Chinese online grocery retailers seek US listings
Two Chinese online grocery retailers have filed for IPOs in the US as they fight for more users and market share in a crowded market.
Tencent-backed MissFresh, which has filed for a NASDAQ listing, reported US$236 million revenue in the three months ended in March, with a net loss of US$93 million.
It counted 8.7 million active users, with 21 percent of them making four or more purchases in a month.
The online grocery market became crowded after Alibaba and Meituan rushed to ride on the wave of daily deliveries of food and other necessities, and they are competing aggressively to grab a slice of the fast-growing market.
Shanghai-headquartered Dingdong Maicai also filed for listing on the New York Stock Exchange after raising US$330 million last month.
It claimed 6.9 million monthly active shoppers in the first quarter.
Both sites have yet to prove their ability to drive profitability as they've been relying on discounts to woo new buyers.
Dingdong had a net loss of 1.39 billion yuan in the first quarter.
According to China Insight Consultancy, the size of China's fresh groceries and daily necessities retail industry has grown at an average of 7.2 percent from 8.4 trillion yuan in 2016 to 11.1 trillion yuan in 2020. It's set to maintain momentum with a market size of 15.2 trillion yuan forecast by 2025.
Both companies said primary use of the proceeds include increasing procurement capabilities, upgrading technology infrastructure, development of technology platform and marketing activities.
On-demand delivery services boomed amid lockdown periods during the pandemic and retailers are rushing to set up dispatch and fulfilment centers to cater to demand.
Investors are betting on fresh grocery and delivery services to become the fastest growing segment in the online shopping realm.
According to domestic consultancy E-commerce Data Center, 14 fresh food grocery sites received more than 13.6 billion yuan of venture capital funding in 2020.