---
title: "MissFresh Suddenly Announces Team Dissolution: Is the Front-Warehouse Model Still Viable?"
description: "MissFresh users discovered a service change notice on its homepage, shifting from 30-minute delivery to next-day delivery. The company stated it adjusted its front-warehouse business to achieve profitability, but later it was learned that MissFresh suddenly announced team dissolution, with all business lines shut down and employee social security and housing fund contributions ending in July."
author: "田静"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2022-07-28"
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# MissFresh Suddenly Announces Team Dissolution: Is the Front-Warehouse Model Still Viable?

> MissFresh users discovered a service change notice on its homepage, shifting from 30-minute delivery to next-day delivery. The company stated it adjusted its front-warehouse business to achieve profitability, but later it was learned that MissFresh suddenly announced team dissolution, with all business lines shut down and employee social security and housing fund contributions ending in July.

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Today, MissFresh users noticed a service change notice on the MissFresh homepage, changing from the original 30-minute delivery to next-day delivery. The notice stated that the fastest delivery time is next-day delivery, with nationwide coverage.
In response, MissFresh said, "Under the major goal of achieving profitability, the company has adjusted its front-warehouse business, and next-day delivery and other businesses are not affected."
**As of the time of writing, we have learned that MissFresh suddenly announced team dissolution, with all business lines completely shut down. Employee social security and housing fund contributions will be paid up to July, with August contributions to be paid by employees themselves.**
According to MissFresh employees, they were asked to work from home yesterday citing air quality management, and today the dissolution was suddenly announced, which was very abrupt.
According to core employees who attended the meeting, MissFresh has no funds left in its accounts, and it is unknown whether July salaries will be paid normally.
Earlier, although MissFresh announced a strategic equity investment cooperation agreement with Shanxi Donghui Group, which planned to invest 200 million RMB in MissFresh, insiders revealed that this financing had not been received.
**From the shutdown of the 30-minute ultra-fast delivery business to the announcement of team dissolution, it took only half a day. The series of changes at MissFresh is lamentable. For specific and accurate information, we defer to official announcements.**
**01 The Rise and Fall of MissFresh over 7 Years**
MissFresh's "front-warehouse model" went from its debut to official shutdown in 7 years, ultimately ending in decline.
Looking back, in 2015, during the first ebb of fresh food e-commerce, the first generation of fresh food e-commerce companies represented by B2C and O2O models went bankrupt, downsized, transformed, or were acquired.
The emergence of MissFresh's front-warehouse model seemed like a lifeline for fresh food e-commerce. Through a two-tier warehousing system of "city sorting centers + community front warehouses," it could cover a three-kilometer radius and achieve one-hour delivery of fresh products.
At that time, most fresh food e-commerce still used traditional courier delivery, with the fastest being next-day or even several days, failing to meet consumers' immediate shopping experience.
One-hour delivery brought MissFresh its glorious moment. The front-warehouse model and the concept of warehouse-store integration became trends, and MissFresh became the object of intense capital pursuit.
From the angel round led by Yuanjing Capital, MissFresh completed 7 rounds of financing between 2014 and 2018, with investors including Tencent Investment, China Growth Capital, Tiger Global Fund, and other well-known domestic and international institutions, totaling over $800 million.
MissFresh quickly entered an expansion phase. In July 2016, within just one year, MissFresh announced regional profitability in Beijing.
Efficiency, speed, low cost, and high profit were the grand blueprint MissFresh drew for the front-warehouse model at that time.
Undoubtedly, faster speed is the biggest advantage of the front-warehouse model. However, as a capital-intensive and investment-heavy model, it also faces issues such as high expense ratios, low gross margins, and difficulties in customer acquisition and conversion.
In 2021, MissFresh failed to meet its KPI set in 2019 of "expanding tenfold and achieving 100 billion yuan in revenue." Instead, it closed warehouses, withdrew from cities, and optimized costs.
According to Caijing Shiyi Ren, MissFresh closed operations in nine cities—Suzhou, Nanjing, Hangzhou, Qingdao, Shenzhen, Guangzhou, Jinan, Shijiazhuang, and Taiyuan—within three days from June 30 to July 1, leaving only Beijing, Shanghai, Tianjin, and Langfang.
From 2018 to 2021, MissFresh accumulated losses of approximately 10.8 billion yuan, almost burning through all the capital raised from the capital markets.
Beset by negative news and on the brink of collapse, on July 14, MissFresh announced a strategic cooperation agreement with Shanxi Donghui Group, which would provide 200 million yuan in equity investment. According to MissFresh, the cooperation went beyond investment, leveraging supply chain integration advantages to explore agricultural product operations and sales, as well as follow-up cooperation in brand agriculture and order-based agriculture.
Before the announcement of team dissolution, we thought this shutdown might be MissFresh's "rein in at the brink," especially since it had attracted 200 million yuan in investment to sustain itself, and it couldn't continue losing money on front warehouses.
One shouldn't stumble twice in the same place. But in reality, the 200 million yuan investment never arrived, cutting off MissFresh's path to self-rescue.
**02 Pros and Cons of the Front-Warehouse Model**
**Success and failure both stem from the same factor. The front-warehouse model once turned MissFresh into a darling of capital, basking in glory. Now that capital has receded, MissFresh has fallen from grace.**
What is the front-warehouse model?
It involves densely deploying multiple small warehouses within urban areas, each covering a limited range—only three to five kilometers. It was this model that allowed MissFresh to establish 1-hour or even 30-minute delivery as its core advantage.
But there is an obvious problem.
Goods in front warehouses are pre-stocked. Fresh products have short shelf lives, and if inventory turnover is low, spoilage rates will inevitably be high. Without very dense population and sufficient purchasing power, the probability of losses in front warehouses is high.
Compared to large warehouse models, each front warehouse covers only about 200-300 square meters, with initial investment in first-tier cities of about 500,000 yuan each. Theoretically, as long as daily orders exceed a certain number, this cost can be easily offset.
However, fresh products require high cold-chain transportation and time sensitivity. In first-tier cities like Beijing and Shanghai, users have higher demands for fresh quality and greater price tolerance. Therefore, with the convenience and quality service of front warehouses, order values can reach higher levels. When supported by a certain scale of orders, profitability becomes natural.
So **this model imposes higher requirements on geography, consumer demographics, and purchasing power.**
For MissFresh, this model had to be based in first-tier cities with high population density, sufficient purchasing power, and rigid willingness to pay.
Specifically, MissFresh's 30-minute ultra-fast delivery front-warehouse model catered more to **immediate needs**, which is an upgraded consumption demand. Naturally, it also demanded higher additional conditions.
Hou Yi, founder of Hema Fresh, pointed out when closing Hema's front-warehouse business: "The front-warehouse model can be replicated at low cost and quickly, but it is difficult to balance cost and efficiency, and it cannot achieve overall profitability. Hou Yi asserted that front warehouses are 'an unviable model, a model designed to show to VCs.'"
Indeed, behind the glamorous facade of front warehouses, hidden problems began to surface over time.
Front warehouses require sufficient population density and purchasing power to balance costs, but few cities nationwide meet these standards besides Beijing, Shanghai, Guangzhou, and Shenzhen. Therefore, whether front warehouses are suitable for nationwide promotion is a question worth deep consideration.
Another example: although the front-warehouse experience is good, if the experience includes warehousing and logistics costs in product prices, high order values alone may make many users feel it's not a necessity. If logistics and warehousing costs are not included, costs cannot be balanced.
Now MissFresh's decline provides another example. Where the front-warehouse model goes from here still requires a long period of trial and exploration.
**Final Thoughts:**
Data indicates that in 2020, China's community retail market reached 11.9 trillion yuan, fresh food retail reached 5 trillion yuan, and FMCG reached 6.9 trillion yuan. E-commerce penetration rates for beauty, books, 3C electronics, and apparel all exceeded 20%, and food delivery accounted for 15%, but fresh food online penetration was only about 3%.
The low penetration rate of fresh food e-commerce has attracted e-commerce giants and capital to compete for this market, so the front-warehouse model will continue to receive high attention in the future.
But currently, this model **still belongs to first-tier cities, a "density business" for concentrated populations, with young people as the main consumer group. When encountering regional ceilings, it inevitably needs to expand to lower-tier markets, transforming into a "breadth business."** We will wait and see.
**Industry analyst Liu Shaode's comments:**
**The retail industry is a business of refined operations. Whether a business model can stand depends on order density and average order value. When order density and average order value are sufficient to cover various operating costs, the business model is naturally sustainable; otherwise, it is not.**
Unlike MissFresh's bleak exit from the front-warehouse track, Meituan has recently been vigorously expanding long-tail consumer goods based on daily chemicals, washing, and general merchandise categories, with some franchisees already achieving full profitability. Similarly, on July 21, Taocaicai promoted free door-to-door delivery to all "group leaders" on its platform. Consumers can enter Taocaicai through Taobao's homepage and choose the nearest group point with the lowest minimum order amount. In a sense, group points are also a form of front warehouse.
What changes in the industry do these advances and retreats reflect?
**1. Capital-intensive business models are like dancing on a tightrope**
In previous articles, I categorized instant retail into three models:
The first is the platform-delivery model, where consumers place orders on a platform, and the platform uses social logistics to deliver goods from stores to consumers. This model is mostly based on offline stores, with the platform serving as an information aggregation site and not owning the goods. Typical examples include Meituan, Ele.me, and Dada.
The second is the self-operated delivery model, where consumers place orders on the merchant's own platform, and goods are delivered from stores to consumers by self-operated or third-party logistics. The platform owns the goods and is mostly based on offline stores with front stores and back warehouses. Typical examples include Taoxianda and Hema.
The third model is the self-operated front-warehouse model, which uses dense front warehouses for storage. The platform owns the goods and uses self-operated logistics for delivery. Typical examples include Dingdong Maicai and MissFresh, mostly fresh food e-commerce.
In the first model, neither the goods nor the logistics belong to the platform; it is essentially an information aggregation platform acting as an intermediary for information transactions. Therefore, the unit order cost is the lowest, and profitability is easiest. The second model spreads the fulfillment cost per order through a diverse product mix (around 40,000 SKUs), with costs in the middle. The third model, by focusing on fresh food, has the highest unit order fulfillment cost. This model can cover fulfillment costs only when order density is sufficiently high; once order density drops, losses become natural.
**2. Profitability in fresh food e-commerce is harder than climbing to the sky**
Entrepreneurs in the fresh food e-commerce track have long been littered with failures. From the early Xuxian.com to Yiguo Fresh and Dailuobo in recent years, and Meituan's Xiaoxiang Fresh, all have faced shutdown. Although Xu Xin once said, "Those who win fresh food win the world; fresh food is the last fortress of e-commerce," the high spoilage rates and high warehousing costs behind fresh food cannot be ignored.
In contrast to the heavy investment, fresh food has relatively low gross margins. According to industry insiders, fresh food e-commerce costs account for 30%-40% of the total price, while gross margins are only 10%-20%. Additionally, fresh food is a non-standard product with obvious localization and personalization characteristics, which means the internet-era rule of "winner takes all" may not apply as effectively in fresh food e-commerce. Given these multiple factors, it's not hard to understand why so many internet entrepreneurs have failed in fresh food e-commerce.
After years of development, fresh food e-commerce has ultimately returned to the industry's original pain points: how to solve high costs, high spoilage, low profits, and unstable profit models. Currently, there is still a long way to go in answering these questions.
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