did not go inside.
At this time, Zhang Qinghua, with his excellent skills and workaholic spirit, had officially passed Zhang Xuhao's comprehensive evaluation and officially become Ele.me CTO, and successfully promoted to the ranks of partners.
Zhang Xuhao, Kang Jia, and Wang Yuan, who were engrossed in discussing how to deal with their competitors' subsidy war, all looked up upon hearing this.
Seeing that the busy Boss Geng had arrived ahead of time, Zhang Xuhao was overjoyed and quickly told the three of them to get up: "Alright, brothers, Boss Geng is here, let's go eat now! Hurry! Don't keep him waiting."
As he spoke, he closed his notebook, grabbed his coat, and headed outside.
The five people exchanged pleasantries as they headed downstairs. Just as they reached the bottom of the stairs, they ran into Lü Sifeng, who was also on his way to dinner, as he came out of the Momo company.
"Hey, Senior Brother Lü, you're eating alone? Didn't you eat with your wife?" Zhang Qinghua asked.
"No, Xiaowen took leave these past two days to go back to her hometown," Lü Sifeng replied.
"Oh, then how about joining us—" Zhang Qinghua started to say, but suddenly realized he had been abrupt and stopped abruptly.
This meal was paid for by his boss, Zhang Xuhao, so it wasn't appropriate for him to ask directly.
"Lu Bo, why don't you come eat with us? Let's have chicken hot pot," Zhang Xuhao quickly chimed in.
Lu Sifeng was unaware that Zhang Xuhao was treating them to the meal, but seeing that Geng Zhi was also there, he readily agreed.
The six of them went downstairs together, turned two street corners, and arrived at the familiar chicken pot restaurant.
The chicken hot pot restaurant was bustling with activity, the sizzling of the clay pots mingling with the chatter of the diners.
In the private room, the chicken hot pot was being served one after another, and the portion that Zhang Xuhao ordered this time was noticeably larger than before.
"Boss Geng, your business is booming and you're getting busier and busier. I'm worried our bi-weekly get-together tradition will be lost!" Zhang Xuhao said, raising his glass first. "Come on, let's have a toast to celebrate our reunion after more than 60 days!"
This time, instead of juice, they drank Budweiser beer.
The beer went down smoothly and sweetly.
"Xuhao, you guys used to have meals together with your junior brother all the time?" Lu Sifeng picked up a piece of frozen tofu and asked curiously.
"Yeah, Lu Bo! Brother Hao treats everyone to chicken hot pot every two weeks. We sit together, listen to Boss Geng's teachings, and brag a bit. It's so much fun! Haha!" Wang Yuan chimed in.
"Wait, why didn't you take me with you??" Zhang Qinghua, standing to the side, was displeased. His chopsticks stopped in mid-air as he glared at Zhang Xuhao and the other two.
"This is a private board meeting," Kang Jia joked with a smug look. "Only founding partners can attend, and you weren't qualified back then."
"You guys are so unfair!" Zhang Qinghua pointed at the three people, shook his head helplessly, then picked up a piece of green pepper and put it in his mouth, chewing it fiercely, as if the green pepper was the three people who "ostracized" him.
Everyone laughed.
"Boss Geng, how many users does your Momo app have now?" Zhang Xuhao asked curiously. "I'm just curious. If it's inconvenient, I won't say."
Geng Zhi picked up a piece of chicken leg meat, put it in his mouth, chewed it, and swallowed it before slowly saying, "Not many, only a little over 200 million people."
"Only 200 million??"
Zhang Qinghua subconsciously repeated the sentence, his face filled with disbelief, and then turned to look at Zhang Xuhao and the other two.
The three of them looked at each other, their eyes filled with envy.
Zhang Xuhao, in particular, couldn't help but sigh.
While Mr. Geng, the boss, always manages to hit the beat perfectly, his own Ele.me is still treading on thin ice, struggling to move forward.
Although Ele.me has received two batches of investment totaling US$100 million from Arctic Capital and has already established a firm foothold in Shanghai, the pressure it faces has not diminished.
Two new competitors have emerged in Shanghai, one of which was founded by an alumnus of Shanghai Jiao Tong University.
Ele.me is now preparing to expand into Beijing, but three other food delivery companies have also emerged in the city, each with substantial backing.
"Xuhao, I see more and more people around us using Ele.me to order food. How many orders do you have on Ele.me now?" Lu Sifeng asked curiously.
Zhang Xuhao hesitated for a moment before slowly speaking: "Currently, the highest daily order volume exceeds 2500."
one."
After he finished speaking, worried that Lü Sifeng across from him would continue to press for details, he quickly got up and ran to the shop owner to ask for more wine.
After asking the question, Lü Sifeng fell silent and continued eating his chicken.
But when Zhang Xuhao returned to the table, he heard Lü Sifeng speak again.
"Konka, what's the average order value for you? How much commission do you get per order?" Lü Sifeng pressed on. "I'm just curious. If it's inconvenient, I won't say."
He was genuinely just curious, the kind of scholarly curiosity a doctoral student has.
Kang Jia hesitated for a moment, then glanced at Zhang Xuhao, who had just sat back down. Seeing that he didn't seem to object, she told him the truth: "The average order value is close to 20 yuan. We used to get a 10% commission on each order, but now that we have a new competitor in Shanghai, we've reduced our commission to 8%."
Lu Sifeng quickly did the mental calculations and said, "2500 orders a day, with an average commission of 1.5 yuan per order, that's over 100,000 yuan a month. At this stage, it's not bad."
Seeing the complicated expression on Zhang Xuhao's face, Lü Sifeng quickly tried to comfort him: "Of our 200 million registered users on Momo, only 60 are daily active users, and we don't have any revenue. At least Ele.me can make money!"
Upon hearing that the daily active users reached 60, Zhang Xuhao and the others looked even more envious.
"Lu Bo, actually we're losing money right now. Our total monthly costs have already exceeded 20, and the costs will skyrocket when we expand to the capital." Zhang Xuhao said, then downed the remaining half-glass of wine.
Kang Jia glanced at Geng Zhi first, then began to pour out his grievances: "To be honest, life isn't easy for us at Ele.me. We're facing a lot of difficulties right now."
Geng Zhi's eyebrows twitched slightly upon hearing this, but he didn't speak; he simply listened.
Kang Jia picked up another piece of frozen tofu, chewed it, and then continued, "Merchants skipping orders, users complaining about timeouts, competitors tripping us up—we've been driven crazy by these problems lately."
"Who are our competitors? Are they internet giants?" Lu Sifeng asked curiously.
"No, that's not it. The giants don't look at our offline-heavy business model. Our competitors are mostly small and medium-sized companies with plenty of capital."
Zhang Xuhao shook his head and continued, "Ele.me's business model isn't actually that hard to learn. There are two competitors in Shanghai that are also imitating Ele.me by developing online websites, such as [Xiaoyezi]. Moreover, they've partnered with merchants to offer subsidies, like free iced tea and poached eggs with every order, which has diverted a lot of our orders."
"Oh." Lu Sifeng listened thoughtfully.
Zhang Xuhao thought that Lü Sifeng's persistent questioning and thinking meant he had a solution, but after waiting for a long time, Lü Sifeng remained silent.
He could only turn his expectant gaze to Geng Zhi, who hadn't said much: "Boss Geng, you always give us some new insights. How do you think we should deal with this kind of competition?"
""
After saying that, Zhang Xuhao raised his full glass and toasted Geng Zhi.
Geng Zhi put down his wine glass and slowly said, "Haozi, tell me in detail all the pain points that Ele.me is currently facing. I'll think about it, and maybe I can really help you solve some of your problems."
"Ah! Okay, okay."
Zhang Xuhao was overjoyed upon hearing this, and Kang Jia, Wang Yuan, and Zhang Qinghua also sat up straight instantly.
Zhang Xuhao began to explain the current pain points one by one: "Because it is a commission-based model, some merchants may skip orders or bypass the platform to accept orders in order to save on commission fees."
"As our operations expand, platform delivery is becoming increasingly strained. To focus on online food delivery orders and building the platform, we've eliminated our platform-based delivery service, relying entirely on merchants for delivery. However, some merchants are delivering extremely slowly, leading to numerous user complaints about late deliveries and severely impacting the user experience."
"We're going to Beijing to promote our products right away, and then we'll go to Guangzhou, but the on-the-ground promotion will be much more difficult than in Shanghai, and the costs will skyrocket."
Zhang Xuhao poured out all the problems Ele.me had recently encountered, like spilling beans.
Finally, he looked at Geng Zhi again: "Boss Geng, with such rapid user growth on Momo, do you encounter these kinds of problems? How do you solve them?"
Geng Zhi slowly peeled off a piece of chicken skin, hesitated for a moment, and then asked, "Haozi, have you guys tried the Momo app?"
"Yes, I've used it a few times, but not many," Zhang Xuhao answered truthfully.
"Okay, then let me ask you a question. Momo and Ele.me are both platform products. What is the biggest difference between them?"
Zhang Xuhao thought for a moment, "Momo is a social networking app, while Ele.me is an O020O platform?"
"Yes, but that's not the essence." Geng Zhi shook his head. "The relationship between Momo users and other users on Momo is weak. But the relationship between Ele.me users and restaurants is a strong transactional relationship. Strong transactional relationships place more emphasis on the user experience."
Geng Zhi paused for a moment, then continued, "On Momo, if you're unhappy chatting with someone, you can just switch to someone else. Neither the user nor the platform suffers any loss. But it's different with Ele.me. Users pay for food, and if they don't receive it on time or the food isn't good, who should they direct their anger at?"
"For the restaurant," Wang Yuan replied.
"Yes, but it's also because of you guys." He looked at him directly, "Because the order was dispatched by Ele.me, and Ele.me is the service provider, so they have to take the blame, right, Konka?"
Kang Jia nodded: "Yes, some customers complain about the slow delivery, and instead of criticizing the restaurants, they directly criticize Ele.me."
"Can't Ele.me require merchants to deliver food faster?" Lu Sifeng asked.
"That's a good question," Zhang Xuhao said with a wry smile, "but there isn't a good answer."
"We could set a standard for delivery time, or design a rating system like Dianping (a Chinese review platform)," Lü Sifeng suggested, which he thought was a great idea.
"Offline scenarios are too complex, and the situations vary greatly from business to business."
After finishing his explanation, Kang Jia continued to give examples: "Some stores are big, some are small. Some merchants have dedicated delivery personnel, while others have the owner deliver personally. Some stores are so busy during peak hours that they don't have extra staff for deliveries at all. Some merchants don't even accept orders with low average order values—"
"So there are so many offline scenarios—it's even more complicated than Momo—" After hearing Kang Jia's explanation, Lü Sifeng fell silent.
"Boss Geng, you just said you could help us solve our pain points. Do you have a solution yet?" Wang Yuan asked hurriedly.
Instead of giving the answer, Geng Zhi continued to guide the group to think.
"Why is Momo so popular?" Geng Zhi asked.
"Because Boss Geng did a good job with marketing." Kang Jia, who had studied the Momo's explosive popularity case, quickly chimed in, "The 3 Gala and your 15-word article on the front page of NetEase the next day provided a boost, accumulating a huge amount of popularity for the Momo launch event."
"That's right," he asked bluntly, "but that was half a month ago, and Momo's DAU is still 60. Do you think it's still because of its popularity?"
Konka remained silent.
"If it really relied solely on marketing, then Ele.me could just hire some marketing company like Huayuhua or some other marketing firm, spend a few hundred thousand on a marketing campaign, and wouldn't their sales skyrocket?"
"Even if marketing can make a product go viral, what happens after the initial hype? Will user retention remain high?"
Geng Zhi's two straightforward questions made Zhang Xuhao and the others ponder.
After more than ten seconds, Zhang Xuhao spoke up: "Good marketing can bring in a flood of traffic, but to retain and sustain that traffic, you must rely on an excellent product experience and word-of-mouth."
He nodded firmly.
"Ah! It's all about reputation!" Wang Yuan suddenly realized, "Isn't this the same logic that Boss Geng used when he succeeded with [Jiaotong University matchmaking]?"
He carefully recalled that when Boss Geng first succeeded in running the "Jiaotong University Matchmaker" service, he emphasized "building momentum" and "providing an exceptional experience."
The words "disruption" and "reputation" are used.
"Yes, the fundamental principles remain the same despite all the changes," Geng Zhi said with a smile.
He didn't say anything more, giving the others time to process their thoughts, and the private room fell silent again.
After a long while.
Zhang Xuhao said, "I understand the logic. Momo has a good reputation for two reasons: first, Boss Geng's persona is well-developed, and second, the Momo app itself has a great user experience, which is why so many users have stayed."
"This corresponds to Ele.me, where a good reputation means—" Zhang Xuhao said, thinking as he spoke, but he hadn't quite figured out the answer yet.
Geng Zhi glanced at the now-cold chicken pot and decided to give the answer directly: "A good reputation means that consumers praise Ele.me, and merchants also praise Ele.me."
"How do you get them to praise you? Solve their pain points, make the product the best it can be, and make them feel great, then they will praise you."
"What are the pain points for consumers, or what makes them happy? If Ele.me has the shops they like to order from and can deliver to them quickly, they'll be happy."
"The former is strongly related to your on-the-ground sales capabilities. The latter depends on the merchant's delivery efficiency."
"What are the core pain points for merchants? High commissions, low delivery efficiency, cumbersome manual recording or verification of online orders, and inability to print orders —"
"High commissions are related to Ele.me's business model. Low delivery efficiency is related to the merchants' capabilities and willingness to deliver."
The issues of manually recording/verifying online orders and the inability to print orders are related to Ele.me's inadequate empowerment tools.
"High commissions lead to merchants skipping orders and bypassing the established channels, and also cause some merchants to switch to competitors, resulting in some merchants having low willingness or efficiency in delivery. These behaviors of merchants directly affect the consumer experience, creating a negative cycle."
Geng Zhi spoke for two minutes straight, finally asking Zhang Xuhao, Kang Jia, and the others, "Am I right?"
"Yes." Zhang Xuhao and the others nodded in agreement.
Geng Zhi nodded and continued, "The root of all these problems is essentially the same issue: the interests of Ele.me and the merchants are clearly opposed."
Zhang Xuhao and the other three remained silent, while Lü Sifeng also frowned.
"Boss Geng, I don't understand," Wang Yuan quickly questioned. "The interests of the platform and the merchants are inherently opposed! If we take less commission, they earn more; if we take more commission, they earn less!"
"Why can't it be a win-win situation?" Geng Zhi asked, posing a soul-searching question.
Everyone fell silent again.
"Boss Geng, I'd like to hear the details," Zhang Xuhao said.
"Rat, let me ask you," Geng Zhi said, pointing to the chicken hotpot in front of him, "this chicken hotpot costs 38 yuan. How much net profit does the owner make per serving on Ele.me?"
Upon hearing Geng Zhi's question, Zhang Xuhao was clearly taken aback. He had not heard of it and shook his head to indicate that he did not know.
Geng Zhi then turned to look at Kang Jia, Wang Yuan, and Zhang Qinghua, and the three of them also shook their heads.
Seeing this, the behind-the-scenes shareholder sighed inwardly: He still doesn't understand the business well enough!
Geng Zhi began to spread his fingers, calmly explaining to them: "Direct costs, that is, raw material costs, including chicken, side dishes, seasonings, and rice, are probably around 10."
"How much?"
"The gross profit is 38-10 yuan, about 28 yuan, and the gross profit margin is about 73%."
"Indirect costs include rent amortization, labor costs for chefs/waitresses/helpers, utilities amortization, as well as takeout containers, taxes, sanitation fees, etc., which I can't estimate."
Geng Zhi glanced at the shop, did some mental calculations, and then said, "But I feel like it could cost around twenty yuan."
"So, the original net profit was 8 yuan, but after deducting the 8% commission—3 yuan, the net profit is only 5 yuan?" Lu Sifeng immediately replied.
Just as Geng Zhi was about to speak, the shop owner, who had been standing behind him for a long time, spoke up: "Young man, your calculations are quite good."
He had originally come to deliver Budweiser beer to the six people, but when he heard Geng Zhi doing the accounting, he didn't say anything and just listened quietly.
When Zhang Xuhao saw the boss coming over and noticed that the shop wasn't busy, he quickly pulled over a chair and began to ask the boss about the details of the accounts.
"—Now that chicken is expensive and rent has increased after the New Year, we only make about 7 yuan if we don't count Ele.me's commission."
"We worked so hard to cook a pot of food, and we could have made 7 yuan, but they took 3 yuan from it, leaving us with only 4 yuan!"
""
"We sell around 400 orders a month, and we have to pay Ele.me 1200 yuan for each. We take the orders and deliver the food ourselves. Ele.me just provides some kind of website, yet they take so much of our money! Why??"
"So, the owner of Ele.me is really heartless!" the owner added immediately.
Zhang Xuhao:
Zhang Xuhao, Kang Jia, Wang Yuan, and Zhang Qinghua suddenly felt a burning sensation on their faces.
After the owner left, Geng Zhi spoke up again: "See? You guys at Ele.me feel you're losing out, and the restaurant owners feel they're losing out too."
The room quieted down again.
Zhang Xuhao's forehead was beaded with sweat: "Then what do we do? If we don't take a commission, how will we make money?"
"Junior brother, do you have a solution? Tell them quickly, look how anxious they are." Lu Sifeng nudged Geng Zhi with his elbow.
He himself wanted to know the answer as soon as possible.
"Let's change the way we make money," Geng Zhi said. "From [sharing money from the boss] to [helping the boss make more money, and then the boss pays you a service fee]. You're using an annual fee model, which is similar to the SaaS model abroad."
"Annual fee model?" Zhang Xuhao frowned, and the others didn't understand either.
"Under the commission model, you take 10% of every order the owner makes. People feel like you are taking away from their incremental sales, which will definitely cause resentment, and they may not be as enthusiastic about taking orders, especially for restaurants with low average order values."
Geng Zhi wiped his mouth with a napkin and continued, "But what if it's an annual fee model? The boss pays a fixed fee, and the marginal cost decreases. Every extra order they sell is their own profit. Not only will they not skip orders or bypass the system, they will also beg you to bring them more orders."
Upon hearing this, Zhang Xuhao and Kang Jia fell into deep thought.
"That way, once merchants pay the annual fee, their loyalty to Ele.me will be even stronger, and they won't easily switch to competitors!" Kang Jia realized. "We could even completely crush our competitors!"
Geng Zhi gave Kang Jia a thumbs up and continued to explain: "That's right, this way you don't need to go door-to-door every week to collect the fees one by one. Instead, you can collect the annual fees from the beginning, eliminate bad debts, and have advance payments, which will immediately make your cash flow more abundant."
"Moreover, this has given rise to a new profit model, similar to Taobao's. With more and more restaurants, everyone will definitely want to grab the featured spot on the homepage and the top position, so Ele.me can charge marketing service fees."
"Furthermore, with the evaluation system that Senior Brother Lü just mentioned, which allows merchants to score their food, their motivation to deliver food will be even greater, and the consumer experience will be improved."
Zhang Xuhao thought for a moment, his eyes growing brighter and brighter, and he was so excited he almost stood up: "Boss Geng, you're amazing!!"
As he spoke, he poured himself a full glass of beer, then poured full glasses for Kang Jia, Wang Yuan, and Zhang Qinghua, and toasted them all to Geng Zhi.
After finishing his beer, Kang Jia finally spoke up: "Boss Geng, how much should the annual fee be?"
Geng Zhi shook his head: "A one-size-fits-all approach is difficult. It might be necessary to stratify businesses based on different cities, the size of restaurants, etc., or implement tiered pricing, or a quarterly fee model. This is a difficult question to answer; you'll need to do detailed calculations."
"Okay, I understand!" Kang Jia nodded.
"With the annual/quarterly fee model, you need to continuously iterate the restaurant management system, empower merchants through technological innovation, solve various pain points for merchants, and then Ele.me's reputation will naturally follow," Geng Zhi added.
Zhang Xuhao, Kang Jia, and Wang Yuan all nodded in agreement, but Zhang Qinghua raised another question: "Currently, the main issue being addressed is the merchants' side, which is good for them. But what if some merchants simply don't have enough manpower for delivery during peak hours, resulting in long delivery times and a poor user experience? What then?"
"That's exactly what I was going to say." Geng Zhi gave Zhang Qinghua another thumbs up. "You could launch a [delay compensation] feature. The platform sets the rules, and if delivery is late, you should compensate the user. [Delay compensation] is how you make users remember you, that's word-of-mouth."
The room fell into a long silence and deep contemplation.
Geng Zhi's straightforwardness had a profound impact on them.
After a long silence, Zhang Qinghua looked at Zhang Xuhao and said, "Brother Hao, shouldn't we give my junior brother Geng some consulting fees? Otherwise, wouldn't that be too heartless?"
Upon hearing this, Zhang Xuhao nodded earnestly: "Boss Geng, we'll give—"
"Mouse, we're friends, don't be so formal!" Geng Zhi waved his hand dismissively. "Who knows, we might have a chance to work together in the future. Just don't refuse me then!"
"If you ever need to use Ele.me, you'll definitely give Boss Geng your full support!"
After discussing the pain points, the conversation among the six people became much more relaxed.
"Boss Geng, I've noticed that group buying is quite popular lately, and several group buying companies have raised a lot of money. Do you think that if Ele.me also does group buying, will it be like this—" Kang Jia said casually.
Before Kang Jia could finish speaking, Geng Zhi, the behind-the-scenes shareholder, immediately interrupted him righteously: "Absolutely not! Forget about it now!"
Konka: "??"
Kang Jia: "Boss Geng, I was just joking, just letting my imagination run wild, don't get excited."
"Don't even think about it! Don't touch it! This model is a bottomless pit. You must focus on your current food delivery business! Trying to do everything will only lead to your demise!"
Geng Zhi's voice suddenly rose seven or eight octaves, which surprised Kang Jia and Zhang Xuhao. They could only nod repeatedly, indicating that they would resolutely not touch group buying.
Geng Zhi was slightly relieved and thought he should quickly tell Li Dongping to do a good job of supervision.
He knew full well that if Ele.me entered the group-buying market at this time, it would either have to raise massive amounts of money to burn or die out completely. Even if it burned through massive amounts of money and miraculously survived, Arctic Capital's shares would be significantly diluted.
This doesn't align with my strategy.
After the six finished their meal, Zhang Xuhao and the other three immediately returned to the company to convene a meeting with the senior executives to discuss the several proposals that Geng Zhi had just put forward.
Geng Zhi and Lü Sifeng headed back towards the school. Lü Sifeng went to report to Qi Chuqin, while Geng Zhi went to meet up with Wang Kai to discuss the upcoming game plans for Red Palm Studio.
Before parting, Lü Sifeng tentatively asked, "Junior brother, Kang Jia just said that Ele.me could use LBS technology for food delivery navigation in the future. I think it's a good idea. What do you think?"
"I also think it's pretty good, but this requires map providers to provide services, which Gaode and Baidu can't do right now."
77
Geng Zhi looked at Lü Sifeng meaningfully and spoke again: "Senior Brother Lü, do you think it's possible for our boss's company to become a ToC map service provider, given its qualifications?"