Delivery of vegetables and fruits: why companies suffered losses in China

      Many Chinese companies have tried to go into the vegetable and fruit delivery business in the same way that food delivery companies operate.
But a quick search of statistics on the Internet shows that most fruit and vegetable delivery companies have failed in China: Daily Youxian lost 7.6 billion yuan in 3 years, and Dingdong Shopping caused heated discussions due to rumors of large layoffs, Ten Hui Group announced the closure of its multi-city vegetable and fruit delivery business.

       This is reportedly primarily due to the short shelf life of fruits and vegetables. According to reports from delivery companies, if traditional fruit and vegetable delivery is used, the fresh food wastage rate will be between 20% and 50%. Even if you buy green vegetables in the summer, you may already have a few wilted leaves when you bring them home.

      One way to solve this problem is to build refrigeration warehouses to store vegetables and fruits in different areas of the city, a warehouse built near the village can solve this problem because it is equivalent to installing a refrigerator at the door of the village. It is reported that after using such a warehouse, the loss rate of fresh products decreased to 1%.

      But here a new problem arose - the cost of building or renting such refrigerated warehouses for storing vegetables and fruits immediately significantly increased the price of all these vegetables and fruits - they began to cost much more than in a regular city offline market.

      Take Dingdong Maicai's Q3 2021 financial report as an example. The cost of renting warehouse space and wages of workers reaches 2.3 billion yuan, which is almost 30% of the total costs.
Therefore, the CEO complained that this model is bulky and heavy, if each order was about 10 yuan more expensive, would you still choose fresh food e-commerce?

     Thus, in the eyes of many delivery companies, such warehouses are “heavy assets” that increase the price significantly, so there will not be many people who are really willing to pay more for freshness and convenience in obtaining vegetables and fruits and there are no new ones in sight yet. prospects in the development of this direction for the delivery of goods in China