By LIN Beichen

Chinese grocery app Dingdong Maicai, backed by investors including Softbank and Sequoia Capital, has filed for a June 9 IPO on the New York Exchange, aiming to raise US$500 million (3.2 billion yuan) in a sector crowded with hungry investors.

Backed by Tencent, grocery delivery company MissFresh has filed for a NASDAQ listing on the same day with hopes of raising twice as much.

As people stayed home last year, demand for fresh grocery deliveries surged. Dingdong Maicai made 11.4 billion yuan in 2020, a lot more than the 3.9 billion it made in 2019. Online GMV was 13 billion yuan – almost twice as much as MissFresh.

Both companies are proud of their money-burning, asset-heavy “front warehouse” models. These proprietary warehouses and logistics teams mean quicker deliveries. While Dingdong Maicai focused on the Yangtze River Delta in Eastern China, MissFrehs has entrenched in Northern China.

MissFresh has over 630 warehouses in 16 cities while Dingdong Maicai has almost a thousand spread across the country. In 2019, MissFresh had over 1,500 warehouses which brought nothing but huge losses and have been largely shut down.

Both companies are losing money. The prospectus of Dingdong Maicai revealed a net deficiency of 1.9 billion yuan in 2019. MissFresh managed to reduce losses from 7.8 billion yuan in 2019 to 1.65 billion yuan last year. 

Online groceries are the site of a pitched battle between e-commerce heavyweights. Pingduoduo has poured money into his grocery project Duoduo Maicai, and JD invested US$700 million in Xingsheng Youxuan, a community group-buying app. 

For Dingdong Maicai and MissFresh, going public is merely the first step to more ferocious competition.