As the frenzy in the grocery delivery sector chills, the online fresh produce platform racked up losses and seems to be downsizing
Dingdong Maicai (DDL: NYSE) (Chinese: 叮咚买菜) reported yesterday a net loss of CNY 1.0963 billion (USD 172.9589 million) for the fourth quarter last year, down 12% compared to the loss of CNY 1.2455 billion from the same period the previous year.
Word has spread about massive job cuts since December last year after the company posted its third-quarter earnings with both climbing revenue and net loss.
Employees said Dingdong's headcount has shrunk by around 10,000 compared with its peak, with a 20% to 50% loss of staff in departments such as procurement and algorithm.
Liang Changlin, founder and CEO of Dingdong, refuted the claim on an earnings call on Tuesday. "Shanghai's labor supervision department has inspected our company and proved that the employee turnover is similar to previous years," Liang said.
Established in 2017 in Shanghai, the online grocer operates mainly in first-tier cities such as Shanghai, Beijing, Shenzhen and Hangzhou. Since its inception, the company has seen an outpouring of investor enthusiasm toward the industry and counted big names like Sequoia Capital and Tiger Global Managementamong its backers.
The onset of the Covid-19 pandemic and ensuing lockdowns accelerated its growth. However, as the market sentiment soured due to growing competition and regulatory scrutiny, Dingdong's net loss leaped.
But the loss narrowed in the fourth quarter last year, and its revenue reached CNY 5.4835 billion, up 72% year on year. The quarterly gross merchandise value (GMV) hit CNY 6.004 billion, registering a year-on-year increase of 59.6%. Orders leaped to 100.1 million, up 63.1%. The company also said that its Shanghai operation turned profitable in December last year.
Ballooning expenses also led to the net loss, as Dingdong expanded its scale through marketing and construction of preposition warehouses.
In the fourth quarter last year, the marketing fees hit CNY 358 million, up 38.3% year on year. The company said the money was used to gain new clients.
As of 2021, Dingdong owned 10 research and development and processing factories and 60 distribution centers in different cities. It also boasts 1,400 preposition warehouses, with a total floor space of 500,000 square meters. The company plans to build three large, modern fresh produce "complexes" this year, where foods can be selected, cooked and consumed on the premises.
In response to increased government oversight against the Internet sector, Liang pointed out that Dingdong is using Internet tools in compliance with the country's regulation.
The company also focuses on helping agricultural suppliers, expanding sales for farmers in remote areas, said he.