Chinese online grocery company MissFresh (Meiri Youxian) has stopped offering on-demand grocery deliveries, a signature business offering, and has begun to lay off the majority of its staff, according to multiple reports from Chinese media. 

The company told Chinese media outlet Caixin that its decision to “temporarily suspend” its on-demand grocery delivery service is to “ensure the maximization of profitability.” The company will continue to offer second-day delivery services, “intelligent fresh market business” (the digitizing of local wet markets), and retail cloud services. MissFresh also told Caixin some of its staff are facing “adjustments” due to “business adjustments.”

Why it matters: MissFresh’s significant downsize shows the difficulty of continuing to raise funds to support its loss-making business and may pose more questions for other grocers operating on a similar cash-burning model. 

  • MissFresh went public on the Nasdaq in June 2021, becoming the first Chinese online grocer to do so. The company’s core grocery delivery business relies on the “distributed mini warehouses” (DMW) model, in which products are picked from warehouses close to people’s neighborhoods, ensuring fast delivery. But the model also requires heavy upfront investment in warehouses and inventories. The model has long been viewed by skeptics as a challenging one to achieve profitability with. MissFresh’s rivals Dingdong Maicai and Meituan Maicai also use the model. 

Cutting on-demand services: On Thursday, MissFresh closed its on-demand grocery delivery business, a core offering that promises fast delivery as quickly as 30 minutes. MissFresh’s app now only supports second-day delivery or even longer for most of the items. 

  • Founded in 2014, MissFresh began to test the DMW model in 2015 and remained the leader in such offerings until 2020, when rival Dingdong Maicai surpassed it. 

Massive layoff: Chinese media outlet Jiemian reported on Thursday that MissFresh had begun a massive round of layoffs. The company’s human resources department told employees that it was the last day of their employment via online meetings, according to audio recordings shared with Jiemian. The company’s HR managers cited difficulty with financing as the main reason for the layoff. 

  • Caixin’s Thursday report confirmed Jiemian’s, saying that the company organized a meeting and told employees that most of them would be suspended without pay. The company will only keep a small amount of staff to complete follow-up work, such as administration, finance, and HR tasks. 
  • MissFresh first began rounds of layoffs last August, with each round affecting more staff than the previous round. This year, the company cut a third of the workforce from 1,500 to about 900 and moved its offices to the outskirts of Beijing to save money, Caixin reported. 
  • Some of MissFresh’s staff haven’t received any pay since June, Jiemian reported. The outlet’s reporters visited MissFresh’s office in Beijing on Thursday afternoon and found some employees were packing to leave, and a few suppliers were there hoping to collect overdue payments. 
  • According to a July 14 filing to the Securities and Exchange Commission (SEC), MissFresh is set to receive RMB 200 million ($29.63 million) in equity investment from Shanxi Donghui, a Chinese multi-conglomerate in the metal and energy sector. But the company’s HR officer said the company has yet to receive the investment and is facing financial difficulties, according to the Jiemian report. 

Context: On June 25, 2021, MissFresh raised $273 million in a Nasdaq IPO after pricing its shares at $13. The company’s shares dropped 26% on the first day and closed at $9.6. On July 29, the company’s stock price was below $0.14, losing more than 98% of its value.

  • In the third quarter of 2021, the company reported $329.3 million in revenue, a 47.2% yearly increase, while its net loss widened 58% to $151.1 million. The company has yet to release its fourth-quarter and yearly earnings for 2021. 
  • Before it went public, MissFresh had 12 rounds of funding and raised a total of $1.7 billion. It was funded by 24 investors, including well-known firms such as Tencent, Tiger Global Management, and ICBC International. 
  • Chinese internet companies, especially those in the content, e-commerce, and retail sector, have embarked on multiple rounds of layoffs since late last year, thanks to the ongoing economic downturn, weak consumption, and the country’s long-term goal of pursuing more hard tech. 

Qin Chen

Qin is the managing editor at TechNode. Previously, she was a reporter at Inkstone, a China-focused news site owned by the South China Morning Post. Before that, she worked in the United States for five...