What’s more, the company burned through $120 million in cash during the quarter, between the cash used in operations and capital investments 9. At the time, Missfresh’s current liabilities, which need to be paid within a year, were over $500 million against a cash balance of $337 million. ĭue to accounting irregularities around revenue recognition, the company hasn’t reported earnings since the third quarter of 2021. In early 2022, Missfresh slashed its corporate staff from 1,500 to 900 and moved its headquarters to the outskirts of Beijing to reduce rent 8. By the time it went public in 2021, this number more than halved to 631 as it worked to reduce cash burn. Missfresh has been downsizing operations since 2019, when it operated over 1,500 mini-warehouses 7. The final blow came when a $30 million lifeline from Shanxi Donghui Group, a Chinese coal-mining company, didn’t materialize 6, but the firm’s finances have been rickety for years. Missfresh was default dead, meaning it was reliant on the kindness of strangers (investors) to sustain its operations. As headaches mount, the company’s CEO ran Three Arrows Capital playbook, and hasn’t been seen in weeks. Suppliers, who are owed over $140 million 5, have camped outside its office, protesting unpaid invoices, while former employees and investors are filing lawsuits for unpaid wages and false claims. By August 2nd, its app stopped taking orders 4. With cash balances dwindling, on July 28, 2022, the company shut down its same-day grocery delivery service, which accounted for about 85% of revenue, and laid off most of its employees. Missfresh adds a growing pile of corpses who tried and failed. To date, there’s scant evidence that this can be done profitably. Combining grocery with speedy delivery is trying to thread a needle through a microscopic hole. Further, the underlying business, grocery, relies on high volumes to compensate for razor thin margins.
#At a glance quick notes drivers#
Building a network of mini-warehouses, stocking them with perishable inventory, and assembling a fleet delivery drivers requires boatloads of capital. Instant grocery delivery is capital intensive. This provides a glimpse into what P&Ls at private firms like Getir and GoPuff might look like. Hot pink aside, Missfresh’s largest differentiator is that it’s public (for now anyway), so its finances are readily available. Half of customers were between 26 and 35 while one-third were between 36 and 45 3.
These cities like Beijing, Shanghai, and Shenzhen are affluent and sport high population densities, an important precondition for building route density. Its over 620 mini-warehouses are scattered across 17 first- and second-tier cities. Missfresh serves a relatively young, urban customer. To date, the industry has struggled to pull this off without the liberal use of profit-sapping promotions 2. The hope is that speedy delivery - average delivery times are approximately 35-40 minutes - and a focus on high purchase frequency categories translates into repeat purchase behavior. Merchandising focuses on fresh produce and fast-moving consumer goods like toilet paper and toothpaste. Each mini-warehouse holds about 4,300 SKUs 1 and provides delivery to a tight radius. Missfresh builds and operates distributed mini-warehouses peppered around residential neighborhoods in large Chinese cities. The Chinese instant grocery delivery business looks a lot like Getir, GoPuff, Jokr, and a cadre of Western instant delivery businesses.
While up close and personal, every business has its own nuance and warts, from a distance the color of driver’s uniforms seems to be the primary differentiator of instant grocery delivery businesses.
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