The COVID-19 lockdown around the world presented online grocery to many consumers for the very first time, increasing an industry that had actually long drawn hesitation. In China particularly, the older generations often worry about purchasing disposable food items without scrutinizing them face to face.
Still, venture financiers are bullish on the future of online grocery. One recipient is China’s Missfresh, which announced Thursday a new financing round of $495 million led by a fund under state-backed China International Capital Corporation. Other financiers include ICBC International Securities, Tencent, Abu Dhabi Capital Group, Tiger Global and a fund handled by the government of Changshu county, home to Missfresh’s east China head office.
By putting mini-warehouses better to clients, the six-year-old startup is able to provide 30-minute shipment to households across 16 Chinese cities.
Few players are able to contend in e-grocery, for business requires early financial investment in massive cold chains and pricey user acquisition to make home shipments profitable. Unsurprisingly, nearly all forerunners in China’s online grocery are backed by or work together with a web giant.
Missfresh is deeply integrated into Tencent’s WeChat messenger. Alibaba has its own internal Freshippo supermarket chain that comes with a delivery service. Restaurant delivery platform Meituan added grocery to its offering last year. Dingdong Maicai is an unusual case without the backing of a major tech company, seeking funds from equity capital institutions like Qiming Endeavor Partners and Gaorong Capital.
Some concern the number of new adaptors will stay with on-demand grocery shopping in post-lockdown life. Research recommends they may. China saw 11.6 million more everyday active users of e-grocery in May compared to the exact same period a year prior to, according to research company QuestMobile. Customers may be hooked to the convenience, but those who see their corner stores shutter due to lost service throughout the lockdown do not have an option but to go digital.
Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.