China's Leading the Way on Fresh Produce E-commerce, With Efforts of Innovators Like Miss Fresh

According to the information from Reuters: “Miss Fresh, an e-commerce startup that delivers fresh produce in 20 Chinese cities, has raised $450 million from investors including Goldman Sachs and Tencent Holdings Ltd, the company’s financial adviser said on Thursday. China Renaissance, a boutique Chinese investment bank and adviser to Miss Fresh, did not disclose the valuation of the company after the fundraising.” While in addition to the information from itjuzi.com, the post-money valuation should be USD 2 billion.

With this 4-year-old star startup (founded in 2014), XU Zheng (徐正), founder and CEO, must be in the spotlight. Not only because of his title and character in this company, but also his good ability of storytelling as well as the foundation of mathematics. Most of the people who had ever talked with XU Zheng, or attended his public speeches, could clearly understand Miss Fresh’s business logic, and then start to believe in it.

“It didn’t take much time before I thought that everything he told me was true,” A senior journalist said, “and two years later when I looked back to think about all the stories, I felt, em…, he’s quite right.”

According to XU Zheng’s latest open class recently, he tries to persuade everybody, maybe as well as himself, again, that Miss Fresh was a result of deliberation and correct decisions.

One fundamental belief of XU Zheng and his co-founder ZENG Bin (曾斌) was they should do something right not for now, but for the next decade. XU Zheng perceived in late 2014 that the core consumer from 2015 to 2025 would be those born in the 1980s and 1990s, and based on this kind of group of consumers, three hypotheses regarding consumption habit and behavior would probably be valid.

• Hypothesis 1: Consumption at the store will become home consumption;
• Hypothesis 2: Scheduled shopping will become immediate shopping;
• Hypothesis 3: Needs for mass products will become for selected products.

Based on the three hypotheses, with the accumulation on agriculture for 3 years in Joyvio Group as well as IT industry for 10 years in Lenovo Group, the two founders decided to devote into the fresh produce e-commerce, and believed “new species” will be born in the new generation of consumers, enhanced by new technologies, like AI, big data and cloud computing, etc.

In fact, Miss Fresh's actual situation of development and financing, XU Zheng and Zeng Bin’s ambition to create their “new species” seemed to be progressing smoothly.

XU Zheng used Walmart and 7-11 as typical symbols of two important retail format in the history, Walmart took the products to the towns among the cities, and 7-11 dived into the communities. He believed Amazon and Alibaba had successfully built a centralized e-commerce system while Miss Fresh will be the deep diver into communities in this e-commerce era, with its efforts on immediate delivery of fresh produce.

Fresh produce is the most time-sensitive products in communities’ daily lives, Miss Fresh currently offered its members a fresh produce delivery service within one hour. In order to achieve this, Miss Fresh had built its front-end warehouses into the communities, fresh produce will be first distributed to different warehouses, then be delivered to consumers who place an order.

One big doubt from the early investors was that this kind of logistics mode could indeed reduce consumers’ waiting time by shortening the distances of delivery, while it definitely will increase the cost of logistics from the cities’ distribution centers to the front-end warehouses. However, Miss Fresh by using the front-end warehouses could dramatically reduce the cost of the cold chain by dismissing the variable cost of the refrigerants (ice bags usually).

Another question appeared after the logistics, was the possible loss from the distribution unmatched consumer needs. XU Zheng’s education background of mathematics helped this, by using big data technologies, Miss Fresh successfully reduced its loss rate under 2%, much lower than the traditional industry from 8% - 15%, which sometimes even came from the “picking and choosing” actions of the consumers.

With all these business basics (supply chain not mentioned because it can be solved with two founders’ agriculture industry accumulations), the last question would be acquiring consumers. So far, Miss Fresh tried to use social networks, especially within WeChat ecosystem, to acquire consumers. With investment from Tencent, Miss Fresh was believed will achieve good performance on acquiring consumers.

Above all, the final challenge which still not under control would be the consumers’ perception and preference. How to take advantages of all the data the company had, and try to offer consumers the right goods they need and want, at a right time, will be the problem.

Miss Fresh, in the end, seems need to obtain and keep improving its ability of content marketing, all the fresh produce on its app and WeChat applet is all contents, before delivery. If Miss Fresh itself is a grand story, then the various fresh produce pages and descriptions would be thousands of storiettes, like "Beef from Inner Mongolia", "coconut from Thailand", "shrimps from Argentina", etc., all of the "story" or "storiettes" are important for Miss Fresh.

Surrounding by JD.com as well as Tmall Supermarket from Alibaba, Miss Fresh would better not be so self-conceit, it will be very multi-dimensional war.

- Author: ZHANG Fan; Cover Photo by Andres Carreno on Unsplash; TONG Huiguang and JI Yujie contributed to this article. Write to ZHANG Fan at ZhangFan@EqualOcean.com