The recent woes of Missfresh Ltd. (Nasdaq: MF) have cast an uneasy spotlight on the capital-intensive business model used by some of China’s leading online grocers, who promise quick deliveries to residents of major cities with millions of residents.
Those struggles have turned attention to its larger rival Dingdong Cayman Ltd. (DDL.US), which is trying to convince investors its similarly modeled business shopping cart is heading down a different aisle. To emphasize that point, the company reported its first-ever non-GAAP profit in its latest quarterly results released last week, helped by a business boom in its hometown of Shanghai where residents were confined to their homes in April and May to control a Covid outbreak.
Dingdong’s leaders used the positive development to underscore the case for their business, saying the company’s “frontline fulfillment grid” model is sustainable over the longer term. The company could also get a boost as Missfresh retrenches and pulls back from the mass-delivery market, potentially reducing competition from at least one major rival.