---
title: "Intensifying Competition! Dingdong Maicai Ventures into Outlet Format, Ready to Battle Hema?"
description: "A new store by the author of Fresh Food Ranking has drawn close attention from the fresh food industry. Recently, the first Dingdong Outlet store opened in Shanghai's Songjiang District. As a leading player in the front-warehouse model, can Dingdong Maicai's trial of the fresh food outlet format succeed?"
author: "生鲜榜作者"
publisher: "New Distribution"
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published: "2023-12-11"
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# Intensifying Competition! Dingdong Maicai Ventures into Outlet Format, Ready to Battle Hema?

> A new store by the author of Fresh Food Ranking has drawn close attention from the fresh food industry. Recently, the first Dingdong Outlet store opened in Shanghai's Songjiang District. As a leading player in the front-warehouse model, can Dingdong Maicai's trial of the fresh food outlet format succeed?

A new store by the author of Fresh Food Ranking has drawn close attention from the fresh food industry. Recently, the first Dingdong Outlet store opened in Shanghai's Songjiang District. As a leading player in the front-warehouse model, can Dingdong Maicai's trial of the fresh food outlet format succeed?

**Debut of Dingdong Outlet's First Store**

The first Dingdong Outlet store is located on Jiutingli Street in Songjiang District, in the western suburbs of Shanghai. The store is surrounded by more than a dozen residential communities, as well as schools and a street of restaurants, with high population density and strong demand for fresh produce. However, there are basically no wet markets or large fresh food supermarkets in the area, and even individual vegetable shops are uncommon. Jia Yupeng, operations director of the Dingdong Outlet store, said that during preliminary inspections, they found that the area around the store is densely populated with residential communities, with a high population density and a main consumer base for fresh food, making it the primary target customer group for Dingdong Outlet. The location not only fits the target customer group but also supplements the fresh food supply. It is reported that on the opening day of the Jiuliting store, the total customer traffic is expected to be around 15,000. The first Dingdong Outlet store covers about 500 square meters. A reporter from Fresh Food Ranking visited the store and found that it focuses on fresh produce, covering categories such as fruits and vegetables, bakery, dairy products, frozen foods, beverages, snacks, health foods, refrigerated aquatic products, meat, condiments, and daily necessities, with over 1,000 SKUs. At the entrance, seasonal oranges and greens are displayed. Further inside, there are areas for vegetables, fruits, and soy products, with freshly baked goods and bakery items nearby. Further back, one wall is lined with freezers containing various refrigerated aquatic products, pastries, and dairy products, while the opposite wall has iron shelves stacked with various condiments, canned goods, and packaged items. In the middle area, there are several cabinets with refrigerated foods and chilled meats. The back area is mainly for daily necessities and leisure snacks. Unlike traditional fresh food supermarkets with dedicated shelves for vegetables and fruits, and unlike Pangdonglai or Fresh Food Legend with carefully arranged product displays, the Dingdong Outlet store uses storage baskets to stack and display fruits and vegetables. There are no fancy electronic price tags or paper tags; products and prices are handwritten, and the store is filled with signs like "No tricks, truly affordable" and "Great value, come to Dingdong Outlet," with various promotional signs everywhere. It looks less like a fresh food supermarket and more like a fresh food warehouse, with a "rough" and "simple" style. Secondly, while general fresh food retail supermarkets mostly sell in bulk, allowing consumers to choose their own portions, all fresh products (aquatic products, meat, vegetables, fruits, etc.) in the Dingdong Outlet store are pre-packaged in equal portions with fixed prices. Consumers only need to choose the number of portions, without weighing. When asked about their evaluation of Dingdong Outlet, consumers unanimously mentioned "really cheap" and "great value." For example, 500g of fresh pork leg is priced at 6.6 yuan, 3 sweet and fragrant corn cobs at 6.9 yuan, and 1.5kg of Aksu apples at 9.9 yuan, which are competitive compared to most supermarkets in Shanghai. According to reports, an insider at Dingdong Outlet revealed that only a portion of the offline products overlap with online products, allowing for linkage and mutual complementarity. The offline store mainly sells products with strong basic livelihood attributes and more room for supply chain optimization. Currently, direct sourcing accounts for about 80% of the products in the first store.

**Focusing on Discount Transformation**

Dingdong Maicai's move into the outlet format is not a rash decision. The front-warehouse business has long struggled with profitability, with challenges such as difficulty in increasing average order value, high perishability of fresh products, and high delivery costs. Early on, Hema CEO Hou Yi viewed the front-warehouse model as a false proposition. From 2019 to 2021, Dingdong Maicai expanded rapidly, opening an average of 2.4 new cities per month. By the end of 2021, Dingdong Maicai had reached 1,400 front-warehouses. During the same period, Miss Fresh was also expanding aggressively. From 2017 to 2018, Miss Fresh proposed the "100 cities, 10,000 warehouses, 100 million households" plan, aiming to expand to 10,000 front-warehouses and triple SKUs. By 2019, Miss Fresh was still trading losses for scale, resulting in a net loss of nearly 3 billion yuan that year. Dingdong Maicai founder Liang Changlin also adhered to this approach, with losses totaling 5 billion yuan over 2019-2020, and in 2021 alone, losses reached 6.4 billion yuan, with losses rapidly expanding.

Bleeding expansion is not a sound business method. Therefore, starting from August 2021, Dingdong Maicai began to slow down expansion, and its operational indicators quietly shifted to "efficiency first, with scale as a secondary consideration." Subsequently, by cutting points, cutting riders, cutting marketing, closing stores, and withdrawing from cities, the company achieved cost reduction. Additionally, in the post-pandemic era, with consumers' desire to spend diminishing and becoming more price-sensitive, keywords like "cheap" and "value for money" have forced the fresh food market to set off a wave of low prices. At the third-quarter earnings call, Liang Changlin made a statement on product pricing, proposing that "instant retail must have price competitiveness when consumer willingness to spend changes, and we should try low prices, ultimately achieving higher product quality and lower product prices." It is reported that by the end of this year, Dingdong Maicai will open a second outlet store in Jinshan District, Shanghai. It seems that Dingdong Maicai will rapidly focus on the offline outlet format.

**Outlet Trend: What Are the Chances of Success?**

Not only Dingdong Maicai, but many fresh food companies are turning to low-price strategies, with product power reform becoming a key direction. In August this year, Hema and Sam's Club engaged in a fierce price war. In October, traditional supermarket chain Better Life, which was facing store losses, performance pressure, and liquidity and debt issues, also moved towards price reduction to survive, announcing an average price cut of about 15%. Recently, Yonghui Group also stated that it will add "genuine discount stores" in its stores nationwide, and simultaneously add discount sections online, offering surprise discounts on food and daily necessities. At this year's New Retail Conference, Hema CEO Hou Yi announced that the outlet store would be the focus of business development going forward. At the same time, Hema has taken the lead in launching a "discount" transformation, starting with price cuts at Hema Fresh offline stores, and will expand to online in the future. More than 5,000 products have already been discounted offline, with prices generally reduced by 20%. In the future, Dingdong Outlet will directly compete with Hema Outlet, which is also based in Shanghai. In terms of store count, Dingdong Outlet currently has only one store, while Hema has over 60 outlet stores in Shanghai, not only in suburban areas but also in central districts such as Changning, Jing'an, and Xuhui, giving it first-mover and scale advantages. In terms of product categories and prices, the two currently differ. A reporter from Fresh Food Ranking observed that the Dingdong Outlet store has nearly 100 types of fruits and vegetables, with a similar number of SKUs for refrigerated/frozen foods, meat, and aquatic products. For example, for fruits and vegetables, except for seasonal oranges which have multiple varieties, other categories basically have one type each, and the varieties are common. In contrast, in Hema Outlet stores, semi-finished products and refrigerated/frozen foods clearly have more SKUs than fruits and vegetables, and for seasonal oranges, there are more varieties and gift box options available in-store. Fruits also include mangosteen, Shine Muscat grapes, avocados, etc., with a richer variety. From a product perspective, Hema Outlet offers more diverse and higher-end fresh products, with little price difference on basic common fresh categories. Additionally, it is reported that Dingdong Outlet did not rebuild its supply chain but operates based on its existing products and warehousing and logistics system. On one hand, this reduces the supply chain cost of the outlet store; on the other hand, it helps Dingdong Maicai digest some of its production capacity.

However, Dingdong Maicai started online and lacks offline operational experience, with store management levels relatively inferior to Hema Outlet. Feng Yi (pseudonym), a veteran in the fresh food industry and former employee of fresh food e-commerce company Dailuobo, told Fresh Food Ranking, "The so-called lack of offline operational experience can be made up through learning. But in the fresh food industry, focusing on a single category has opportunities for growth, while doing broad categories is not easy. The first Dingdong Outlet store has 4-5 employees in-store, with at least three times that number in backend support." In Feng Yi's view, the additional labor costs, fresh food spoilage, and supply chain management pressure are all issues that Dingdong Maicai needs time to balance. Feng Yi also mentioned that Dingdong Outlet is doing community business, and like Hema Outlet, Yipin Fresh Food, and Qian Dama, its direct competitors include not only peers but also mom-and-pop stores. During the promotion of Dailuobo, he found that long-term sustainable community business requires providing consumers with emotional and environmental value beyond product value. "Chain community fresh food stores tend to be standardized and uniform, and the delivery process feels colder than mom-and-pop stores, making it harder to retain customers. Especially if Dingdong Outlet is positioned in suburban areas to target lower-tier markets in first-tier cities and the middle-aged and elderly demographic, these consumers pay more attention to emotional value." Therefore, to extend the store's development lifecycle, training and managing community store personnel is also key to Dingdong Outlet's development. Currently, Dingdong Outlet is indeed profitable due to its affordable prices, good product quality, existing supply chain, and brand recognition, but how far Dingdong Outlet stores can go and whether they can compete with Hema Outlet remains to be tested by the market.


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