Dingdong Maicai Enters the "Comeback Moment" | Heavy Spending on In - app Purchases
Author | Xie Yunzi
Editor | Huang Yida
In the past two years, the most frequently asked question to Dingdong Maicai by investors has been: What's the difference between you and Meiyouyouxian? Why did Meiyouyouxian go under while you survived?
In November 2023, the once-popular star startup Meiyouyouxian was delisted from the NASDAQ. Almost simultaneously, Wang Song, an experienced retail professional who had worked at Hema and Ele.me, became the CFO of Dingdong Maicai. His response at the time was — “We're a company that focuses on providing quality products in a down-to-earth manner.”
As early as 2021, before Meiyouyouxian's collapse, Liang Changlin, the founder and CEO of Dingdong Maicai, proposed the slogan of “Efficiency first, with appropriate consideration for scale” during an earnings conference, shifting from national expansion to in-depth regional development.
The following year, Dingdong Maicai resolutely “cut losses”, gradually withdrawing from multiple cities such as Tianjin, Xiamen, and Chengdu, and even completely exiting the Southwest market. In 2024, the pain of strategic contraction reached its peak. In January of the same year, the company “closed in one go” 27 sites in Guangzhou and 11 sites in Shenzhen. For a time, doubts and pessimism became the dominant themes in the outside world.
Unexpectedly, it was also in this year that Dingdong, having finally stopped the bleeding, restarted its expansion strategy, especially focusing on achieving new growth.
Financial report data shows that in 2024, Dingdong Maicai achieved an annual revenue growth of 15.5%, reaching 23.066 billion yuan, with a net profit attributable to the parent company of 295 million yuan. During the same period, the company's net operating cash flow reached 929 million yuan, the highest since its listing, and it was also the first time in history that it turned positive for the whole year.
However, just as Dingdong Maicai finally emerged from the “negative cycle” of scale and profitability, when Liang Changlin looked at the Chinese retail battlefield again, internet giants had launched a fierce battle for traffic in the “instant retail” sector.
As a “medium-sized company”, how will Dingdong Maicai at this time continue this hard-won positive development and prove its growth resilience and long-term value?
Net profit attributable to the parent company of Dingdong Maicai; Charted by 36Kr based on financial reports
Reducing losses, improving efficiency, and “Musk building rockets”
The pandemic was like a major training exercise, educating the market to the fullest extent. On the other hand, the disorderly expansion of major players accelerated the bursting of the bubble.
In July 2022, Meiyouyouxian was almost “dissolved on the spot”. Suppliers from all over the country had no way to collect their debts, and many small businesses couldn't get their payments back smoothly in the short term. In the fresh food e-commerce industry, the profiles of suppliers often overlap to some extent. In the short term, the entire industry was plunged into a supply chain crisis.
In Wang Song's recollection, Dingdong Maicai immediately addressed the concerns of suppliers, and the secret to communication was absolute honesty. “We almost mobilized the entire company to do our best to give suppliers accurate payment times and speed up the payment process. After about 1 - 2 months, the stability of the supply chain was restored.”
Some suppliers told 36Kr that in the early days, Dingdong had difficulty raising funds, and Liang Changlin sold his startup project to “infuse blood” into the company. “He once ran a maternal and infant e-commerce platform that made more than 20 million yuan in profit a year. At a supplier conference, we sat around and talked about this experience, and everyone was very touched. We believe in his determination to make Dingdong Maicai successful.”
However, at that time, for Dingdong Maicai to completely win the trust of the market, it still needed to prove its self-sufficiency. According to the financial reports, from 2021 to 2023, Dingdong Maicai was a heavily loss-making enterprise.
In the context of fresh food e-commerce, the shortcomings of the front - end warehouse model are obvious — limited SKUs, low average order value, low gross profit, and difficulty in covering the high costs brought by daily losses, marketing, and logistics and distribution.
Among all fresh food e-commerce players, Xiaoxiang and Pupu Supermarket both adopt the large warehouse model. The area of their front - end warehouses is mostly around 600 - 1000 square meters, with SKUs controlled between 4000 - 8000, which is basically the same as the product variety of medium - sized supermarkets.
Early on, like Meiyouyouxian, Dingdong's warehouse area was mostly around 300 - 400 square meters, with 3000 - 4000 SKUs. The small - warehouse model has less room for trial - and - error and is more sensitive to product fluctuations. This is why, after Meiyouyouxian's collapse, more attention was focused on Dingdong Maicai's survival.
However, compared with “competitors”, Dingdong Maicai sensed the changes in the capital market earlier. In the more than two years from 2022 to 2023, the company's main development strategy was “closing stores, reducing losses, and stopping bleeding”.
At the end of May 2022, Dingdong Maicai intensively closed some of its business in cities in Hebei and Anhui. In the same period of 2023, it closed all its sites in Chongqing and Chengdu. If market contraction was for reducing losses, then Dingdong improved efficiency mainly through its digital brain.
After becoming the CTO in October 2020, Jiang Xu spent nearly a year comprehensively upgrading the company's digital infrastructure, including cloud computing, enabling Dingdong Maicai's system to reach the “high - capacity” level of a mature e - commerce platform. Subsequently, Jiang Xu and his team paid particular attention to the accumulation of daily operation data.
Jiang Xu believes that the front - end warehouse in fresh food e - commerce is essentially a distributed cold - chain logistics system, and he has always hoped to bring all aspects of this system online. “If calculated based on 1000 front - end warehouses with 4000 SKUs each, there are more than 4 million product combinations. With such a huge amount of calculation, human capabilities are always limited.”
In the beginning, Jiang Xu was almost “scolded every day”. Sometimes, a single warehouse would receive hundreds of boxes of milk, far exceeding the average sales volume; other times, the products would be sold out early, leaving nothing to sell.
“We sometimes even joked that building the digital system was like Musk building rockets, relying entirely on explosions to test and correct mistakes.”
Of course, in the face of each inventory “explosion”, Jiang Xu would also attribute the problem, analyzing which link had the most issues to better control losses in the later stage. After repeating this process for three years, by the end of 2023, Dingdong Maicai's full - link digital system was finally launched.
How can we more intuitively understand the operation mode of this digital system?
According to 36Kr's understanding, Dingdong makes a prediction of all SKUs in each warehouse every 24 hours. After considering the human resources and inventory of the large warehouses and front - end warehouses, it formulates production and replenishment plans based on the “minimum granularity”. After receiving the purchase orders, suppliers then transport the goods to the large warehouses through the transportation system. Some products will be produced and packaged into standard products in the large warehouses and then distributed to different front - end warehouses.
The full - link digital process of Dingdong Maicai; Picture from the interviewee
When consumers place orders at the terminal, the front - end warehouse will sort and pack the goods, and then dispatch the delivery capacity through the system to deliver the goods to each user. After the entire delivery is completed, the order information will be captured by the prediction system, thus completing the closed - loop of the entire link.
“You'll find that there are many small systems nested within this large closed - loop.”
Gong Yunhao is in charge of Dingdong Maicai's supply chain, mainly dealing with warehouse - to - warehouse operations, especially the allocation and management from large warehouses to front - end warehouses. To make a 500 - square - meter warehouse achieve the effect of a 1000 - square - meter one, Gong Yunhao strived to improve the timeliness of inventory allocation and better coordinate the cooperation between different systems.
“After the goods arrive at the large warehouse, we need to arrange for outbound and allocation. In this process, balancing shortages and losses is very important. After completing the distribution from the large warehouse to the front - end warehouses, we also need to ensure that the goods match the consumers' needs. If there are deviations, we need to quickly adjust and redistribute the goods.”
After the successful launch of the entire digital system, Jiang Xu also began to upgrade the in - depth thinking ability of the digital model, gradually allowing the system to take over human decision - making.
By the end of 2023, 90% of the purchases in Dingdong Maicai's front - end warehouses were directly completed by the system. Even in extreme weather conditions, the system's accuracy in product prediction could remain above 85%. In addition, in terms of the loss rate, which best reflects operational efficiency and digital capabilities, Dingdong Maicai has kept this figure within 1% - 2% for a long time.
Meanwhile, the effect of Dingdong Maicai's loss - reduction finally became apparent.
2024: In - depth development, profitability, and “Optimal in Shanghai”
In September 2023, Dingdong Maicai achieved single - month profitability for the first time, and single - quarter profitability in the fourth quarter. However, at that time, the industry mostly believed that Dingdong Maicai was “trading scale for profit”.
“At that time, an investor told me that our profitability was achieved through cost - cutting, and I could understand his doubts.” Perhaps for this reason, in 2024, Wang Song focused on achieving new market growth, starting with maintaining personnel stability.
“At the beginning of last year, we called the person - in - charge of the South China and Beijing regions to the Shanghai headquarters for a meeting. They saw us closing the warehouse in Xiamen one day and withdrawing from Chengdu the next, so they were worried that it would be their turn. We had to reassure everyone.” Wang Song has always believed that as long as the profit - and - loss structure can be optimized, suppliers will see the growing business, and employees will see the increasing order volume, which will help rebuild confidence in the company.
This “reassurance” meeting also became the turning point for Dingdong Maicai to break out of the loss cycle.
Wang Song, CFO of Dingdong Maicai
According to 36Kr, in 2024, Dingdong Maicai reduced losses by 60% in the three first - tier cities of Beijing, Guangzhou, and Shenzhen. Subsequently, the company invested the saved resources in East China, where it has the most competitive advantages.
By then, the fresh food e - commerce industry had clearly passed the critical period of survival. In 2024, Dingdong Maicai resumed its expansion strategy. In August of that year, Liang Changlin announced a continuous increase in the penetration of the warehouse network in the Jiangsu, Zhejiang, and Shanghai regions, focusing on in - depth regional development.
From a broader retail perspective, affected by cold - chain logistics, supply - chain coverage capabilities, and China's complex terrain, except for Yonghui, there hasn't been an offline chain supermarket in the Chinese market that can successfully expand across the country and meet people's “three meals a day” needs. Moreover, before the “all - round learning” from Fat Donglai, the hypermarket models, including Yonghui, were on the decline; Hema Fresh, which tried to open stores nationwide and penetrate into lower - tier markets, was also repeatedly exposed to supply - chain issues such as food safety.
Interestingly, during the years when the fresh food e - commerce industry was “madly burning money for expansion”, Pupu Supermarket, which originated in Fuzhou, only expanded to 9 cities, mainly concentrated in the South China market. In 2024, Pupu also presented an enviable report card — with annual revenue reaching 30 billion yuan and achieving annual profitability for the first time. This seems to indicate that the era of “scale is everything” is over, and the “small and beautiful” conservative strategy is more commercially intelligent.
Focusing on Dingdong Maicai again, Wang Song told 36Kr that even during the most difficult years of 2022 and 2023, the company never gave up on densifying its warehouses in the Jiangsu, Zhejiang, and Shanghai regions. In the previous year, Dingdong Maicai opened 130 new warehouses in Jiangsu and Zhejiang, with a greater focus on second - and third - tier markets.
The Dingdong Maicai app shows that among the 25 cities where it currently has warehouses, 15 are in Jiangsu and Zhejiang provinces. In addition to new first - tier cities such as Hangzhou, Nanjing, and Suzhou, it has also penetrated into lower - tier cities like Shaoxing, Wenzhou, Huzhou, and Taizhou.
It's obvious that compared with the unfamiliar northern market, in Jiangsu and Zhejiang provinces, Dingdong doesn't have to worry too much about consumers' needs. In Wang Song's view, compared with the “consumption stratification” in first - tier cities, the disposable income of consumers in second - and third - tier cities is relatively stable. While continuously penetrating the East China market, Dingdong Maicai is also adjusting its warehouse network structure.
Jiang Xu told 36Kr that the new warehouses opened by Dingdong Maicai fall into two categories: one is the split - type warehouse, where an old warehouse is divided into two or three new ones. In some areas, there may also be a situation where a central warehouse is accompanied by smaller ones. The other type is a completely new warehouse for “expanding territory”.
Wang Song also added that Dingdong Maicai will dynamically adjust the density of warehouses based on the average order volume per warehouse in the past few months and the growth scale of the number of users in the covered communities. From the current warehouse network layout, the delivery radius of Dingdong Maicai in Shanghai is 1.2 to 1.5 kilometers,