Missfresh Ltd. (Nasdaq: MF), the online grocery delivery platform that celebrated its initial public offering in June, has released its second-quarter financials, showing 35% GMV growth.
Investors saw strong topline sales growth of 41%, at $293.4 million, topped with GMV of $358.3 million. The number of orders reached 23.8 million in the three months through June, a 32% increase from the same period a year ago. Net loss widened to $222 million; adjusted net loss excluding share-based compensation expenses and changes in fair value of options was $137.7 million.
The platform, backed by tech giant Tencent Holdings (OTC: TCEHY; HKEX: 0700), said in its first quarterly results as a public company that it has mastered a "winning combination" for "sustainable growth in the long run."
"Our unique business matrix consisting of on-demand DMW retail, intelligent fresh markets and retail cloud service, along with our core capabilities built on supply chain enhancement, technology-driven forces and value chain empowerment, present an excellent value proposition in the neighborhood retail market," Zheng Xu, the founder, chairman, and chief executive officer of Missfresh, said in a statement published after markets closed Thursday.
As delivery providers all race to shorten the delivery time, Missfresh noted its recent improvement. The company said it achieved the average delivery time per order during the second quarter of 37 minutes compared with 39 minutes in the first quarter of 2021.
Founded in 2014, Missfresh became the leader in China's on-demand distributed mini-warehouse (DMW) retail industry in 2018 and 2019 in terms of GMV. Last year, it ranked second, according to iResearch.
The company's IPO in late June, worth $273 million, was "a great start to the company's next phase," as the chief financial officer of Missfresh, Jun Wang, told CW in an interview at the time. Wang also described the company's strategy of helping offline retailers digitize by providing an open platform, as well as focusing on customer demands, product quality and variety.
New Business Lines Strengthening
Rather than just become the largest online supermarket, the company also aims to lead the digitalization of China's neighborhood retail.
In the interview, Wang also talked at length about the business units Missfresh had launched after the Covid-19 outbreak. "The fresh market complements our DMW business, which mainly targets large city customers. The fresh market business is designed for customers in lower-tier cities, who have more time on hand to do more extensive shopping offline with fresh groceries. That fulfills a different customer base, with our existing capabilities in retail management, as our products are friendly to customers or partners."
Further, "With the retail cloud business, it carries our vision to fortify the whole retail industry by providing SAAS+AI platform to offline supermarkets. We offer a comprehensive platform to third-party supermarkets, thus further enable them to operate on-demand services and use AI to upgrade their operational efficiency."
Boosted by its superior cold chain logistics, Missfresh launched an intelligent fresh market business in the second half of 2020 and had signed contracts to operate 58 intelligent fresh markets in 15 cities in China as of June.
Additionally, thanks to its sourcing and logistics capabilities, the company's fresh flower delivery business saw record growth. This year, Missfresh's flower sales increased by 467% around the Qixi Festival, China's traditional Valentine's Day.
"The rapid growth of our flower business can be attributed to consumer recognition of MissFresh's superior shopping experience," Bo Qi, the senior manager of the flower business at Missfresh, said in a statement.
Qi added, "Our pioneering DMW model ensures the immediacy of fresh flower delivery, while our direct procurement of flowers from their place of origin in Yunnan province and integration into MissFresh's efficient supply and distribution chain have improved the economics of fresh flower delivery."
Sales Surge in JD Partnership
Missfresh recently reported a 389% increase in sales on JD.com (Nasdaq: JD; HKEX: 9618) and JD-Daojia (JDDJ) since commencing their collaboration in April. JDDJ is one of China's largest local on-demand retail platforms in terms of GMV – and now consumers can order products from Missfresh on the platform.
Currently, approximately 570 of Missfresh's DMWs sell on JDDJ in 17 cities including Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou.
All products, including a wide range of daily necessities, including fruits, vegetables, seafood, grains, ready-to-cook meals, are to be delivered to consumers within one hour.
Missfresh also sells through other channels, including Ele.me and Meituan (HKEX: 3690)
In the third quarter, Missfresh expects to generate revenues in the range of 2,020 million yuan to 2,090 million yuan, representing year-over-year growth of up to 45%. Gross margin is expected to improve by 250 basis points to 350 basis points on a quarter-over-quarter basis.
TechNode quoted Missfresh CEO Xu saying the company has far-reaching expansion plans to grow in the 15.7 trillion yuan market it is forecast to become by 2025. "The market of this size is big enough to accommodate diversified user demands and different business models," Xu told the medium on IPO day.
As an industry leader and early runner in the market, Missfresh is well-positioned to expand in the neighborhood retail delivery. Its technology drive and focus on consumer experience, as well as backing by Chinese titan Tencent and horizontal partnerships with major channels, are factors to propel the long-term growth of Missfresh. Overall, its unique infrastructure and robust technological capabilities could be the backbone to support both online and offline retail.
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