Goldman-Invested Miss Fresh Promotes Half-Price Spring Festival Deal
As Chinese spring festival is approaching, the holiday season is the best time of the year for retailers. Miss Fresh joined the spring festival competition by offering deals and short-distance delivery service to its customers.
According to iyiou.com, Miss Fresh (每日优鲜) claimed that it would continue providing 1-hour delivery service during spring festival public holidays and offer half-price deals at the meantime. The announcement of spring festival service and deal reinforced the Miss Fresh’s image of fast delivery, especially for the fresh products.
As introduced by EqualOcean, Miss Fresh is an e-commerce body selling fresh product and providing corresponding delivery services, which are enabled by its characteristic front-end warehouse. It is currently valued at USD 2 billion according to itjuzi.com, and investors of its latest funding are big names such as Goldman Sachs, Tiger Global China, Tencent Holdings and others. Tencent officially announced its Smart Retail strategy in March 2018, and from its investment map, the portfolio includes Miss Fresh, YH Super Species (永辉超级物种), Pinduoduo and other e-commerce startups and enterprises.
Days before Miss Fresh announcing its special spring festival delivery and deals, another Tencent-backed e-commerce enterprise, JD.com, also stated that it would continue its business during spring festival and no take-offs. Spring festival, as a world-known Asian festival, is a big holiday season in China, just like Christmas for the west. Miss Fresh and JD.com’s spring festival offering may not be only for marketing, but also consider the holiday-driven increased demand. According to Qdaily’s China Spring Festival Consumption Investigation Report published in 2018, dining and retail revenues exceeded CNY 926 billion during the national spring festival holidays with a YOY (year-on-year) growth of 10.2%.
Holliday-triggered and boosted fresh products’ consumption demands are time-dependent. Families either set a feast at home or dine out in groups. Both require fresh products including but not limited to vegetables, meat, seafood, etc., and fresh products are the most-valued property in Chinese diet. Hence the requirement gives rise to short-distance and cold-chain delivery providers. Miss Fresh, a fresh product retailer, and delivery provider have strengths in timelines on accounting to its front-end warehouse structure.
The front-end warehouse is a concept comparing to the centralized warehouse, which may take acres of land to store inventories or goods. Front-end warehouse is like the branches of centralized warehouses, which is smaller in both area and SKU types. Pros of front-end warehouse are understandable since it is geologically closer to communities and neighborhoods, which result in a lowered time cost contrasting to long-distance transportation. A 1600 sq. ft.front-end storage can radiate 2-3 mile surrounding communities. The public data of Miss Fresh’s scale dated July 2018 was equipped over 1,000 front-end warehouses in more than 20 cities. According to Guosen Securities (国信证券) and Zhongtai Securities (中泰证券), Miss Fresh’s MAU (monthly active user) was over 1.97 million in November 2017 and GMV (gross merchandise value) reached CNY 10.3 billion (USD 1.5 billion) in the year of 2017. Though the number looks attracting, the penetration rate of fresh product retailers’ app in China was only 3.44% dated July 2018.
Cons of Miss Fresh might be dense in its delivery service. The limited SKU types enable Miss Fresh to enlarge the quantity of each SKU that brings it a better cost of goods and simplify the inventory management at some degree. Nevertheless, the short-distance delivery is a big chunk in its operating costs. The delivery cost is mainly generated by the wage of delivery persons and maintenance costs of cold-chain delivery since it is branding for freshness. As more e-commerce bodies like JD.com and Alibaba joining in the fresh products market and chain supermarkets’ participation, the competition is getting intense. Market occupation and profitability are the next significant indicators for each player in the industry.