Scan the QR code or click "Read Original" to register As the hottest track catalyzed by the pandemic, community group buying had a particularly chaotic 2020. Its main battlefield is fresh produce, but excessive subsidies and false prosperity caused by overheated capital have disrupted pricing and supply systems, severely disturbing the fresh market and plunging it into a whirlpool of public opinion. Yet even so, players in community group buying have not ceased their efforts, because the long-term benefits from these bundles of cabbage and pounds of radishes are indeed considerable. After entering 2021, the policy of staying put during the Spring Festival has given fresh e-commerce companies another boost, and the battle has reignited. -01- Escalating Battle Unlike previous price wars fueled by burning cash, this time fresh e-commerce players have extended the battle to the capital market. According to media reports, fresh e-commerce platform Dingdong Maicai is considering an IPO in the U.S., seeking to raise at least $300 million. Meanwhile, rumors suggest that Miss Fresh has secretly initiated IPO plans. Although the company has not officially commented, the rumors are not unfounded. At this stage, fresh e-commerce is still widely favored, and entering the capital market could yield a relatively good valuation. Whether it is Miss Fresh, Dingdong Maicai, or other fresh platforms, the likelihood of them pursuing the capital market in the future is very high. Once the IPO is confirmed, its impact on future development will be more profound. First, it alleviates financial pressure. Currently, fresh e-commerce is still in a stage of burning cash without profits. Going public can raise funds to replenish ammunition for future competition. Moreover, early investors can gain some returns, and after easing the pressure of initial investments, they can continue to inject capital into the company. Second, it opens up market space. An IPO can also increase the platform's visibility, further opening market space, promoting market share growth, and enhancing the company's growth and sustainable development. Since no fresh e-commerce company has yet gone public, the dividends of being the "first fresh e-commerce stock" remain substantial. Thus, the timing for IPOs is opportune for current fresh e-commerce companies. Amid rumors of Miss Fresh and Dingdong Maicai vying for the "first fresh stock," their similar "front-warehouse instant delivery model" has also attracted widespread attention. -02- Pros and Cons of the Front-Warehouse Model Miss Fresh has covered more than 20 cities since its inception, focusing on first-tier cities. It establishes front micro-warehouses in business districts and communities based on order density, covering a radius of three kilometers, with relatively large front-warehouse areas. Dingdong Maicai, on the other hand, began expanding last year. As of January this year, Dingdong Maicai has opened groups in over 30 cities nationwide, with approximately 1,000 front warehouses. The proficient use of the "front-warehouse instant delivery model" has brought certain advantages to Miss Fresh and Dingdong Maicai. For example, front-warehouse delivery units are typically the closest to consumers, enabling more timely delivery and enhancing consumer experience. Additionally, front warehouses generally use centralized procurement, significantly reducing procurement and transportation costs. However, every coin has two sides. While the front-warehouse instant delivery model aids Miss Fresh and Dingdong Maicai, it also brings drawbacks, such as increased storage and delivery costs. Fresh products are perishable, requiring higher standards for storage and transportation, keeping cold-chain costs high. Moreover, front-warehouse operations are labor-intensive, often requiring a large number of delivery personnel, leading to higher labor costs and resulting in delivery fees being more expensive than the produce itself. Earlier, Miss Fresh CFO Wang Jun stated in a media interview that Miss Fresh still needs over $800 million in external funding annually to meet expansion needs such as building front warehouses and R&D. Dingdong Maicai has also invested heavily in establishing front warehouses in multiple locations during its rapid expansion in recent years. Costs of warehouse construction, delivery, and labor are the most critical concerns for fresh e-commerce. If a balance cannot be achieved, the platform will struggle to be profitable. Moreover, as scale continues to expand, the drawbacks of front warehouses bring uncertainty to operations. -03- Intensifying Competition With the long-term catalyst of the pandemic, consumers are increasingly accepting online purchasing, and the penetration rate of fresh e-commerce is rising, indicating that competition is becoming more intense. This is evident from the rumors of Dingdong Maicai and Miss Fresh vying for the "first stock." However, for Dingdong Maicai and Miss Fresh, their biggest competitors are not just each other. First, internet giants are eyeing the market. The primary challenge comes from the impact of major internet companies entering the fresh market, such as Meituan Maicai under Meituan, Duoduo Maicai incubated by Pinduoduo, and Hema Fresh backed by Alibaba's ecosystem. Giants can provide significant support in terms of traffic and capital. Second, traditional supermarkets are accelerating their layout. As fresh e-commerce becomes increasingly popular, many physical supermarkets have launched their own home delivery platforms, such as RT-Mart's "RT-Mart Youxian" and Yonghui Superstores' "Yonghui Home." Traditional supermarkets have stable supply chains and the advantage of offline stores, making it easier to offer instant delivery services. In the current fresh track, whether internet e-commerce or traditional supermarkets, no industry leader with significant influence has emerged. Every player has a chance to win, including Dingdong Maicai and Miss Fresh. In this opportunity, those who can continuously develop markets and optimize their supply chains will have a greater chance of becoming the ultimate winner. -04- IPO Is Not a Panacea For Dingdong Maicai and Miss Fresh, an IPO only brings short-term benefits and is not sufficient to break the deadlock. Amid the current situation of numerous giants and fragmented traffic, only by continuously improving core businesses and investing in their own facilities can they achieve a true breakthrough, such as optimizing costs, markets, models, and digital infrastructure. From a cost perspective, fresh e-commerce platforms like Dingdong Maicai and Miss Fresh can try direct sourcing from production areas, avoiding the layers of price increases in traditional procurement and achieving one-step transportation. This not only saves procurement and transportation costs significantly but also reduces losses from handling during transit. From a market expansion perspective, major fresh e-commerce companies focus on North China, East China, South China, and Central China, without expanding into the Northwest. However, the consumption potential in the Northwest is not inferior. Therefore, developing markets with huge potential can differentiate them from other platforms. From a business model perspective, the front-warehouse model has pros and cons. In the short term, it is still difficult to integrate various costs. Under this uncertainty, front warehouses can be utilized more effectively. For example, selecting front warehouses with prime locations to create a store-warehouse integrated model can not only increase revenue but also explore other business models. From a digital infrastructure perspective, fresh e-commerce platforms can use precise user profiles and big data to analyze user needs, monitor product dynamics in real time, and provide consumers with products that offer better value and fit their needs. Additionally, big data can eliminate unnecessary links in the supply chain, reduce additional transaction costs, and greatly improve operational efficiency. The continuous news of fresh e-commerce companies going public indicates that the industry has reached a certain level of maturity. Surviving the waves of 2020 is half the battle, but the layout and development in the latter half are equally important. Therefore, whether Dingdong Maicai and Miss Fresh go public or not, they should stay true to their original mission, prioritizing providing good services to consumers, to move forward unwaveringly. Source: Liu Kuang (ID: liukuang110)