China grocery platform Dingdong Maicai raises $700m

The fresh capital will be used for geographic expansion, supply chain development, and team building.

The company was established in 2014 and an online delivery platform was launched three years later. Dingdong uses a front-warehouse model, operating small warehouses in city centers instead of large facilities in suburban locations. This is intended to speed up the fulfillment process, with each warehouse covering a 3-kilometer radius and guaranteeing delivery within 30 minutes.

Another differentiator is that Dingdong purchases fresh produce directly from farms as a means of quality control. Revenue shot up 600% in February last year, riding a COVID-19 wave fueled by public concerns around food safety in traditional wet markets.

Dingdong originated in Shanghai and then entered other major cities such as Beijing, Shenzhen, and Hangzhou. It now has 800 front-end warehouses across 29 cities. Monthly revenue exceeds RMB1.5 billion with more than 800,000 daily orders. The company claims to have over 30 million household users.

The investor base features Sequoia Capital China, Gaorong Capital, BAI, Capital Today China Group, and Starquest Capital. Reuters reported in May 2020 that General Atlantic had led a $300 million round, but this was denied by the company. It was reported in February that Dingdong was working on a US IPO with a view to going public this year.

The company's direct competitors include Miss Fresh, which has a similar front-end warehouse model. Miss Fresh raised RMB2 billion ($305 million) in December from three Qingdao government-related funds. This followed a $495 million round in July.

China's overall fresh produce market has experienced explosive growth since last year. All the country's major internet companies have entered the space, among them Alibaba Group, Meituan, JD.com, and Pinduoduo.

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• Topics
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• DST Advisors
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