---
title: "Fresh Food E-commerce in 2022: Forced to 'Give Up,' Yet Still Able to Mount a Conservative Offensive?"
description: "From the年初 rush to enter prepared dishes in search of new paths to the year-end release of Miss Fresh's delayed 'huge loss' report, the fresh food track's 'Mercury retrograde' period has been exceptionally long. This year, with external capital becoming more cautious and industry competition intensifying, the fresh food e-commerce track has frequently heard 'contraction' voices, with a clear trend of accelerated decline, and massive layoffs and cost reduction becoming a common consensus in the industry. Among them, the former leading platform Miss Fresh has had the hardest time, first drastically reducing business to 'survive by cutting off an arm,' then trying every means to keep its 'listed company' title, yet still deeply mired in the dual shadows of huge losses and debt disputes. In the mixed fresh food e-commerce track, what is the foundation for survival for all players: seeking financing to continue 'burning money,' optimizing supply chains to improve quality, seeking new turns in lower-tier markets, or developing private label products for differentiated competition?"
author: "锌刻度"
publisher: "New Distribution"
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published: "2022-12-07"
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# Fresh Food E-commerce in 2022: Forced to 'Give Up,' Yet Still Able to Mount a Conservative Offensive?

> From the年初 rush to enter prepared dishes in search of new paths to the year-end release of Miss Fresh's delayed 'huge loss' report, the fresh food track's 'Mercury retrograde' period has been exceptionally long. This year, with external capital becoming more cautious and industry competition intensifying, the fresh food e-commerce track has frequently heard 'contraction' voices, with a clear trend of accelerated decline, and massive layoffs and cost reduction becoming a common consensus in the industry. Among them, the former leading platform Miss Fresh has had the hardest time, first drastically reducing business to 'survive by cutting off an arm,' then trying every means to keep its 'listed company' title, yet still deeply mired in the dual shadows of huge losses and debt disputes. In the mixed fresh food e-commerce track, what is the foundation for survival for all players: seeking financing to continue 'burning money,' optimizing supply chains to improve quality, seeking new turns in lower-tier markets, or developing private label products for differentiated competition?

From the年初 rush to enter prepared dishes in search of new paths, to the year-end release of Miss Fresh's delayed 'huge loss' report, the fresh food track's 'Mercury retrograde' period has been exceptionally long. This year, with external capital becoming more cautious and industry competition intensifying, the fresh food e-commerce track has frequently heard 'contraction' voices, with a clear trend of accelerated decline, and massive layoffs and cost reduction becoming a common consensus in the industry. Among them, especially the former leading platform Miss Fresh has had the hardest time, first drastically reducing business to 'survive by cutting off an arm,' then trying every means to keep its 'listed company' title, yet still deeply mired in the dual shadows of huge losses and debt disputes. In the mixed fresh food e-commerce track, what is the foundation for survival for all players: seeking financing to continue 'burning money,' optimizing supply chains to improve quality, seeking new turns in lower-tier markets, or developing private label products for differentiated competition?

**This year, 'silence'**
**became the main theme of the fresh food track** The 2022 of fresh food e-commerce, represented by Miss Fresh's late financial report, tells the story of the industry collectively entering a 'Mercury retrograde' period. After months of independent auditing, Miss Fresh finally released its 2021 financial report on November 14, which should have been disclosed before April 30. The annual report showed that in 2021, Miss Fresh's loss expanded to 3.85 billion yuan, with increased costs being the main reason for the enlarged loss. According to the financial data, in fiscal year 2021, Miss Fresh's total operating costs were 10.812 billion yuan, a year-on-year surge of 39.08%. It is worth mentioning that Miss Fresh now has only 55 full-time employees. The financial report previously mentioned that as of December 31, 2019, 2020, and 2021, Miss Fresh had 1,771, 1,335, and 1,925 full-time employees, respectively. In other words, Miss Fresh has laid off more than 97% of its employees. In addition, Miss Fresh is also deeply embroiled in debt disputes with employees and suppliers. Public data shows that to date, Miss Fresh is burdened with more than 760 labor dispute lawsuits, involving a total amount of about 813 million yuan; suppliers have filed more than 600 lawsuits against Miss Fresh and its subsidiaries. It is reported that in July this year, Miss Fresh attempted to 'survive by cutting off an arm,' that is, it shut down its extreme-speed delivery business under the front-warehouse model nationwide, retaining only the next-day delivery service, but subsequently, in Beijing, Shanghai, and other places, there were situations where next-day delivery could not be ordered—Miss Fresh described this move in its financial report as 'a series of major adjustments to its business strategy,' and also included a risk warning that 'these business strategy adjustments may ultimately not be successful.'

> _On October 7, Miss Fresh made another move, announcing an adjustment to the ratio of its American Depositary Shares ('ADS') to its Class B ordinary shares ('ADS ratio'), from 1:3 to 1:90. After the ratio change, from October 17 to October 28, 2022, Miss Fresh's ADS closing prices were above $1, meeting Nasdaq compliance requirements. Although this move preserved Miss Fresh's listed company status, as of the time of writing by Zinc Scale, its market value was only $12.01 million, still at risk of falling below the minimum listing standard._

Miss Fresh's experience is a microcosm of the industry's overall development setback. In fact, Miss Fresh's struggles and difficulties in 2022 are just a microcosm of the overall development setback of fresh food e-commerce. **This year, with external capital becoming more cautious and industry competition intensifying, the fresh food e-commerce track has frequently heard 'contraction' voices, and massive layoffs and cost reduction have become a common consensus in the industry.** Since the beginning of the year's 'race to make prepared dishes' craze, from the frequent actions of several major fresh food platforms in 2022, it is not difficult to see everyone's urgent desire to escape difficulties. For example, Hema clarified that it wants to take the 'multi-format online and offline collaborative development path'; Dingdong Maicai's business scope added shared bicycle services, enterprise management consulting, and leisure sightseeing activities; Miss Fresh also cooperated with a leading short video platform to do live-streaming shopping with extreme-speed delivery. **Unfortunately, these attempts to find a 'second growth curve' did not make much of a splash.** More importantly, from the performance of major fresh food e-commerce platforms at the two important nodes of the 618 mid-year promotion and the Double 11 annual promotion, unlike previous years when they issued coupons and offered bargain prices, they all remained silent, indicating that the fresh food track has fallen into 'silence' is an established fact.

**Non-standardized products**
**are difficult to break through the 'ceiling' of segmentation** Why is the fresh food track so difficult? To find the answer to this question, we need to start with the non-standardized nature of fresh food products. As commodities, fresh products have a lower proportion of manual design in the entire production process compared to other categories, and raw materials are likely not processed through industrial assembly lines. This leads to **large individual differences in fresh products, and they also have characteristics such as naturally high customer acquisition costs, high fulfillment costs, high loss rates, low gross margins, and few brands.**

Regarding non-standardized fresh products, Chen Hudong, a special researcher at the E-Commerce Research Center of NetEase Economics, believes that fresh food is essentially a money-burning industry, and due to the high requirements of freshness, back-end supply chain matching, and regionality, 'although the industry is currently fiercely competitive overall, it has basically not yet formed an efficient profit model, and there are many problems to solve.' If broken down, the standardization of agricultural products upstream in the industry requires reverse restrictive production through large-scale orders in the fresh food industry, while downstream consumers' personalized preferences such as taste and flavor need to be satisfied by the fresh food industry with a rich SKU supply. Based on this, **the industry believes that the difficulties in the development of the fresh food e-commerce industry are mainly concentrated in the midstream logistics infrastructure construction, brand building, and customer acquisition links**, 'including how fresh food e-commerce can build an effective user growth system after abandoning aggressive subsidy tactics, how to maintain high repurchase rates of existing users, and ensure the quality of fresh products, and establish brand awareness among user groups.' Compared to independent startups like Miss Fresh, which have capital and cost disadvantages, comprehensive platforms have natural competitive advantages. For example, based on the redundant capacity of comprehensive e-commerce platforms, the scale advantages and delivery advantages of large platforms, coupled with extended business lines such as offline stores, can share the costs of same-city delivery. In addition, fresh food consumption has the notable characteristic of 'limited channels,' and channel stickiness will significantly increase users' repurchase rate on the same channel. This means that, apart from the high construction costs of the product supply chain, comprehensive platforms that have already gained user trust can also benefit from processed foods and other methods on this basis. This explains why, although everyone rushes into the market at the same time, only the fresh food entrepreneurs who rode the 'wind' have harvested a mess. After all, whether they are comprehensive e-commerce or cross-border players, even if they shrink their battle lines or even shut down businesses, they have their own main businesses to support them, while **as independent startups, they can neither continue to 'burn money for market share' nor achieve 'self-hematopoiesis,' so naturally they end up in this situation.** 'The money-burning in the fresh food e-commerce track is more effective for large platforms with lower customer acquisition costs. For independent and startup platforms, if they don't have millions of active consumers as a base, it is difficult to burn past the 'critical point.' In an interview with Entrepreneur, Hu Xiang, a managing partner of Black Horse Fund, also said this.

**After strategic contraction**
**conservative offense becomes a new choice** It is undeniable that fresh products still belong to rigid consumption, and the huge market space almost constantly arouses the enthusiasm of the fresh food e-commerce industry.

> _Data released by the National Bureau of Statistics shows that in October, retail sales of grain, oil, and food products and beverages by units above the designated size increased by 8.3% and 4.1% year-on-year, respectively, with growth rates 8.3 and 4.1 percentage points higher than the growth rate of retail sales of goods by units above the designated size._

In addition, a report by iResearch Consulting pointed out that **the fresh food e-commerce market will usher in a new round of reshuffling in the next one to two years, and supply chain capability is the key for enterprises to break through and win.** Jiang Han, a senior researcher at Pangoal Institution, also said that enriching private label products and differentiated products, while increasing heavy investment in the fresh supply chain, can greatly improve product power and operational efficiency, which is undoubtedly the key to profitability in the fresh food e-commerce track. Therefore, although business contraction has become an industry consensus, there is no lack of 'conservative offense' moves. Judging from the current development status of relevant platforms, in addition to continuous technology and cost investment to optimize the supply chain and improve efficiency, they are also eyeing lower-tier markets and segmented consumer groups. Among them, Hema has used its new business, Hema Outlets, to fill the gap left by the large-scale closures of Hema Neighborhood and Hema Mini and the gradual contraction of coverage. It is reported that Hema Outlets mainly focuses on private label products, selling half-price fresh products that are near expiry, have short shelf life, or are easily damaged, as well as products with guaranteed quality but poor appearance, to achieve the turnover and circulation of such near-expiry products. To date, Hema Outlets has opened more than 50 stores nationwide and is still expanding. In October this year, Meituan Select upgraded its brand positioning to 'Tomorrow's Arrival Supermarket,' aiming to improve the 'last mile' consumption experience through a network of pickup points covering urban and rural areas. The 'order today, pick up tomorrow' service model of the Meituan Select platform has covered nearly 3,000 cities and counties nationwide. As for Dingdong Maicai, this year it launched two new service sections, 'Mom's Choice' and 'Light Nutrition Planet,' with the former focusing on mothers and children's food, and the latter targeting young people who advocate a healthy light diet, indicating that on the business side, it is also beginning to cater to new demands for consumption differentiation. At the same time, **in order to solve the problem of homogenization, fresh food players have begun to explore private label and specialty products, especially focusing on the currently popular prepared dishes.**

Fresh food players are making efforts on private labels. A simple example: public data shows that in 2019, Hema's private label share was just over 10%, but according to the latest data, Hema's private label sales share has reached 35%; this year, Dingdong Maicai launched hot pot private labels such as 'Tomato Oxtail Pot,' 'Angelica Lamb Pot,' and 'Hakka Drunken Chicken Pot,' which are quite popular among consumers. With this wave of fresh food players 'adding bets,' and with the implementation of their self-built supply chain centers in many places across the country, and the continuous improvement of warehouse and transportation networks, perhaps there will be breakthroughs in intermediate links such as standard setting, production circulation, and brand promotion. Of course, these all require time to give us answers.


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