---
title: "MissFresh's Lesson, Dingdong's Guide"
description: "Dingdong Maicai is transforming from a fresh e-commerce company into a food company. After MissFresh's collapse, Dingdong has been closing unprofitable cities and focusing on prepared dishes to achieve profitability."
author: "田静"
publisher: "New Distribution"
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published: "2023-05-23"
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# MissFresh's Lesson, Dingdong's Guide

> Dingdong Maicai is transforming from a fresh e-commerce company into a food company. After MissFresh's collapse, Dingdong has been closing unprofitable cities and focusing on prepared dishes to achieve profitability.

**Introduction: Dingdong Maicai is undergoing a transformation from a "fresh e-commerce enterprise" to a "food enterprise."**

Ten months ago, MissFresh, known as the "first stock in community retail," ceased operations, with its "hematopoietic" capacity continuously declining. As of today, MissFresh's stock price is only $0.64, with a market value of only $5.02 million.

**Next is Dingdong Maicai.** Ten months later, Dingdong Maicai began to "ring." On May 22, news broke that Dingdong Maicai would withdraw from Chengdu and Chongqing. By switching location to Chengdu Tianfu Square or Chongqing Guanyin Bridge, users could see a "Service Adjustment Announcement" on the Dingdong Maicai app homepage, stating that Dingdong Maicai stations would stop delivery services at 18:00 on May 29, 2023. The news of "Dingdong Maicai withdrawing from Sichuan and Chongqing" spread quickly.

**Withdrawing from cities to stop losses**

On May 22, many users with IP addresses in Sichuan and Chongqing posted on Xiaohongshu asking, "Is Dingdong Maicai going bankrupt?" This speculation had some basis, as screenshots showed many products on the Dingdong Maicai platform marked as sold out. The day before, the Dingdong Maicai app had launched a "welfare zone" in the Sichuan-Chongqing region, with many products at 50% off and promotions like 10 items for 99 yuan, attracting many users to "fleece the wool." Now it has been confirmed that this was a precursor to the shutdown. On May 22, users in the Sichuan-Chongqing region received a service adjustment announcement on the Dingdong Maicai app, stating that to serve users more efficiently, they would adjust the operation of front-warehouses in the region. Meanwhile, stations in the region would stop delivery services at 18:00 on May 29, 2023. Users needing to refund account balances or unexpired green card memberships could contact customer service for assistance with refunds and card cancellations, and station community services would also be adjusted accordingly. In local Dingdong Maicai activity WeChat groups, customer service employees said the groups would be disbanded, and they would solve problems for everyone one last time.

From Dingdong Maicai's response, the main impact this time is on businesses in Chongqing and Chengdu, while other regions are temporarily unaffected. This city withdrawal can be described as **unexpected but within expectations**. Why? Starting from May 2022, Dingdong Maicai had already begun to shrink its battlefield and slow down its expansion. According to public data, by the end of May 2022, Dingdong Maicai had already closed stations in Xuancheng and Chuzhou, Anhui, and before that, stations in Tangshan, Hebei, and Zhuhai, Guangdong had stopped services. Tianjin also stopped services on June 15; in October, it withdrew from the Xiamen market. In November of the same year, Dingdong Maicai's subsidiary Shishishun (Qingdao) E-commerce Co., Ltd. was officially deregistered. According to Qichacha data, Shishishun Qingdao was established on July 8, 2021, located in Qingdao, Shandong, mainly engaged in wholesale, with a registered capital of 10 million yuan, and the actual controller is Shanghai Yibaimi Network Technology Co., Ltd., i.e., "Dingdong Maicai." It can be seen that **2022 became a watershed for Dingdong Maicai.**

Before that, **from June 2020 to June 2021, was the peak of Dingdong Maicai's expansion**, with an average of 2.4 new cities per month. At the same time, Dingdong Maicai's Q3 2021 financial report showed that as of the end of that quarter, Dingdong Maicai had 1,375 front-warehouses in 37 cities nationwide, with the number of cities increasing by 185% year-on-year. Since August 2021, Dingdong Maicai adjusted its operational strategy from "scale first, efficiency second" to "efficiency first, scale second." Then, since 2022, Dingdong Maicai has gradually withdrawn from some second- and third-tier cities. So far, it has withdrawn from Xiamen, Zhuhai, Tianjin, Zhongshan, Chuzhou, Langfang, Tangshan, and other cities. As of now, the Dingdong Maicai app shows 28 cities operating normally (including Chengdu and Chongqing), of which 18 are Yangtze River Delta cities, accounting for 66.7%. The total number of cities has decreased by 9 compared to September 2021, a reduction of nearly a quarter. With the withdrawal from Chengdu and Chongqing, the era of large-scale expansion for Dingdong Maicai is fading away.

**Turning losses into profits**

Behind this fading is Dingdong Maicai's continuous self-rescue. Many industry insiders say that this leading front-warehouse player in the fresh food track is using intensive cultivation to dispel doubts about the difficulty of profitability in front-warehouse models.

**Narrowing losses**

Financial data shows clues. In the second half of last year, through large-scale contraction and cost optimization, Dingdong Maicai once achieved profitability. Objectively speaking, Dingdong Maicai's loss situation has greatly improved. On May 12, Dingdong Maicai announced its unaudited financial report for the quarter ending March 31, 2023. In the first quarter of this year, Dingdong Maicai's total revenue was approximately 4.998 billion yuan, a year-on-year decrease of 8.2%; among which product revenue reached 4.938 billion yuan, down 8.1% year-on-year, and service revenue was 59.7 million yuan, down 12.9% year-on-year. In addition, in the first quarter, Dingdong Maicai's GMV decreased by 6.8% year-on-year to 5.451 billion yuan, compared to 5.851 billion yuan in the same period of 2022. Regarding the decline in revenue and GMV, Dingdong Maicai mentioned that in the same period of 2022, the East China region was affected by the epidemic, leading to a significant increase in supply, resulting in a high revenue base in March last year; additionally, last year Dingdong Maicai optimized its regional layout and withdrew from some cities.

What is lost is gained. **While revenue shrank, losses also narrowed significantly.** In the fourth quarter of last year, Dingdong Maicai's fulfillment costs were 1.494 billion yuan, down 16.4% year-on-year; in the first quarter of this year, fulfillment costs were 1.196 billion yuan, a decrease of 19.4% compared to the same period in 2022. Clearly, with contraction and city withdrawals, key fulfillment costs have also decreased. It is evident that compared to MissFresh's stumbling forward, Dingdong Maicai's contraction and city withdrawals are a wise move.

**Increasing focus on prepared dishes**

In response to the news of withdrawing from the Sichuan-Chongqing market, Dingdong Maicai responded: Recently, based on considerations of cost reduction and efficiency improvement, the company adjusted its business in Chongqing and Chengdu, suspending services in the relevant regions. This adjustment does not affect the company's normal operations in other regions. In the future, the company will increase investment in supply chain, food research and development, and processing, and will maintain deep cooperation with excellent food enterprises, including those in the Sichuan-Chongqing region. On closer inspection, this may be preparation for the next step in prepared dishes. In the first quarter 2023 financial report, self-branded products, mainly prepared dishes, accounted for 19% of Dingdong Maicai's overall GMV, with the penetration rate of self-branded products rising to over 70%. The prepared dish brand "Cai Changqing," focusing on home-style dishes, has monthly sales exceeding 70 million yuan. It is understood that in February 2022, Dingdong Maicai established a prepared dishes division and upgraded it to a first-level department. In March this year, Dingdong Maicai recruited "prepared dish partners" from the entire industry, offering a total target scale of 5 billion yuan in prepared dish orders.

As is well known, the domestic prepared dish track is heating up. This year, the Central Document No. 1 also proposed for the first time to cultivate and develop the prepared dish industry, injecting a shot in the arm for the industry. With government support and recognition, Hema, as a fresh food platform, has also set a target of 5 billion yuan in annual sales this year and listed prepared dishes as a first-level department for key development. With the rapidly developing track and growing demand, and the ability to increase product average order value and gross margin, increasing focus on prepared dishes has become a trend that fresh food platforms are chasing, and Dingdong Maicai is no exception. Dingdong Maicai founder and CEO Liang Changlin said: The prepared dish segment is currently profitable, and with the expansion of the prepared dish segment, growth in experience, and improvement in supply chain, profitability will become stronger and stronger. "I hope we can not only become the largest prepared dish company but also the most profitable prepared dish company." Unlike MissFresh, Dingdong Maicai is also seeking more profit channels while cutting off its arm to survive.

**Reshaping and transformation**

Liang Changlin said, "Only by squatting down can you jump far." And now is the moment for Dingdong Maicai to squat. As one of the models in instant retail, the front-warehouse model has always been a pain point that the industry cannot solve, with high costs, high losses, low profits, and unstable profit models. Fulfillment costs and order density are key indicators of whether a platform can sustain profitability. With sufficient order density, fulfillment costs can be covered; once order density is insufficient, it directly leads to losses. The two complement each other; when one rises, the other rises, and when one falls, the other falls.

From the perspective of instant retail, instant retail has become the fastest-growing project at present. Chen Weilong, founder of instant retail flash warehouse, mentioned at this year's China FMCG Innovation Conference that Meituan Flash Purchase is growing at about 50%, flash warehouse growth exceeds 200%, while Hema and Dingdong Maicai's growth rates are both below 30%, lower than the industry average. It can be seen that the front-warehouse model is gradually declining on the instant retail track.

After "reflecting on the pain," Dingdong Maicai began to **narrow vertically and broaden horizontally.** In 2023, Dingdong Maicai turned to the development of self-branded products, directly cooperating with farmers or crop bases on the supply side, bypassing intermediaries in the complex chain, improving product gross margins as much as possible, and achieving profitability goals. At the same time, it continues to increase product development efforts, and in the creation of key categories, single products, and bestsellers, deepens supply chain integration. It is also investing heavily in warehouse and factory construction. It is reported that Dingdong Maicai now has more than 10 food factories and three super-large 3F factories, ensuring comprehensive control in food research and development, production, and quality control.

A series of actions indicate that Dingdong Maicai is completing its transformation from a "fresh e-commerce enterprise" to a "food enterprise." Affected by the popularity of "Zibo barbecue," the search volume for the keyword "barbecue" on the Dingdong Maicai app doubled in April, driving a surge in sales of barbecue-related prepared products. Among them, the "Cai Changqing" barbecue family package saw a 500% month-on-month increase in sales. It can be noted that Dingdong Maicai has not uniformly named its self-branded products like "XX Preferred." Why? According to insiders, Dingdong Maicai tends to develop self-branded products into "independent brands," hoping that these brands can eventually step out of Dingdong and become independent brands.

Clearly, Dingdong Maicai's transformation path has been paved for a year. Despite experiencing business contraction from some city withdrawals, its sustainable profitability has not been disconnected under the cruel "battle royale" and peer comparison. So, will Dingdong Maicai follow in MissFresh's footsteps? Obviously not. MissFresh's decline is a warning to other platforms. MissFresh's lesson is Dingdong Maicai's guide, and its reshaping path still has a long way to go.

**Commentary by Liu Shaode, FMCG New Retail Analyst:** Against the backdrop of consecutive layoffs in major internet companies, it is not surprising that fresh e-commerce companies are withdrawing from cities and cutting off their arms to stop bleeding. Under the epidemic, consumers avoided risks and reduced going out, which briefly brought a highlight moment to Dingdong Maicai, explaining why the Q4 2022 financial report achieved first-quarter profitability. But the epidemic will eventually dissipate. When life returns to normal, fresh e-commerce represented by Dingdong Maicai will ultimately face competition from community fresh food stores and wet markets. In addition, internet giants represented by Duoduo Maicai, Meituan Youxuan, and Hema are advancing more aggressively this year, undoubtedly bringing considerable pressure to Dingdong Maicai. Previously, Xingsheng Youxuan successively withdrew from Henan, Shandong, Sichuan, Chongqing, Fujian, Guizhou, and other provinces and cities, nearly retreating to its base in Hunan. For Dingdong Maicai, also capital-catalyzed, choosing to sacrifice the pawn to save the rook in the current environment of economic downturn and weak consumption is a wise choice.

The deeper reason lies in the loss curse that fresh e-commerce cannot avoid. Insurance and cold chain logistics, product quality control, procurement and inventory management, operating costs and profit margins, consumer habits and trust—any of these are insurmountable mountains in front of fresh e-commerce. Especially the heavily invested front-warehouse model exacerbates Dingdong Maicai's profitability difficulties. According to estimates, the order fulfillment cost of the front-warehouse model is as high as 10-13 yuan per order, far exceeding all other fresh e-commerce models. Dingdong Maicai seems to have realized this, so it has shifted its strategic focus to the prepared dish field. Similarly, Hema has also set a sales target of 5 billion yuan for its newly established prepared dish department, showing the importance it attaches.

Whether shifting to prepared dishes will become a lifeline for Dingdong Maicai and others may need to be verified over time. But the current city withdrawals for Dingdong Maicai are like what Liang Changlin said, "Only by squatting down can you jump far."


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