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Analysis EO
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Analysis EO
Jul 15, 2020 04:00 am ·

Ten of the Most Anticipated Upcoming New Retail IPOs in China 2020

Even though COVID-19 has impacted business activities globally, the Chinese stock market has recovered rather quickly, and the IPO deals have been pushed through at almost the same levels as at the same time last year. Investors are quite optimistic about Chinese stocks – the stocks added about $1 trillion in value last week after the government encouraged investors to buy the country’s shares. EqualOcean has long been keeping a close eye on China’s retail companies. In this article, we will introduce ten companies that are most anticipated for their potential IPOs, given investors’ increasing optimism in Chinese IPOs and the transformation of new retail companies. Yuanfudao is a unicorn company, founded in 2012 and focused on Chinese K12 online education. It is competing with GSX and Zuoyebang as one of the Chinese top edTech companies during the Covid-19 epidemic. In eight years, Yuanfudao’s cumulative service users have already exceeded 400 million. It owns products such as Xiaoyuan Souti, Xiaoyuan Kousuan, Yuantiku and Banma AI that cover a broad spectrum of studying scenes. On March 31, Yuanfudao officially announced the completion of its latest G round financing, led by Hillhouse Capital, Tencent Investment, Boyu Capital and IDG capital. After the round was completed, the valuation of Yuanfudao reached $7.8 billion. Zuoyebang was internally incubated by Baidu in 2014, and it started to operate independently in 2015. It began with tool-based education applications like photo search. After accumulating a certain number of users, Zuoyebang cut into the online live class market. Currently, it has various educational products, including Zuoyebang, Zuoyebang Zhiboke, Zuoyebang Kousuan. With more than 800 million cumulative service users, Zuoyebang is presently the largest K12 online education platform in China. Its latest E round fund happened on June 29 and helped the company raise $ 750 million. Xingsheng Selected was founded in 2014. It seized the opportunity of community group purchases and fresh e-commerce platforms, forming an e-commerce platform focused on community groups. Already deployed in 12 provinces, it has tens of millions of active users, with over 7 million daily orders. On June 1, Xingsheng Selected got a B round financing of $200 million from KKR. It was also revealed as one of a number of Changsha companies under listing in 2020, and it is possible it will be the first community group fresh retail company to go IPO. The firm competes with Qdama, Miss Fresh, Tongchengshenghuo in China. Read more about Qdama Miss Fresh is a fresh retail unicorn founded in 2015. At the beginning of 2020, the monthly active users of Miss Fresh were in first place in the market, with more than 2.7 million users, followed by Yonghui Life and Hema Xiansheng, with 1.9 million and 1.5 million MAU respectively. In May, Miss Fresh also completed its latest round of financing with multiple investors, including CICC, according to 36Kr. This round of funding will add pressure on its peers, at least on the pre-warehouse track. Kidswant specializes in mother and child products, aiming to provide an all-inclusive business model to meet the demand of expectant mothers and children aged 0 to 14. On April 23, 2018, Kidswant was delisted from NEEQ,  despite increasing positive revenue and more than 16.7 billion CNY in market value at the time. In recent years, its online platform has gradually gained customers through its offline store reputation and premium membership population. On July 13th, the official website of Shenzhen Stock Exchange announced the prospectus of Kidswant, which mentioned Kidswant’s plan of raising 2.45 billion CNY through IPO on GEM. Miniso was founded by Guofu Ye and Japanese designer Miyake Junya in 2013. It initially positioned itself as fast-fashion retail stores, with most product pricing around 10 CNY. It sells very similar products to big brands like MUJI, but at a much lower price, also includes successful joint name products like the ones with Marvel. In 2018, Miniso received 1 billion CNY strategic investment from Hillhouse Capital and Tencent Investment and launched its project of preparation for an IPO. Perfect Diary is a Chinese cosmetics brand founded in 2017. It has recently discussed IPO matters with several investment banks and is expected to be listed at the end of this year or the first half of 2021. Its investor lineup has been quite strong, including prestigious institutions like Zhenge Fund, Boyu Capital, Tiger Global Management and Hillhouse Capital. Naixue Tea (known as Nayuki) is a well-known domestic tea brand founded in 2015. All stores are directly operated, and not allowing any form of franchise. The main products include Xunhaocha, hand-made soft French bread and cold bubble tea. It emphasizes the quality and freshness of ingredients and aims to develop healthier drinks than traditional milk tea. Recently, the market rumors reveal a potential US IPO plan of Naixue Tea, aiming at raising as much as 400 million dollars. Jiang Xiaobai is a Chinese light-aroma baijiu brand with a focus on the market of young adults. It was founded in 2012 by Shiyuan Tao, who founded the new trend of a younger population in online alcohol consumption. Jiang Xiaobai’s investors include Hillhouse Capital, Sequoia Capital, IDG Capital and other domestic first-tier funds. Reuters reported that Jiang Xiaobai planned to IPO to raise $500 million to $1 billion in 2020, but the firm has denied this news. Genki Forest was founded in 2016 and is well known to consumers for its representative product – sparkling water. In 4 years, Genki Forest has completed four rounds of financing with a valuation of 4 billion CNY. Its product category has evolved from the initial sugar-free sparkling water to the current sugar-free tea, milk tea, fruit tea and other beverage subdivisions. On July 4, Genki Forest’s first self-built factory in Chuzhou was opened to the public for the first time. It has three high-speed production lines with an annual output of 450 million bottles. Market Analysis Although spreading through the spectrum of the retailing industry, all ten companies have emphasis on digital transformation. For the online education market that includes Yuanfudao and Zuoyebang, the market has crushed out more and more small-to-middle-size players in recent years because of its high cost of winning new customers and building a stickier customer base. The increasing advertisement fee and low conversion rate add pressure on giant players, but at the same time promotes creative products with higher efficiency like AI classes and double teacher live broadcasts. Future differentiators in the industry are very likely to be the ability to independently generate followers and to develop high-quality educational products. For the cosmetics market and soft drinks market that, includes companies like Perfect Diary, Naixue Tea, Jiang Xiaobai and Genki Forest, the main players all aim to attract the younger generation. Their advertisement through different online platforms like Xiaohongshu and Tiktok, their fashionable designs and PR strategies all boost their short-term popularity. However, behind the high revenue growth among these companies, ongoing challenges are still building up around consumers’ confidence in domestic products. With unsustainable sales strategies oriented around Japanese-like brand names and cheaper substitute concepts, we see further limits to the possible future margin growth. For fresh e-commerce companies like Xingsheng Selected and Miss Fresh, EqualOcean expects the differentiator to be the ability to break into third and fourth-tier cities, where local lower-priced farm goods create higher barriers to entry. With a long supply chain built into the market, every adjustment and renovation could significantly increase the cost. This kind of challenge also caused a high amount of bankruptcy in the industry at the end of 2018. Besides, more prominent companies like Meituan and DiDi have also entered this community group fresh e-commerce business, posing challenges to smaller ones.

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Dec 8, 2019 09:04 am · EO company

"Infrastructure rookie"MissFresh

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May 31, 2019 09:47 am · EO company

The daily superior that MissFresh is coddled overmuch by capital

Analysis EO
Analysis · 2
Analysis EO
Apr 28, 2019 11:06 pm ·

Can Miss Fresh and Fresh Hippo Stay Fresh Abroad?

Founded in 2014, Miss Fresh (每日优鲜) is a Chinese e-commerce new grocery company. It completed its 230 million Series B+ financing round in 2016. According to iYiou, the company is committed to restructuring the supply chain. Fresh Hippo (盒马鲜生) is Alibaba’s new grocery chain and is part of their e-commerce arm. Miss Fresh’s domestic advantages lie in its asset-light business model, third party and cold chain logistics, and scale effect. Fresh Hippo also uses an asset-light business model, but it’s facing an economic slowdown due to its shaky upward supply chain while rapidly expanding. While each platform has its advantages, how would they generally fare in the United States assuming their benefits are transferred? We compared the United States’ fresh grocery market with China’s and took a look at how Miss Fresh could potentially stay fresh abroad. The United States’ Online Fresh Grocery Market Kantar’s Worldpanel report shows that e-commerce grocery sales grew 30% and leading countries include China (+52%), South Korea (+41%), UK (+8%), France (+7%), Japan (+5%), and the United States (+5%). According to Nielsen U.S.A., online grocery in the States is forecasted to be a USD 100 billion business by 2022, representing over 12% of the country’s projected total for the retail food and grocery business that year. Furthermore, FMI Research expects 70% of U.S. consumers will regularly purchase packaged goods online in 5-7 years as 2017 was a disruptive year for the industry. Amazon Fresh / Amazon Pantry is the pioneer in the online grocery industry. However, to use this service, consumers must have an Amazon Prime membership, a move to entice more customers to buy a membership. Amazon Fresh also differs from its competitors by using a more efficient supply chain. They acquired Whole Foods to establish “mini distribution centers arguably,” and Whole Foods can take advantage of Amazon Fresh’s massive supply chain. Furthermore, Amazon Fresh also uses replenishment centers just outside the urban area to maintain efficient orders and line item fill rates. In the traditional grocery market, Wal-Mart, Costco, and Safeway shifted to an O2O model to enhance their competitive edge. Wal-Mart provides grocery pickup and delivery to its customers; Costco only provides service to its members but offers free online grocery delivery at select locations; Safeway offers discounts and deals for online grocery such as free delivery and USD 20 off for your first purchase. These traditional grocers have substantial physical assets and aren’t as attractive to those using an asset-light business model like Amazon Fresh. However, Walmart still reports firm earnings announcements despite it being asset-heavy which show that they found a way to be profitable “without embracing the store closing panacea,” according to Steve Dennis, a Forbes contributor. He also argues that Walmart reported strong earnings to show that “retail companies can have enormous physical assets and will remain highly relevant.” China’s Online Fresh Grocery Market According to Euromonitor, China occupies the most significant percentage of the e-commerce market and is driven mainly by a combination of technology, infrastructure, and economic factors. China occupied the largest online fresh grocery market share at 32.3% in 2016. According to Euromonitor, from 2012 to 2016, the country reported a 52.9% CAGR, beating the United Kingdom, the United States, France, Japan, South Korea, Australia, and others. China is also forecasted to keep its dominance in the market from 2017 to 2021 despite having a lower CAGR within the same period than Australia, Italy, and Germany with 16.6%, 16.0%, and 14.1%. According to the E-grocery Market in China report published by the Canadian government, the rise of disposable income and spending in China led to the country’s “golden age for e-commerce.” Its value sales jumped due to emerging players and retailers trying to lure consumers to their websites. In the online fresh grocery market, top players include Alibaba’s Fresh Hippo, Miss Fresh, Yiguo, Mecai, Fresh Legend, and more. However, traditional supermarkets such as Yonghui Supermarket have adopted an O2O business model to compete, a similar tactic to its United States counterpart. While new grocery retail is becoming a new norm, traditional supermarkets still occupy a large share of the market. However, unlike Amazon Fresh which acquired Whole Foods to boost area coverage arguably, Miss Fresh and Fresh Hippo haven’t used a similar tactic: Fresh Hippo takes advantage of Alibaba’s technology, and Miss Fresh is a pioneer in its “urban sorting center + front warehouse” cold chain logistics system. According to iYiou, users can enjoy a great instant shopping experience within an hour with Miss Fresh due to its small focus on targeting a “high-end market” and first warehouse delivery. Miss Fresh’s daily repurchase rate reached 80%. Can Miss Fresh & Fresh Hippo Survive the Fight Abroad? Assuming Miss Fresh and Fresh Hippo’s advantages are carried over to the States, they still may face trouble due to lack of differentiation. Consumers are favouring more organic products; the industry is forecasted “to grow at an annualized 16.1% over the next five years through 2023-24, to reach USD 4.5 billion.” Additionally, the States has a stricter food standard. Depending on where Miss Fresh and Fresh Hippo import their goods from, they may lose their scale effect in the United States versus in China. It might benefit Miss Fresh and Fresh Hippo if they merged or partnered with stores like Target in addition to their e-commerce platform. As such, it may help them integrate smoother than opening a stand-alone store where their brand isn’t as widely recognized as it is in China. However, what may give Miss Fresh and Fresh Hippo a competitive advantage is how efficient they use their technology in controlling their overall supply chain and keep up with demand. In terms of the downward supply chain, Fresh Hippo may have already surpassed Amazon in terms of technology. By implementing facial recognition payment and 30-minute deliveries, Business Insider has argued that it's likely where Amazon is going to take Whole Foods.  How well Miss Fresh and Fresh Hippo understand the United States consumer is also significant to lower their variable costs as much as possible as brick-and-mortar stores have lower variable costs than pure players.  XU Zheng (徐正), Miss Fresh’s CEO, believed that supply, demand, and poor circulation were problems facing the new grocery industry, according to iYiou. China’s middle class gets richer which simultaneously improves the quality and desire for fresh products have significantly improved. However, supply wasn’t able to keep up with the need for traditional grocers. As the online new grocery industry and market grows, it may boil down to who is more efficient at balancing these two realms.

Analysis EO
Analysis · 2
Analysis EO
Feb 22, 2019 05:03 pm ·

Miss Fresh and the Fresh Product Industry Chain

Miss Fresh (每日优鲜) is a company founded in 2014 and isolated the brand Mr. Fresh (每日优鲜便利购) in 2017. Miss Fresh focuses on providing fresh products through to-door delivery and the line of Mr. Fresh offers in-office shelf services, which sells food, snacks, and drinks on shelves but is different from the vending machine. Currently, Miss Fresh has covered 20 cities in China and has set over 1,000 front-end warehouses and it plans to build over 10,000 front-end warehouses to support the expanssion to 100+ cities. Background of the Emerging Market Demographic Approaching to the third decade of the 21st century, the demographic distribution in China has changed, and the main force of consumption has been shifting from previous Post-60s and Post-70s to Post-80s and Post-90s. Besides, the millennium babies have begun to take over the lead in consumption. Post-80s and Post-90s  compose 23.62% (328.32 million according to 2010’s census data) of the total population 1.39 billion (2017’s census data), but these two groups are the main participants in e-commerce economy. Miss Fresh was founded in 2014 in which e-commerce giant Alibaba went public in New York Stock Exchange and made the IPO record. The development of e-commerce has urged and pushed the construction of China’s logistics network that enables all other industries relied on logistics to grow. For fresh product e-commerce, logistics is a critical ring and the growth of the fresh product e-commerce should thank e-commerce for making the business easier as it pushed the construction of logistics network. Economy Growth and Change in Consumption Behavior Except for the logistics, the growth of e-commerce in China impacts the population’s consumption behavior intensively, especially for Post-80s and following generations. Post-80s and the after-gen (born later than the 1980s) were born in the age that China’s economy started to boom. According to World Bank’s data, in 2000, China’s GDP (Growth Domestic Production) was only USD 1,211.35 billion and USD 959.4 per capita calculated in current value, while the U.S’ GDP was USD 10,284.78 billion and USD 36,449.9 per capita; in 2017 China’s GDP was USD 12,237.7 billion and USD 8,827.0 per capita, while the U.S.’ GDP was USD 19,390.60 billion and USD 59,531.7 per capita. In the first 17 years, China’s GDP increased tenfold and citizen purchasing power also increased nearly 10 times. Comparing to Post-60s and Post-70s, Post-80s and the after-gen’s consumption behaviors present a drastic change. Since they were born in a good age, the younger generation is less sensitive to price and willing to pay for better quality, while the Post-60s tends to cling on price, though they have the best affordability in consumption, and Post-70s are in the middle of the two generations. The pursuit for goods quality extends the market including the fresh product industry, and Miss Fresh is one of those startups founded under the trend. Industry Chain and Miss Fresh’s Supply Chain Industry Chain In traditional fresh product industry, the industry chain is divided into three major chains: the upper, the middle, and the lower chains. The upper chain includes all participants and resources in fresh food production, including water product, meat, vegetables, etc.; the middle chain is fresh product sellers and involvers are wholesalers, supermarkets, farmers market, e-commerce sellers like Miss Fresh, etc.; the lower chain involvers partly overlap with the middle chain’s participants like wholesale, but other involvers are restaurants, families, processed food factories, etc. Other assistive but important roles also join the industry chain to complete the circulation, like logistics is responsible for the product’s circulation in the industry just like veins in plants. In China, agriculture is still in the standardizing progress since most are family-run and lacks unified and systematic management, which leads to the scattered supply origins and increases the costs in the upper chain. By far, China does not have a Sysco-alike company role in the middle chain to distribute fresh product effectively, and sometimes the middle chain may contain excessive players that add up the final price of fresh products to the lower chain. Beyond, the fresh product industry has higher requirements for logistics because of the rotting issue and quality control. The cold chain logistics situation in China is hindering the development of the fresh product industry. The cold chain circulation rates in China for meat, vegetables and fruits, and water products in 2015 were 34%, 22%, and 41% respectively, while developed countries’ average was above 90%. Beyond, the rotting rates of meat, vegetables and fruits, and water products were 8%, 15%, and 10% respectively in 2015 when developed countries controlled the rotting rate at around 5%. The low circulation rate restricts the sale map of the fresh product and limits the market size of the industry; the high rotting rate generates more costs and harms the benefits of participants in the following chains. Miss Fresh’s Supply Chain Miss Fresh’s supply chain is simpler and more effective than China’s traditional fresh product industry. Miss Fresh is the only connector between origin and dining table because it eliminates all redundant parts existing in the traditional way. Miss Fresh’s selected SKU has only approximately 3,000 kinds and the fine selection allows Miss Fresh to have a better position in the bargain – fewer varieties but more in quantity. The fewer varieties could satisfy customers’ need and with a larger quantity, it could lower the costs – the same reason why wholesale’s unit price is cheaper than fine grocery’s. The fewer varieties result in better quality control and costs control in the transition process. Different kinds of fresh products have varied requirements for the storage environment and transition conditions. For instance, apple’ quality is sensitive at cold temperatures, heat, and collision, while durian must be frozen in transition, so these two kinds of fruits are not likely to be transited by the same van. Products with different storage and transition requirements will require different refrigerated vans for each kind. The fewer varieties with more quantity can guarantee the full use of a refrigerated van and optimize the cost-efficiency per van per transition. Besides the transition process, the front-end warehouse is one of the core competencies of Miss Fresh. Front-end warehouse is the second last destination of fresh products before it is delivered to the customer. As mentioned at the beginning, Miss Fresh covered 20 cities by 2018 and built over 1,000 front-end warehouses to support the last 2-hour delivery range. Front-end warehouse is a small transition point with the storage function located close to communities and neighborhoods. The traditional fresh product providers suffer from loss generated in the transition from the regional transition center to the final destination since they do not have front-end warehouses and refrigerated vans are not frequently used due to the budget consideration. Comparing to the traditional mode, Miss Fresh can keep the rotting rate at around 5% resulting from the simplified purchase process – from origin to door. Plus, the front-end warehouse eliminates the time that fresh products spend in transition and avoids further damage. Each front-end warehouse can radiate regions constrained in the radius of 3 km (2 miles). Within the range, Miss Fresh is able to keep the delivery time less than two hours. Selected SKUs and front-end warehouses increase the efficiency and lower the cost for Miss Fresh. The content generated by Miss Fresh in its app could stimulus the purchasing need and invoke the long-tail effect. Miss Fresh promotes fresh products and pushes the updates to its customers. The effect of marketing or advertising resulted in more consumptions and increased the revenues accordingly. In 2017, Miss Fresh’s revenue generated in August was approximately CNY 280 million (USD 41.4 million) and it claimed that the company reached the break-even point at the average level in Tier-1 cities. The total revenue recognized in 2017 was over CNY 3 billion (USD 443.1 million) and in 2018 was over CNY 10 billion (USD 1.5 billion), which is threefold the number in the previous year. While most players in the industry are not even at their break-even point, Miss Fresh is the leading player in the market. The Fresh Product Industry and the Competition The fresh product consumption in China is more frequent than the world’s average – every family shops 3 times in a week while the world average is 2.5. The online product consumption penetration rate was around 1% in 2017 in China. The transaction volume of fresh products increased from 2011 to 2017 at a CAGR of 6.3% and that of online fresh products increased from 2013 to 2017 at a CAGR of 107.9%. Hence the room of online fresh product consumption is huge. Competitors in the fresh product industry came in bundles and diminished in groups but Miss Fresh is one of the few that stayed in the market. If categorizing the fresh product providers according to the scenarios, there are To-Home, To-Store, and To-Home&Store fresh product providers. 73% of fresh products was distributed through the farmers market, 22% was distributed by supermarkets, 3% was distributed by e-commerce bodies, and the remaining 2% was distributed by other channels. Miss Fresh is under To-Home category since it provides to-door delivery and doesn’t have physical grocery stores. To-Store, which is also the largest distribution channel, is the traditional fresh product providers like supermarkets and groceries and the newly-emerged community grocery stores. The To-Home&Store providers like Fresh Hippo (盒马生鲜), 7Fresh, Super Species (超级物种), and others provide both to-door delivery and in-store shopping. Fresh Hippo and Yiguo However, the To-Home&Store style, also considered as a category under new retail, has a preference in siting selection, which drives up the costs and limits the range that it can radiate. To-Home fresh product providers have little financial pressure from store rent and maintenance. The siting restricts To-Home&Store’s expansion, but each site has higher average sales per unit area (ASPUA) per month adding the online sales than traditional To-Store fresh product providers. Fresh Hippo’s ASPUA is claimed to be CNY 50,000 (USD 7,386) while the traditional peers’ number is averagely around CNY 10,000 (USD 1,477). According to TrustData, Miss Fresh took approximately 50% of the online fresh product market consumers, while Fresh Hippo took approximately 26%. Fresh Hippo might be considered the biggest competitor for Miss Fresh, though their business models differ from each other. Fresh Hippo’s parent company Alibaba invested an online fresh product provider named Yiguo (易果生鲜), which was founded in 2005. Yiguo was originally a To-Home fresh product provider, but it started to transform itself to provide 2B (to-business) and expand the cold chain supply chain logistics network ExFresh (安鲜达) in 2013. From an outsider’s perspective, it seems that Yiguo’s To-Home business was handed to Fresh Hippo. Besides Fresh Hippo, community grocery chains are strong competitors for Miss Fresh. Fresh Legend (生鲜传奇), Qian Dama (钱大妈), and other community grocery chains are growing at a surprising speed. Community groceries solved the last one-mile problem for fresh product consumers and most of them locate the community or neighborhood. Community grocery chains have similar supply chain like To-Home fresh product providers, but the difference lies in the last one mile. Fresh Legend raised CNY 300 million (USD 44.3 million) in 2018 and Miss Fresh received USD 450 million. The frequency of investment activity in fresh product industry drops since 2015 and the total financing amount declined to less than 1/3 of the amount in 2017. Startups that received investments in a capital winter presents exceptional attraction to investors that indirectly acknowledged the progress they had made. The Weakness of the Business To-home fresh product business can be regarded as a unilateral business because the size of consumers is not dependent on the improvements made by the product providers. The more or better products provided have no direct influence on the increase of customer base. Moreover, the switching barrier within the industry is low and the costs that customer switches to different fresh product providers, whether the same type or different, is near to zero. Based on this judgment, even under a different category, Miss Fresh is substitutable by Fresh Legend or other community grocery chains. The logistics and switching barrier are two most critical limitations for the growth of the fresh product industry. For Miss Fresh, its business model is outstanding, and this will attract followers and introduce intensive competitions. People chase after good things and so do investors and business founders. How to elevate the switching barrier to increase customer loyalty and deepen and broaden the moat is the question left for the industry and each player in the market.

Analysis EO
Analysis · 2
Analysis EO
Nov 23, 2018 11:19 pm ·

Besides the grand story of blueprint, Miss Fresh needs more storiettes to sell the products

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