---
title: "What Would Happen if Douyin Invested in Pupu Supermarket?"
description: "After three years, Chen Xingwen seems to have found new financing for Pupu Supermarket. According to media reports, Pupu completed a new round of financing negotiations in March, with a short-video internet company as the likely investor, speculated to be Douyin. This investment could provide much-needed funds and traffic support for Pupu, while helping Douyin strengthen its home-delivery capabilities in local life services."
author: "RBF内容组"
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published: "2024-06-01"
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# What Would Happen if Douyin Invested in Pupu Supermarket?

> After three years, Chen Xingwen seems to have found new financing for Pupu Supermarket. According to media reports, Pupu completed a new round of financing negotiations in March, with a short-video internet company as the likely investor, speculated to be Douyin. This investment could provide much-needed funds and traffic support for Pupu, while helping Douyin strengthen its home-delivery capabilities in local life services.

After three years, Chen Xingwen seems to have found new financing for Pupu Supermarket.
According to existing media reports, "Pupu Supermarket completed a new round of financing negotiations in March this year." But this time, the olive branch extended to Pupu Supermarket came not from an investment institution, but from a short-video internet company.
Although the financing rumors and the specific company involved have **not been officially confirmed by Pupu Supermarket**, industry insiders can still pick up clues from market trends. After all, among the leading short-video internet companies in China capable of "transfusing" Pupu Supermarket, the scope can roughly be narrowed down to **Douyin and Kuaishou**.
However, Kuaishou, as a listed company, has the responsibility to disclose all major investment moves to the public, but no corresponding announcement has been seen so far.
Therefore, **industry insiders speculate that the main investor in this round is likely Douyin**. Following this logic, if Douyin and Pupu Supermarket reach a cooperation, what speculations might arise?
**For Pupu Supermarket, this financing is undoubtedly a timely help.**
First, Pupu has not yet achieved self-sustaining profitability; after eight years of establishment, it is still mired in losses, and only in 2023 did it reach a break-even point. To achieve its 2024 profit target, Pupu Supermarket has adopted various cost-cutting measures this year, including staff reductions and outsourcing. Second, Douyin can provide not only financial support but also, if the two sides cooperate further, leverage Douyin's massive traffic entrance to help Pupu Supermarket in the fiercely competitive track.
For Douyin, Pupu Supermarket already has a vast offline delivery "iron cavalry" in some cities, and its fulfillment resources can fill the gap in the home-delivery scenario that Douyin has not yet conquered. Coupled with Pupu Supermarket's high-frequency, essential fresh produce categories as a traffic magnet, this can clearly further **penetrate the hinterland of local life services.**
**On the surface, the cooperation is full of favorable factors, a marriage of "taking each other's strengths to make up for weaknesses."** But from an overall industry perspective, in the smoke-filled fresh e-commerce and local life tracks, are there still many opportunities for both sides to race for territory?
**Pupu "finds money" in the internet**
Looking at Pupu Supermarket's financing history, its first five rounds of financing totaled over $150 million, mainly concentrated between 2016 and 2019, with the most recent being a strategic financing from IDG Capital completed in November 2021.
Image source: Qichacha
In the three years without capital movements, Pupu Supermarket attempted to turn profitability into a turning point and move toward a healthier cash flow cycle. It has repeatedly predicted profitability timelines, but has still not achieved full profitability.
**Under such circumstances, Pupu Supermarket, which has been "burning money" all along, has to keep "finding money."**
Since its establishment in 2016, Pupu Supermarket first spent three years establishing a foothold in Fuzhou; in 2019, it expanded to the Pearl River Delta region, targeting Shenzhen, which has an internet gene, first, then Guangzhou; in 2021, it expanded to Wuhan, Chengdu, and Foshan. At that time, the number of registered users of the Pupu Supermarket app reached 170 million, and it was also in that year that Pupu shouted the slogan "gradually starting nationwide city expansion."
Now, in addition to Fuzhou and Xiamen in its home base of Fujian, Pupu Supermarket has gradually opened business in Guangzhou, Foshan, and Shenzhen in Guangdong Province, as well as Chengdu in Sichuan and Wuhan in Hubei, covering a total of 7 cities.
**As Pupu Supermarket races to expand its territory, while aggressively reaching more user groups and expanding market share, it also suffers from the pain points of its steadfast "front-warehouse" model—the "impossible triangle" of price, quality, and efficiency.**
It is worth noting that Pupu Supermarket also carries the label of "large warehouse." Dingdong Maicai, which also uses front warehouses, has a single warehouse area of around 300 square meters, while Pupu Supermarket's warehouse area reaches 800 square meters. The advantage is that it can introduce more high-margin products such as daily necessities, but the cost is extremely high warehouse construction costs.
In addition to the oversized warehouses, Pupu, which focuses on expansion in first-tier cities, also has to fulfill its "30-minute delivery" commitment, requiring its large warehouses to be densely distributed in central urban areas, thereby increasing cost pressure. The excessively high SKU count (over 6,000) also brings high wastage rates and labor costs, such as high front-warehouse construction and management fees, geographical layout challenges, and a high dependence on meticulous logistics operations, all of which haunt Pupu Supermarket.
Furthermore, Pupu Supermarket is making efforts in private labels, aiming to increase overall profit margins and gain more bargaining power by controlling the source. According to previous reports, Pupu Supermarket's private label sales in 2024 are expected to approach 5 billion yuan, accounting for 15%-20% of total sales. The main categories for private labels are food, daily necessities, frozen aquatic products, meat, and poultry.
The author observed that Pupu Supermarket recently launched eight categories including seafood, meat, poultry, frozen products, and pastries.
Image: Pupu Supermarket
Private labels are certainly an incremental space worth exploring, but controlling the source inevitably requires more upfront costs, posing a severe challenge to its cash flow.
Now, Pupu Supermarket faces unavoidable high offline promotion costs and relatively low user conversion rates. Meanwhile, other players racing on the fresh e-commerce track, such as Meituan's Xiaoxiang Supermarket and Pinduoduo's Duoduo Maicai, already have mature business layouts and highly sticky platform users. In other words, Pupu is already "surviving in a crack."
From this perspective, Pupu Supermarket, which has been "burning money" all along, has to find financial backing again.
**Douyin "visits" local life three times
Arrives at Pupu's doorstep**
Looking at the other protagonist of the story, Douyin, which started the short-video era and broke through with powerful algorithm technology, has never been content and has always been committed to finding self-sustaining businesses. Relying on its massive traffic entrance, it has the capital to "wrestle" with vertical giants in the e-commerce and local life tracks.
**Compared with the increasingly mature interest e-commerce, Douyin's progress in local life business can be described as "mixed blessings."**
The good news is that Douyin has already opened up a closed business loop for the store-visit side of local life. Public data shows that Douyin Life Services achieved a payment GMV (gross merchandise volume) of over 100 billion yuan in the first half of 2023, mainly contributed by store-visit business (including store-visit dining and store-visit comprehensive) and hotel & travel business. Douyin also previously mentioned that its 2023 GMV target for "store-visit + hotel & travel" business was 290 billion yuan.
In just a few years, achieving a half-year GMV of over 100 billion yuan highlights Douyin's formidable strength.
**But unlike the store-visit business, Douyin has not made breakthrough progress in the home-delivery business.**
The core reason is that Douyin's traffic advantage has not been smoothly transferred to the "home-delivery" business scenario. **"Home-delivery" competes on the richness of local life supply and fulfillment strength**, which is the fundamental reason why Douyin finds it difficult to run through the "0-1" process in a short time. Clearly, Douyin has realized this after repeated failed attempts.
In 2021, news broke that "Douyin established a dedicated food delivery business team," with its food delivery business named "Xindong Waimai"; three months later, the Xindong Waimai mini-program software was approved for registration; the following year, Douyin and Ele.me announced a cooperation, and the 3 million blue riders at that time just filled the fulfillment shortfall of Douyin's food delivery business.
Just when Douyin's determination to lay out its local life business became apparent and the outside world was cheering, the Ele.me Douyin mini-program was only deployed in some cities across the country, and its presence was weak. Douyin still found it difficult to break through the consumer mindset occupied by dedicated functional apps.
It is reported that Xindong Waimai entered the market through an aggregation model. The lightweight operation method could open up the food delivery battlefield in a short time, but the traffic was ultimately diverted to other food delivery platforms, and the core assets were not in Douyin's hands. Moreover, Xindong Waimai, which has been in internal testing mode, has never publicly disclosed its merchant recruitment and operation methods.
**In the end, the story of Xindong Waimai came to an end with Douyin responding that it had "no food delivery plans for now."**
Subsequently, Douyin began to differentiate its entry into food delivery, testing the waters with a "group-buying home delivery" model. In 2023, when a product link was attached to a Douyin short video, it would jump to the merchant's purchase page, and a "group-buying delivery" function appeared. At that time, Douyin Life Services officially released a "Public Notice on Regional Agents for Group-Buying Delivery," stating that in September of that year, it would expand from 6 cities including Beijing, Shanghai, and Chengdu to 24 cities including Shenzhen and Wuhan, and launch group-buying delivery services, introducing regional agents for group-buying delivery in those areas.
Image source: Douyin Life Services
Just when everyone thought that the lazy person's gospel of "lying at home watching videos and ordering food" was about to arrive, Douyin's group-buying delivery still found it difficult to break the absolute market share of Meituan and Dianping, gradually fading from consumers' view.
**Without an offline fulfillment system, Douyin cannot outline a beautiful blueprint for "home delivery," and without high-frequency, essential categories to attract traffic, Douyin cannot cultivate user habits.**
But Douyin has not given up on getting a share of local life.
In January this year, the "2023 Douyin Life Services Annual Data Report" released by Douyin Life Services showed that over the past year, users watched over 2 billion planting videos, 10.61 million planting live streams, and searched for life services-related content 59.3 billion times. More than 4.5 million physical stores operated on Douyin, of which 2.15 million small and medium-sized merchants achieved revenue growth.
Although it has repeatedly encountered obstacles in the "home-delivery" scenario, Douyin has the advantage to share the local life cake, but it is missing a piece of the "home-delivery" puzzle.
**Local life track: "more monks than porridge"**
**How can Douyin × Pupu achieve 1+1>2?**
In summary, Pupu Supermarket and Douyin have the advantages the other needs, and the win-win potential of cooperation is high.
First, from Pupu Supermarket's perspective, Pupu has about 450 front warehouses, with each warehouse shipping 2,500 to 3,000 orders per day, and an average order value of over 60 yuan. Such strong supply chain and user stickiness, combined with Douyin's massive market share and internet marketing advantages, would make the cooperation a formidable opponent for other giants.
Second, from Douyin's perspective, according to reports, Douyin's local life business GMV in 2022 was 77 billion yuan. Additionally, according to data released by the "Douyin Life" WeChat official account, the total transaction volume of Douyin Life Services platform in 2023 increased by 256% year-on-year. Based on this, Douyin's local life GMV in 2023 was nearly 200 billion yuan, close to one-third of Meituan's. This indicates that Douyin has the most basic user mindset, low user education costs, and combined with Pupu Supermarket's delivery capabilities, it can create momentum in a short time.
**Although the alliance between Douyin and Pupu Supermarket offers breakthrough opportunities for both sides, it cannot be ignored that the local life track has become a new "arena," and under white-hot competition, the challenges they face are also greater.**
According to iResearch data, by 2025, the market size of local life services in China will grow to 35.3 trillion yuan, and the online penetration rate of local life services will also increase to 30.8%. Thus, the local life market still has great potential, attracting various players to enter.
Image: Local life services market size
In addition to Meituan, which originally held a huge advantage and is still digging deeper by launching its own brand Xiaoxiang Supermarket, platforms such as Pinduoduo, Kuaishou, Xiaohongshu, and Tencent are coming on strong, determined to get a share of the local life sector.
In July last year, a "local life" entrance appeared on Pinduoduo's recharge center page; Meituan launched a fixed live-streaming entrance; Xiaohongshu also launched an "official store visit cooperation center" and introduced a "100 store visit plan"...
Major platforms are racing ahead in the commercialization of local life, but on the "home-delivery side," Meituan Waimai and Ele.me, and on the "store-visit side," Dianping and Meituan, still firmly hold the majority of market share with their mature delivery systems and large numbers of platform merchants.
Looking further, low-priced food delivery has become mainstream, and its market share was already divided up by Meituan and Ele.me in the previous food delivery competition. Since Luckin started the "9.9 yuan" trend, "low-price discounts" have swept across all tracks. Therefore, Pupu Supermarket, which focuses on high quality and high efficiency, must also deepen its supply chain and private labels to adapt to the consumption trend of the "low-price retail era."
In the local life track dominated by giants, how "Douyin × Pupu" can each leverage their strengths to take a share, the author will continue to follow.
******Recommended Reading**


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