But things started to take a downturn last year. Despite the hype and money, these companies struggled to make a profit as lockdowns eased and people simply went back to shopping in person. What’s worse, they were caught in China’s new fight against antitrust behavior. The Chinese government was quick to impose fines and pen editorials questioning the value of the industry.
As a result, the once-promising startups and big tech companies decided to cut back on their expansion plans, implement massive layoffs, or outright file for bankruptcy. DiDi and Ele.me, two successful tech companies that bet on online grocery as their new growth driver, decided to shut down those services. At least two more online grocery startups have closed their businesses in the last year.
The latest lockdowns are giving the industry a second chance. With other Chinese cities like Beijing and Hangzhou also facing imminent lockdowns, millions of people are once again downloading these apps and relying on them on a daily basis. In fact, Dingdong’s app rose to third place in the App Store’s free app chart in China in the beginning of April.
The daily battle
While the luckier Shanghai residents may receive one-off free grocery packages from their employers or local governments, most people, like Song, needed to figure out a way to buy their own groceries. Some residents formed neighborhood groups through messaging apps, collecting everyone’s order and bulk-buying directly from nearby farms or food factories.
But Song soon realized that buying groceries with all her neighbors means she didn’t get to make her own choices. She lives in an older residential neighborhood where over three-fourths of the people are seniors or families with children. While her neighbors are placing family-size orders for things like five pounds of pork, such purchases would take her forever to consume.
The only other option for her, then, is the grocery apps. She frantically refreshes Dingdong, Hema, and Meituan Maicai every day to get a slot.
But with the lockdown interrupting the supply chain for many goods, including groceries, even placing an order on those apps requires luck and dedication. Like Black Friday shoppers waiting to bust the store doors open, Shanghai residents are swarming onto the apps at the designated time to try to buy as much as they can before the stocks run out in seconds. It can be stressful and frustrating.
Li, a consultant in Shanghai who’s only using her surname because she wishes to stay anonymous, also got up early every morning for a week to try her luck with half a dozen different apps. But during the lockdown, she did not secure one successful order, while her mother, living under the same roof, managed to get three. There was one time when Li put hundreds of RMB worth of groceries into the shopping cart — yet when she came to the payment stage, the only thing left in stock was a bag of candies.