Alibaba-backed online grocer Nice Tuan is reportedly downsizing its operations, according to an internal letter (in Chinese) made public on Saturday and in various Chinese media reports.
Why it matters: Nice Tuan is the latest grocery startup to scale back its operations amid consolidation in China’s highly competitive community group buy market.
- The market shakeup has already affected several top players, including Tongcheng Life, Tencent-backed Shixianghui, and Didi’s Chengxin Youxuan.
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Details: Chinese media reported that the Nice Tuan laid off staff at short notice with no severance pay, prompting many workers to complain on various social media. In the internal letter, Nice Tuan didn’t mention those that had been laid off but said it would launch “major” reforms in some low-profit areas.
- TechNode found that Shanghai users couldn’t place orders through the company’s WeChat mini program as of Monday morning.
- Chinese media QQ News reported that Nice Tuan had stopped operating in several cities, including Changchun, Harbin, Jinan, Zhangzhou, Fuzhou.
- The company will prioritize markets in central China’s Hunan and Hubei provinces, as well as southeastern China’s Jiangxi province, a company representative told Chinese media 36Kr, adding that operations in some highly loss-making areas will be shut down.
- The company said in the letter that it plans to integrate some of its regional operations into Alibaba’s grocery retail business unit (including Fresh Hippo and other community group buy services). The company will share Alibaba’s operational resources, supply chain, and partners, Nice Tuan founder Chen Ying said in the letter.
- The company’s page on Weibo is filled with employee complaints, accusing it of forcing workers to quit without severance pay and violating the country’s labor law.
- A Weibo user with the handle of Yansideyulalala said more than 100 workers in the company’s Chengdu office were laid off on Saturday without any advanced notice or severance pay. TechNode couldn’t verify the user’s identity.
- The company didn’t respond to TechNode’s Monday requests for comments.
Context: Nice Tuan has received more than $1.2 billion in funding since it was founded in 2018. The firm received its most recent investment, a $750 million Series D, in March from Alibaba, DST Global, GGV Capital, and others.
- Since last year, Chinese tech giants such as Pinduoduo and Meituan have entered the competitive community group-buy market, squeezing out smaller players by offering customers generous discounts to gain market share.