Recently, Dingdong Maicai has once again closed multiple sites.
In early February, consumers in Guangzhou reported on social media that the sites near their residence were closed. The user stated that the customer service of Dingdong Maicai had previously replied that starting from January 30th this year, due to the adjustment of service scope, 11 stations including Shenzhen Huaqiang North Station, Shuibei Station, Lingzhi Station, and University City Station, as well as 27 stations including Guangzhou Jiahe Station and Longdong Station, have ceased operation.
On February 27th, Interface News saw on the Dingdong Maicai App that when switching the address to Guangzhou Baiyun District, Panyu District, and some areas in Shenzhen, it all displayed "not within the delivery range".
In response to the news of site closure mentioned above, Dingdong Maicai responded to Interface News that in order to improve operational efficiency, the company has temporarily merged or closed a small number of sites in Guangzhou and Shenzhen. In this adjustment, nearly 90% of the overall service scope in South China has not been affected.
In addition, Dingdong Maicai stated that there are plans to expand its service scope and add new sites in South China and other regions this year. In order to better serve users, the company will continuously refine and deepen its business coverage areas, and site adjustments and upgrades will continue to be carried out.
In the southern region, Dingdong Maicai faces strong opponents not only including Hema and Meituan Maicai, but also Pupu Supermarket. In fact, Dingdong Maicai entered the southern region not too late. Taking Shenzhen as an example, Dingdong Maicai landed in the Shenzhen market in 2019, while Hema started earlier, and Pupu Supermarket also accelerated the construction of its Shenzhen site in 2019. However, Fuzhou, Fujian is the headquarters of Pupu Supermarket, and the South China and Sichuan Chongqing regions have always been the main markets of the platform.
This is not the first time Dingdong Maicai has undergone regional contraction.
In the first half of 2023, Dingdong Maicai suspended its business in Chongqing and Chengdu. As the pioneer of the pre warehouse model, Dingdong Maicai has been expanding all the way in 2021, with over 1000 pre warehouses. According to financial report data, at the end of 2022, the number of pre positioned positions decreased, but there were still over 900. In 2023, the company did not disclose the specific number of sites.
Fresh e-commerce is generally facing profit difficulties, and the demand for stop loss has forced Dingdong Maicai to reduce costs while striving for market stability. The financial report of Dingdong Maicai shows that the company achieved a net profit of 2.1 million yuan in the third quarter of 2023, while a net loss of 340 million yuan in the same period of 2022. As of the third quarter of 2023, the company achieved four consecutive quarters of profitability under the Non GAAP standard.
At the third quarter financial report conference call, Dingdong Maicai has stated that it will continue to optimize its operations for the North and South China regions in the future, consolidating its scale and profitability. It is worth mentioning that in December last year, Dingdong Maicai appointed former executives from Hema as CFO.
After the epidemic, the habits of consumers buying groceries online have changed, which has brought more challenges to the fresh e-commerce industry. According to online economic and social data, the penetration rate of fresh e-commerce has maintained a growth trend in the past few years, with a penetration rate of about 10.28% in 2022. However, after fierce competition, it is expected that the penetration rate will decrease to 8.97% in 2023.
Chinese food industry analyst Zhu Danpeng analyzed to Interface News that fresh food e-commerce in China is a money burning track involving multiple links, from upstream procurement, intermediate warehousing, to later distribution and maintenance of user traffic, all require a large amount of financial support.
He believes that firstly, this is the game of giants; In addition, the investment cycle of fresh e-commerce is very long, and the industry as a whole is relatively difficult. After the epidemic, the dependence of users on online grocery shopping has decreased, and it is inevitable that the platform will face challenges.
In addition to cost reduction and efficiency improvement, Dingdong Maicai is also betting on self operated products and pre made dishes, which is its current core strategy. At the beginning of last year, Dingdong Maicai claimed that the platform's target scale for pre made dishes reached 5 billion yuan in sales. Dingdong Maicai is expected to release its fourth quarter and annual financial reports before the end of trading on February 29th Eastern Time. Previously, the company had set a goal of achieving adjusted profits for the fourth quarter and full year.