Scan the QR code in the image to register " _Throughout its journey, MissFresh's entrepreneurial history is also inspiring. _ " On June 25, 2021, MissFresh was officially listed on Nasdaq under the ticker symbol "MF". As of the time of writing, MissFresh's market value reached $2.274 billion (approximately RMB 14.8 billion). MissFresh was founded in 2014 and pioneered the DMW (Distributed Mini-Warehouse) instant retail business in 2015. Previously, the outside world positioned MissFresh as a fresh food e-commerce company, but this clearly underestimated its ambitions. In March 2021, MissFresh told a bigger story: to become "China's largest community retail digitalization platform". The overall business can be summarized by a formula: (A+B)xN. Here, A refers to the DMW instant retail, B is the smart wet market, and N is the retail cloud. Throughout its journey, MissFresh's entrepreneurial history is also inspiring. As a new species in the community retail industry, MissFresh attracted capital's favor as soon as it was founded, and within just three years, it made it onto the list of Chinese unicorn companies. Although the entrepreneurial path was always accompanied by uncertainties brought by industry ups and downs, fortunately, at every major key node, MissFresh made choices that were "difficult but correct". As MissFresh founder and CEO Xu Zheng said, "Entrepreneurship still requires long-term goals and original aspirations, resisting temptations and enduring loneliness. Sometimes people have two legs, while money has four legs. If you chase money, you can never catch up. So focus on doing things, create your value, and money will chase you and you can't avoid it." Since its establishment, MissFresh has received favor from many star investment institutions, including Tencent, CICC, Goldman Sachs, Tiger Global, and others. In this IPO, MissFresh not only received oversubscription, but existing shareholders CICC, Tencent, US long-term fund Davis, Yuan Sheng, and Yuan Jing also continued to increase their stakes, collectively purchasing up to $90 million worth of ADSs. The endgame is the beginning One night in 2014, in the deep of the night at the Holiday Inn in Shanghai, Xu Zheng and Zeng Bin, then executives at Joyvio, couldn't sleep. They had come to Shanghai to source fruit from local fruit tycoons, trying to convince them to sell better products at higher prices. They had drunk a lot, but with little effect. "Why can't good products sell?" The two, feeling depressed, went to the convenience store downstairs to buy some drinks, and chatted while drinking. At that moment, Zeng Bin suddenly said, "Why don't we do it ourselves?" Xu Zheng said, "Sure." Emboldened by alcohol, the two hit it off and began to wildly plan the future of a "new company". That night, Xu Zheng barely slept. "I was thinking about what we should do next to quickly build what we talked about over drinks." Soon after, the two completed their resignation handovers and officially founded MissFresh in October 2014. Initially, MissFresh's idea was simple: to break down circulation barriers and better connect high-quality fresh food producers with consumers. At that time, the company's logistics were entirely outsourced to third-party cold chain, with next-day delivery after purchase. It wasn't until a warehouse overflow incident that Xu Zheng and Zeng Bin realized the importance of building their own logistics. That was in May 2015. Taking advantage of the "Foodie Festival" event, MissFresh also ran promotions on its platform, receiving nearly 50,000 orders in one day. But at that time, the warehouse could only pack at most 4,000 orders per day, and many users placed orders but didn't receive goods. Later, MissFresh wrote a love letter to customers, titled "Sorry, I Love You". Because the handling was just right, MissFresh regained consumer trust. According to Xu Zheng's later recollection, after the letter was sent, the platform's orders the next day were even more than before the overflow. At the same time, MissFresh also began to build its own supply chain system, renting and building warehouses. In user research, Xu Zheng found that as fresh food buyers become younger, efficient home delivery would definitely become a future consumption trend. The construction of DMWs covering a three-kilometer radius began, and this model became an industry first. Regarding the question of building large warehouses versus small ones, Xu Zheng and Zeng Bin had serious discussions. Ultimately, MissFresh chose small warehouses that could be opened more densely, getting closer and closer to users. However, compared to large warehouses, small warehouses have a challenge: relatively complex organizational management. On this point, Xu Zheng and Zeng Bin were clear-headed, and they left the solution to the technical system. In subsequent development, MissFresh placed great emphasis on investment in supply chain and technology. According to the prospectus, MissFresh invested over RMB 1 billion in technology R&D over the past three years, with more than 440 R&D personnel out of over 1,400 employees. According to iResearch, in China's DMW instant retail industry, MissFresh's technology and intelligence levels are industry-leading, ranking first in fresh food management patents and technology team size. It is precisely based on long-term accumulation, optimization, and iteration of technology and algorithms that MissFresh's operational efficiency has continuously improved, fulfillment costs have decreased year after year, and the fulfillment profit margin (gross margin minus fulfillment expense ratio) is also better than the industry average. According to the prospectus, from 2018 to 2020, MissFresh's operating expenses as a percentage of revenue decreased by 25.8% over three years, and the fulfillment expense ratio (fulfillment expenses as a percentage of revenue) decreased by 9.2%. During the same period, the platform's net revenue increased from RMB 3.5 billion to RMB 6.1 billion. As of March 31, 2021, MissFresh had established 631 DMWs in 16 cities nationwide. By GMV (Gross Merchandise Volume), in 2020, MissFresh held a 28% market share in the DMW instant retail sector, ranking first in northern China. Moreover, MissFresh's average order value ranked highest among DMW players, reaching RMB 94.6 in 2020. Looking back, whether it's meeting the demand for community instant retail or the long-term construction and deep cultivation of the smart retail network technology system, MissFresh always seems to step on trends ahead of time and lead the industry. To a large extent, this is attributed to the two founders' "endgame thinking". Xu Zheng's unit of thinking is usually "five or ten years later". "Will what we do today have value in ten years? You need to constantly study the endgame because it is uncertain. But the more uncertain things are, the more your cognition exceeds others, which creates a decisive move, and the probability of winning in the future increases. In certain things, you can't really differentiate." MissFresh co-founder Zeng Bin emphasized "starting with the end in mind". "Only by starting from the endgame to think about your starting point can you avoid detours." "A team that can fight hard battles," maintaining a steady rhythm A term often mentioned by the MissFresh team is "dark tunnel". It's not hard to see that along the way, MissFresh has personally experienced some darkest moments. In 2016, fresh food e-commerce was experiencing the first wave of death after brutal growth, and voices disparaging the track were everywhere. Even though MissFresh started quickly and had extremely high repurchase rates, as a company just two years old, there were still many uncertainties at that time. Fortunately, every time they encountered bottlenecks, Xu Zheng's team unhesitatingly persisted. "The people at MissFresh are truly a team that can fight hard battles," Zeng Bin said with emotion. As an early investor in MissFresh, Wu Haiyan, managing partner of China Growth Capital, commented that Xu Zheng is an entrepreneur who can always inspire the team to maintain vitality and drive. "He has a unique sense of humor and optimism. His relaxation and humor, I think, will also help the company go far." But in fact, in the early development, MissFresh itself also encountered the problem of too fast a pace. Fortunately, the management team adjusted the pace in time. "By the third year, we realized the company was developing too fast, so we started to slow down." According to Xu Zheng's recollection, once, when he was communicating with a group of employees, he found that most couldn't articulate the company's mission, culture, and values. "It must be developing too fast; if no one can say it, that won't do!" It was from this time that MissFresh began to emphasize culture internally, value organizational values, and maintain an appropriate development speed, neither too fast nor too slow. In the second half of 2018, Wang Cheng, a post-90s partner appointed as general manager of the South China region, was very anxious because he didn't know how to achieve growth targets, suffering from insomnia every night. This time, Xu Zheng's advice to him was not to fight with numbers, but to be relaxed yet not lax, and tense yet not strained. In Xu Zheng's view, every company will experience a stage of being too fast or too slow, and it's necessary to find the balanced flavor. "MissFresh has passed the 'finding rhythm' stage in its first five years. Starting from the second five years, our rhythm is to increase the proportion of maturity and expand influence and scale." More than just DMWs: three business lines targeting community retail Currently, if one merely positions MissFresh as a fresh food e-commerce company, that clearly underestimates its ambitions. In March 2021, MissFresh released its new (A+B)xN strategy, announcing that it would no longer be limited to self-operated fresh food e-commerce, but rather build a community retail digitalization platform to help participants in the community retail industry achieve digital transformation. Here, A represents DMW instant retail, which MissFresh will continue to deepen in first- and second-tier cities; B represents smart wet markets, meaning MissFresh will cover smart wet market business in more cities; and N represents the retail cloud, which platformizes the company's innovative business model and RAIN technology system. In simple terms, MissFresh has transformed from a single e-commerce retail platform to a "community retail + technology empowerment" comprehensive platform, as clearly defined in its prospectus for its future: China's largest community retail digitalization platform. Why this strategic update? First, the market space for community retail digitalization in China is huge. According to iResearch, in 2020, the scale of China's community retail was RMB 11.9 trillion, expected to grow to RMB 15.7 trillion by 2025. At the same time, in 2020, the online penetration rate of China's community retail was 20.9%, and by 2025, it will grow to 45.5%. In other words, by 2025, the market size of China's digital community retail will reach RMB 7.2 trillion. Second, due to the diversity of consumer groups and demands, China's community retail formats are diversified and extremely fragmented. For example, in the same city, there are supermarkets, convenience stores, wet markets, and e-commerce, and no single model can dominate absolutely. Take wet markets as an example: even though fresh food consumption has trended online in recent years, the market share of wet markets has remained stable and has a solid user base in residential communities. iResearch reports show that currently, China's wet market scale exceeds RMB 3 trillion, accounting for 56% of fresh food shopping market share. "When an industry is highly fragmented, the platform should choose to empower. MissFresh's community retail digitalization is to deeply digitally empower 'supermarkets + wet markets + small stores', by outputting our core capabilities, helping and growing rapidly together with everyone, this is our basic transformation logic," Xu Zheng said. It is reported that MissFresh mainly achieves the transformation and empowerment of traditional wet markets through three major paths: renovating venues and hardware, optimizing merchant mix and introducing new formats; providing merchants with a full-process SaaS service package including electronic payment, online marketing, CRM tools, and business planning to improve the digitalization level of wet markets; and helping merchants open online e-commerce channels, build online private domain traffic, and increase revenue. This business generates revenue from charging individual merchants rent, annual SaaS product fees, and commissions based on merchants' e-commerce GMV. According to the prospectus, as of May 31, 2021, MissFresh had signed operation agreements with 54 wet markets in 14 cities and had begun operations in 33 wet markets in 10 cities. With the expansion of the smart wet market business, MissFresh gradually established its second growth curve. In terms of DMW instant retail business, in the future, MissFresh will continue to widely and systematically promote the DMW model in target cities and regions to increase DMW coverage; at the same time, strengthen core technical capabilities to continue driving growth, optimizing supply chain, and improving fulfillment, operation, and marketing efficiency; further strengthen user loyalty and increase the average annual consumption of effective users. As for the retail cloud, MissFresh plans to use the AI digital platform and other core capabilities, targeting long-tail small and medium-sized supermarkets, providing digital capabilities for online and offline omni-channel retail, customer management, supply chain, and fulfillment management, helping them quickly start and efficiently operate their businesses digitally, and thereby achieving its own development path from vertical e-commerce to platformization. It is reported that in the community retail industry, small and medium-sized merchants in the long-tail market account for over 80% of market share. According to iResearch data, as retail enterprises' demand for digitalization increases, the scale of China's community retail cloud industry is expected to reach RMB 1.9 trillion by 2025. Through platformization output, MissFresh has again raised its own ceiling. Undoubtedly, MissFresh's (A+B)xN strategy allows the platform to not be limited to a single business format or some cities in the future, thus having broader imagination space. Regarding the future boundaries of MissFresh, Xu Zheng once said in an interview, "I have always said that we are doing community retail, but we entered with fresh food as a high-frequency entry point, driving all community-related retail, but this is just an entry point. MissFresh has always been based on this unchanged thing, constantly exploring species-level innovation." Source: ChinaVenture (ID: China-Venture) Author: Ma Mujie -END-