With the latest financing round, QianDama is seeking to expand its network in eastern and central China.
Variety of vegetables on display. Image Credit: Kate Trysh/Unsplash
Chinese fresh food seller QianDama announced its completion of around CNY 1 billion (USD 142 million) series D round of financing on December 26. This round of financing has seen participation from existing investors Genbridge Capital (启承资本), and others including Costone Capital (基石资本), JG Investment (兼固资本) and Taikang Asset (泰康资产).
The company has held a total of five financing rounds, of which the total amount is undisclosed. It is estimated that the latest round of financing will catapult QianDama’s valuation to between CNY 8.5 billion and CNY 10 billion. Funding raised from this round of financing will be used to accelerate its expansion nationwide. In the first half of 2020, QianDama is anticipating the commencement of no less than 100 stores in each of nine cities that it intends to enter.
Founded in 2012, QianDama is a wholesale retailer of agricultural products, from meat to vegetables and fruits. It is advocating for freshness, with its slogan that translates literally as ‘We do not sell overnight meat’ – i.e., ‘We only sell today’s meat.’ The stores will start clearing their stocks by 7 pm each day, slashing their prices every half an hour. The ‘zero inventory’ is applied to its entire supply chain.
Relying on its ‘community franchise system,’ QianDama has been experiencing an explosive growth. In the 2012 to 2018 period, the Guangzhou-based company opened an average of three stores per day, amounting to over 100 stores each month. QianDama is seeking to broaden its network outside southern China. Currently, over 1,600 stores have been established, with 30 stores located in the eastern region of the country, with 90% of which are franchise stores. Central China will be the next battleground for QianDama, beginning with Wuhan.
In addition to this, sales have surged at a Compounded Annual Growth Rate (CAGR) of 277% since its inception to date, with expected sales in 2019 reaching a staggering CNY 7 billion, according to the company’s investor Gaorong Capital.
Genbridge Capital, which invested in QianDama in the previous three rounds, is the second-largest shareholder in the company. “We are optimistic about QianDama’s future, due to its effective business model in the fresh food industry with clear omni-channels, huge multi-regional growth space with the excellent management team,” states Chang Bin, founder of Genbridge Capital.
In the last few years, several contenders in the fresh grocery market have emerged, including Fresh Hema (盒马鲜生) and Dingdong Maicai (叮咚买菜), of which they are adopting distinct operating models. For instance, Dingdong Maicai is an instant online delivery platform, which currently has over 200 warehouses, serving 1,500 communities in Shanghai.
According to the ‘2018 Community Store Fresh Food Operation Research,’ China’s community-based fresh food market experienced steady growth, averaging at 7.7% from 2012 to 2016, before slowing down in the following year, indicating that the market is entering into a more cautious stage. It is expected that the market size will reach CNY 5.55 trillion by 2022.