---
title: "Pupu Supermarket Secures New Funding, Dark Horse of Front-Warehouse Model Aims for Top Spot"
description: "Pupu Supermarket recently completed a new round of strategic financing led by IDG Capital, bringing renewed attention to the front-warehouse model in fresh food e-commerce. Despite ongoing profitability debates, the company's steady growth and nearly 10 billion yuan in annual revenue position it as a strong contender to lead the sector."
author: "生鲜榜作者"
publisher: "New Distribution"
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published: "2021-11-29"
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# Pupu Supermarket Secures New Funding, Dark Horse of Front-Warehouse Model Aims for Top Spot

> Pupu Supermarket recently completed a new round of strategic financing led by IDG Capital, bringing renewed attention to the front-warehouse model in fresh food e-commerce. Despite ongoing profitability debates, the company's steady growth and nearly 10 billion yuan in annual revenue position it as a strong contender to lead the sector.

Source: Fresh Food Ranking (ID: sxbgfwx)
Editor: Guo Xiao

**Key Takeaways:**
1. What are the details of Pupu's latest funding round?
2. Can the front-warehouse model ultimately be profitable?
3. How can user operations be optimized to achieve profitability?

Recently, Pupu Supermarket completed a new round of financing, bringing renewed attention to the long-quiet front-warehouse track. As one of the mainstream fresh food e-commerce models in China, the front-warehouse model has often been criticized for the substantial upfront investment required.

However, looking at actual data, leading players such as Dingdong Maicai and Miss Fresh have not only performed well but have also successfully gone public.

Yet, precisely because of this, the front-warehouse model once became a business model that many investment institutions observed from the sidelines for a long time without easily investing. Therefore, this rare financing has brought Pupu Supermarket, already a dark horse in the front-warehouse space, back into the public eye.

**Financing Details**

It is reported that this round is a strategic financing led by IDG Capital. This is also the only investment in the fresh food retail sector among IDG's eight investment events since November this year.

According to Pupu Supermarket's official website, it has previously completed seven rounds of financing, with its main markets in Fuzhou, Xiamen, Shenzhen, Guangzhou, Wuhan, Chengdu, Foshan, and other places. This year, it has just begun to gradually expand its city coverage nationwide.

Industry insiders say that since its establishment in 2016, Pupu Supermarket has focused on Fujian, where its supply chain system is quite complete, and only began to expand to Guangdong, Shenzhen, and other places in 2019. It is not difficult to see that it is leveraging its geographical advantages to steadily develop within the radiation range of its original supply chain.

This financing, as the only publicly disclosed round since October 2019, on the one hand makes the market landscape of the front-warehouse track even more unpredictable in the eyes of investment institutions; on the other hand, it also highlights the awkward position of the front-warehouse model in the fresh food retail industry.

Overall, Pupu Supermarket's annual turnover has approached 10 billion yuan, and its steady development pace makes it quite competitive among its peers. Whether it can strive to become the number one in the front-warehouse model after withstanding financial pressure remains to be seen.

**Profitability Controversy of Front-Warehouse Model**

Pupu Supermarket's development in recent years can be seen as a microcosm of the entire front-warehouse model. In terms of costs, the visible costs of front-warehouse, such as rent, labor, delivery vehicles, and spoilage, have remained high.

Therefore, it is difficult to gain an advantage in cost compared to other business models. For example, in the community group buying model, rent can be saved by cooperating with community stores; spoilage can be minimized through advance mobile ordering. Additionally, the existence of group leaders also minimizes labor costs.

Secondly, industry insiders say that as fresh food e-commerce, other costs such as platform operation costs and marketing costs are also substantial.

Especially with the influx of capital into the fresh food track, competition between the front-warehouse model and other business models has become increasingly fierce, which is bound to lead to higher operating costs and lower gross margins.

To increase average order value, players such as Dingdong Maicai, Miss Fresh, and Pupu Supermarket have been striving to increase SKUs and expand business formats in recent years. Dingdong Maicai has even invested in building fresh food factories, trying to increase average order value through improving the upstream supply chain.

However, facing various group buying models that are backed by capital and naturally closer to residents, the front-warehouse model indeed faces significant pressure.

Nevertheless, according to the Q3 financial reports recently released by Miss Fresh and Dingdong Maicai, their Q3 revenues saw year-on-year growth of 47.2% and 111%, respectively. Although their losses also increased correspondingly, with significant increases in monthly active users and gross margins, this development trend seems acceptable to all parties.

In general, although the front-warehouse track still faces certain financial pressure, with large room for optimization in various links, profitability is not impossible in the future. The optimization and improvement of user operations is one such area.

**Deep Diving into User Operations**

In recent years, with the combined efforts of many e-commerce platforms, domestic users' consumption habits have been initially cultivated, and the market education stage has passed. Subsequently, a significant portion of industry competition will focus on user operation systems, especially for many B2C fresh food e-commerce platforms.

In this system, users are generally divided into six categories based on their attributes: potential users, new users, active users, declining users, silent users, and churned users.

Among them, the first two can be simply understood as users who have not yet been exposed to the platform and users who have just been exposed to the platform; active users are those who have been continuously placing orders on the platform.

Declining users are consumers whose needs are no longer met by the platform or whose needs have diminished, and their loyalty to the platform continues to decline; silent users are those with weak shopping needs or who primarily use other platforms, often specific groups not responsible for daily shopping; churned users, as the name implies, were once active users on the platform but have turned to other platforms due to changing needs or shopping experiences.

Based on this, the overly general "user operations" can be made concrete. First, for new users, their numbers can be increased through expanding channels and improving promotional efficiency, such as issuing various coupons.

These coupons for new users cultivate their usage habits by deducting a certain amount when placing an order. The usage threshold is extremely low, and the learning cost for users is almost non-existent, so while stimulating consumption, they also allow users to quickly understand product categories based on the type of coupon.

Of course, such coupons should also remind users of their scope and validity period to minimize the chance of problems during first-time shopping.

Subsequently, by simplifying the shopping process design and reducing the learning cost of using the platform, new users can be converted into active users.

The main operational goal for this group is to make them familiar with platform rules as soon as possible. Once they have a basic understanding, consumption coupons or medium-denomination coupons can be issued to gradually increase their average order value and purchase frequency.

Additionally, low-denomination coupons with high thresholds can be issued, and popular or best-selling products can be recommended based on users' browsing or purchase habits.

For silent users, they can be converted into active users by establishing a user growth system and increasing product penetration; for churned users, corresponding recall strategies can be designed.

For example, many platforms currently set up combination coupons for user recall, i.e., one low-threshold high-denomination coupon paired with one low-threshold low-denomination coupon to promote activation, maximizing the number of user purchases and extending platform usage time.

In addition to coupons, platforms often launch various targeted activities during operations, such as inviting friends, lucky draws, web mini-games, and membership points.

Among them, inviting friends is the most convenient way for platforms to acquire new users and promote activation, so the threshold should not be too high, and the registration and invitation acceptance processes should be minimized.

Mini-games need to increase gameplay and pay attention to user participation, but the visual style should not be too flashy or cheap, and they are often suitable for launching with platform mascots.

**Are you "watching" me?**


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