Dingdong Maicai, which describes itself as China’s leading and fastest growing fresh grocery e-commerce platform, grew its revenue by 43.2 percent in the first quarter of 2022, with orders up by 15.6 percent year-on-year.
Yet the company, which has been a big purchaser of seafood for its home-delivery meal-service and a distributor of fresh seafood, posted another loss – CNY 448 million (USD 70.8 million, EUR 62.7 million) for the quarter. It has never posted a quarterly profit; However, its loss margin continued to decline, to a current 7.8 percent in Q1 2022.
Online sales accounted for 24.5 percent of total retail sales of physical products in China in 2021 – more than double the figure from 2014. Larger online retailers like Tmall and JD.com have aggressively sought to source and sell premium seafood to drive high-margin sales.
Dingdong supplies its clients from a self-operated network of urban warehouses that are smaller in scale than the giant warehouses associated with China’s biggest retailers. The firm supplies fresh and packaged food produce sourced from contracted suppliers and has also launched a portal, Mommy’s Select, to target the high-value functional foods sector with salmon and other imported foods.
The long wait for profitability at the Shanghai-based company, which continues to spend aggressively to grab market share, has taxed the patience of Dingdong investors. Dingdong’s share price on the New York Stock Exchange dropped 77 percent in the 12 months to the end of June 2022, in part because of uncertainty caused by Chinese regulators intentions to further rein in large e-commerce companies in the country. Yet there has been a slight bounceback in the company’s stock price as investors saw potential that Dingdong’s sales could benefit due to China’s zero-COVID policy, which has forced cities across the country into strict lockdowns.
Dingdong's competitors include Beijing-based grocery app Missfresh, which has seen its share price collapse to a fraction of its value since the company’s initial public offering on the Nasdaq Stock Exchange in 2021.
Photo courtesy of Wirestock Creators/Shutterstock
